Tax Deductible under 194C on Hire charges paid for Hiring of Vehicles

There is a controversy on whether the hire charges paid to hirers is liable to TDS under section 194C or 194I here are some clarifications for the same

According to section 194C the scope of the term Work shall include:

a)      Advertising

b)      Broadcasting and telecasting including production of programmes for such broadcasting or telecasting

c)      Carriage of goods or passengers by any mode of transport other than by railways

d)      Catering

e)      Manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer BUT DOESNOT INCLUDE manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person other than such customer

According to section 194I the term rent means any payment by whatever name called under any lease, sublease, tenancy or any other agreement or arrangement for the use of any:

a)      Land

b)      Building (includes factory building)

c)      Land appurtenant

d)      Machinery

e)      Plany

f)       Equipment

g)      Furniture

h)      Fittings

Some Issues:

1.      Hire Charges paid for Transportation of employees:

A company has entered into agreement with a transport service and as per the agreement the staff required for running bus and maintenance and repairs to it has to be done by the transporter and in this case it was held that the provisions of 194 I confirmed to the payment for rent on hiring of land and buildings, furniture but not for transport vehicle and other mode of transportation so the payments made for transport has fallen under the ambit of 194C

2.      Payment made for vehicle rent for transportation of passengers:

A transporter  of passengers has entered into agreement  for taking the passengers from different places to the institute and from there again to  different places in the city and for fulfilling the requirements of agreement the transporter has hired additional vehicles for carrying his work and has not deducted any TDS for the payments made by him to the person who has given the vehicles on rent and he has also provided the drivers and staff for running the bus so it was clearly held that the payment is covered under 194C

3.      Payment of car rent for  Transportation of employees:

If payment was made for any rent of a car for the transport of employees it will also be covered under 194C.

4.      Payment made to bus operators for pickup and dropping of students and staff:

Here a contract was entered into with a transporter with some conditions such as all the responsibility for running the buses has to be borne by the transporter here the AO held that the buses used will qualify under plant according to section 194I and  has to deduct TDS @10% but assessee is of the contention that it was a contract as the buses were not utilized as a plant but used for fulfilling the obligation so 194I will not be applicable and it was held that assessee has rightly deducted TDS under 194C.

On comparision of all the explanations it was never the intention of the legislature to overlap any of the items mentioned in meaning of work under section 194C.Therefore the payment made for carriage of employees school students cannot be made liable for TDS under 194I

Kiran

                All You Need To Know About 80CCG & 80GB

Rajiv Gandhi Equity Savings Scheme 80CCG (RGESS), 2012

With an objective to encourage flow of savings of the small investors in domestic capital market, the Government of India (GOI) announced a scheme named Rajiv Gandhi Equity Savings Scheme, 2012 (RGESS) to offer tax benefits to ‘New Retail Investors’.

Avail the additional tax benefits under RGESS

Under RGESS, ‘New retail Investor’ can invest upto Rs.50,000 in eligible securities and avail additional tax benefit (i.e., deduction) upto Rs.25,000 under Section 80CCG. This is over and above the limit of Rs.1,00,000 currently available under Section 80C of the Income Tax Act, 1961.

Who is eligible?

·         You must be a resident individual.

·         You must be a new retail investor i.e. you do not have a demat account or you have a demat account but have not done any transaction till the date of Notification viz; November 23, 2012.

·         Your gross total income must be less than or equal to Rs.10 lacs.

Where to invest?

You can invest in eligible securities. Eligible securities considered for RGESS investment are:

·         Equity shares of selected companies which include:

·         Companies falling in the list of ‘CNX-100’ of NSE or ‘BSE-100’.

·         Public sector enterprises categorized as Maharatna, Navratna or Miniratna by the Central Government.

·         Units of Mutual Fund (MF) schemes which are RGESS compliant.

·         Units of Exchange Traded Funds (ETFs) which are RGESS compliant.

·         IPOs /NFOs of above mentioned companies/funds.

Click here to view List of RGESS eligible stocks / ETFs / MF schemes

Is there any lock-in?

·         Lock-in period under RGESS is of three years which includes ‘Fixed Lock-in’ period of one year and ‘Flexible lock-in’ period of two years.

·         During ‘Fixed Lock-in’ period, eligible securities cannot be sold / pledged. During ‘Flexible lock-in’ period, eligible securities can be sold / pledged subject to certain conditions.

·         The designated RGESS demat account will be converted into a regular or ordinary demat account at the end of the flexible lock-in period.

Next Step

·         Open a new demat account with any DP of NSDL.

·         If you already have a demat account and you are eligible, designate your demat account under RGESS.

·         To designate your demat account under RGESS, submit a declaration in Form A to your DP.

·         Start investing.

How to invest?

·         Secondary Market:

·         Approach any SEBI registered Stock Broker of your choice.

·         Mutual Funds:

·         Approach any Mutual Fund distributor or a SEBI registered Stock Broker. Ensure to provide your demat account details i.e., Demat Account Number and DP ID.

·         IPO / NFO of RGESS compliant companies/funds:

Investor must ensure to mention demat account details i.e., Demat Account Number and DP ID in the IPO / NFO application form.

Capital gain exemption on transfer of residential property if invested in a manufacturing small or medium enterprise [New Section 54GB]

The Government had announced National Manufacturing Policy (NMP) in 2011, one of the goals of which is to incentivise investment in the Small and Medium Enterprises (SME) in the manufacturing sector. Therefore, with effect from assessment year 2013-14, a new section 54GB has been inserted so as to provide rollover relief from long term capital gains tax to an individual or an HUF on sale of a residential property (house or plot of land) in case of re-investment of sale consideration in the equity of a new start-up SME company in the manufacturing sector which is utilized by the company for the purchase of new plant and machinery.

This relief would be subject to the conditions that —

• the amount of net consideration is used by the individual or HUF before the due date of furnishing of return of income under sub-section (1) of section 139, for subscription in equity shares in the SME company in which he holds more than 50% share capital or more than 50% voting rights.
• the amount of subscription as share capital is to be utilized by the SME company for the purchase of new plant and machinery within a period of one year from the date of subscription in the equity shares.

If the amount of net consideration subscribed as equity shares in the SME company is not utilized by the SME company for the purchase of plant and machinery before the due date of filing of return by the individual or HUF, the unutilised amount shall be deposited under a deposit scheme to be prescribed in this behalf.

Suitable safeguards so as to restrict the transfer of the shares of the company, and of the plant and machinery for a period of 5 years are proposed to be provided to prevent diversion of these funds. Further, capital gains would be subject to taxation in case any of the conditions are violated.

The transfer should take place during April 11, 2012 and 31st March, 2017. 

Furnish Audit Report Electronically for A.Y 2013-14

An assessee required to furnish a report of audit under sections 44AB, 92E or 115JB of the Act, shall furnish the same electronically for AY 2013-14 onwards [Refer Notification No.: 34/2013 dated 01-05-2013].

Notification No.34/2013 dated 01-05-2013

A person having Total Income in excess of Rs. 5 Lakhs, shall furnish a return of income for AY 2013-14 and subsequent years, electronically

Refer Notification No.34/2013 dated 01-05-2013.

Due Date for Service Tax Return for the period Oct'12 - Mar'13 is 31-08-2013

Dear All

F.No.137/99/2011-Service Tax

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

***

New Delhi, dated the 23^rd April, 2013

Order No: 03/2013-Service Tax

            In exercise of the powers conferred by sub-rule(4) of rule 7 of the Service Tax Rules, 1994, the Central Board of Excise & Customs hereby extends the date of submission of the  Form ST-3, for the period from 1^st October 2012 to 31^st March 2013, from 25^th April, 2013 to  31^st August, 2013.

            The circumstances of a special nature, which have given rise to this extension of time, are as follows:  

      “The Form ST-3, for the period from 1^st October 2012 to 31^st March 2013, is expected to be available on ACES around 31^st of July, 2013”.

 Himani Bhayana

Under Secretary (Service Tax)

Central Board of Excise and Customs

To

All Chief Commissioners of Central Excise / Customs and Central Excise

Directors General of Service Tax /Central Excise Intelligence /Audit/Systems All Commissioners of Central Excise/ Customs and Central Excise

All Commissioners of Service Tax

All Commissioners LTU

All Additional Directors General Systems

Service Tax Return(Jul'12 - Sep'12) filing Date Extended from 15th Apr'13 to 30th Apr'13

CBEC extends the last date of filing of ST 3 return for the period July-September, 2012 from 15th to 30th April, 2013. For CBEC's Order No 2/2013-ServiceTax dated 12-4-2013.

ALTERNATIVE MINIMUM TAX (AMT)

Alternate Minimum Tax provisions are applicable for different assessment years as follows:

	Upto A.Y.2011-12	A.Y.2012-13	A.Y.2013-14 Onwards
LLP	Not Applicable	Applicable	Applicable
Any other firm	Not Applicable	Not Applicable	Applicable
Individual ,HUF, AOP, BOI,  artificial juridical person	Not Applicable	Not Applicable	Applicable  if adjusted total income exceeds 20 lakhs
Any person	Not Applicable	Not Applicable	Applicable

                                                                                                                                                                                

A CORPORATE ASSESSEE IS SUBJECT TO MAT (Minimum Alternative Tax) NOT 
AMT(Alternative Minimum Tax).

Levy of AMT:

A limited liability partnership (from A.Y.2012-13) or any other non corporate assessee (From A.Y.2013-14) is subject to AMT

DETERMINATION:

Step 1:
Find out the Income tax liability of non corporate assessee ignoring provisions of sections 115JC to 115JF.

Step 2: 
find out adjusted total income .And it is net income or total income of assessee as increased by

a.amount claimed as deduction under section 80H to 80RRB(except 80P) and

b.amount claimed as deduction under 10AA.

If assessee is an individual ,HUF,BOI,AOP or an artificial juridical person and the adjusted total income is less than or equal to  20 lakhs then these provisions will not apply  

Step 3: 
Find out 19.055%(18.5%+EC+SHEC) of adjusted total income in step 2

Step 4:
If amount computed under step 1 is equal to or more than amount determined under step 3,Then AMT provisions are not applicable.

If step 3 is more than step 1 then:

a. Adjusted total income of step 2 will be the deemed total income for that year and

b.19.055 % of adjusted total income will be tax liability

Step 5:

The excess amount computed under step 3 over step 1 will be available as credit for alternative minimum tax and it can be carried and set off against the regular tax liability of next 10 Years.

Tax credit shall be allowed for set off for an assessment year in which regular income tax exceeds alternative minimum tax.

Step 6:
If AMT provisions are applicable then assessee have to obtain report in form 29C from chartered accountant.

AMT provisions will apply only if the assessee has claimed any deduction under section 10AA or 80H to 80RRB (except 80P)

Service Tax Reverse Charge Mechanism Applicability for Proprietorship

CBEC Introduced Service Tax Reverse Charge Mechanism in the month of Jul’12 vide Notification No.30/2012 Dt: 20.06.2012. The following cases will attract service tax in the hands of service recipients, with effect from 01.07.2012.

S.No.	Description of a service	Service provider	Service receiver	Percentage of  service tax payable by the person providing service	Percentage of service tax payable by the person receiving the service
1.	GTA in respect of services  provided or agreed to be provided  by a goods transport agency in respect of transportation  of goods by road	Goods transport agency	Consignor or Consignee is specified person	Nil	100
2.	Arbitral Tribunal in respect of services  provided or agreed to be provided  by an arbitral tribunal	Arbitral tribunal	Business entity	Nil	100
3.	Advocate Services in respect of services  provided or agreed to be provided  by individual advocate	Individual advocate	Business entity	Nil	100
4	Support Service in respect of services  provided or agreed to be provided  by way of support service by Government or local authority	Government	Business entity	Nil	100
5.	Service provided from Non-Taxable Territory to Taxable Territory in respect of any taxable services provided or agreed to be provided  by any person who is located in a non-taxable territory and received by any person located in the taxable territory	Any person	Any person	Nil	100

Note:  As per Section 65 B (17) : "Business entity" means any person ordinarily carrying out any activity relating to industry, commerce or any other business or profession.

Service Tax Reverse Charge Mechanism Applicability for Firm

CBEC Introduced Service Tax Reverse Charge Mechanism in the month of Jul’12 vide Notification No.30/2012 Dt: 20.06.2012. The following cases will attract service tax in the hands of service recipients, with effect from 01.07.2012.

S.No.	Description of a service	Service provider	Service receiver	Percentage of  service tax payable by the person providing service	Percentage of service tax payable by the person receiving the service
1.	GTA in respect of services  provided or agreed to be provided  by a goods transport agency in respect of transportation  of goods by road	Goods transport agency	Consignor or Consignee is specified person	Nil	100
2.	Arbitral Tribunal in respect of services  provided or agreed to be provided  by an arbitral tribunal	Arbitral tribunal	Business entity	Nil	100
3.	Advocate Services in respect of services  provided or agreed to be provided  by individual advocate	Individual advocate	Business entity	Nil	100
4.	Support Service in respect of services  provided or agreed to be provided  by way of support service by Government or local authority	Government	Business entity	Nil	100
5.	Service provided from Non-Taxable Territory to Taxable Territory in respect of any taxable services provided or agreed to be provided  by any person who is located in a non-taxable territory and received by any person located in the taxable territory	Any person	Any person	Nil	100
6	Sponsorship in respect of services  provided or agreed to be provided  by way of sponsorship	Any person	Body corporate or partnership firm	Nil	100

Note:  As per Section 65 B (17) : "Business entity" means any person ordinarily carrying out any activity relating to industry, commerce or any other business or profession.

Service Tax Reverse Charge Mechanism Applicability for Body Corporate / Company

CBEC Introduced Service Tax Reverse Charge Mechanism in the month of Jul’12 vide Notification No.30/2012 Dt: 20.06.2012. The following cases will attract service tax in the hands of service recipients, with effect from 01.07.2012.

S.No.	Description of a service	Service provider	Service receiver	Percentage of  service tax payable by the person providing service	Percentage of service tax payable by the person receiving the service
1.	Hiring of Motor vehicles designed to carry passenger (a)with abatement (b)without abatement	Individual/Firm/HUF	Body Corporate	Nill  60%	100% 40%
2.	Supply of manpower for any purpose	Individual/Firm/HUF	Body Corporate	25%	75%
3.	Works Contract Service	Individual/Firm/HUF	Body Corporate	50%	50%
4.	GTA in respect of services  provided or agreed to be provided  by a goods transport agency in respect of transportation  of goods by road	Goods transport agency	Consignor or Consignee is specified person	Nil	100
5.	Arbitral Tribunal in respect of services  provided or agreed to be provided  by an arbitral tribunal	Arbitral tribunal	Business entity	Nil	100
6.	Advocate Services in respect of services  provided or agreed to be provided  by individual advocate	Individual advocate	Business entity	Nil	100
7.	Support Service in respect of services  provided or agreed to be provided  by way of support service by Government or local authority	Government	Business entity	Nil	100
8.	Service provided from Non-Taxable Territory to Taxable Territory in respect of any taxable services provided or agreed to be provided  by any person who is located in a non-taxable territory and received by any person located in the taxable territory	Any person	Any person	Nil	100
9.	Sponsorship in respect of services  provided or agreed to be provided  by way of sponsorship	Any person	Body corporate or partnership firm	Nil	100
10.	Insurance Services in respect of services  provided or agreed to be provided  by an insurance agent to any person carrying on insurance business	Insurance agent	Business man carrying on insurance business	Nil	100
11.	Services provided by a Director of a company to the said company	Director of the said Company	Company	Nil	100

Note:  As per Section 65 B (17) : "Business entity" means any person ordinarily carrying out any activity relating to industry, commerce or any other business or profession.