Saturday, 27 February 2010

Budget 2010: Service tax Exemption provided and withdrawn

Exemptions:

1) Statutory taxes charged by the foreign governments are being excluded from taxable value for levy of service tax under the Air passenger transport service.

2) Exemption from service tax is being provided to services relating to ‘Erection, Commissioning or Installation’ of,-

(a) Mechanized Food Grain Handling Systems etc.;

(b) Equipment for setting up or substantial expansion of cold storage; and

(c) Machinery/equipment for initial setting up or substantial expansion of units for processing of agricultural, apiary, horticultural, dairy, poultry, aquatic, marine or meat products.

3) Pre-packaged I.T. software, with the license for right to its use, is being exempted from service tax, subject to specified conditions.

4) At present exemption from service tax is available to transport of fruits, vegetables, eggs or milk by road by a goods transport agency. The scope of exemption is being expanded to include food grains and pulses in the list of exempted goods.

5) Exemption from service tax is being provided to Indian news agencies under ‘Online Information and Database Retrieval Service’ subject to specified conditions.

6) Exemption from service tax is being provided to the ‘Technical Testing and Analysis Service’ and ‘Technical Inspection and certification service’ provided by Central and State seed testing laboratories, and Central and State seed certification agencies.

7) Exemption from service tax is being provided to the transmission of electricity. The above changes will come into effect immediately.

Withdrawal or amendments of exemptions:

1) Exemption from service tax on ‘Service provided in relation to transport of goods by rail’ is being withdrawn. The levy will come into effect from 01.04.2010.

2) Exemption from service tax, presently available to Group Personal Accident Insurance Scheme provided by Govt. of Rajasthan to its employees, under General Insurance Service is being withdrawn.

3) The exemption from service tax on ‘Commercial training or coaching service’ is being restricted to vocational training courses in the designated Trades notified under the Apprentices Act, 1961.

The above changes, except at S. No.1, will come into effect immediately.

Friday, 26 February 2010

HIGHLIGHTS OF MAJOR CHANGES IN SERVICE TAX LAW IN BUDGET 2010-11

I. SERVICE TAX IS BEING IMPOSED ON THE FOLLOWING SPECIFIED SERVICES:



1) Service of permitting commercial use or exploitation of any event organized by a person or organization.



2) The existing taxable service ‘Intellectual Property Right (IPR)’ excludes copyright from its scope. Copyrights on (a) cinematographic films and (b) sound recording are being brought under the ambit of service tax. However, copyright on original literary, dramatic, musical and artistic work would continue to remain outside the scope of service tax.

3) Service tax on the following health services:



(a) health check up undertaken by hospitals or medical establishments for the employees of business entities; and



(b) health services provided under health insurance schemes offered by insurance companies.



(The tax on these health services would be payable only if the payment for such health check up or preventive care or treatment etc. is made directly by the business entity or the insurance company to the hospital or medical establishment).



4) Service provided for maintenance of medical records of employees of a business entity.



5) Service provided by Electricity Exchanges.



6) Certain additional services provided by a builder to the prospective buyers such as providing preferential location or external or internal development of complexes on extra charges. However, service of providing vehicle-parking space would not be subjected to tax.



7) Service of promoting of a ‘brand’ of goods, services, events, business entity etc.



The promotion, marketing or organizing of games of chance, including lottery, is being introduced as a separate service. Consequently, the Explanation in provision relating to Business Auxiliary Service is being deleted.



The above changes will come into effect from a date to be notified, after the enactment of Finance Bill, 2010.



II. SCOPE OF CERTAIN EXISTING SERVICES IS BEING EXPANDED OR ALTERED AS FOLLOWS:



1) The scope of air passenger transport service is being expanded to include domestic journeys, and international journeys in any class.



2) At present, in the case of Information Technology Software Service the levy of tax is limited only to cases where IT software is used for furtherance of business or commerce. The scope of the taxable service is being expanded to cover all cases irrespective of its use.



3) In the case of ‘Commercial training or coaching’ service, an Explanation is being added to clarify that the term ‘commercial’ in the context of this service would mean any training or coaching, which is provided for a consideration, whether or not for profit. This change is being given retrospective effect from 01.07.2003.



4) In the definition of ‘Sponsorship Service’, the exclusion relating to sponsorship pertaining to sports is being removed.



5) In the ‘Construction of complex service’, it is being provided that unless the entire consideration for the property is paid after the completion of construction (i.e. after receipt of completion certificate from the competent authority), the activity of construction would be deemed to be a taxable service provided by the builder/promoter/developer to the prospective buyer and the service tax would be charged accordingly.



6) Amendments are being made in the definition of the ‘Renting of immovable property service’ to,-



(i) provide explicitly that the activity of ‘renting’ itself is a taxable service. The change has been given retrospective effect from 01.06.2007; and



(ii) levy service tax on rent of vacant land where there is an agreement or contract between the lessor and lessee for undertaking construction of buildings or structures on such land for furtherance of business or commerce during the tenure of the lease.



7) Definitions of ‘Airport Services, ‘Port services’ and ‘Other port services’ are being amended to provide that,-



(a) all services provided entirely within the airport/port premises would be classified under these services; and



(b) an authorization from the airport/port authority would not be a pre-condition for taxing these services. 21



An explanation is being added in ‘Auctioneer’s service’ to clarify that the phrase ‘auction by government’ means an auction involving sale of government property and not when the government acts as an auctioneer for sale of the private property.



9) Definition of ‘Management of Investment under ULIP Service’ is being amended to provide that the value of the taxable service for any year of the operation of policy shall be the actual amount charged by the insurer for management of funds under ULIP or the maximum amount of fund management charges fixed by the Insurance Regulatory and Development Authority (IRDA), whichever is higher.



The above changes will come into effect from a date to be notified, after the enactment of Finance Bill, 2010.



III. AMENDMENTS IN ACT:



Chapter V of the Finance Act, 1994 is being amended to,-



a) insert an explanation in sub-section (3) of Section 73 to clarify that no penalty shall be imposed where service tax along with interest has been paid before issuance of notice by the department under this sub-section.



b) provide definition of the term ‘business entity’ to include an association of persons, body of individuals, company or firm but not an individual.



The above changes at (a) will come into effect from a date of enactment of the Finance Bill, 2010 and (b) from a date to be notified after the enactment of Finance Bill, 2010.



IV. EXEMPTIONS:



1) Statutory taxes charged by the foreign governments are being excluded from taxable value for levy of service tax under the Air passenger transport service.



2) Exemption from service tax is being provided to services relating to ‘Erection, Commissioning or Installation’ of,-



(a) Mechanized Food Grain Handling Systems etc.;



(b) Equipment for setting up or substantial expansion of cold storage; and



(c) Machinery/equipment for initial setting up or substantial expansion of units for processing of agricultural, apiary, horticultural, dairy, poultry, aquatic, marine or meat products.



3) Pre-packaged I.T. software, with the license for right to its use, is being exempted from service tax, subject to specified conditions.



4) At present exemption from service tax is available to transport of fruits, vegetables, eggs or milk by road by a goods transport agency. The scope of exemption is being expanded to include food grains and pulses in the list of exempted goods.



5) Exemption from service tax is being provided to Indian news agencies under ‘Online Information and Database Retrieval Service’ subject to specified conditions.



6) Exemption from service tax is being provided to the ‘Technical Testing and Analysis Service’ and ‘Technical Inspection and certification service’ provided by Central and State seed testing laboratories, and Central and State seed certification agencies.



7) Exemption from service tax is being provided to the transmission of electricity. The above changes will come into effect immediately.



V. WITHDRAWAL OR AMENDMENTS OF EXEMPTIONS:



1) Exemption from service tax on ‘Service provided in relation to transport of goods by rail’ is being withdrawn. The levy will come into effect from 01.04.2010.



2) Exemption from service tax, presently available to Group Personal Accident Insurance Scheme provided by Govt. of Rajasthan to its employees, under General Insurance Service is being withdrawn.



3) The exemption from service tax on ‘Commercial training or coaching service’ is being restricted to vocational training courses in the designated Trades notified under the Apprentices Act, 1961.



The above changes, except at S. No.1, will come into effect immediately.



VI. AMENDMENTS IN RULES AND NOTIFICATIONS:



1) Export of Services Rules, 2005 and Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 are being amended so as to move some of the specified taxable services from one category to another.



2) In the Export of Services Rules, 2005, the condition prescribed i.e. ‘such service is provided from India and used outside India’ is being deleted.



3) Notification No. 1/2002-ST dated 01.02.2002 is being superceded by another notification to provide that the construction and operation of installations, structures and vessels for the purposes of prospecting or extraction or production of mineral oils and natural gas in the Exclusive Economic Zone and the Continental Shelf of India and for supply of any goods connected with these activities would be within the purview of the provisions of Chapter V of Finance Act, 1994. Suitable changes are being made in the Export of Services Rules, 2005 and Taxation of Services (Provided from Outside India and Received in India) Rules, 2006.



4) Notification No. 5/2006-CE (NT) is being amended and given partial retrospective effect to remove the bottlenecks in refund of accumulated credit to the exporters.



The above changes will come into effect immediately.
Here are the Highlights of Union Budget 2010:


Vision & Objective:


GDP Growth to be targeted at 9%
Target of Rs 25,000 cr disinvestment this year
Direct Tax Code and GST will be implemented from April 1, 2011
Fertilizer Subsidy to be reduced
GDP to reach 10% in near future
To consider Parikh Report on Fuel Price
FDI Regime to be simplified
Inflation Rate to be lowered in 2 Months
2% interest subvention for Exports extended for one year
Committed to SEZ Growth

Banking:

More Private Banks to be encouraged
Additional Banking License to Private Players
FY10 Capital for PSU Banks stand at Rs 16,500 crore
Rs 1,200 crore to be allocated to PSU Banks
Rural Banks to be supported
Banks to get Rs 6,000 crore to improve fundamental structure
Banks for all villages with a population of 2,000


Agriculture:

Four-pronged agricultural strategy to be adopted
More help to Food Processing Sector
Rs 400 crore to be allocated for Green Revolution in Eastern India
Rs 300 crore for Rashtriya Krishi Vikash Yojna
Extend Loan Repayment for drohught-hit Farmers
Farmers, who repay loan on time, will get a waiver of 2%
Farmers to get Loans at 5%
To extend farm loan repayment by 6 months
Agriculture Loan for Farmers increased to Rs 3,75,000 crore
New Food Policy from April 1, 2010
Rs 300 crore to be allocated for Pulse Production


Infrastructure:

Rs. 1.37 lakh crore for Infrastructure Development
Railways to be allocated Rs 16,772 crore
Road Development allocation increased to 19,894 crore
20 km National Highway to be built everyday
Proposal to hike allotment for renewable energy by 61%
To Establish Clean Energy Fund
More than double allocation for Power Sector to 5,130 crore
Coal Regulatory Authority to be set up
One-time grant of Rs 200 crore for Tamil Nadu dor Textiles
NREGA Allocation at Rs 40,100 crore
Rs 1200 crore package for drought-hit Bundelkhand
Ganages - Rs 500 crore
Bharat Nirman Yojna - Rs 48,000 crore
Solar Energy - Rs 1,000 crore
Tirupur Textile Industry - Rs 500 crore
Goa - Rs 200 crore special package
To set up 20,000 MW Solar Power by 2022
Delhi-Mumbai Industrial Corridor to be set up



Education:

Allocation for School Education increased from Rs 26,800 crore to Rs 31,036 crore
Allocation for Health at 22,300 crore
Sarva Sikha Abhiyaan - Rs 36,000 crore


Urban Development & Housing:

Rs 5,400 crore for Urban Development - hike of 75%
Rs 61,000 crore for rural Development
Indira Awas Yojna to get Rs 10,000 crore
House Loans up to Rs 10 lakh - 1% subsidy extended for one year
Focus on Slum Development


Social Sector:

National Social Security Fund for unskilled labourers to be set up with Rs 1,000 crore
National Pension Scheme - New Accounts to get Rs 1,000 per year by the government
National Health Insurance Scheme for NREGA Workers, who work for 15 days in a Month
Farmer Fund for Women - Rs 100 crore
Dalits and Poor to get more focus


Technology:

Unique ID to be given on time
Rs 19000 crore allocated for Unique ID Project
Rupee to have new Symbol. A new look Rupee to come up soon.

Tech Advisory Group to set up under Nandan Nilekani


Plan & Expenditure:



Gross Tax Receipts - Rs 7.46 lakh crore
15% rise in plan expenditure
Fiscal Deficit for FY 2010 revised to 6.9% of GDP
Fiscal Deficit - 5.5% for FY 2011
Fiscal Deficit - 4.8% for FY 2012
Defence Allocation - Rs 147,344 crore



Taxation:


Tax audit limit raised to 60 lakhs.
Income Tax Form Saral-2 to be re-introduced from next year
No increase in Exemption Limit for the Taxpayers
Tax Slabs changed
Income up to Rs. 1.6 lakh - nil
Income from Rs. 1.6 lakh - Rs 5 lakh - 10% tax
Income from Rs 5 lakh - 8 lah - 20% tax
Income of above Rs 8 lakh - 30% tax
60% of the taxpayers to be benefited
Rs. 20,000 tax exemption for investment in infrastructure bonds.
Tax Exemption under 80c will be Rs 1.2 lakh instead of Rs 1 lakh
Corporate Surcharge reduced from 10% to 7.5%
MAT (Minimum Alternative Tax) increased to 18% from 15%
Excise Duty hiked from 8% to 10%
Service Tax remained at 10%
No Service Tax on News Agencies
R&D deduction hiked
CET (Central Excise Tariff) on Petroleum Products hiked by Rs 1
Petrol, Diesel Prices to go up
Partial Rollback on Excise Duty on Cement, Large Cars
Cement and Large Cars to be costlier
CHEAPER PRODUCTS - CNG, Mobile, Medicines, Medical Equipments, Farm Equipments, Mobile Phones, Mobile chargers, Watches, Readymade Garments, Microwave Ovens, Toys, Foreign Farm Equipments, Set Top Boxes, Water Purifier, LED Lights
COSTLIER PRODUCTS - Petrol, Diesel, Coals, cigarettes, Cement, Large Cars, Jewellry, Gold, Silver, Pan Masala

Wednesday, 24 February 2010

Beware of fraudulent email related to Income Tax refund

Here we would like to mention that Income tax department is not sending any email regarding income tax refund. Income tax department also issued a clarification regarding the same. The department has also asked tax payers to avoid replying to e-mail addresses like lhxbkw@accounts.Net, cvhfvs@accounts.Net and nvfmfi@accounts.Net .

Income Tax dept asks tax payers to avoid fraud mails

A sample one such fraud email is as follows:-

Dear applicant,
After the last annual calculation of your fiscal activity we have determined
that you are eligible to receive a tax refund of 820.50 Rupees.

Bank account holders at the Bank of India, will receive the money within 12 hours after filling the form.

To Access your tax refund please complete the form attached to this email .
—————————————————————————

Department of Revenue,Ministry of Finance Government of India

We Advise all our visitors if they receive any such mail just delete the same and do not fill any form and neither visit the website of such fraudsters.

Service Tax Liability more then 10 lakh Pay Tax online and File Return Electronically

Notification No. 01/2010 – Service Tax- New Delhi, the 19TH February 2010


G.S.R. (E).- In exercise of the powers conferred by sub-sections (1) and (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994, namely :-

Short title and commencement.- (1) These rules may be called the Service Tax (Amendment) Rules, 2010.(2) They shall come into force on the 1st day of April, 2010.
In the Service Tax Rules 1994 (hereinafter referred to as the said rules), in rule 6, in sub-rule (2), for the proviso, the following proviso, shall be substituted, namely:-“Provided that where an assessee has paid a total service tax of rupees ten lakh or more including the amount paid by utilisation of CENVAT credit, in the preceding financial year, he shall deposit the service tax liable to be paid by him electronically, through internet banking.”
In the said rules, in rule 7, after sub-rule (2), the following proviso shall be inserted, namely:-“Provided that where an assessee has paid a total service tax of rupees ten lakh or more including the amount paid by utilisation of CENVAT credit, in the preceding financial year, he shall file the return electronically”.

[F. No. 137/13/2010 - CX.4]
(Madan Mohan)
Under Secretary to Government of India

Tuesday, 23 February 2010

ESIC approves enhancement of wage ceiling from 10,000 to 15,000

ESIC approves enhancement of wage ceiling from 10,000 to 15,000

The ESI Corporation has approved to enhance wage ceiling from Rs 10,000 per month to Rs15,000 per month for coverage of employees under the ESI Scheme in its 149th meeting held on Friday under the chairmanship of Union Minister of Labour and Employment Mallikarjun Kharge.

Union Minister of State for Labour and Employment Harish Rawat and the vice-chairman, ESIC, were also present in the meeting.

Keeping in view the increase in cost of living index and recommendations of the Parliamentary Standing Committee on Labour, the corporation increased the wage ceiling limit for coverage of the employees under the ESI Scheme.

This will help the corporation to provide social security net to more and more employees of the organised sector.

Bad debts need not be proven to be irrecoverable u/s 36(1)(vii). It is sufficient if they are written off

In the case of TRF Limited vs. CIT (Supreme Court) Supreme Court had to consider whether after the amendment to s. 36 (1) (vii) w.e.f. 1.4.1989, an assessee had to establish, as a matter of fact, that the debt advanced by the assessee had, in fact, become irrecoverable or whether writing off the debt as irrecoverable in the accounts was sufficient. HELD deciding in favour of the assessee:

(i) The position in law is well-settled. After 1.4.1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. When a bad debt occurs, the bad debt account is debited and the customer’s account is credited, thus, closing the account of the customer. In the case of companies, the provision is deducted from Sundry Debtors.

(ii) As the AO has not examined whether the debt has, in fact, been written off in accounts of the assessee. the matter is remitted to the AO for de novo consideration of the above-mentioned aspect only and that too only to the extent of the write off.

Note: The judgements in Oman International Bank 313 ITR 128 (Bom), Morgan Securities 292 ITR 339 (Del) are impliedly approved. See Also: Kohli Brothers Color Lab (All).

Monday, 22 February 2010

New Form 16, Form 16A, Form 16AA, Form 27D, and forms showing breakup of TDS and TCS for Financial Year 2009-10 (A.Y. 2010-11)

Income-tax (First Amendment) Rules, 2010
Notification No. 9/2010/F.No. 142/27/2009-SO(TPL)
Dated 18-2-2010
S.O. (E).– In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
1. (1) These rules may be called Income-tax ( First Amendment) Rules, 2010.
(2) They shall come into force from the 1st day of April, 2009.
2. In the Income-tax Rules, 1962, -
(a) for rules 30, 31 and 31A the following rules shall be substituted, namely:-
“Time and mode of payment to Government account of tax deducted at source or tax paid under sub?section (1A) of section 192.
30. (1) All sums deducted in accordance with the provisions of sections 192 to 194, section 194A, section 194B, section 194BB, section 194C, section 194D, section 194E, section 194EE, section 194F, section 194G, section 194H, section 194-I, section 194J, section 194K, section 194LA, section 195, section 196A, section 196B, section 196C and section 196D shall be paid to the credit of the Central Government—
(a) in the case of deduction by or on behalf of the Government, on the same day;
(b) in the case of deduction by or on behalf of persons other than those mentioned in clause (a),—
(i) in respect of sums deducted in accordance with the provisions of section 193, section 194A, section 194C, section 194D, section 194E, section 194G, section 194H, section 194-I, section 194J, section 195, section 196A, section 196B, section 196C and section 196D—
(1) where the income by way of interest on securities referred to in section 193 or the income by way of interest referred to in section 194A or the sum referred to in section 194C or the income by way of insurance commission referred to in section 194D or the payment to non?resident sportsmen or sports associations referred to in section 194E or the income by way of commission, remuneration or prize on sale of lottery tickets referred to in section 194G or the income by way of commission or brokerage referred to in section 194H or the income by way of rent referred to in section 194-I or the income by way of fees for professional or technical services referred to in section 194J or the interest or any other sum referred to in section 195 or the income of a foreign company referred to in sub-section (2) of section 196A or the income from units referred to in section 196B or the income from foreign currency bonds or shares of an Indian company referred to in section 196C or the income of Foreign Institutional Investors from securities referred to in section 196D is credited by a person to the account of the payee as on the date up to which the accounts of such person are made, within two months of the expiration of the month in which that date falls;
(2) in any other case, within one week from the last day of the month in which the deduction is made; and
(ii) in respect of sums deducted in accordance with the other provisions within one week from the last day of the month in which the deduction is made:
Provided that the Assessing Officer may, in special cases, and with the approval of the Joint Commissioner—
(a) in cases falling under sub-clause (i), permit any person to pay the income-tax deducted from any income by way of interest, other than income by way of interest on securities or any income by way of insurance commission or any income by way of commission or brokerage referred to in section 194H quarterly on July 15, October 15, January 15 and April 15; and
(b) in cases falling under sub-clause (ii), permit an employer to pay income-tax deducted from any income chargeable under the head “Salaries” quarterly on June 15, September 15, December 15 and March 15.
(1A) All sums paid under sub-section (1A) of section 192 shall be paid to the credit of the Central Government—
(a) in the case of payment on behalf of the Government, on the same day;
(b) in all other cases, within one week from the last day of each month on which the income-tax is due under sub-section (1B) of section 192.
(2) The person responsible for making the deduction from any income chargeable under the head “Salaries” or, the person who pays tax, referred to in sub-section (1A) of section 192 or, in cases covered by sub-section (5) of section 192, the trustees shall pay the amount of tax so deducted to the credit of the Central Government by remitting it within the time prescribed in sub-rule (1) into any branch of the Reserve Bank of India or of the State Bank of India or of any authorized bank accompanied by an income-tax challan :
Provided that where the deduction or payment, as the case may be, is made by or on behalf of Government, the amounts shall be credited within the time and in the manner aforesaid without the production of a challan.
(3) The person responsible for making deduction under sections 193, 194, 194A, 194B, 194BB, 194C, 194D, 194E, 194EE, 194F, 194G, 194H, 194-I, 194J, 194K, 195, 196A, 196B, 196C and 196D shall pay the amount of tax so deducted to the credit of the Central Government by remitting it within the time prescribed in sub-rule (1) into any branch of the Reserve Bank of India or of the State Bank of India or of any authorized bank accompanied by an income-tax challan, provided that where the deduction is made by or on behalf of Government the amount shall be credited within the time and in the manner aforesaid without the production of a challan.
Certificate of tax deducted at source or tax paid under sub?section (1A) of section 192.
31. (1) The certificate of deduction of tax at source or, the certificate of payment of tax by the employer on behalf of the employee, under section 203 to be furnished by any person deducting tax in accordance with the provisions of—
(a) section 192 shall be in Form No. 16:
Provided that in the case of an individual, resident in India, where his income from salaries before allowing deductions under section 16 of the Income-tax Act, 1961 does not exceed rupees one lakh fifty thousand, the certificate of deduction of tax at source shall be in Form No. 16AA;
(b) section 193, section 194, section 194A, section 194B, section 194BB, section 194C, section 194D, section 194E, section 194EE, section 194F, section 194G, section 194-I, section 194J, section 194K,section 194LA, section 195, section 196A, section 196B, section 196C and section 196D shall be in Form No. 16A.
(2) The certificate mentioned in sub-rule (1) shall be furnished within a period of one month from the end of the month during which the credit has been given or the sums have been paid or, as the case may be, a cheque or warrant for payment of any dividend has been issued to a shareholder:
Provided that where the income by way of interest on securities referred to in section 193 or the income by way of interest referred to in section 194A or the sum referred to in section 194C or the income by way of insurance commission referred to in section 194D or the payment to non-resident sportsmen or sports associations referred to in section 194E or the income by way of commission, remuneration or prize on sale of lottery tickets referred to in section 194G or the income by way of commission or brokerage referred to in section 194H or the income by way of rent referred to in section 194-I or the income by way of fees for professional or technical services referred to in section 194J or the interest or any other sum referred to in section 195 or the income of a foreign company referred to in sub-section (2) of section 196A or the income from units referred to in section 196B or the income from foreign currency bonds or shares of an Indian company referred to in section 196C or the income of Foreign Institutional Investors from securities referred to in section 196D is credited by a person to the account of the payee as on the date up to which the account of such person are made, the certificate under sub-rule (1) shall be issued within a week after the expiry of two months from the month in which income is so credited:
Provided further that the certificate in the case of deduction of tax under sub-section (1) of section 192 or, payment of tax by the employer on behalf of the employee, under sub¬section (1A) of that section or section 194D may be furnished within one month from the close of the financial year in which such deduction was made:
Provided also that the certificate in cases, other than those mentioned in the second proviso, where payment of income-tax deducted is permitted quarterly in accordance with clause (a) of the proviso to clause (b) of sub-rule (1) of rule 30 may be furnished within fourteen days from the date of payment of income- tax:
Provided also that where more than one certificate is required to be furnished to a payee for deductions of income-tax made during a financial year, the person deducting the tax, may on request from such payee, issue within one month from the close of such financial year a consolidated certificate in Form No. 16A for tax deducted during whole of such financial year.
(3) Where in a case, the TDS certificate issued under this rule is lost, the person deducting tax at source may issue a duplicate certificate of deduction of tax at source on a plain paper giving necessary details as contained in Form No. 16 or Form No. 16A, as the case may be.
(4) The Assessing Officer before giving credit for the tax deducted at source on the basis of duplicate certificate referred to in sub-rule (3), shall get the payment certified from the Assessing Officer designated in this behalf by the Chief Commissioner or the Commissioner and shall also obtain an Indemnity Bond from the assessee.
Quarterly statement of deduction of tax under sub?section (3) of section 200.
31A.(1) Every person, being a person responsible for deducting tax under Chapter XVII¬B shall, in accordance with the provisions of sub-section (3) of section 200, deliver or cause to be delivered to the Director-General of Income-tax (Systems) or the person authorized by the Director General of Income-tax (Systems), quarterly statement—
(i) in Form No. 24Q in respect of deduction of tax at source under sub¬sections (1) and (1A) of section 192; and
(ii) in Form No. 26Q in respect of other cases of deduction of tax at source,
on or before the 15th July, the 15th October, the 15th January in respect of the first three quarters of the financial year and on or before the 15th June following the last quarter of the financial year:
Provided that where,—
(a) the deductor is an office of Government; or
(b) the deductor is a company; or
(c) the deductor is a person required to get his accounts audited under section 44AB in the immediately preceding financial year; or
(d) the number of deductees’ records in a quarterly statement for any quarter of the immediately preceding financial year is equal to or more than fifty,
the person responsible for deducting tax at source, and the principal officer in the case of a company shall deliver or cause to be delivered such quarterly statements on computer media (3.5” 1.44 MB floppy diskette or CD-ROM of 650 MB capacity):
Provided further that a person other than a person referred to in the first proviso, responsible for deducting tax at source, may at his option, deliver or cause to be delivered the quarterly statements on computer media (3.5” 1.44 MB floppy diskette or CD-ROM of 650 MB capacity):
Provided also that a person responsible for deducting tax at source from the payments referred to in rule 37A shall furnish quarterly statements in accordance with the provisions of rule 37A and rule 37B.
(2) The person responsible for deducting tax at source and preparing quarterly statements shall,—
(i) quote his tax deduction and collection account number (TAN) and permanent account number (PAN) in the quarterly statement:
Provided that the permanent account number shall not be required to be quoted where tax has been deducted by or on behalf of the Government;
(ii) quote the permanent account number of all persons in respect of whose income, tax has been deducted:
Provided that the permanent account number shall not be quoted in respect of the persons to whom the second proviso to sub-section (5B) of section 139A of the Act applies;
(iii) furnish particulars of the tax paid to the Central Government.
(3) The person responsible for deducting tax at source and preparing quarterly statements on computer media shall, in addition to the provisions in sub-rule (2),—
(i) prepare the quarterly statement as per the data structure provided by the e-filing Administrator designated by the Board for the purposes of administration of Electronic Filing of Returns of Tax Deducted at Source Scheme, 2003 supported by a declaration in Form No. 27A in paper format:
Provided that in case any compression software has been used for preparing the quarterly statement on computer media, such compression software shall be furnished on the same computer media;
(ii) affix a label indicating name, permanent account number, tax deduction and collection account number and address of the person responsible for deduction of tax at source, the period to which the statement pertains and the volume number of the said computer media in case more than one volume of such media is used”.
(b) after rule 31A the following rule shall be inserted, namely:-
“Quarterly statement of collection of tax under sub?section (3) of section 206C.
31AA. (1) Every person, being a person responsible for collecting tax under section 206C shall, in accordance with the proviso to sub-section (3) of section 206C, deliver or cause to be delivered to the Director-General of Income-tax (Systems) or the person authorized by the Director General of Income-tax (Systems), quarterly statement in Form No. 27EQ on or before the 15th July, the 15th October, the 15th January in respect of the first three quarters of the financial year and on or before the 30th April following the last quarter of the financial year:
(a) the collector is an office of Government; or
(b) the collector is a company; or
(c) the collector is a person required to get his accounts audited under section 44AB in the immediately preceding financial year; or
(d) the number of collectees’ records in a quarterly statement for any quarter of the immediately preceding financial year is equal to or more than fifty, the person responsible for collecting tax at source, and the principal officer in the case of a company shall deliver or cause to be delivered such quarterly statements on computer media (3.5” 1.44 MB floppy diskette or CD?ROM of 650 MB capacity):
Provided further that a person other than a person referred to in the first proviso, responsible for collecting tax at source, may at his option, deliver or cause to be delivered the quarterly statements on computer media (3.5” 1.44 MB floppy diskette or CD?ROM of 650 MB capacity).
(2) The person responsible for collecting tax at source and preparing quarterly statements shall,—
(i) quote his tax deduction and collection account number (TAN) and permanent account number (PAN) in the quarterly statement:
Provided that the permanent account number shall not be required to be quoted where tax has been collected by or on behalf of the Government;
(ii) quote the permanent account number of all persons in respect of whose income, tax has been collected;
(iii) furnish particulars of the tax paid to the Central Government.
(3) The person responsible for collecting tax at source and preparing quarterly statements on computer media shall, in addition to the provisions in sub?rule (2),—
(i) prepare the quarterly statement as per the data structure provided by the e?filing Administrator designated by the Board for the purposes of administration of Electronic Filing of Returns of Tax Collected at Source Scheme, 2005 supported by a declaration in Form No. 27B in paper format:
Provided that in case any compression software has been used for preparing the quarterly statement on computer media, such compression software shall be furnished on the same computer media;
(ii) affix a label indicating name, permanent account number, tax deduction and collection account number and address of the person responsible for collection of tax at source, the period to which the statement pertains and the volume number of the said computer media in case more than one volume of such media is used.”
(c) after rule 37 the following rule shall be inserted, namely:-
“Returns regarding tax deducted at source in the case of non?residents.
37A. The person making deduction of tax in accordance with sections 193, 194, 194E, 195, 196A, 196B, 196C and 196D of the Act from any payment made to—
(i) a person, not being a company, who is a non-resident or a resident but not ordinarily resident, or
(ii) a company which is neither an Indian company nor a company which has made the prescribed arrangements for the declaration and payment of dividends within India;
shall send within fourteen days from the end of the quarter a statement in Form No. 27Q to the Director General of Income-tax (Systems) or the person or agency authorized by the Director General of Income-tax (Systems) referred to in rule 36A:
Provided that where the income by way of interest on securities referred to in section 193 or the payment to non-resident sportsmen or sports associations referred to in section 194E or the interest or any other sum referred to in section 195 or the income of a foreign company referred to in sub-section (2) of section 196A or the income from units referred to in section 196B or the income from foreign currency bonds or shares of an Indian company referred to in section 196C or the income of Foreign Institutional Investors from securities referred to in section 196D is credited by a person to the account of the payee as on the date up to which the accounts of such person are made, the statement in Form No. 27Q shall be sent within fourteen days after the expiry of two months from the month in which income is so credited.”
(d) for rules 37CA and 37D the following rules shall be substituted, namely:-
“Time and mode of payment to Government account of tax collected at source under section 206C.
37CA. (1) All sums collected in accordance with the provisions of sub-section (1) or sub¬section (1C) of section 206C shall be paid to the credit of the Central Government within one week from the last day of the month in which the collection is made.
(2) The person responsible for making collection under sub-section (1) or sub-section (1C) of section 206C shall pay the amount of tax so collected to the credit of the Central Government by remitting it within the time prescribed in sub-rule (1) into any branch of the Reserve Bank of India or of the State Bank of India or of any authorized bank accompanied by an income-tax challan:
Provided that where the collection is made by or on behalf of the Government, the amount shall be credited within the time and in the manner aforesaid without the production of a challan.
Certificate for collection of tax at source under section 206C (5).
37D. (1) The certificate of collection of tax at source under sub-section (5) of section 206C to be furnished by any person collecting tax at source under sub-section (1) or sub¬section (1C) of that section shall be in Form No. 27D.
(2) The certificate referred to in sub-rule (1) shall be furnished within a period of one month from the end of the month during which the amount is debited to the account of the buyer or licensee or lessee or payment is received from the buyer or licensee or lessee, as the case may be:
Provided that where more than one certificate is required to be furnished to a buyer or licensee or lessee for tax collected at source in respect of the period ending on the 30th September and the 31st March in each financial year, the person collecting the tax, may on request from such buyer or licensee or lessee, issue within one month from the end of such period, a consolidated certificate in Form No. 27D for tax collected during whole of such period.
(3) Where in a case, the certificate for tax collected at source issued under this rule is lost, the person collecting tax at source may issue a duplicate certificate of collection of tax at source on a plain paper giving necessary details as contained in Form No. 27D.
(4) The Assessing Officer before giving credit for the tax collected at source on the basis of duplicate certificate referred to in sub-rule (3), shall get the payment certified from the Assessing Officer designated in this behalf by the Chief Commissioner or Commissioner and shall also obtain an Indemnity Bond from the assessee. ”;
(e) for Form No.16 and Form no. 16A the following forms shall be substituted, namely:-
Download New Form 16 in (Salary Certificate) after amendment by Income-tax (First Amendment) Rules, 2010 (notification No. 09/ 2010 Dated 18/02/2010) for Financial Year 2009-10/ Assessment Year 2010-11
Download New Form 16A in (TDS Certificate) after amendment by Income-tax (First Amendment) Rules, 2010 (notification No. 09/ 2010 Dated 18/02/2010) for Financial Year 2009-10/ Assessment Year 2010-11
(f) after Form 16A the following form shall be inserted, namely:
Download New Form 16AA in Certificate for tax deducted at source from income chargeable under the head “Salaries” – cum – Return of income) after amendment by Income-tax (First Amendment) Rules, 2010 (notification No. 09/ 2010 Dated 18/02/2010) for Financial Year 2009-10/ Assessment Year 2010-11
(g) Forms 17 and 24C shall be omitted;
(h) In Form 24Q, for Annexure I, the following Annexure I shall be substituted, namely:?
ANNEXURE I: DEDUCTEE WISE BREAK-UP OF TDS
ANNEXURE: DEDUCTEE WISE BREAK-UP OF TDS
(Please use separate Annexure for each line – item in the table at S. No. 4 of main Form 26Q)
(j) for Form No. 27D, the following form shall be substituted, namely:
FORM NO. 27D
(k) for Form 27EQ:
(i) for the figure and letter “31A”, the figure and letter“ 31AA” shall be substituted;
(ii) for the Annexure, the following Annexure shall be substituted, namely:?
ANNEXURE: PARTY WISE BREAK-UP OF TCS
(l) for Form 27Q:?
(i) for the words, figures and letters “see rule 31A(1)(c)(i)”, the words, figures and letters “see sections 194E, 195, 196A, 196B, 196C, 196D and rules 31A and 37A”, shall be substituted;
(ii) or the Annexure, the following Annexure shall be substituted, namely:?
ANNEXURE: PARTY WISE BREAK-UP OF TCS
[Notification No.___ /2010/F.No. 142/27/2009?SO(TPL)]
(M. RAJAN)
Under Secretary to the Govt. of India
Note:? The principal rules were published vide Notification No. S.O 969 (e) dated the 26th of march, 1962 and last amended by Income?tax (13th Amendment ) Rules, 2009 vide Notification No. S.O. 3245 (E) dated 18th December, 2009.

Saturday, 20 February 2010

Five Insurance policies everyone must have

Protecting your most important assets is an important step in creating a solid personal financial plan. The right insurance policies will go a long way toward helping you safeguard your earning power and your possessions. In this article, we’ll show you five policies that you shouldn’t do without.
1. Long-Term Disability Insurance :- The prospect of long-term disability is so frightening that some people simply choose to ignore it. While we all hope that, “Nothing will happen to me,” relying on hope to protect your future earning power is simply not a good idea. Instead, choose a disability policy that provides enough coverage to enable you to continue your current lifestyle even if you can no longer continue working.
2. Life Insurance :- Life insurance protects the people that are financially dependent on you. If your parents, spouse, children or other loved ones would face financial hardship if you died, life insurance should be high on your list of required insurance policies. Think about how much you earn each year (and the number of years you plan to remain employed) and purchase a policy that will replace that income in the event of your untimely demise. Factor in the cost of burial too, as the unexpected cost is a burden for many families.
3. Health Insurance :- The soaring cost of medical care is reason enough to make health insurance a necessity. Even a simple visit to the family doctor can result in a hefty bill. More serious injuries that result in a hospital stay can generate a bill that tops the price of a one-week stay at a luxury resort. Injuries that require surgery can quickly rack up five-figure costs. Although the ever-increasing cost of health insurance is a financial burden for just about everyone, the potential cost of not having coverage is much higher.
4. Home Insurance :-Replacing your home is an expensive proposition. Having the right home insurance can make the process less difficult. When shopping for a policy, look for one that covers replacement of the structure and contents in addition to the cost of living somewhere else while your home is repaired.
Keep in mind that the cost of rebuilding doesn’t need to include the cost of the land, since you already own it. Depending on the age of your home and the amenities that it contains, the cost to replace it could be more or less than the price you paid for it. To get an accurate estimate, find out how much local builders charge per square foot and multiply that number by the amount of space you will need to replace. Don’t forget to factor in the cost of upgrades and special features. Also, be sure the policy provides adequate coverage for the cost of any liability for injuries that occur on your property.
5. Automobile Insurance :-Some level of automobile liability insurance is required by law in most localities. Even if you are not required to have it and you are driving an old junker that has been paid off for years, automobile liability insurance is something you shouldn’t skip. If you are involved in an accident and someone is injured or their property is damaged, you could be subject to a lawsuit that could cost you everything you own. Accidents happen quickly and the results are often tragic – having no automobile liability insurance or purchasing only the minimum required coverage saves you only a small amount of money and puts everything else that you own at risk.
*Bonus Tip For Business Owners: In addition to the policies listed above, business owners need business insurance. Liability coverage in a litigation-happy society could be the difference between a long and prosperous endeavor or a trip to bankruptcy court.
Shop Carefully :-Insurance policies come in a wide variety of shapes and sizes and boast many different features, benefits and prices. Shop carefully, read the policies and talk to the salesperson to be certain that you understand the coverage and the cost. Make sure the policies that you purchase are adequate for your needs, and don’t sign on the dotted line until you are happy with the purchase.

Payment of Interest on Savings Bank Account on Daily Product Basis

RBI/2009-10/322
DBOD. No. Dir. BC 77/13.03.00/2009-10
February 19, 2010
All Scheduled Commercial Banks
(Excluding RRBs)
Dear Sir
Payment of Interest on Savings Bank Account on Daily Product Basis
Please refer to our circular DBOD. No. Dir. BC.128/13.03.00/2008-09 dated April 24, 2009 advising banks that in view of the present satisfactory level of computerisation in commercial bank branches, it is proposed that payment of interest on savings bank accounts by scheduled commercial banks would be made on a daily product basis with effect from April 1, 2010. Further, banks were advised that in order to ensure a smooth transition, they may work out the modalities in this regard.
2. We advise that payment of interest on savings bank accounts may be made by banks on a daily product basis with effect from April 1, 2010.
Yours faithfully
(P. Vijaya Bhaskar)
Chief General Manager-in-Charge

Thursday, 18 February 2010

Rights and Duties of Persons searched under Income Tax Act

Charter of Rights and Duties of Persons searched:


The following is the Charter of rights and duties of persons searched which has been reported in [1994] 208 ITR (St) 5.

Rights of the person searched:

To see the warrant of authorisation duly signed and sealed by the issuing authority.

To verify the identity of each member of the search party before the start of the search and on conclusion of the search.

To insist on personal search of ladies being taken only by a lady, with strict regard to decency.

To have at least two respectable and independent residents of the locality as witnesses.

A lady occupying an apartment being searched has a right to withdraw before the search party enters, if, according to custom, she does not appear in public.

To call a medical practitioner in case of emergency.

To allow the children to go to school, after checking their bags.

To have the facility of having meals, etc., at the normal time.

To inspect the seals placed on various receptacles, sealed in course of search and subsequently at the time of reopening of the seals.

Every person who is examined under section 132(4) has a right to ensure that the facts so stated by him have been recorded correctly.

To have a copy of the panchanama together with all the annexures.

To have a copy of any statement that is used against him by the Department.

To have inspection of the seized books of account, etc., or to take extracts therefrom in the presence of any of the authorised officers or any other person empowered by him.

To make an application objecting to the approval given by the Commissioner of Income-tax for retention of books and documents beyond 180 days from the date of the seizure.



Duties of the person searched:

To allow free and unhindered ingress into the premises.

To see the warrant of authorisation and put signature on the same.

To identify all receptacles in which assets or books of account and documents are kept and to hand over keys to such receptacles to the authorised officer.

To identify and explain the ownership of the assets, books of account and documents found in the premises.

To identify every individual in the premises and to explain their relationship to the person being searched. He should not mislead by impersonation. If he cheats by pretending to be some other person or knowingly substitutes one person for another, it is an offence punishable under section 416 of the Indian Penal Code.

Not to allow or encourage the entry of any unauthorised person into the premises.

Not to remove any article from its place without notice or knowledge of the authorised officer. If he secretes or destroys any document with the intention of preventing the same from being produced or used as evidence before the court or public servant, he shall be punishable with imprisonment or fine or both, in accordance with section 204 of the Indian Penal Code.

To answer all queries truthfully and to the best of his knowledge. He should not allow any third party to either interfere or prompt while his statement is being recorded by the authorised officer. In doing so, he should keep in mind that –

If he refuses to answer a question on a subject relevant to the search operation, he shall be punishable with imprisonment of fine or both, under section 179 of the Indian Penal Code.


Being legally bound by an oath or affirmation to state the truth, if he makes a false statement, he shall be punishable with imprisonment or fine or both under section 181 of the Indian Penal Code.

Similarly, if he provides evidence which is false and which he knows or believes to be false, he is liable to be punished under section 191 of the Indian Penal Code.


To affix his signature on the recorded statement, inventories and the panchanama.

To ensure that peace is maintained throughout the duration of the search, and to co-operate with the search party in all respects so that the search action is concluded at the earliest and in a peaceful manner.

Similar co-operation should be extended even after the search action is over, so as to enable the authorised officer to complete necessary follow-up investigations at the earliest.

Wednesday, 17 February 2010

All directors of a company cannot be prosecuted for offence in cheque bouncing cases

http://armutha.blogspot.com/
Brief : As per section 141 of Negotiable Instruments Act, If the person committing an offence under section 138 of the Negotiable Instruments Act is a company, every person who, at the time the offence was committed, was in charge of and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly In the instant case, the National Small Industries Corporation challenged a Delhi High Court judgment, in a batch of cases, quashing the summons issued to the directors of various companies in cheque bouncing cases. The Bench dismissed the appeals agreeing with the High Court’s findings.


All directors of a company cannot be prosecuted for an offence in cheque bouncing cases under the Negotiable Instruments Act, the Supreme Court held on Monday.


A Bench comprising Justices P. Sathasivam and H.L. Dattu said: “Every person connected with the company shall not fall within the ambit of the Section 141 of the Act. Only those who were in charge of and responsible for the conduct of the business of the company at the time of commission of an offence will be liable for criminal action. If a director was not in charge of and was not responsible for the conduct of business at the relevant time, [he] will not be liable for a criminal offence under the provisions.”

The Bench said: “The liability arises from [one] being in charge of and responsible for the conduct of the business at the relevant time when the offence was committed, and not on the basis of [one] merely holding a designation or office in a company. Section 141 is a penal provision creating vicarious liability, which, as per settled law, must be strictly construed.

“It is therefore not sufficient to make a bald, cursory statement in a complaint that the director (arrayed as an accused) is in charge of and responsible for the conduct of the business of the company without anything as to the role of the director.”

Justice Sathasivam, writing the judgment, said: “A company may have a number of directors, and to make any or all directors accused in a complaint merely on the basis of a statement that they are in charge of and responsible for the conduct of the business without anything more [on their role] is not a sufficient fulfilment of the requirements under Section 141.”

The Bench said: “Vicarious liability on the part of a person must be pleaded and proved, and not inferred. If the accused is the managing director or joint managing director, then it is not necessary to make a specific averment in the complaint, and by virtue of their position, they are liable to be proceeded against.

“If the accused is a director or an officer who signed cheques on behalf of the company, then also it is not necessary to make a specific averment in complaint.”

The Bench said: “The person sought to be made liable should be in charge of and responsible for the conduct of the business at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.”

In the instant case, the National Small Industries Corporation challenged a Delhi High Court judgment, in a batch of cases, quashing the summons issued to the directors of various companies in cheque bouncing cases. The Bench dismissed the appeals agreeing with the High Court’s findings.

AUTOMATION OF CENTRAL EXCISE AND SERVICE TAX (ACES)

http://armutha.blogspot.com
AUTOMATION OF CENTRAL EXCISE AND SERVICE TAX (ACES)
Register yourself with ACES to seek Assessee registration; to file tax return, claims and intimations and for tracking their status at http://www.aces.gov.in/

Tuesday, 16 February 2010

Tax on Gifts

www.armutha.blogspot.com

It is important to note that such gifts received could have tax implications in the hands of the recipient; therefore, one needs to exercise caution so that he is not caught unawares.
Sum of money:-As per the provisions of the I-T Act, 1961 (the Act), any sum of money received by an individual or a Hindu undivided family in a particular financial year, without consideration, the aggregate value of which exceeds Rs 50,000 is taxable.

Immovable Property:Effective October 1, 2009, the scope of the taxability provisions in respect of the gifts has been enlarged to include immovable property, including land or building or both. If any immovable property is received without consideration, whose stamp duty value exceeds Rs 50,000, the stamp duty value of such property would be taxable.
If any immovable property is received for a consideration which is less than the stamp duty value of the property by an amount exceeding Rs 50,000, the stamp duty value of such property would be taxable.

Other gifts:- Similar to the immovable property, certain other gifts received w.e.f October 1, 2009, has also been brought under the tax net. These include shares and securities, jewellery, archeological collections, drawings, paintings and sculptures as specified under the Act. In these cases, if the aggregate fair market value of the benefit received by way of a gift exceeds Rs 50,000, the same would be taxable.

Exceptions to the rule :- It is pertinent to note that the tax law does provide for certain exceptions which are worth noting as these provide substantial relief to individuals/HUF under normal day-to-day circumstances. These include:

Gifts from relatives :-Gifts received from any relative, as defined under the Act, is not taxable. Relatives include spouse of the individual; brother or sister of the individual; brother or sister of the spouse of the individual; brother or sister of either of the parents of the individual; any lineal ascendant or descendant of the individual; any lineal ascendant or descendant of the spouse of the individual; and the spouse of the person referred to as aforesaid.

Gifts received on marriage:-Any gift received by an individual on the occasion of his/her marriage would also not be taxable. It is customary to receive gifts of money and kind on the occasion of marriage. Therefore, this is an important exception to the general rule.

Gift received under a will, etc :-Any gift received under a will or by way of inheritance, or in contemplation of death of the payer is also not taxable.

Certain other events :-In case an individual receives any gift from any local authority as specified under the Act, the same would not be taxable. Similarly, any gift received from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust/institution, as specified under the Act, would not be taxable.

Documentary Evidence:-Gifts received are quite prone to litigation. Hence, it is prudent to maintain documentary evidence in respect of the gifts received, to avoid any dispute with tax authorities at a later stage. This is particularly relevant in case the gift amount is substantial and also where it is received from relatives. In case of gift of money received from a relative, it is advisable to have gift deed/letter of understanding exchanged and kept in records by the recipient of the gift for future reference.

Monday, 15 February 2010

Starting a company? What you should do on priority?

New entrepreneurs as well as established small business players find it difficult and cumbersome to get through the first stage of starting a company, which is it's legal formation. This is one of the most important areas to look into, however many people overlook it and find themselves handicapped a few years down the line when they are looking for external investment or finance.
Remember that any investor looks for an asset, and assets have first existence on paper. Even banks look for 3 years track record to provide unsecured or secured finance.
So what should one do? Here are some steps that I would like to advice.
1. Secure your idea on paper :
Put a business plan together. Refer to various sample business plans that are available online. Put a study on market size, market need, your product offering and how your product offers significant value addition to other players in the market. Generally investors like ideas that cater to mass market and offer a much needed solution to a problem at lesser price and in quicker time.
Get your copyright, trademark and apply patents if possible.
2. Form a company :
Decide the ownership structure in equity terms and form the company on paper. In forming a company, here are the options that one has to consider:
a. Sole Proprietorship Firm :
Although a lot of people get started with sole proprietorship firms, such form of companies is suitable if one wants to expand the company operations in the future and scale the company. Though Sole proprietorship firm lets you open a bank account. The major advantage of this form is that it is easiest to form and the biggest drawback is that the liability of Sole Proprietor is UNLIMITED.
b. Partnership Firm :
Partnership firms are very much like Sole Proprietorship firms with the only difference of multiple partners. Both forms let you open a bank account and shift to more recognized model in the future. It costs approximately Rs. 10000 to start a Partnership Firm. Major disadvantage of Partnership firm is that the liability of Partners is UNLIMITED & each partner is liable for all the deeds of other partner & the Firm.
c. Private Limited Company :
This is the most recognized form of company formation that needs minimum Rs. 1 lac as paid up capital by it’s shareholders and needs a minimum of two directors. Private limited company formation needs simple documentation and costs approximately Rs. 20,000.

d. Limited Liability Partnership :
Limited liability partnerships is a newly introduced format by the ministry of corporate affairs and offers several advantages both Private Limited Company & Partnership Firms such as :
i. Limited liability on directors / Partners
ii. Unlimited partners
iii. Tax benefits in the form of NO TAX on PROFIT distribution
It costs approximately Rs. 15,000 to start a limited liability Partnership.
e. Foreign Incorporation :
This type of incorporation is required when your target market lies outside your country of residence and operation. Most online firms cater to diversified global clients hence need to form a company in the region they conduct business in. Foreign companies who want to do business in India can register a private limited with foreign directors. While Indian businesses who want to do foreign incorporation can typically opt for Limited Liability Company structure which can be registered online and are supported by most countries such as US, UK and Singapore. The cost varies depending on the Country & type of Incorporation.

3. Start recording transactions :
You will be able to open your bank accounts once your company is formed. It is very important to do as many transactions as possible through bank because it is the perfect evidence for various VCs or financing institutions.

4. File your company returns regularly :
File returns for your company regularly, there are various tax numbers required in order to do that. But it is better if you file your returns on time.

5. Know the bank people and get your finance pre-approvals :
When you start the company and customers start coming in, most people get stuck with inability to arrange finance for scaling up. Although Venture Capital and Angel investment exists, most people know that the probability to secure it is as good as winning a lottery. But do not get upset. If you have your papers right, any of your local bank has programs such as unsecured and secured finance, from Rs. 30 lacs to even Rs. 300 crores.

A summary of VAT updates on notifications and circulars issued during the month of January 2010 in Maharashtra

Tax Clearance Certificate
In order to attain uniformity in procedures, the departmental officers have been instructed to issue Tax Clearance Certificate under the Maharashtra Value Added Tax Act, 2002 in the prescribed format. Further, format of the Profession Tax Clearance Certificate has also been prescribed.
MVAT circular on Issuing of Tax Clearance Certificates (Trade Circular No.1T of 2010, Date: 05/01/2010)
Revised parameters for submission of bank guarantee for early refund
Revised parameters have been formulated for dealers willing to submit bank guarantee for early refund. This is in supersession of the parameters prescribed under Circular No. 56T of 2007 dated 23rd August, 2007 dealing with standard procedures for processing of refund applications.
Trade Circular No.3T of 2010 on Refund under MVAT
Submission of Value Added Tax Audit Report for the periods 2005-06, 2006-07 and 2007-08
With effect from October 1, 2009, it was mandatory to submit the Value Added Tax Audit Report electronically in the new format.
However, it has now been clarified that the Audit Report for the periods 2005-06, 2006-07 and 2007-08 can be submitted physically in the old format. The dealers, however, have an option to submit these Audit Report in the new format electronically.
Trade circular No. 4T of 2010 on Filing of Audit Report in Form-704 for the periods 2005-06, 2006-07 and 2007-08
Extension in due date for submission of Value Added Tax Audit Report for the year 2008-09
The due date for submission of Value Added Tax Audit Report for the year 2008-09 has been extended to March 31, 2010. Consequently, the „Statement of Submission of Audit Report? along with prescribed documents is required to be furnished by April 10, 2010.
Due Date for MVAT audit in form 704 for financial year 2008-09 extended to 31st March

Recommendations made by the GST Council in its 22nd Meeting held on 6th October 2017

The GST Council, in its 22nd Meeting which was held today in the national capital under Chairmanship of the Union Minister of Finance and C...