Why you should file tax returns before July 31 deadline

Q: July 31 is the last date for filing it returns. But a lot of people use the two year extended window to file their returns. Is this advisable? And what are the implications of missing the July 31 deadline?

A: One should file income tax return before the deadline rather than waiting for the deadline; file it as soon as possible.

If one files the income tax return late, that is after the deadline of July 31 then a penal interest is required to be paid. The penal interest is equal to 1 percent of the tax due whether one day or one month, 1 percent per month or part of the month, the penal interest would be payable. Therefore, I strongly recommend all taxpayers of India to file income tax return in time.

Those who have got loss etc, they cannot take the benefit of carry forward of the loss, especially if the tax return is filed beyond July 31.

If no tax is due and return is delayed then one can file the return after July 31. No penalty, no penal interest but only in a situation when no tax is due.

Q: Suppose there is any kind of unpaid tax pending because of variety of reasons like if one is changing employer or have any kind of other source of income etc then is there any penalty if one does not file returns within July 31?

A: Yes, if one does not file return before July 31 then some taxes are due. Reasons are not concerned, whether change of employer or some other income, tax on other income, interest income and property income. The fact remains that as on July 31 some tax is outstanding. On that tax the net tax payable amount penal interest will be the required to be calculated and to be paid. That means even if return is delayed for two days, for example if one files in the month of August even then penal interest will be charged for the whole month. Therefore, file the return in time, pay the taxes now and file the return before July 31.

Caller Q: I am holding unlisted company shares for last 20 years for which there is a buyback offer by an American multinational company. Can I pay long-term capital gain tax without indexation at the rate of 10 percent?

A: You will not be able to take advantage of 10 percent tax rate as that is applicable only for listed company. You have to calculate the cost based on cost, inflation index and then make payment of 20 percent tax and you can save tax also by making investment in real estate.

Caller Q: What is the right time to declare interest on the bank fixed deposits (FDs)?

A: On accrued basis declare your income from bank FDs etc. This means you would have a cumulative fixed deposit receipt and bank will give the details, certificate and details of accrued interest. Therefore, best is to declare accrued interest in the income tax return but still the choice lies with the taxpayer to take whichever path he would like to chose. One can go for cash system of accounting or mercantile system of accounting but follow one system consistently, for example you may declare accrued interest on year-to-year basis or you may declare the entire interest income at one go in the year in which you receive the actual amount of the interest. However, it's better to go in for declaring on accrued bases so it is easy for you to take advantage of the tax deducted at source also.

Staff crunch may burn Rs 15,000-cr hole in direct tax mop-up

Direct tax collection may fall short by Rs 15,000 crore due to manpower shortage, the Income-Tax Gazetted Officers Association apprehends.

Suggesting filling up nearly 1,350 additional posts of Group A officers by promoting Group B Income Tax Officers, A. Sitarama Rao, President of the Association, said, “With just 50 per cent of the sanctioned strength of these commissioners, how on earth will the Government narrow its gap between revenue and expenditure to 4.8 per cent in 2013-14 and three per cent by 2016-17?”

At a press conference here on Thursday, the Association said the problems were two-fold. First, the effective strength of the additional posts at certain levels will be much less than projected. Second, the direct recruitment process will take time.

Income Tax Gazetted Officers are basically promotees and account for nearly 15 per cent of total workforce in the department. After spending years as officers, they are promoted to the post of Assistant Commissioner of Income Tax and Deputy Commissioner of Income Tax.

The Association claims that these two ranks alone collect 80-85 per cent of total direct taxes.

According to its back-of-the-envelop calculation, the targeted working strength at the level of Deputy Commissioner of Income Tax and Assistant Commissioner of Income Tax will be reduced to 1,528 against the sanctioned strength of 2,914.

The Association’s statement comes after the Government has approved creating over 20,000 additional posts (Group A – 1,349, Group B – 2,064 and Group C – 17,338) in the Income Tax Department as part of cadre restructuring.

It was said that the move would generate additional revenue of over Rs 25,750 crore a year against additional expenditure of nearly Rs 450 crore annually.

However, the Association feels that even this additional revenue will not be possible, apart from shortfall in the Budget target of Rs 6.68 lakh crore.

The Income Tax Department plans to appoint 270 Group A officers a year for five years. Half of these will be through direct recruitment and half through promotion.

According to the Association, considering that the Union Public Service Commission (agency responsible for recruitment of Group A officers at Central Government level) cannot commence its recruitment process before February 2014, only 270 vacancies are likely to be filled by way of promotions. The corresponding 270 direct recruitment vacancies in 2013-14 and 2014-15 will actually be available only after two years.

Direct tax includes income, corporate, securities transaction and wealth tax. During April-June, gross direct tax collection rose to Rs 1.24 lakh crore against Rs 1.11 lakh crore during same period last fiscal.

Simplifying procedure for filing income-tax returns

The deadline for filing income tax returns, July 31, is just week away. Needless to say, many individuals dread the date with I-T department, as they find the entire process very confusing. However, according to experts, if an individual is clear about the basics, the entire procedure can be completed in an hour's time. "Tax payers earning over Rs5 lakh are now required to file their tax return electronically. This will reduce paperwork to a great extent," says Vineet Agarwal, director at KPMG. Choose the right form Tax consultants are divided over the applicability of forms ITR-1 (Sahaj) and ITR-2 for salaried individuals, drawing income from salary and interest. Going strictly by the new I-T rules, an individual cannot file returns using the simpler form ITR-1 (Sahaj) if the person has any taxexempt income above Rs5,000. Since the I-T department has not issued any clarification so far, there are numerous interpretations on the matter. "Due to the change in rules, most salaried individuals will now have to use ITR-2. After all, typically, their remuneration includes tax-exempt components like house rent allowance (HRA), transport /conveyance allowance and leave travel allowance (LTA), which can easily exceedRs5,000 in a year," explains Vaibhav Sankla, director with tax consultancy firm H&R Block. However, many experts argue that ITR-1 (Sahaj) is the relevant form for this year. "Our view is that if the exempt income has been accounted for in Form 16, salaried individuals can continue to use ITR-1 (Sahaj). However, if they have earned an income of over Rs5,000 from, say, dividends, they will have to use ITR-2. Similarly, resident Indians, who may have been deputed abroad by their employers and are claiming a double tax avoidance treaty benefit, will have to use ITR-2," says Sonu Iyer, partner and national leader — human capital services, EY (formerly E&Y).Until last year, such additional, explicit disclosures were not sought by the I-T department. Check your tax credit Take a look at Form 26AS, which shows the amount of tax deducted from your salary that your employer has actually deposited with the I-T department, on the e-filing portal. "It is critical to ascertain whether the tax deducted from your income (as per your Form 16) matches the figures in Form 26AS. The two versions must tally. If you go ahead with filing the return without seeking clarity on the nature of the discrepancy, you are bound to get a notice from the I-T department later," says Iyer. Simplifying procedure for filing income-tax returns Claim 80G, other deductions You also need to figure out whether you want to claim any extra deductions you forgot to claim earlier. For example, if you have not submitted the relevant bills while making your investment declaration in January, your Form 16 might not have accounted for the deduction of up to Rs5,000 on preventive health checkups under section 80D. You have the option of claiming this deduction while filing returns. "ITR forms do not require you to enter any details of such bills. However, it is advisable to retain copies of these bills. If there is an enquiry from the tax department in future, these bills will serve as proof," says Sankla of H&R Block. Similarly, you can also claim deductions under section 80G on donations made to charitable institutions. "Typically, employers do not consider 80G deductions in Form 16. So, the individual can claim the benefit at the time of filing return. In the ITR form, you will be required to provide details like the amount donated as well as the charity's name, PAN and address," he adds.

Business Group Wants Separate Ports For Exports, Imports

A business lobby group is demanding that the government designate separate seaports for exports and imports to overcome gridlock in the country’s biggest trade gateway, Tanjung Priok Port in North Jakarta.



Indonesian Employers Association (Apindo) chairman Sofjan Wanandi said on Monday that the lengthy dwelling time at the port resulted in high business costs that burdened business players and moreover, markedly disrupted international trade activities.



“We certainly cannot do business as usual, and certainly require a drastic change. Otherwise, both exports and imports will be impacted,” he told reporters after a meeting with Industry Minister MS Hidayat.



Exports and imports in Southeast Asia’s top economy have grown to record highs in recent years, with last year seeing exports reaching US$190.03 billion and imports settling at $191.69 billion.



In line with significant surges in overseas trade activities, the dwelling time at Tanjung Priok Port which shoulders more than 70 percent of incoming and outgoing goods, has further expanded in the past few years, peaking to eight days this year from 6.5 days last year.



Indonesia’s dwelling time ranked highest compared to its Southeast Asian neighbors, including Singapore (1.2 days) and Thailand (five days).



In the past few weeks, poor performance in Tanjung Priok Port has raised deep concerns among business players as it could process only 170 containers on a daily basis, far fewer than the 600 containers that it should tackle, according to an estimate by the Indonesian Chamber of Commerce and Industry (Kadin).



The slow handling activities at the port caused Rp 4.8 billion ($472,209) per day in losses for exporters and importers, Kadin’s recent statistics reveal.



A quick solution to accelerate exports would be to build a new seaport to mainly serve exports in Kawasan Berikat Nusantara (KBN) industrial bonded zone in North Jakarta, Sofjan said.



KBN, which covers Marunda, Cakung and Tanjung Priok, currently serves as an export-processing zone (EPZ) that hosts more than 100 factories.



On the other hand, to cope with big inflows of overseas goods, particularly raw materials and intermediary goods, the government should allow a special verification process, with importers and importer producers getting their purchased items checked at their own warehouses instead at the densely occupied Tanjung Priok Port, Sofjan added.



In response to the demand from local business players, the Industry Minister said breakthroughs were needed at the heavily congested port as the problems could further hurt both exporters and importers if they remained unsolved.



“We must [first] realize the plan to build a new container port in KBN. At least that can be a temporary alternative due to inefficiency at Tanjung Priok. If such inefficiency continues, our industry will suffer bigger losses and undermine the competitive edge of local businesses,” Hidayat said.



“The verification at warehouses of each importing firm would be feasible as an emergency solution to temporarily ease overloads at the port, but should be followed by stricter customs procedures,” he added.

Source:-www.thejakartapost.com

No unfair trade practice if complainant couldn’t prove that it was lured by false advertisement to a

MRTP : Where complainant could not prove that it acted on false and misleading advertisement issued by respondent-carrier before handing over its consignment to said carrier, no case of unfair trade practice was made against respondent

Curb Import Of Mobiles And Electronics To Support Rupee

Jul 22, 2013

MUMBAI: Experts have recommended curbs on imports of imports and pro-growth policies to encourage inflows from foreign institutional investors. Reserve Bank of India's moves to raise rates has been criticized as it hurts growth and encourages foreign debt which is seen as hot money.



"There is a need for RBI to cut rates aggressively to bring back the 'feel better' factor as a 'feel good' factor is something that will take longer. There is a need for this to encourage inflows from foreign institutional investors which is the only source through which capital can come in fast and in large quantities" said Pradip P Shah, Chairman, IndAsia Fund Advisors. He was speaking at a seminar on the falling rupee and its impact on the Indian economy.



He also said that foreign currency non-resident deposits ( FCNR) which has helped India raise foreign currency in the past can be encouraged through sops such as lower cash reserve ratio and statutory liquidity ratio requirement for these deposits. He said that central government must do its bit by discouraging imports of consumer electronics, micro electronics and consumer products if required through non-tariff barriers. "Right now these imports are not doing anything for the Indian economy they are only creating jobs in Thailand or some other country" he said.



Echohing his view Saugata Bhattacharya economist Axis Bank said that the government's top priority should be in reviving growth. "Growth coming down from 9% to 7% is not as bad as growth coming down from 6% to 5%" he said. According to Bhattacharya besides placing curbs on imports the government could provide a simultaneous sop to domestic production through tax cuts.



According to Prabodh Thakker, Vice President, IMC and chairman of Aon Global Insurance Brokers to support the rupee there was a need to provide a boost to domestic manufacturing, improve the policy environment and spur growth.

Source:-timesofindia.indiatimes.com

Fresh Curbs On Gold Imports

Mumbai, July 22: The Reserve Bank of India (RBI) today tightened gold imports further by ordering nominated banks and agencies to ensure the export of one-fifth of every lot of gold imported.



The central bank said banks must retain 20 per cent of the imported gold in customs bonded warehouses and will only be able to further import gold after exporting at least 75 per cent of the gold from those warehouses.



The RBI added that the banks and agencies could make available gold in any form for domestic use only to entities engaged in the jewellery business.



The latest measure came as part of what it called a move to “rationalise” the import of gold into the country.



Both the Union government and the central bank have been concentrating on bringing down gold imports over the past few months to tackle the ballooning current account deficit (CAD).



India’s CAD, which simply put is the difference between inflows and outflows of foreign currency, rose to 4.8 per cent of the gross domestic product in 2012-13 from 4.2 per cent in 2011-12. A high CAD has also been blamed for the recent depreciation in the value of the rupee.



As part of these efforts, while import duty of gold was raised to 8 per cent from 6 per cent, the RBI had in the recent past placed various restrictions on banks’ import of gold.



These steps seem to have met with success as imports in June are estimated to have fallen to around 31 tonnes from 162 tonnes in May and 141 tonnes in April.



India imported around 830 tonnes of the yellow metal in the previous fiscal.



In its notification today, the central bank said all nominated banks/nominated agencies must ensure that at least one fifth of every lot of imported gold is exclusively made available for the purpose of export.



Analysts said the quantitative restriction was a clever move by the RBI as it had to be seen in the context of the tight export market now prevailing.



This had resulted in gems and jewellery exports from India declining in 2012-13.



With imports of gold now linked to exports, the amount of the yellow metal coming into India could be hit if exports do not pick up.



The instructions will, however, not apply to import of gold by units in the special economic zones, export-oriented units or star trading houses, which import gold only for the purpose of exports, it added.



The RBI said on a review of earlier norms, it “has been decided to rationalise the import of gold in any form/purity, including import of gold coins” and the new guidelines will come into force with immediate effect.



The government will issue separate instructions, if any, to the customs authorities and the DGFT to operationalise and monitor these import restrictions, the RBI said.



The banks and other authorised agencies have been asked to strictly ensure that foreign exchange transactions are compliant with new instructions, the RBI said, adding that they will be responsible for monitoring operations.



It further said earlier instructions on the import of gold on a consignment basis and against letters of credit had been withdrawn.



Gems and Jewellery Export Promotion Council chairman Vipul Shah said, “This step will boost exports and foreign revenue. There will not be any shortage of gold for domestic use. There will be some impact on prices.”

Source:-www.telegraphindia.com

Adjustments made by TPO to be deleted as it provided no reasoning or data to justify exclusion of co

IT/ILT : Where TPO only provided unsupported reasoning and no data for excluding comparables adopted by assessee, adjustment was not sustainable

Income from short-term investment of sum acquired through convertible zero coupon debenture is taxab

IT: Where a company had introduced in assessee-company a sum of Rs. 900 crores in form of zero coupon convertible debenture to be converted into equity shares within a span of 36 months and out of which a sum of Rs. 500 crores was invested by assessee in short-term deposits with banks, interest earned on these deposits was an income chargeable under head 'income from other sources'

Sum paid under VRS on closure of a few of units as a part of restructuring process is an allowable r

IT: Where only two units of assessee-company were closed as part of restructuring process, expenditure on voluntary retirement scheme was allowable as revenue expenditure

Income from letting out of a commercial complex is ‘Income from house property’ and not a business i

IT : Income earned by assessee-firm from letting out a commercial complex was to be assessed as income from house property and not as business income

Adjudicating authority can’t go beyond the scope of show cause notice

ST : Demand cannot be confirmed on a ground not specified in show-cause notice

Interest earned by supplier of goods on deferred payment is exempt from ST

ST/ECJ : Supplier of goods/services who authorizes his customer to defer payment of price, in return for payment of interest, is, in principle, making a grant of loan and accordingly, interest earned thereon falls under negative list

HC denied to admit writ against a revision order as assessee had an alternate remedy to appeal befor

IT: Against revision order, assessee should approach Appellate Tribunal instead of filing writ petition before High Court

Ownership of land with developer of a housing project isn’t a condition precedent for sec. 80-IB ded

IT : Ownership of land for development of a housing project is not a criterion for section 80-IB deduction

Payment of consultancy fees to carry on business more efficiently and profitably is a revenue exp.

IT : Expenditure incurred on consultancy charges to carry on business more efficiently, is to be treated as revenue expenditure, and not as capital expenditure

Ownership of property transferred during pendency of proceedings before BIFR or during winding up to

CL: Where transfer of properties were made either during pendency of reference before BIFR or during pendency of winding up proceedings, Official Liquidator was to be directed to take steps for restoration

‘Due date’ under sec. 36(1)(va) for payment of employee’s contribution to PF is same as contemplated

IT: Employee's contribution towards Provident Fund if paid before due date of filing return is allowable under section 36(1)(va) to employer assessee

Functionally different comparables to be excluded from list of comparables for TP study

IT/ILT : Where in course of transfer pricing proceedings, TPO made certain adjustment to ALP determined by assessee, in view of fact that two comparables selected by TPO were functionally different, assessee's plea that said comparables were to be excluded while determining ALP, was to be accepted

Finance Ministry Initiates Steps To Correct Trade Data Discrepancies

21 Jul, 2013

NEW DELHI: The Finance Ministry has asked Customs Department to ensure use of standard units on same items entering or leaving the country across ports in order to prevent discrepancies in trade data, which lead to embarrassment.





The Central Board of Excise and Customs (CBEC) has found that Standard Unit Quantity Codes (UQC), indicated in the Customs Act, are not being uniformly declared by importers and exporters for the same items across different ports.



"The issue of poor quality of trade data has been engaging the attention of the government," CBEC said in a communication to the Customs and other revenue officials.



An error of USD 9 billion was noticed in the country's exports for April-November period of 2011-12.



"The solution lies in improving the quality of data by using standard UQCs...Accordingly, it is directed by the Board that Customs field formations should ensure that only the correct and prescribed Standard UQC ... is mentioned in Bills of Entry/ Shipping Bills," the CBEC said.



It said an analysis of National Import Data Base (NIDB) reveals that there are at times "variations between the lowest and highest unit values of the same item", which might escape detection on account of the use of different unit codes.



Use non-uniform UQCs impacts data quality and makes comparisons and aggregations difficult, the CBEC said.



"The use of non-uniform UQCs for the same item also vitiates the quality of the NIDB data and reduces its utility to the assessing officers, who are unable to ascertain the contemporaneous values or assessment practice of a given item in different Customs locations," it said.



UQC have been specified in the Customs Tariff Act, 1975. The Board, which is responsible for collection of indirect taxes, asked the Chief Commissioners of Customs to ensure the instructions are "complied with scrupulously".



It, however, said the exercise should not result in delays in clearance of cargo.



Earlier, the Directorate General of Foreign Trade (DGFT) had streamlined flow of trade figures from different ports in the country.



This was done following the error in export figures of April-November period of 2011-12. The Prime Minister's Office had asked the commerce department to explain the errors.



Data reporting problems also created problems for officials during a recent visit of Commerce and Industry Minister Anand Sharma to Mauritius where bilateral trade figures were found not matching.

Source:-economictimes.indiatimes.com