Exemption from Filing ITR

By: Raman Aggarwal

The CBDT has exempted certain class of assesses from filing the Income Tax Return after the accomplishment of following conditions:

Ø      Assessee should be an individual.

Ø      Income of the assessee does not exceed Rs. 5 Lac.

Ø      Income is chargeable under the head Income from Salaries.

Ø      Interest income should be less than Rs.10000 from the saving bank account. 

If any individual assessee has income from interest of Fixed Deposit or Rental Income from House Property or any Income from Capital Gain or Gain from Business or Profession or any Speculation Income from share transaction, then assessee will not be eligible to claim the benefit of “Exemption from filing Income Tax Return”. 

There are some other conditions also for availing this benefit-

Ø      Assessee has reported the Permanent Account Number (PAN) to the employer.

Ø      Assessee has reported all the income & full details of deduction under section 80C to the employer and employer has deducted the TDS.

Ø      Assessee has received TDS certificate in Form No. 16 from their Employer.

Ø      Employer has deposited the TDS amount to the Central Government.

Ø      Assessee has no claim of refund of taxes.

Ø      Assessee has received Salary only from one employer and if any assessee changes their job in middle of the Financial Year, assessee has to file the return. 

If any notice u/s 142(1), 148, 153A or 153C of the Income Tax Act, 1961 has been issued for filing an Income Tax Return for the relevant assessment year then the exemption from filing Income Tax Return will not available.

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All about Company

By: Mahesh Kumar

Steps to Register a new Company

Do you want to start an Indian Company?

To register a company, you need to first apply for a Director Identification Number (DIN) which can be done by filing eForm for acquiring the DIN. You would then need to acquire your Digital Certificate and register the same on the portal. Thereafter, you need to get the company name approved by the Ministry. Once the company name is approved , you can register the company by filing the incorporation form depending on the type of company 

Step 1 : Application For DIN

The concept of a Director Identification Number (DIN) has been introduced for the first time with the insertion of Sections 266A to 266G of Companies (Amendment) Act, 2006. As such, all the existing and intending Directors have to obtain DIN within the prescribed time-frame as notified.  You need to file e-Form DIN-1 in order to obtain DIN. To get more information about the same click Director Identification Number

Step 2 : Acquire/ Register DSC

The Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically. This is the only secure and authentic way that a document can be submitted electronically. As such, all filings done by the companies under MCA21 e-Governance programme are required to be filed with the use of Digital Signatures by the person authorised to sign the documents. 

Acquire DSC -A licensed Certifying Authority (CA) issues the digital signature. Certifying Authority (CA) means a person who has been granted a license to issue a digital signature certificate under Section 24 of the Indian IT-Act 2000.

Register DSC -Role check for Indian companies is to be implemented in the MCA application. Role check can be performed only after the signatories have registered their Digital signature certificates (DSC) with MCA. To know about it click Register a DSC

Step 3 : New User Registration

To file an e-Form or to avail any paid service on MCA portal, you are first required to register yourself as a user in the relevant user category, such as registered and business user. To register now click New User Registration

Step 4 : Incorporate a Company

Apply for the name of the company to be registered by filing Form1A for the same. After that depending upon the proposed company type file required incorporation forms listed below.

1. Form 1: Application or declaration for incorporation of a company.

2. Form 18: Notice of situation or change of situation of registered office.

3. Form 32: Particulars of appointment of managing director, directors, manager and secretary and the changes among them or consent of candidate to act as a managing director or director or manager or secretary of a company and/ or undertaking to take and pay for qualification shares.

Once the form has been approved by the concerned official of the Ministry, you will receive an email regarding the same and the status of the form will get changed to Approved. To know more about e-Filing process click "All About e-Filing".

Do you want to register a Part IX Company?

In order to register Part IX Company, applicant is required to file Form 1A for name availability. After approval of the same, applicant is required to file Form 37 and Form 39 along with filing e form 1, 18 and 32.

Do you want to register a Section 25 Company?

To register a section 25 company, applicant is required to file Form 1A for name availability. Once the name is approved/made available, there is a further requirement of obtaining a license for a Section 25 Company, for which Form 24 A is to be filed in order to obtain a license for such company. After obtaining license number, applicant can proceed further to incorporate a company by filing e forms 1, 18 and 32. 

Do you want to start a Foreign Company?

Any foreign company can establish its place of business in India by filling Form 44 (Documents delivered for registration by a foreign company). The eForm has to be digitally signed by authorized representative of the foreign company.

There is no need to apply and obtain DIN for Directors of a foreign company but the DSC of the authorized representative is mandatory, which again is not required to be registered on MCA Application

Change Company Information

Do you want to intimate changes among managing director, directors, manager and secretary of a company?

A company can intimate changes among managing director, directors, manager and secretary of a company by filing Form 32 with ROC within 30 days from date of such change takes place. 

Do you want to change Company Name?

1. In order to change company name, Form 1A is required to file for name approval.

2. After the name gets approved, applicant is required to file form 23 (necessary resolution for alteration of MOA and AOA) and form 1B to give effect to change in name.

Do you want to change Object Clause of MOA?

In case company wants to change its object clause, it can do so by filling passing necessary resolution and the same needs to be filed in Form 23.

Do you want to change registered office of the company?

In case company wants to change its registered office within local limits of the same city or place, intimation regarding the same has to be filed in Form 18. 

Similarly, if company wishes to shift or change its registered office outside local limits of city, town or village, Form 23 and Form 18 are required to be filed to ROC to give effect to such change. 

In case, company wants to shift the registered office from one state to another state, it needs to file following forms to give effect to such change. These forms are:

1) Form 23 

2) File petition with CLB and intimate ROC in Form 61 

3) Form 21 (Notice of the court or the company law board order)

4) Form 18 ( Notice of situation or change of situation of registered office)

If there is a change of registered office of the company within the state from the jurisdiction of one Registrar to the jurisdiction of another Registrar, Form 23, Form 1AD and Form 18 is required to file in this case. 

Do you want to increase authorized capital of the company?

A company can increase its authorized capital by filing Form 5. Similarly, subscribed capital and paid up capital of the company gets increased on filing and approval of Form 2 (Return of allotment of shares). 

Do you want to convert a Public company into a Private company?

A public company can convert itself in to a private company by filing Form 23 (Alteration of MOA and AOA) and approval of Form 1B (Application for approval of the Central Government for conversion of a public company into a private company) 

Do you want to convert a Private company into a Public company?

A Private company can convert itself in to a Public company by filing Form 23 for registration of such resolution passed by the company (Alteration of MOA and AOA) and filing of Form 62 (Prospectus as per Schedule II or Statement in lieu of prospectus as per Schedule IV)

Do you want to register a charge or make modification in registered charges (other than those related to debentures?

In case you want to register a charge or make modification in registered charges (other than those related to debentures),you need to file Form 8 for registration or for modification of a registered charge.

Do you want to register a charge or make modification in registered charges (related to debentures)?

In case you want to register a charge or make modification in registered charges (related to debentures), you need to file Form 10 for registration or modification of a registered charge.

Do you want to report repayment or satisfaction of registered charges?

In case you want to report repayment or satisfaction of registered charges, you need to file Form 17 (satisfaction of charge). This form is applicable for both the type of charges as per point 8 and 9 above.

Do you want to change information of a Foreign Company?

A foreign company can change its information by filing Form 49 and Form 52. 

Form 49 is required when there is -

1. Alteration in the charter, statute or memorandum and articles of association,

2. Alteration in Address of the registered or principal office

3. Alteration in directors and secretary of a foreign company.

Similarly, Form 52 is required to give notice in case of -

(A) Alteration in names and addresses of persons resident in India authorized to accept service on behalf of a foreign company 

(B) Alteration in the address of principal place of business in India of a foreign company 

(C) Annual accounts and list of places of business established in India by a foreign company 

(D) Cessation to have a place of business in India.

Compliance Related Filing

Do you want to do Annual e-filing?

Companies incorporated under the Companies Act 1956, are required to file the following Forms with the Registrar of Companies (ROC) every year: 

S. No.	Document	e-Form
1	Balance-Sheet	Form 23AC to be filed by all Companies
2	Profit & Loss Account	Form 23ACA to be filed by all Companies
3	Annual Return	Form 20B to be filed by Companies having share capital
4	Annual Return	Form 21A to be filed by companies without share capital
5	Compliance Certificate	Form 66 to be filed by Companies having paid up capital of Rs.10 lakh to Rs. 5 crore

How to do the Filing

Companies can do e-Filing in following ways:- 

The Company representative can upload the e-Forms on the MCA portal through the ‘Annual Filing Corner’ link (after registering oneself as a user of the portal) at his convenience from his office/ home. This is the most convenient way of e-Filing. 

The Company representative can prepare the e-Forms as per guidelines, get them digitally signed by the authorized signatory, copy them in a CD or a pen drive and visit the nearest “Registrar’s Front Office” (RFO). RFO staff will assist in uploading of e Forms on MCA portal. 

Other points to be remembered: 

1) Balance Sheet and Profit & Loss Accounts are to be filed as two separate documents with different e-Forms; 

2) Each e-Form along with the relevant attachment(s) should be less than 2.5 MB. 

3) The Balance Sheet, Profit & Loss Account and Annual Return are filed as attachments to the respective e-Forms. A scanned copy considerably increases the size of the document besides being more expensive. You are therefore, advised to convert the Text file/ Excel sheets by using the PDF converter software (PDF conversion facility is also available on the MCA portal for business users) and upload these attachments as PDF documents.

Do you want to do other compliance related filing?

Forms under other compliances are as under:-

1. Form 2 (Return of allotment)

2. Form 3 (Particulars of contract relating to shares allotted as fully or partly paid-up otherwise than in cash)

3. Form 4 (Statement of amount or rate percent of the commission payable in respect of shares or debentures and the number of shares or debentures for which persons have agreed for a commission to subscribe for absolutely or conditionally)

4. Form 4C (Return in respect of buy Back of Shares)

5. Form 22 (Statutory Report)

6. Form 23 (Registration of resolution(s) and agreement(s)

7. Form 23B (Information by Auditor to Registrar)

8. Form 25C(Return of appointment of managing director or whole time director or manager)

9. Form 62(Form for submission of documents with Registrar of Companies)

10. Form DD-B (Report by a public company)

11. Form 1(Statement of amounts credited to investor education and protection fund)

Approval Related Filing

Do you want to do HQ approval related filing?

1. Form 23AAA (Application to Central Government for modification in the matters to be stated in the company's balance sheet or profit and loss account)

2. Form 23AAB(Application for exemption from attaching the annual accounts of the subsidiary companies)

3. Form 23AAC(Application to Central Government for not providing depreciation)

4. Form 23C (Form of application to the Central Government for appointment of cost auditor)

5. Form 24AB(Form for filing application for giving loan, providing security or guarantee in connection with a loan)

6. Form 24B(Form of application to the Central Government for obtaining prior consent for holding of any office or place of profit in the company by certain persons)

7. Form 63 (Form for filing application for declaration as Nidhi Company)

8. Form 65 (Form for filing application or documents with Central Government)

9. Form (Form of application for approval for declaration of dividend out of reserves)

10. Form DD-C (Form of application for removal of disqualification of directors)

11. Form I (Form of application for approval of the Central Government for the appointment of sole selling agents by the company)

12. Form II (Form of application for approval of the Central Government for the appointment of sole buying agent by a company)

Do you want to do RD approval related filing?

1. Form 1AD (Application for confirmation by Regional Director for change of registered office of the company within the state from the jurisdiction of one Registrar to the jurisdiction of another Registrar). This is applicable only for the companies registered in the states of Maharashtra and Tamilnadu, as both these states have two RoC offices.

2. Form 24A (Form for filing application to Regional Director)

3. Form 64 (Form for filing application for opening branch(s) by a nidhi company)

Do you want to do ROC approval related filing?

1. Form 1B (Application for approval of the Central Government for change of name or conversion of a public company into a private company)

2. Form 61 (Form for filing an application with Registrar of Companies)

Close a Company

Do you want to close a Company?

A company can be closed by adopting the following ways:- 

(A) Strike off a company under Section 560 :

Section 560, of the Companies Act, 1956, deals with strike off provisions of a defunct company. Any defunct company desirous to strike off its name from the register of Registrar of company can apply in Form FTE for strike off its name from the register maintained by ROC as per Guidelines for ‘FAST TRACK EXIT MODE’ issued vide General Circular No. 36/2011 dated 7.6.2011. Similarly, ROC has also power to strike off any defunct company after satisfying himself of the need to strike off a defunct company and has reasonable cause. But before passing any order in this regard, an opportunity of being heard must be provided to the defunct company by following the due procedure u/s 560. 

(B) WINDING UP

Section 425, of Companies Act, 1956, deals with modes of winding up.

The winding up of a company may be either -

(a) By the Tribunal (also known as compulsory winding up).

(b) Voluntary winding up.

(c) Subject to the supervision of the Court.

Overview of Winding up

You can get a general picture from the following steps of winding up which are summarized below (except Voluntary winding up)

1. Firstly, issuing a written demand for debt payments to the target company.

2. Secondly, present a winding up petition to the court and the company

3. Thirdly, Court hearing for the petition

4. Fourthly, granting of winding up order by the court

5. Fifthly, meeting of creditors and other relevant parties

6. Sixthly, appointment of liquidator.

7. Seventhly, realization and distribution of company’s assets to the creditors

8. Eighthly, realize of duties for liquidator

9. Lastly, dissolution of the company.

For more details please visit Company Liquidators website (http://www.companyliquidator.gov.in/) 

Voluntary Winding up

Voluntary winding up which may be:

i) Member’s Voluntary winding up.

ii) Creditor’s Voluntary winding up.

In case of voluntary winding up, the entire process is done without court supervision. When the winding up is complete, relevant documents are filed before the court for obtaining the order of dissolution. A Voluntary winding up can be done by members or creditors. The circumstances in which company may be wound up voluntarily are: 

a) When the period fixed for the duration of the company in its articles has expired.

b) When an event on the happening of which the company is to be dissolved as per its articles happen.

c) The company resolves by special resolution at any general meeting to be voluntary winding up.

Do you want to convert the existing Company to LLP?

In case company wants to convert the existing company to LLP, it has to comply with the requirements of LLP Act, 2008 (File Form 18 under LLP Act, 2008). For details, please visit the link http://www.llp.gov.in/ available on MCA portal. After it gets approved, intimation regarding this can be given in Form 14 - LLP {Form for intimating to Registrar of Companies of conversion of the company into limited liability partnership (LLP)} with ROC.

5 Mistakes to avoid while saving tax!

By: Prof. Bajaj

Its March knocking on the door and the same mad rush is seen everywhere. For what? To save tax of course.

Be it businessman or salaried or professionals, there is still a huge chunk who are yet to make their tax saving investments and while doing so at the last moment, are likely to make a lot of mistakes. What could be those mistakes and why should one avoid them, lets have a look:

1. Making long term commitments without considering all factors

Last year, Mr. Sunil had made a contribution of Rs. 36,000 towards PF deducted by his employer. So he bought a 15 year policy with an annual premium of Rs. 64,000 so that his Rs. 1 Lakh limit is achieved. However, this year, due to increase in his salary, his PF contribution has increased to Rs. 48,000 p.a. But still he has to pay Rs. 64,000 premium towards his policy. So, in effect, he is paying Rs. 1,12,000 this year towards 80C, however, he would be entitled for deduction of only Rs. 1 Lakh. This problem could continue further, as his salary is expected to increase every year and so would his PF contribution.

Similar story has occurred with Mr. Pramod. He had availed a home loan and was paying an EMI of Rs. 25,000 p.m. As per the repayment schedule, out of the total Rs. 3 Lakhs paid, only Rs. 71,000 was the principle and balance was interest. Thus, he purchased a ULIP with an annual premium of Rs. 29,000 and 5 years payment commitment. As we know, that every year, the principle component increases and interest component decreases, next year, he will have the principle component increased to Rs. 96,000 and will still have to pay Rs. 29,000 towards the ULIP premium.

If they had invested the balance amount of Rs. 64,000 and Rs. 29,000 in an avenue which does not compulsorily requires annual investment (Example ELSS, PPF, NSC etc) then this problem would not arise.

So its better to be careful while choosing long term commitment amount. You might be required to pay them for long, but wont be able to avail tax benefit on the same.

2. Thinking that all life insurance policies qualify for tax deduction

It is a general myth (mostly propagated by insurance agents) that a life insurance policy is the best thing for saving tax. Before agreeing or disagreeing to the same, I would like to draw your attention to something more important.

Not all life insurance policies would qualify for tax benefit u/s 80C. If you want to avail this benefit, you will have to ensure that the life risk cover is at least 5 times the premium paid by you. (This is as per the current tax laws. It could increase to 10-20 times the premium in DTC). Thus, if you think of following the first point and your agent starts pushing you for a single premium plan, first check if the plan is giving you a life risk cover of 5 times the premium or not. In most cases, single premium plans do not have this feature and would, therefore, not qualify u/s 80C.

There is another breed of products (of course insurance-cum-investment plan), which requires annual payments, gives 5 times life risk cover in the first year, but the cover drops to 1.25 times the premium paid from the second year. You need to be cautious while buying these plans, because, they will give you tax benefit in the current year. But the next year premium will not be eligible for tax deduction, but you still will have to pay the premium.

3. Not considering the other items that qualify for tax deduction

Before arriving at the amount you need to invest for tax saving, make sure you have accounted for few other less-known items which qualify u/s 80C. One of the most important amongst them is the tuition fees paid towards your children’s education. Also, if you are salaried, don’t forget to deduct the HRA, Conveyance Allowance (within the prescribed limits) before you arrive at your amount required to be invested to save tax. Seeking professional help for the same could be of great help.

4. Investing Blindly for just Tax saving

This tax saving season, many fly-by-night organisations (claiming themselves as NGOs) call and request you to donate them to save tax u/s 80G. While it is always good to do charity, it is also important that it is done for the right purpose and it is being used for the right purpose. Remember that out of the amount donated to such NGOs, only 50% would qualify for tax saving. Just to give an example, if you still have a taxable income of Rs. 10,000 on which you want to save tax. Suppose You are in a 20% tax slab. If you donate this amount to the NGO, Rs. 5000 will qualify for tax saving. So in effect, you will pay tax on the balance Rs. 5,000 i.e. Rs. 1000. Which means your tax saving is Rs. 1000 and total money going from your pocket is Rs. 11,000 (Rs.10000 Donation + Rs. 1000 tax)

As against this, if you do not donate, you just require to pay Rs. 2000 as tax. There is no tax saving, but the total money going from your pocket is only Rs. 2000. We are nowhere suggesting that you should not donate. But while donating,

[A] Don’t do it just to save tax.

[B] Check the credibility of the organisation if they are putting your money to the right purpose.

5. Not Being realistic with your expectations

You have several options like PPF, LIP, NSC, ELSS, Bank FD etc for saving tax u/s 80C. Having said that, each of them have some merits and demerits over others. While choosing the investment product, take your overall financial planning into account and then make the investment. I have seen some people having expectations like, “Advise me a product for tax saving which will give me guaranteed tax-free returns of 15%. Also, there should be no lock-in for this product.”

Alas! If there existed such product, then maybe no other products were needed at all. But as on date such product does not exist, which will satisfy all these conditions. Some product will fulfil the ‘guaranteed’ part of it, and some other will fulfill the tax-free 15% part of it. So unless you are reasonable with your expectations, you will not find the right product for tax saving.

Excise Duty on Branded Readymade Garments

By: CA Ankit Gulgulia

In Recent times the Rollback of Excise Duty Exemption on Branded Readymade Garments has been a Subject Matter of big protest from Industry. Despite all the efforts and rows the government looks in no mood to give any relaxation on the same. Excise duty at the rate of 10% shall now apply to ready-made garments and made-up articles of textiles falling under Chapters 61, 62 and 63 of the Central Excise Tariff when they bear or are sold under a brand name. The duty shall be applicable from 01.03.2011.

What is Excise Duty?

Excise Duty is a tax attracted by the event of manufacture but collected at some convenient stage which may be after the said event, which is only for administrative convenience. It is a duty levied up on goods manufactured and not up on sales or the proceeds of sale of goods. 

From the above definition it can be said that excise duty shall be levied only when the activity is a manufacture and only when it is leviable the same shall be collected at the time of sale.

Major Issues

This article aims to discuss several issues that require clarity for the industry and are presented as hereunder:

a. Why and how is Excise Duty Calculated on Retail Sale Price in case of Branded Readymade Garments when the excise duty is leviable on manufacture?

If Ideally the excise duty is leviable on event of manufacture then the base for computing the tax shall be manufacturing cost instead of retail sale price. Why is that in case of Branded Readymade Garments the calculation of excise is based on retail sale price?

Retail sale price means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like, as the case may be, and the price is the sole consideration of such sale.

As Per Section 3(2) of Central Excise Act,1944, the Government may notify such categories of goods to which the revised principle of excise valuation would apply. The revised principle would require payment of excise duty on the basis of the said tariff value. Thus the goods, which are coved under this new principle, would be required to discharge excise duty on the basis of the tariff value as notified instead of the basis of the wholesale selling price. Readymade Garments valuation is covered by this principle only. Duty is to be paid on a tariff value equal to 45% of the retail sale price.

Based on the Same the Computation of Value for Excise shall be As Follows:

Particulars	Amount
Retail Sale Price	100/-
Tariff Value Notified (45%)	45/-
Excise Duty Payable at the Rate of 10.3% (45 x 10.3%)	4.64/-

b. What are the exempted Categories?

Articles not bearing a Brand Name

The Articles not bearing a brand name are exempted from the applicability of excise duty. The exemption is based on the condition that no CENVAT credit shall be taken.

Thus readymade garments, not bearing a brand name are exempted from payment of Central Excise duty. Further, the manufacture has an option to pay duty @ 5% on cotton items and 10% on others and take CENVAT credit.

Brand name or Trade name : means a brand name or a trade name, whether registered or not, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person.

SSI Exemption

For evaluating the eligibility of a Small Scale Industry, under Central Excise Act, the following conditions must be satisfied:

a. The turnover of the Unit must not exceed rupees One Hundred and Fifty Lakhs made on or after the 1st day of April in any financial year and

b. The turnover of the Unit must not exceed rupees Four Hundred Lakhs in the preceding financial year.

For the Purpose of Computing the Exemption limit it is very pertinent to know the finance minster’s statement on the floor of the house as Quoted hereunder:

“While initiating debate on the Finance Bill-2011 the Finance Minister said that the garment traders had criticised the proposed 10 per cent excise duty on readymade garments saying it would hurt the small business. He added

1) “To address this concern, I propose to enhance the abatement of 40 per cent to 55 per cent on the retail sale price.

2) With this relief a unit will continue to be eligible for SSI exemption in 2011-12 even if it had a turnover based on retail sale price of Rs 8.90 crore in the current year”, the Minister said. (Current year means 31-03-2011)”

Many persons thought that there is no excise duty now until you reach a turnover of Rs. 8.90 Crores instead of Rs. 1.50 Crores presently available to SSI. It is not the case. Let us See how

At present under the scheme of excise for SSI, an SSI which does not have a turnover of Rs. 4.00 Crores during the year ending 31-03-2011 will not be liable to excise duty until he reaches a turnover of Rs. 1.50 Crores during the period ending 31-03-2012. If at any moment during the period ending 31-03-2012 the turnover crosses Rs.1.50 Crores, his liability to excise starts notwithstanding the fact that his turnover during the year ending 31-03-2012 is less than Rs. 4.00 Crores. However he would become eligible to the SSI benefit for the year ending 31-03-2013 if the turnover was less than Rs. 4.00 Crore for 31-03-2012.

Illustration:

(The Important Jinx in the statement of finance minister was “retail sale price”(as bolded above). No Doubt finance minister knows the correct words to put at correct place to be politically superior.)

Other Conditions for availing SSI benefit

a. The SSI scheme is Optional.

i.Option 1: Pay the normal rate of duty on the goods cleared and avail CENVAT credit on the inputs.

ii.Option 2: Avail the exemption scheme and forgo the claim of CENVAT Credit on inputs till you reach the turnover of Rs. 150 Lakhs.

iii.In both the cases the option shall be exercised before effecting the first clearances at the normal rate of duty. Such option shall not be withdrawn during the remaining part of the financial year.

iv.However the manufacturer can take the credit on capital goods and use the same for payment of normal duty after he crosses the basic exemption limit of Rs. 150 Lakhs.

Provisions for Clubbing of Turnover

i.Sales by the same manufacturer from different factories: Where goods are cleared from one or more factories by the same manufacturer, the turnover of the factories will be clubbed to determine the exemption limit of Rs. 400 Lakhs/150 Lakhs and not separately for each factory.

ii. Sales by different manufacturers from the same factory: Where the specified goods are cleared by one or more manufacturers from the same factory, the exemption shall apply to the aggregate value of clearances of all the manufacturers from that factory.

Where one factory is used by one manufacturer for some part of the year and by another manufacturer for the remaining part of the year then their turnover will be clubbed to determine their SSI status.

Exemption to Job Worker:

Job worker is exempted from payment of duty and following Central Excise duty procedure if duty liability is being discharged by the principal manufacturer. However, the job worker may be authorized to follow central excise procedure and pay duty.

Exemption On Uniforms, Blankets Etc.

No excise duty on uniforms or made-up articles like quilt, blankets, towels, linen etc bearing the name or logo of a school, security agency, company, hotel or airline etc., it is clarified that such products would not merit treatment as “branded” products merely because the name of the school, institution or company or their logo is either printed, embroidered or etched on them. This is equally true of made ups such as towels, linen etc bearing the name of a hotel, restaurant or airlines. In all these cases, there is no nexus between such a name or logo & the product at the time of its sale which is essential ingredient in the definition of the term “brand name”. Unless such garments/made- ups also bear a brand name in addition to the name or logo of the school, security agency, hotels, airlines and company, such goods would not attract the excise duty.

It is also gathered that in some cases, apart from the name or logo of such organisations, the name of the tailor or manufacturer is affixed on such garments. However, mere affixing of name of the tailor or manufacturer would not constitute a brand name.

Another related issue is the applicability of the mandatory excise duty to blankets which are supplied to the defence establishment, armed forces, police forces etc against tenders that stipulate that the name of the manufacturer should be clearly indicated or marked on the product. As pointed out above, affixing the name of the manufacturer on such goods would not, by itself, bring them within the ambit of branded goods.

c. Whether the Service tax Input received on various services can be claimed as CENVAT Credit against the Excise Duty Payable?

As per Cenvat Credit Rules -“input service” means any service,—

(i) used by a provider of taxable service for providing an output service; or

(ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal, and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal but excludes services certain service when used in some specific instances.

Since there is no one to one Correlation required in CENVAT utilisation, So if nature of input service falls within definition ambit the CENVAT of input service can be very much utilised against excise amount payable, thereby reducing the funds (PLA) outflow.

Tax benefit differently able

Tax benefits to individual who are differently able, Parents who have dependents who are differently able including minor and certain benefits to private sector for providing employment opportunities to differently able

As per recent estimate there are more than 70 million people in India who are differently able. The challenges and hardship which they face are enormous form getting basic education, rehabilitation, continuous cost of medical requirements and getting job or practising a profession or vocation. The government of India has provided various concessions and reservations to empower differently able person and their families.

There are many differently able people and families who are tax payers and there are many individuals who have dependents who are differently able but are not aware of the provision of the various Acts which provides various benefits and concession in tax.  Further government has also provided concession to private sector to encourage them to appoint differently able person.

The article highlights the benefits government provides in Income Tax Act, Professional Tax and a scheme to encourage private sector to provide employment opportunities to differently able.

The deduction under section 80U, 80DD, 80DDB and 10(14) under Income Tax Act and Professional Tax Act are direct deduction were as through proper tax planning one can claim benefit under section 64(1) of Income Tax Act. There is also one scheme introduce by Government to encourage private sector to employee person who are differently able. Lets us go through in details all 7 different benefits.

1. Income Tax Act, Section 80U – Deduction in case of person with disability

Who can claim the benefit: Individual who is resident during previous year and is certified by Medical Authority to be a person with Disability.

Deduction allowed: In case of Person with Disability(at least 40%)Rs 50,000 /- is allowed. In case of Person with Severe Disability (80% of one or more disabilities) \Rs. 1,00,000/- is allowed.

Important Definitions:

A. “disability” shall have the meaning assigned to it in clause (i) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996), and includes “autism”, “cerebral palsy” and “multiple disabilities” referred to in clauses (a), (c) and (h) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999)

B. “medical authority” means the medical authority as referred to in clause (p) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996), or such other medical authority as may, by notification, be specified by the Central Government for certifying “autism”, “cerebral palsy”, “multiple disabilities”, “person with disability” and “severe disability” referred to in clauses (a), (c), (h), (j) and (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999)

C. “person with disability” means a person referred to in clause (t) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996), or clause (j) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999)

D. “person with severe disability” means—(i) a person with eighty per cent or more of one or more disabilities, as referred to in sub-section (4) of section 56 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996); or

(ii)a person with severe disability referred to in clause (i) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999).

Important Points to be noted:

A. In few cases medical certificate will be valid up to a limited period, say five years and requires individual to reassess himself with the medical authority for fresh certificate. The deduction can only be claimed were the medical certificate is live, in case it is expired new certificate is required to claim the deduction.

B. Individual whose income is from salary, Tax is Deducted from Source (TDS) by employer from monthly salary. The tax is computed after considering estimated gross total income of the individual for the entire year and divided by 12 months. Individuals can inform the employer regarding the benefit under this section, which can be reduce from gross total income and hence TDS is deducted on the lesser amount

C. For prescribed Forms, see Form No. 10-IA and Forms prescribed under Persons with Disabilities (Equal Opportunities, Protection of Rights & Full Participation) Act, 1995. Medical certificate can be issued by Neurologist having a degree of Doctor of Medicine (MD) in Neurology (or, in case of children, a Pediatric Neurologist having an equivalent degree) or A Civil Surgeon or Chief Medical Officer (CMO) of a government hospital.

2. Income Tax Act, Section 80DD – Deduction in respect of maintenance including medical treatment of a dependant who is a person with disability

Who can claim the benefit: Individual or Hindu Undivided Family (HUF) who is resident during previous year, and has incurred expenditure in relation to maintenance or treatment of depended disable or has invested in a particular scheme of LIC for benefit of the depended disable.

Deduction allowed:

A. Rs 50,000/- for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability. Or Rs 1,00,000/- for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with Severe disability having medical certificate granted by prescribed Medical Authority

B. Any amount paid or deposited under a scheme framed by the Life Insurance Corporation or any other insurer or the Administrator or the specified company for the maintenance of a dependant, being a person with disability or person with Severe disability (subject to over all limit of Rs 50,000/- or 1,00,000/- as applicable)

Important Definitions:

A. “dependant” means—(i)in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them;(ii)in the case of a Hindu undivided family, a member of the Hindu undivided family dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance, and who has not claimed any deduction under section 80U in computing his total income for the assessment year relating to the previous year

Other definitions of “disability”, “medical authority”, “person with disability” & “person with severe disability” will be same as mention in section 80 U.

Important Points to be noted:

A. In the case of an individual the deduction is available to spouse, children, parents, brothers or sisters of the individual. In the case of HUF the deduction is available to any member of the HUF

B. Currently LIC is offering Jeevan Aadhar Plan for claiming benefit under this section.

C. The nomination in case of insurance taken should be in favour of dependent for receiving the benefit in lump sum or annuity in event of death of individual or Members of the HUF in whose name subscription of the scheme is taken. Alternatively nomination can be in favour of trust for the benefit of dependent

D. In case the dependent predeceases the individual or the member of the Hindu undivided an amount equal to the amount paid or deposited under the insurance scheme shall be deemed to be the income of the Individual or HUF in the year in which such amount is received and shall accordingly be chargeable to tax as the income of that year.

E. In few cases medical certificate will be valid up to a limited period, say five years and requires individual to reassess himself with the medical authority for fresh certificate. The deduction can only be claimed were the medical certificate is live, in case it is expired new certificate is required to claim the deduction.

F. Individual whose income is from salary, Tax is Deducted from Source (TDS) by employer from monthly salary. The tax is computed after considering estimated gross total income of the individual for the entire year and divided by 12 months. Individuals can inform the employer regarding the benefit, which can be reduce from gross total income computation and hence TDS is deducted on the lesser amount

G. For prescribed Forms, see Form No. 10-IA and Forms prescribed under Persons with Disabilities (Equal Opportunities, Protection of Rights & Full Participation) Act, 1995. Medical certificate can be issued by Neurologist having a degree of Doctor of Medicine (MD) in Neurology (or, in case of children, a Pediatric Neurologist having an equivalent degree) or A Civil Surgeon or Chief Medical Officer (CMO) of a government hospital.

H. The benefit under this section will be not be available in cases were dependent has avail benefit us 80 U.

3. Income Tax Act Section 80DDB Deduction in respect of medical treatment, etc

Who can claim the benefit: Individual or Hindu Undivided Family (HUF) who is resident during previous year, and has paid any amount for the medical treatment of such disease or ailment, for himself or dependent in case of individual or any member of HUF in case of HUF

Deduction allowed: Rs 40,000/- deduction shall be allowed or amount actually paid, whichever is less. In case any of the above is a senior citizen (Above 65 years), an additional deduction of Rs. 20,000 shall be allowed towards payment of the senior citizen. i.e. in case of senior citizens the above limit of 40,000 shall be upgraded to Rs.60000.

Important Definitions:

A. “dependant” means—(i)in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them;(ii)in the case of a Hindu undivided family, a member of the Hindu undivided family dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance.

B. “Government hospital” includes a departmental dispensary whether full-time or part-time established and run by a Department of the Government for the medical attendance and treatment of a class or classes of Government servants and members of their families, a hospital maintained by a local authority and any other hospital with which arrangements have been made by the Government for the treatment of Government servants

C. “senior citizen” means an individual resident in India who is of the age of sixty-five years or more at any time during the relevant previous year.

Important Points to be noted:

A. The deduction shall be reduced by the amount received, if any, under the insurance from the insurer or reimbursed by the employer

B. For availing the deduction a certificate in the prescribed form from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other prescribed specialists, working in a Government hospital, has to be submitted.

C. For the purposes of section the following shall be the eligible diseases or ailments :

(1)Neurological Diseases where the disability level has been certified to be of 40% and above,—

(2)Dementia ;

(3)Dystonia Musculorum Deformans ;

(4)Motor Neuron Disease ;

(5)Ataxia ;

(6)Chorea ;

(7)Hemiballismus ;

(8)Aphasia ;

(9)Parkinsons Disease ;

(10) Malignant Cancers ;

(11) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

(12) Chronic Renal failure ;

(13) Hematological disorders :

(14)Hemophilia ;

4. Income Tax Act Section 10(14) Rule 2BB Transport Allowance

Who can claim the benefit: Salaried Individual

Deduction allowed: Rs 1600 Per Month

Important Points to be noted:

A. Transport allowance is granted to an employee, to meet his expenditure for the purpose of commuting between the place of his residence and the place of his duty. Most of employers pay Rs 800/- Per Month as the same is exempted. However for employee, who is blind or orthopaedically handicapped with disability of lower extremities, the exempted amount is Rs 1600/- Per Month

B. Employee can request employer to structure their pay in such a manner that they receive Rs 1600/- as monthly transport allowance to claim the benefit

C. Tax Exempt is irrespective of actual expense. (No bills/receipts needed)

5. Income Tax Act Section 64 Income of individual to include income of spouse, minor child, etc.

Who can claim the benefit: Individual who has a minor child suffering from any disability of the nature specified in section 80 U.

Deduction allowed: There is no direct deduction, but the income generated by minor child who is disable will not be clubbed with individual

Important Points to be noted:

A. As the income of the child is not clubbed the child is treated as a separate entity and can file an independent return with all its benefits. For example, Individual can transfer their revenue generating asset like fix deposits in the name of disable child and the interest earned will not be clubbed with the income of individual but will be assessed separately, which provides significant scope for tax savings.

B. Further the disable child while filing its own return can claim benefit under section 80U

6. Profession Tax Act, State Maharashtra Section 27A Exemptions

Who can claim the benefit: Any person suffering from a permanent physical disability (including blindness), being a permanent physical disability specified in the rules made in this behalf by the State Government, which is certified by a physician, a surgeon or an oculist, as the case may be, working in a Government Hospital

Deduction allowed: Complete amount of professional tax payable

Important Definitions:

"Government Hospital" includes a departmental dispensary whether full time or part time established and run by a Department of the Government for the medical attendance and treatment of a class or classes of Government servants and members of their families, a hospital maintained by a local authority and any other hospital with which arrangements have been made by the Government for the treatment of Government servants

Important Points to be noted:

A. The individual shall forward the certificate to employer who will produces the aforesaid certificate before the prescribed authority in respect of the first assessment year for which he claims deduction

B. As the professional tax is subject matter of state, which is responsible for collection, making rules and provide exemption, individual need to check with respective states for rules if any for exemption.(the above exemption is in relation to Maharashtra State). In most states the Professional tax is exempted for disable person.

7. Scheme For Providing Employment To Persons With Disabilities In The Private Sector

Who can claim the benefit: Private Sector Employers who are employing person with disability on or after 01-April-2008

Deduction / Benefits: Payment of the employer's contribution to the Employees Provident Fund and Employees State Insurance for the first three years by Government.

Important Points to be noted:

A. Employees with disabilities, with monthly wage up to Rs.25000/- per month, working in the private sector would be covered. Those earning above 25000/- per month will not be eligible

B. The scheme will be applicable to the employees with disabilities employed covered under the Persons with Disabilities (Equal Opportunities. Protection of Rights and Full Participation) Act. 1995 and the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple disabilities Act. 1999.

C. The employers would submit a copy of the disability certificate including statement, issued to the disabled employee by the Competent Authority, first time when such benefit under EPF and ESI is claimed.

D. The Government will directly provide employer's contribution for the schemes covered under the Employees Provident Fund & Miscellaneous Provisions Act. 1952 and the employment State Insurance Act 1948. This will be done in respect of employees for a maximum period of 3 years.

Though the government has provide some relief in tax, however much can be done to further empower the differently able people. The exemption under 80U and deduction for expenditure incurred for medical treatment under 80DD should be increased to Rs. 2,00,000/- , considering rising cost of living and increasing cost of medicine supplies and rehabilitation.  One of the major problem person with disability faces is in travelling, most of them spend huge amount on commuting to work places as public mode of transport is not accessible for wheelchair users and for most other users, considering this government should increase the limit of transport allowance exemption for salaried class upto Rs. 4000/- Pm. The introduction of scheme to encourage private sector to employee differently able person is good step by government. As per annual report 2009-10 by ministry of social justice and empowerment, under the scheme, 144 and 261 persons have been registered by Employees Provident Fund Organization (EPFO) and Employees State Insurance Corporation (ESIC) respectively till 30.09.2009.though the initially target was to create 1 Lakh job every year. Though the response has been dreadful, government needs to increase the incentive for further participation by private sector. For example, government should link incentive for private sector to create work places accessible, increase the limit from 3 years contribution to life long, etc. with budget and election coming we can hope some more promises from government.

To support the differently able community not only the efforts from the government are required but there should be willingness from the corporate world, to provide them equal opportunity and level playing field. Most of the corporate offices are not accessible to the person who is on wheelchair. However slowly the environment is changing and corporate have realised that providing employment is not just part of CSR but the differentlyential able people are itself  great resource which can contribute equally for the objectives and goals of the organisation and society at a large.

Disclaimer:The information is as per laws applicable in country India. The information provided above is in good faith and with bonafide intention to benefit individuals, parents and person with disability including children. Kindly consult your insurance agent/ legal adviser/ tax consultant prior to any tax or finance decision. The convoluted legal language has been simplified for easy understanding. No liability lies with author for misinterpretation or decision or the outcome of the information presented above.

About the author: The author CA Chirag Chauhan is member (Membership Number 131194) of the Institute of Chartered Accountant of India. He himself is paraplegic, wheelchair bound. 

Source : Research - Ministry of Finance, Ministry of Social Justice and Empowerment 

Chartered Accountancy Course- Number of attempts does not matter. The value of a CA always remain the same.

By : Ca Sachin Data

A well known speaker started off his seminar by holding up a Rs.1000 note. In the room of 200, he asked, "Who would like this Rs.1000 note ?"

Hands started going up.

He said, "I am going to give this Rs.1000 note to one of you but first, let me do this." He proceeded to crumple (make wrinkle) the note .

He then asked, "Who still wants it?"

Still the hands were up in the air.

"Well," he replied, "What if I do this?" And he dropped it on the ground and started to grind it into the floor with his shoe.

He picked it up, now all crumpled and dirty. "Now who still wants it?" Still the hands went into the air.

"My friends, you have all learned a very valuable lesson. No matter what I did to the money, you still wanted it because it did not decrease in value. It was still worth Rs.1000 . Many times in our lives, we are dropped, crumpled, and ground into the dirt by the decisions we make and the circumstances that come our way.

Many a times the students think that they are contemptible and have again landed into the hands of the failure. 

They feel as though they are worthless. But no matter what has happened or what will happen, you will never lose your value. You are special - Don't ever forget it!

How the banking crisis became a fiscal one

How did the subprime crisis in the US morph into a crisis of sovereign debt in the euro zone countries? From its introduction in 1999 to the start of the subprime crisis in mid-2007, spreads over German bunds or government bonds on euro zone countries were very modest and moved in a narrow zone. This paper tells the story of how and why this changed, bringing us to the present when speculation is rife whether the euro zone will survive.

The authors distinguish three phases of the crisis. During the first phase, from July 2007 to the rescue of Bear StearnsCos. Inc. in March 2008, spreads rose only modestly and there was little differentiation between sovereigns. The second phase lasted till January 2009, when Anglo Irish Bank Corp. was nationalized. During this period sovereign spreads rose substantially, particularly after the collapse of Lehman Brothers Holding Inc., but there was substantial differentiation between countries. And in the third phase since the Anglo Irish nationalization, the authors say: “Not only did financial sector stress raise sovereign spreads as before, but now sovereign weakness also transmitted to the financial sector. Although spreads declined initially after the nationalization of Anglo Irish, the subsequent march upwards was spectacular, as was the country differentiation.”

Earlier, Reinhart and Rogoff had pointed out in their comprehensive study of banking crises that banking crashes are usually followed by fiscal crises. They also said that sovereign debt ratios and the likelihood of sovereign defaults also rise after such crises. Mody and Sandri take the story forward, telling us that while a surge in private debt may be the immediate reason for a banking crisis, the fiscal and banking crises reinforce each other.

The authors say that the Bear Stearns rescue led to the presumption that banks would be rescued and therefore linked a euro zone member-country’s sovereign debt to the state of its banking system. Sovereign spreads increased in response to the perceived weakness of a country’s banks. After the nationalization of Anglo Irish Bank, this relationship was cemented. Countries whose initial debt-to-gross domestic product ratios were higher were affected the most. Also, the countries which were the least competitive were affected the most because the financial crisis led to a substantial pruning of growth prospects, particularly because the euro zone countries do not have the option of devaluing the currency. That in turn led to a belief that their public debt would prove to be unsustainable. The resulting higher spreads affected the banks holding the government’s bonds, which in turn raised fears of the government having to bail them out and all this resulted in an adverse feedback loop. Mody and Sandri conclude: “With the fiscal room for intervention much more limited, the eurozone economies have moved to a new, more stressed regime from which there is no quick return.”

The authors believe that the priority must be to protect the banks, even if that entails higher fiscal costs. Once the banks are protected, growth too will revive. While that conclusion may be debatable, the paper presents the detailed story of how the euro zone got into its current mess.

Simply Economics | Manas Chakravarty