Compliance Under Service Tax - 2012-13 - Bank Audit

The compliance under service tax provisions post Finance Bill 2012 may need clarity on 3 aspects which are discussed as under

Small Service Provider Exemption

The basic exemption is available to the CA whose taxable services in 2011-12 did [does] not exceed Rs.10 lakhs. Such CA would not be liable to service tax for services provided in 2012-13 upto a value of Rs. 10 Lakhs. Once the limit is exceeded then they would be liable for the incremental services beyond Rs. 10 Lakhs.

Therefore if eligible for the exemption, no need to charge any service tax for the bank audit

II. Date of Billing

The Bank audit could have commenced in March 2012, however the completion of the services would be in April/ May 2012. Since the completion of service is important, as per the Point of Taxation Rules {POTR} the rate of service tax would be: Basic- 12% EC- 0.24 SHEC- 0.12- Total 12.36%.

This is so because we do not receive any advance and billing prior to provision of service would not change the rate.

III. Date of payment

The date of payment would be irrelevant this year as the rate of 12% is effective for the year and changes if any are only expected to be in Budget 2013.

This is for general guidance of members, however, members may take their independent and correct view regarding chargeability of service tax.

How to File Revised Tax Return Online

If an individual has already filed the income tax return and subsequently discover any omission or wrong statement therein, he can re-file the return with necessary modification. This re-filing of the income tax return is referred to as Revised Return. The process for revising the return is very simple. Please remember that the process outlined below is applicable if you had filed the original return online.

Rules related to Revised Return

Revised return can be filed for any previous year at any time before the expiry of 1 year from the end of the relevant assessment year or before completion of the assessment whichever is earlier. For this financial year (2010-11), you can file the revised return till March 31st, 2012

However, if the income tax department completes the assessment of your return earlier, then a revised return cannot be filed.

Revised return can be filed only if the original return was filed before due date. Thus if a return is filed after a due date then it cannot be revised

A loss return filed within time can also be revised and in such case loss as per the revised is carried forward

One should have acknowledgement number and date of filing the original return in order to file a revised return

Return filed in response to the notice u/s 148 can also be revised. It should be noted that notice u/s 148 is issued in respect of the escaped income in the respective assessment year

In case of concealment of income and furnishing of inaccurate information in income tax return an individual will be penalized

RBI has made special Arrangement to Deposit TAX Payments on 30, 31 March 2012

Due to rush hour ReserveBank of India has made special arrangement to deposit Tax Payment on 30, 31 March 2012 at Mumbai and Navi Mumbai Offices except normal working time Hours.  RBI further instructed to all BankAgencies i.e. State Bankof India and theirAssociates, Public SectorBanks as well as designated private sectorbank to receive all types of taxes beyond Normal working hours. Thus the All Taxpayers are requested to take advantage of these facilities provided for the financial year ending March 31, 2012 and assessment year 2012-13 as per Press Release : 2011-2012/1551. Schedule of Tax Deposit is as below:

Date	Office	Cash DepositTimings	Cheque Deposit Timings
March 30.2012	Fort Mumbai	10.00 AM to 4.00 PM	10.00 AM to 5.00 PM
March 30.2012	Navi Mumbai Belapur	10.00 AM to 4.00 PM	10.00 AM to 4.00 PM
March 31,2012	Fort Mumbai	10.00 AM to 4.00 PM	10.00 AM to 5.30 PM
March 31,2012	Navi Mumbai Belapur	10.00 AM to 4.00 PM	10.00 AM to 4.00 PM

Calculate your tax liability based on your taxable income.

After Budget-12, the Income Tax Department has published Online Tax Calculation Software on their portal.  This calculator calculate Tax liablity which is based on your Taxable Income of Fin. Year 2012-13 i.e. Assessment year 2013-14.  Simple procedure to calculate tax with this calculator. 

 For Example – If you earn annually Rs. 800000/- (Gross Income),

deduct from Gross Income your 10 (i)

Deductions then Less/Add your House Property Income under section 24.

After these Deductions add your Other source of Incomeand then Less deduction under chapter VIA.

After all you get Taxable Income.  This Taxable Income Put on Tax Calculator and follow the procedute. 

You will get Tax Liability for Assessment Year 2013-14.

Click Here to Calculate your Tax Liability for Assessment year 2013-14.

Income tax india

Income Tax Department facilitates a PAN holder to view its Tax Credit Statement (Form 26AS) online. Form 26AS contains Details of tax deducted on behalf of the taxpayer by deductors Details of tax collected on behalf of the taxpayer by collectors Advance tax/self assessment tax/regular assessment tax, etc. deposited by the taxpayers (PAN holders) Details of paid refund received during the financial year Details of the High value Transactions in respect of shares, mutual fund etc.

The Tax Credit Statement (Form 26AS) are generated wherein valid PAN has been reported in the TDS statements. Tax Credits Statement (Form 26AS) can be viewed/accessed through 3 ways : 1. View Tax Credit from https://incometaxindiaefiling.gov.in Taxpayers who are registered at the above potal viz. https://incometaxindiaefiling.gov.in can view 26AS by clicking on 'View Tax Credit Statement (From 26AS)' in "My Account". The facility is available free of cost.  For "New Registration", Click on 'Register' on the portal. The registration process is user-friendly and takes minimal time. View Demo2. View Tax Credit (Form 26AS) from bank site through net banking facility The facility is available to a PAN holder having net banking account with any of authorized banks. View of Tax Credit Statement (Form 26AS) is available only if the PAN is mapped to that particular account. The facility is available for free of cost. View Demo List of banks registered with NSDL for providing view of Tax Credit Statement (Form 26AS) are as below       1. Axis Bank Limited        2. Bank of India        3. Bank of Maharashtra       4. Citibank N.A.       5. Corporation Bank       6. ICICI Bank Limited       7. IDBI Bank Limited       8. Indian Overseas Bank       9. Indian Bank       10. Kotak Mahindra Bank Limited        11. Oriental Bank of Commerce       12. State Bank of India       13. State Bank of Mysore       14. State Bank of Travancore       15. The Federal Bank Limited       16. UCO Bank       17. Union Bank of India       18. Bank of Baroda       19. Karnataka Bank       20. The Saraswat Co-operative Bank Limited       21. City Union Bank Limited       22. State Bank of Patiala 3. View Tax Credit (Form 26AS) from TIN website The facility is available to PANs that are registered with Tax Information Network for view of 26AS statement. The PAN holder has to fill up an online Registration form for such purpose. Thereafter, verification of PAN holder's identity is done by the TIN-Facilitation Centre personnel either at PAN holder's address or at the TIN-facilitation center that has been chosen by the PAN holder. The verification involves a cost at prescribed rates. Once authorised, the PAN holder can view Tax Credit Statement online.

Income tax rates F.Y 2012-2013

These rates are subject to enactment of the Finance Bill 2012. The rates are for the previous Year 2012-13:

1. Income Tax Rates

1.1 For Individuals, Hindu Undivided Families, Association of Persons and Body of Individuals

Total Income	Tax Rates
Upto Rs. 200,000*	Nil
200,001 to 500,000	10%
500,001 to 10,00,000	20%
Above Rs. 10,00,000	30%

*In the case of a resident individual of sixty years or more but less than eighty years, the basic exemption limit is INR 250,000

The category of women below the age of 65 years has been removed.

In the case of a resident individual of the age of eighty years or above,

Total Income	Tax Rates
Upto Rs. 500,000*	Nil
500,001 to 10,00,000	20%
Above Rs. 10,00,000	30%

Surcharge is Nil

Education cess is applicable @ 3 percent on income tax

Marginal relief may be available.

1.2 For Partnership Firms

• Partnership Firms are taxable @ 30 percent

• Surcharge is Nil

• Education cess is applicable @ 3 percent on income tax

1.3For Domestic Companies

• Domestic companies are taxable @ 30 percent

• Surcharge is applicable @ 5 percent if total income is in excess of INR 10,000,000

• Education cess is applicable @ 3 percent on income tax (inclusive of surcharge, if any)

1.4 For Foreign Companies

• Foreign companies are taxable @ 40 percent

• Surcharge is applicable @ 2 percent if total income is in excess of INR 10,000,000

• Education cess is applicable @ 3 percent on income tax (inclusive of surcharge, if any)

Income Tax Deductions

Making it Less Taxing

As we approach the last quarter of the financial year, most salaried individuals would have received a deadline from their employers to submit their proof of investments that qualify for deductions from their taxable salary income. It can be a taxing affair if you don't plan ahead.

Most of us are aware of popular investment avenues, such as life insurance policies, Public Provident Fund (PPF), National Saving Certificates (NSC) etc., which are eligible for deduction under Section 80C of the Income-tax Act, 1961. However, we tend to ignore a few other investments and expenditures that may also be eligible for tax concessions. It could save you a neat sum for a profitable investment. While making a tax-saving investment, evaluate the need and risk associated with each. Also, revisit these avenues keeping the Direct Taxes Code in mind, which is proposed to be effective from 1 April 2012.

Here is a list of some of the investments and expenditures that qualify for exemptions/ deductions under various sections of the Act.

Investments eligible under Section 80C/80CCC/80CCD

These investments are subject to a limit of Rs 1 lakh per financial year.

Life insurance premiums: Deduction is available under Section 80C with respect to premium paid towards life insurance policy for self, spouse and any child. It may be noted that no deduction is available for any late-fee charges paid. The amount received on maturity of the policy is exempt from tax, subject to prescribed conditions.
While making atax-saving investment, evaluate the risk associated with each product. Also, revisit these avenues keeping in mind the Direct Taxes Code, which is proposed to be implemented from 1 April 2012.
Public Provident Fund (PPF): Contribution to a PPF account in the name of self, spouse and a child is eligible for deduction under Section 80C. Earlier the annual investment in PPF was limited to Rs 70,000, thereby limiting the tax deduction also. However, with effect from 1 December 2011, this limit has been raised to Rs 1 lakh per year. The annual accretion on the account is also not taxable.

National Saving Certificate (NSC): The amount invested in NSC is eligible for deduction under Section 80C. Further, the interest accrued annually on NSC, though taxable, is deemed to be re-invested and qualifies for deduction (except in the year of maturity).

Parizad Sirwalla is a partner at KPMGFive-year bank fixed deposits (FDs): FDs with a scheduled bank, under a notified scheme, with a tenure of five years is eligible for deduction under the above section. However, the interest accrued on the FDs is subject to tax laws.

Post office five-year time deposit (POTD) scheme: POTDs are similar to bank FDs. A five-year POTD qualifies for deduction under Section 80C. However, interest accrued on the same is entirely taxable.

Senior Citizen Savings Scheme (SCSS): SCSS is another scheme eligible for deduction under Section 80C. However, it is intended only for senior citizens. The interest accrued on the same is entirely taxable.

Unit-linked insurance plans (Ulip): Investments in Ulips in the name of self, spouse and a child, which covers life with benefits of equity investments, is eligible for deduction under Section 80C.

Mutual fund (MF) and Equity-linked savings scheme (ELSS): Subscription to MFs and ELSSs qualifies for deduction under Section 80C. Currently, dividend and long-term capital gains on equity-oriented funds where securities transaction tax is paid are exempt from tax.

Home loan principal repayment: Equated monthly installments that are paid to repay home loans consists of two components-principal and interest. The principal component qualifies for deduction under Section 80C, provided the loan is taken from a prescribed lender (banks, PSU, etc.). The interest component can save your income tax as a deduction from rental income, subject to prescribed conditions.

Stamp duty and registration charges for a home: Stamp duty and registration charges paid for transfer of property qualify for deduction under Section 80C.

Tuition fees: Tuition fees paid for full-time education in an Indian university, college, school, educational institution, for any two children are eligible for deduction under Section 80C. It is pertinent to note that tuition fees do not include payment towards any development fees or donation or payment of similar nature.

NABARD rural bonds: Investment in rural bonds issued by NABARD qualify for deduction under section 80C.

Contribution to pension funds: Contributions to certain pension funds of LIC or any other insurer are eligible for deduction. Contribution to the National Pension Scheme is also eligible for deduction.

Other deductions:

Infrastructure bonds: The amount invested in these qualify for additional deduction up to Rs 20,000 per annum (pa) under Section 80CCF.

Medical insurance premium: Premium paid for self, spouse and dependent children can be deducted up to Rs 15,000 per annum (pa) and an additional Rs 5,000 can be discounted if they are senior citizens. You can claim a deduction of up to Rs 15,000 for premium paid for your parents' health cover, with an additional deduction of up to Rs 5,000 pa for senior citizens.

Maintenance, including treatment, of disabled dependent: Deduction of Rs 50,000 pa is available for expenditure incurred for treatment of a disabled dependent or for an amount deposited in a prescribed scheme (Section 80DD). The deduction is increased to Rs 1 lakh if the disability is severe-over 80%.

Medical treatment: Deduction of up to Rs 40,000 (Rs 60,000 for senior citizens) is available under Section 80DDB per financial year on medical expenses incurred for treatment of specified diseases (self and dependent).

Donations: An amount donated to a prescribed charitable institution qualifies for deduction under Section 80G. It would need to be claimed at the time of filing your personal tax return.

Rent: This deduction is usually associated with salaried taxpayers. However, a deduction is also allowed for individuals who do not receive HRA under Section 80GG. The deductible amount is the rent paid in excess of 10% of total income-subject to a maximum of Rs 2,000 per month or 25% of total income, whichever is less.

Interest on education loan: Interest paid on an education loan qualifies for deduction under Section 80E. It is available for eight years starting from the financial year in which the individual starts paying interest.

Income Tax from 01 Apr 12

Income Tax Applicable From 01/Apr/2012 :

New Tax rates: (For Ordinary source of income)

Slab	Income Between	Tax rate
1	0 - 1.60 Lakhs	0%
2	1.60 Lakhs to 10 Lakhs	10%
3	10 Lakhs to 25 Lakhs	20%
4	Above 25 Lakhs	30%

For Female, second slab begins from 1.90 Lakhs and for Senior citizen it begins from 2.40 Lakhs

Companies tax rate changed from 30% to 25%.

New due dates for Tax Returns:

Sl No	Type	Date	First filing (under DTC)
1	Non-Business / Non-Corporate	30th June	30/06/2012
2	Others	31st August	31/08/2012

 Tax incentives:

Earlier terms Deductions under Chapter VI A will be treated as Tax incentives.

80C gets a major hit by introduction of EET methodology (Exempt - Exempt - Tax). The investment is Exempted when invested. The investment is Exempted till it is remained invested. The investment is Taxed when it is withdrawn.

Also, investments are considered only of those invested through savings intermediaries approved by PFRDA (Pension Fund Regulatory and Development Authority)!!

Such savings intermediaries may in turn invest in ELSS mutual funds, government securities, Public sector securities, etc.

Such investments are also exempted to the maximum of Rs. 3 Lakhs.

All such savings will be governed directly by government by an appointed depository (an independent agency).

Other than this, Tuition fees for children will be allowed as deductions.

No maximum limit for this, as savings are charged once they are withdrawn.

Medical treatment, higher education loan interest, donation and rent paid by self-employed individual are deductible.

New provision comes for Handicapped individuals to get deductions upto 75,000.

Major Deductions applicable under Tax Incentives for an individual:

Investments through PFRDA approved agencies (Max of 3 Lakhs)

Payment of tuition fees

Medical treatment

Health insurance

Donations

Interest on loan taken for higher education

Maintenance of a disabled dependant

Interest income on Govt bonds

*Some more for specific cases, like political contributions, royalty, etc

Deductions from Salaries:

Allowed are only, PT, Transport Allowance (limit prescribed) and special allowances given exclusively to meet duties (to the extent actually incurred).

Also deduction is allowed for PF as tax incentives.

And last, deductions are allowed for Voluntary retirement, Gratuity on retirement and pension received.

No deductions on HRA, Medical reimbursements, etc, etc.

Employer part of PF paid will be exempt from tax as Tax Incentives under EET methodology (to employees).

 House Property:

No deduction for Housing loan repayment of Self-Occupying property. This includes interest as well as part of principal.

Only Let out properties are considered and the Gross rent and specified deductions are taken with simple calculations.

Residuary Sources (Other Sources)

Earlier things follow almost.

Any amount exceeding 20,000 taken / accepted / repaid as loan or deposit, otherwise by an account payee cheque/draft shall be added to the income.

 Computation of total Income

Incomes are broadly divided into 2 sources, namely Special Sources and Ordinary Sources.

Special sources are given no deduction and what is earned is taxed directly (generally at a lower rate).

Ordinary sources are divided into further categories, namely:

Income from employment.

Income from House Property

Income from Business

Capital gains

Income from Residuary Sources (Similar to other sources, with some minuses

Income Tax F.Y 2012-13 A.Y 2013-14

DTC F.Y 2012-13

Personal Income Tax Slabs – Basic Exemption Limits Raised!

In a big relief for the individual taxpayers, the new DTC has proposed widening of personal income-tax slabs marginally. The Cabinet-approved Bill proposes widening of the tax slabs with lowest rate of:

10% for Rs. 2-5 lakh taxable income (current slab Rs.1.6-5 lakh)

20% for Rs.5-10 lakh (current slab Rs.5-8 lakh) and

30% for above Rs.10 lakh taxable income group of people (current slab above Rs.8 lakh).

If you’re a Senior citizen or women, there is good news for you – the threshold income has been fixed at a higher Rs.2.5 lakh as against Rs.2 lakh for standard categories.

PERSONAL INCOME TAX
(Amount in ‘ lakh)	10%	20%	30%
Now	1.6-5	5 L -8L	8L & above
DTC I	1.6-10	10L -25 L	25L & above
Likely	5-Feb	5-10	10L & above
# Exemption limit to be raised from ’1.6 lakh to ’2 lakh  # Further relief for women, senior citizens expected  # Corporation tax rate stays at 30%, but no cess or surcharge proposed  # MAT rate to be raised from 18% to 20% of book profits

                                                                         

Higher Corporate Tax

On the Corporate tax front, the DTC Bill cleared by Cabinet has sought to retain the present level of 30% (for domestic companies), but inclusive of 10% surcharge and a 3% education cess. However, the above figure fall trifle short of expectations of the corporate lobby which stood at 25%, as proposed by the DTC draft released earlier.

Minimum Alternate Tax @20% – A Dampener!

The Bill seeks to impose Minimum Alternate Tax (MAT) at 20% of the book profit as against 18% being levied currently on the Indian companies. The original DTC draft had proposed to calculate MAT on gross asset base which could have translated into effective higher tax rate based on huge asset base for the companies operating in capital-intensive sectors such as infrastructure and capital goods. But, owing to sharp criticism, the levy is to be maintained on book profits, as now.

Further, the axe is likely to fall on Indian IT companies with the advent of DTC regime which would call for the end of “Tax holidays” enjoyed by these companies. This step will bring these IT companies on par with other industries prevailing in India.