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1, Temple Complex, Shiv Mandir, Tilak Bridge, New Delhi 110001

July 2014

ASAP & ASSOCIATES

CHARTERED ACCOUNTANTS

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Nitin Goyal

(CA- FINAL)

COMPILED BY

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INDEX 1. TDS/INCOME TAX ………………………………………………..……………………………………….…5

2. SERVICE TAX…………………………………………………………………..…………………….….9

3. DVAT..................................................................................................... 11

4. MISC......................................................................................................13

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Warm greetings!

The prime motive of this newsletter is to keep you updated with the day-to-day changes in the Direct and Indirect Tax scenario. We try to consolidate and refer to amendments and notifications taking effect during the last 15 days. Tax laws have to be interpreted in each context and can have different implications in different circumstances. You are advised to approach us for formal professional advice before you intend to act on any issues. This information may not be exhaustive nor may the interpretation given here be conclusive. ASAP shall not be responsible for any action taken without formal consultancy.

TAX UPDATES

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A. Disallowance for non Payment or non deduction of TDS restricted to 30%.

As per section 40(a)(ia), in case of payments made to resident, the deductor can claim deduction for payments as expenditure in the previous year of payment, if tax is deducted during the previous year and the same is paid on or before the due date specified for filing of return of income under section 139(1) of the Act.

In case of non-deduction or non-payment of tax deducted at source (TDS) from certain payments made to residents, the entire amount of expenditure on which tax was deductible is disallowed under section 40(a)(ia) for the purposes of computing income under the head “Profits and gains of business or profession”. The disallowance of whole of the amount of expenditure results into undue hardship.

In order to reduce the hardship, due to non-deduction or non-payment of TDS on payments made to residents, the disallowance is restricted to 30% of the amount of expenditure claimed.

B. What to do in case of TDS mismatch?

Even if the credit for TDS as claimed in the return matches with the balance as appearing in the Form 26AS, Assessing Officer may still raise a demand for payment of differential amount due to TDS mismatch. The reason for such differences could be as under: 1. TAN of deductor was wrongly

mentioned. 2. Name of deductor was not spelt

correctly. 3. Tax deducted by one deductor

wrongly included in the amount of tax deducted by another deductor

In case of such TDS mismatch, an assessee can file a rectification request. The TDS mismatch may also be due to error in TDS return filed by deductor. In such a situation, you should intimate the deductor about such error and require him to rectify the TDS return.

In a press note no. 402/92/2006 dated April 17, 2014 CBDT had noted that

TDS/ Income tax

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many taxpayers commit mistakes while furnishing details of tax credit in the return of income. Such mistakes include: Invalid/incorrect TAN of deductor; Furnishing same TAN for more than

one deductor; Filing information in wrong TDS

Schedules in the Return Form; Furnishing wrong challan particulars

in respect of Advance tax, Self-assessment tax etc.

Consequently, the tax credit could not be allowed to the taxpayers while processing returns despite the tax credit being available in 26AS statement. The CBDT, therefore, directs the taxpayers to verify if the demand raised on them is due to tax credit mismatch on account of such incorrect particulars and submit rectification requests with correct particulars of TDS/tax claims for correction of these demands. The rectification requests have to be submitted to the jurisdictional Assessing Officer in case the return was processed by such officer, or the taxpayer is informed by CPC, Bangalore that such rectification is to be carried out by Jurisdictional Assessing Officer. In all other cases of processing by CPC, Bangalore, an online rectification request can be made.

C. Recent changes in Form 3CA, 3CB, 3CD. Some changes has been made in Form 3CA, 3CB and 3CD by CBDT via Notification no. 33 dated 25th july 2014. Listed below are the modifications/ additions made in this notification. FORM 3CA

1. Now the period for which profit & loss account/ Income and expenditure account has been prepared have to be mentioned.

2. In the opinion part, now we have to mention our observations/ qualifications if any.

FORM 3CB Changes made are similar to that in Form 3CA as mentioned above. FORM 3CD The new Form 3CD has 41 clauses as against 32 clauses prior to this notification. Listed below are the key modifications/ additions made in Form 3CD. PART A 1. Now we have to mention whether

the assessee is liable to pay Indirect tax like excise duty, service tax, sales tax, custom duty etc and furnish the registration number for the same.

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2. Mention the clause under which the audit has been conducted.

PART B 1. Earlier we were only required to

mention a list of books of account maintained; now we also have to mention the address at which the books of accounts are kept. And if books of accounts are not kept at one location, we need to furnish the addresses of locations along with the details of books maintained at each location.

2. Apart from mentioning the list of books examined we also have to mention the nature of relevant documents examined.

3. For reporting the effect in profit and loss due to change in method of accounting or method of valuation a format has been prescribed.

4. A new clause has been added whereby details of property along with consideration received or accrued and value adopted or assessed is to be furnished/ disclosed, where any land or building or both is transferred during the P.Y for a consideration less than the value adopted or

assessed or assessable by any authority referred to in Sec 43CA or Sec 50C.

5. Additional disclosures required under clause 19 erstwhile clause 15

for sec 32AC, 35(2AA), 35(2AB), 35AD,35CCC and 35CCD

6. Disclosures to be made on whether during the previous year the assessee has received any property, being share of a company other than a company in which public are substantially interested, without consideration or for inadequate consideration as referred to in Sec 56(2) (viia).

7. Disclosures to be made on whether during the previous year the assessee received any consideration for issue of shares which exceeds the fair market value of the shares as referred to in sec 56(2) (viib).

8. Disclosures on whether the assessee has incurred any speculation loss referred to in Sec73 during the previous year.

9. Disclosure on whether the assessee has incurred any loss referred to in sec 73A in respect of any specified business during the previous year.

10. To be report whether the company is deemed to be carrying on a speculation business as referred in explanation to Sec 73.

11. Apart from reporting on the Tax deducted & remittance as per provision of chapter XVII-B or XVII-BB, we also have to report TDS & TCS returns are submitted on time or not and whether the assessee is liable to pay interest under sec 201(1A) or sec 206C(7).

12. While reporting on tax on distributed profits under sec 115-0

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disclosure to be made for amount of reduction as referred to in Sec 115-O (1A) (i) & (ii).

13. Disclosures on cost Audit to include disqualification or disagreement on any matter/ item/ value/ quantity as may be reported/ identified by the Cost Auditor. Earlier the requirement was to only state whether Cost Audit was carried out or not & to enclose copy of report.

14. Similar disclosure to be made with respect to audit under Central excise Act as mentioned above.

15. To be reported whether any audit was conducted under Sec 72A of the finance Act, 1994 in relation to valuation of taxable services, further disclosures to be made for any disqualification or disagreement on any matter/ item/ value/ quantity as may be reported/ identified by the auditor.

16. Details of demand raised or refund issued during the previous year under any tax laws other than IT Act 1961 & Wealth Tax Act 1957 along with details of relevant proceeding.

The above mentioned modifications increases the responsibilities of the Chartered Accountants while performing the Tax Audit, as the Auditor has to ensure more compliances than earlier. The

disclosure requirements were also increased substantially, and the auditor can no longer just rely on the certification received from the client, as the amendment requires specific disclosures to made in respect of items for which earlier auditor were just required to obtain a certificate.

D. Various important dates in the month of July:

Due date of filing Return in case of

assessee having incomes from Salary, Rent, Capital gain, Interest, or Business with turnover less than 60 Lakh: 31-July-2014

Due date for Payment of TDS/TCS

deducted/collected in July: 07-August-2014

Due date of Issue of Quarterly TDS/TCS certificate for June quarter for Govt. Deductors: 15-August-2014.

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A. Surrender of service tax registration

As per Rule 4(7), every registered assessee, who ceases to provide the taxable service for which he is registered, shall surrender his registration certificate immediately to the Superintendent of Central Excise.

The service tax assessee can surrender the registration certificate in any of the following circumstances- i) Death of proprietor ii) Ceases to provide the taxable

service iii) Change in the constitution of

business iv) Turnover is below the threshold

limit v) Shifting the business premises

from one jurisdiction to another jurisdiction

vi) Applying for centralized registration by surrendering the single registration of other offices / branches.

The surrender of registration is of two types – Assessee who has obtained

registration and migrated to ACES and

Assessee who obtained

registration prior to 01.04.2010 and has not migrated to ACES.

Assesses are required to apply for surrender of Service Tax registration online. For applicants having registration prior to 01.04.2010 who have not migrated to ACES system, it is not necessary to apply for online and then surrender registration certificate online. They may apply for surrender of certificate by way of a manual application, along with other documents as required. The Department has issued instruction to liberally cancel the registration for assessee. In this case, the intimation for cancellation shall be sent by post.

Rule 4(8) provides that on receipt of the application for surrender, the Superintendent of Central Excise shall ensure that the assessee has paid all monies due to the Central Government under the provisions of the Act, and the rules and the notifications issued there under, and thereupon cancel the registration certificate.

SERVICE TAX

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B. Various important dates in the month of July:

Due date for payment of Service Tax for the month ended July: 05-August-2014

Due date for payment of Service Tax for the month ended July making E-PAYMENT: 06-August-2014

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A. Manners regarding all notices or

summons or orders issued under the Delhi Value Added Tax Act, 2004 or Delhi Value Added Tax Rules, 2005 or the Central Sales Tax Act, 1956, 1. As per the order dated 18/07/2014, (a) All Value Added Tax Authorities

shall issue the notices/ summons/ orders to the dealers by electronic means by pasting the same on web-page of individual dealers. In addition to this, an SMS alert on the registered mobile numbers of the respective dealer may also be sent, wherever a mobile number has been furnished to the Department. The documents shall also be emailed to the dealers, if the email id has been intimated by dealer to the department.

(b) The documents so generated will

be available on the department’s website www.dvat.gov.in, and will be accessible to dealers in their respective login ID. Such documents shall be deemed to have been issued and served for the purposes of Delhi Value Added Tax Act, 2004, Delhi Value Added Tax Rules, 2005 and the Central Sales Tax Act, 1956.

(c) As soon as a ‘document’ is issued by any VAT Authority, the same

shall be available instantly to the dealer for view as under:

i. On the dealer’s web page under the link Notices/Summons/Orders.

ii. As soon as dealer logs on to his web

page, a pop-up message will appear. This pop up message will also appear at the time of next two logins also. After reading the ‘document’, the dealer shall click on ‘OK’ button available at the end of the notice, as a proof of reading the ‘document’. Afterwards, the dealer may access other links.

iii. An SMS alert to the dealer’s mobile number registered with the department, showing notice/ summons/ order number and date of hearing/appearance, if any, will also be generated, simultaneously as under: (a) TIN: (b) Notice/Summon/Order ID:

DVAT

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(c) Date of Hearing/Last Date of compliance:

This manner of service, shall be deemed to be a service of document for the purpose of Rule 62 of the Delhi Value Added Tax Rules, 2005, at par with other manners prescribed under the said Rule.

2. Dealers shall quote the ‘document’ reference number and date along with their TIN in their further communication with regard to that particular hearing/compliance.

3. The dealers are advised to visit

their webpage regularly in order to have immediate access of notice/ summon/ order issued to him, if any.

4. The notices/summons/orders may

also continue to be issued by registered post till 31.03.2014.

B. Extension of date of filing of online

return for 1st quarter of 2014-15: The last date of filing of online/hard copy of first quarter return for the year 2014-15, in Form DVAT-16, DVAT-17 and DVAT-48 along with required annexures /enclosures has been extended to 08/08/2014.

However, the tax due shall continue to be paid in the usual manner as per the provisions of section 3(4) of the Delhi Value Added Tax Act, 2004. The dealers filing the returns through digital signature need not be required to file hard copy of the return/Form DVAT-56

C. Various important due dates in month of August 2014.

(i) Due date for deposit of DVAT TDS for month ended July 2014: 15-August-2014

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Important annou A.

A. Due date of filling of Form DPT-4

under Companies act, 2013 has been extended upto 31-08-2014. This Ministry has received reference regarding filing of Form DPT4 under the provisions of the Companies Act, 2013. As per section 74(1)(a) of the Companies Act, 2013and the companies (Acceptance of Deposits) Rules, 2014 made there under, companies are required to file a statement regarding deposits existing as on date of commencement of the Act within a period of 3 months from such commencement. The time for filing of said statement is expiring on 30-06-2014. After considering the reference, it has been decided to grant extension of time for the period of 2 months i.e. up to 31-08-2014 without any additional fee in terms of section 403 of the Act to enable the companies for filing of statement under Form DPT4 with the Registrar.

B. Various Important Due dates in month of July 2014.

Due date Applicable Form

Obligation

15/08/2014 Electronic Challan cum Return (ECR)

E-Payment of PF for July (Cheque to be cleared by 20th)

21/08/2014 ESI Challan

Payment of ESI of July

MISC.

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