Kalyan finance act 2013 14

An analysis of Direct Tax Proposals
-by CA. Kalyan Chakravarthy Vennety
7th March, 2013 at

Let’s begin with a nice quote…

Rates of Corporate-tax for the AY 2014-15
• Surcharge – Domestic Co.
Nature of Co. Pecentage Marginal Relief
Domestic Co. TI 5% Yes
1cr to 10 cr
Domestic Co. TI >10cr 10% Yes

Company 115JB>1cr as above Yes

• Surcharge – Other than Domestic Co.
Nature of Co. Pecentage EC + SHEC
Non-Resident TI >1 cr 10% 2%+1%

Foreign Co. TI >1cr 2% 2%+1%
<10cr
3
Foreign Co. TI >10cr 5% 2%+1%
V R Jogeswara Rao & Co., Chartered Accountants

Rates of Income-tax for the AY 2014-15
• Individuals, HUF, AOP, BOI, AJP
Slab 0-60Yrs 60Yrs- >80Yrs Surcharge
% 80Yrs %
%
Upto ` 2L NIL Slab NA Slab NA NIL
Upto ` 2.50L Slab NA 10% Slab NA NIL
Upto ` 5L Slab NA Slab NA NIL NIL
` 2L - ` 5L 10% Slab NA Slab NA NIL
` 2.5L - ` 5L Slab NA 10% Slab NA NIL
` 5L - ` 10L 20% 20% 20 NIL
Above ` 10L 30% 30% 30% NIL
Above 1Crore 30% 30% 30% 10%
• Companies, Co-op Soc., Firms, LA. No change in 4
rates from AY 2013-14 except Surcharge of 10%

Rates of Income-tax for the AY 2014-15
• The only benefit this financial year is there is a
tax credit of `2000 under section 87 for people
having an annual income up to RS 5 Lakh. There is
no other benefit as compared to previous financial
year.
• The surcharge in cases of persons referred to in
this paragraph, having income above one crore
rupees shall be levied at the rate of ten per cent.
Marginal relief will be provided.
• No marginal relief in case of Education cess.

5


Commodities Transaction Tax
• New Commodities Transaction Tax is proposed on
commodity transactions entered in Recognised
Stock exchanges.
• Taxable Commodity Transaction would mean sale
of commodity derivatives in respect of
commodities other than agricultural commodities,
traded in recognised stock exchange.
• Separate Administrative procedures also provided.
• To come into force by way of notification.
• Deduction of CTT paid available u/s.36.
• Provisions applicable with effect from 1.4.2014 6


Taxation of Royalties & FTS
• Section 115A. India has tax treaties with 84
countries.
• Royalty is taxed @ 10% to 25%, but Section 115A was
10% due to which in some cases it has resulted in
taxation @ 10%.
• Hence proposed to amend to 25%.
• Provisions applicable with effect from 1.4.2014

7


Incentive for New Plant & Machinery
As appeared in a financial newspaper…

8


• New section 32AC introduced for acquisition and
installation of new Plant & Machinery by a
manufacturing company.
• Conditions:
• It should be a company
• Engaged in business of manufacture of goods.
• Invests more than `100 crore in new assets during 1.4.2013 to 31.3.2015
• Deduction of 15% of the aggregate cost of new
assets acquired and installed during the FY 2013-14.
• If the cost is more than 100 crore, deduction in FY
2014-15 is equal to aggregate cost of new asset Acq
& Inst during 1.4.2013 to 31.3.2015 less: deduction
claimed in FY 2013-14.
9
• Contd…

• “New Asset” is defined as New P&M but does not
include:
• Previously used P&M in India or outside India,
• P&M installed in office, residential unit including guest house,
• Appliances including computers and software,
• Vehicle,
• Ship or Aircraft,
• Any P&M, whole of cost which is allowed as a deduction in computation of
PGBP of any previous year.

• Lock in period of 5 years.(NA in case of amalgation)
• The above Investment allowance is over & above
the additional depreciation allowance u/s.32(1)(iia)
• Applicable with effect from AY 2014-15 & 10

subsequent years.

Rebate of `2,000 & Sunset clause 80IA
• Section 87 Rebate of `2,000 for Individuals having
Total Income upto `5,00,000.
• Rebate is equal to amount of tax or `2,000
whichever is less.
• Applicable with effect from AY 1.4.2014.
• Sec 80IA: Terminal date for power sector to
commence the eligible activity to avail the tax
incentive extended by a further period of one year
i.e.upto 31.03.2014
• Applicable with effect from 01.04.2014
11


Interest on Housing Loan
As appeared in one of the financial newspaper…

12


Interest on Housing Loan
• Deduction in respect of interest on housing loan
sanctioned during AY 2014-15
• New sec 80EE for Individual for interest on Loan
• Deduction shall not exceed `1 Lakh
• If Interest paid in AY 2014-15 is less than `1 Lakh,
balance deduction available in AY 2015-16.
• Conditions:
• Loan should be sanctioned between the year 1.4.2013 & ending on 31.3.2015;
• Amount of Loan should not exceed `25 Lakhs;
• Value of the new house property should not exceed `40 Lakhs;
• Assessee should not own any house property on the date of sanction.
• Proviso: if deduction allowed under this section, no
deduction allowed under any other provisions of the
act for the same year or any year. 13

• Applicable with effect from AY 1.4.2014.

Sec 10(10D)Limit of % of eligible premium
• Existing sum received from Life Insurance incl.
bonus is exempt subject to premium not > 10% of
actual sum assured.
• Existing sec 80C(3A) provides deduction up to
maximum limit of 10% of actual sum assured.
• Proposed: In case of Life Insurance policy issued on
or after 1.4.2013 on life of person claiming
deduction u/s.80U or 80DDB, any sum received as
bonus or otherwise, is exempt u/s.10(10D) subject
to premium payable for any of the year of the term
not more than 15% of the actual sum assure.
• Similarly section 80C(3A) also to be amended.
• Applicable with effect from AY 1.4.2014. 14


Expanding scope of sec 80CCG
• Rajiv Gandhi Equity Savings scheme.
• Existing section 80CCG provides deduction of 15%
deduction subject to maximum of `25,000
• Conditions:
• Resident Individual acquires listed equity shares;
• One time deduction;
• Only to new retail investor whose GTI not more than `10 Lakhs;
• Notified scheme was Rajiv Gandhi Equity Saving Scheme.

• Proposed: Investment in units of Equity Oriented
fund as per section 10(38)
• Applicable with effect from 1.4.2014.
15


Some other amendments
• Sec 80D Deduction upto `15,000 for contribution
to health schemes extended to more schemes to
be notified.
• Exemption to income of Investor Protection Fund
of depositories on lines of IP fund by Stock Ex.
• 100% deduction to donation to National Children's
Fund u/s.80G
• Exemption to National Financial Holdings Co. Ltd
on lines of Specified U/t of UTI created vide UTI.
• Lower rate of tax (15%) on dividends received from
foreign co. sec 115BBD extended to 1 more year 16


Removal of cascading effect of DDT
• Existing section 115O: 15% DDT by co. paying Div.
• Existing section 115BBD: Exemption of 15% Dividend recd by
Indian co. from foreign co. i.e. 26% case.
• Existing section 115O: Dividend payable by a co. is reduced
by an amount of dividend received from subsidiary if
subsidiary has paid DDT.
• This ensured removal of cascading effect.
• Now it is proposed to amend section 115O in order to
remove cascading effect in respect of dividend received by
a company from a similarly placed foreign co. i.e. 50% case.
• Where tax on dividend received from foreign subsidiary is
payable u/s115BBD by holding co., then dividend distributed
by holding co. in the same year, to the extent of such
dividend shall not be subject to DDT u/s.115O
17

Concessional rate of Withholding tax
• Existing sec 194LC: if Indian co. borrows money in
foreign currency from source outside India either
by way of Loan agmt. or by issue of Long Term
Infrastructure bonds, then the interest payment to
Non-resident subject to concessional rate of
5%TDS.
• To promote subscription of Infrastructure bonds by
foreign companies:
• Where a Non-Resident deposits foreign currency in designated bank
account and such money is converted in rupees;
• Utilised for subscription of Long Term Infrastructure Bond issue of Indian
Co.;
• Then for the purpose of this section, the borrowing
deemed to be in foreign currency 18


Taxation of Securitisation Trusts
• Existing section 161: If Trust income consists or
includes PGBP, taxation would be @MMR.
• The taxation at the level of Trust was considered to
be restrictive particularly where investors in the
trust are persons exempt from tax like M-Funds.
• Therefore to facilitate Securitisation, it is proposed
to amend section 10 and add new chapter XII-EA
and provide exemption.

19


Securities Transaction Tax
• Proposed to amend section 98 of Finance Act no.2
of 2004 to reduce STT as under:
Sr. Particulars Who pays Existing Proposed
% %
1. Delivery based units Purchaser 0.1 NIL
2. Delivery based units Seller 0.001 0.1
3. Sale of Futures Seller 0.017 0.1
4. Sale of Units to MF Seller 0.25 0.001


20


TDS on Trf. of certain Immo. properties
• Existing provisions have statutory requirement to
quote PAN in property transactions;
• But it was found by department that majority did
not quote PAN or quoted invalid PAN;
• No provision was existing of TDS on trf. of Immo.
Property except in the case of compulsory acqn.
• New section 194IA: every transferee at the time of
making payment or at the time of crediting of any
sum as consideration to resident transferor, for
transfer of immovable property(OTHER THAN AGRI
LAND), shall deduct tax @ 1% of such sum.
• No TDS where total amount of Cons’n < `50Lakhs
21

Taxation on Buyback of Unlisted shares
• Existing section 46A provides that consideration
received by a shareholder on buy back of shares is
not treated as dividend but taxed as capital gain.
• Unlisted companies are resorting to buy-back
instead of dividend to avoid DDT u/s.115O.
• New chapter XII-DA: provides that the
consideration paid by the Co. for purchase of
unlisted shares exceeding the sum received by the
Co. at the time of issue of such shares would be
treated as distributed income and would be taxed
@20%
22


Taxation on Buyback of Unlisted shares
• May Overrule the case reported inArmstrong
World Industries Mauritius Multiconsult Ltd.(210)
Taxman 303 (AAR) Held that the capital gains
arising out of the proposed buyback of shares is
not taxable in India in view of paragraph 4 of
Article 13 of the DTAC between India and Mauritius.

23


New section 43CA
• Existing: Section 50C did not cover stock in trade.
• New section 43CA: Where consideration for trf of asset
(other than Capital asset) being Land or L&B or both, is
less than stamp duty value, the value so adopted,
assessed, assessable shall be deemed to be full value of
consideration for the purpose of computing income
u/h Profits & Gains of Business or Profession.
• Where date of agmt for fixing value of consideration
and date of registration of transfer ARE NOT SAME,
stamp duty value as on date of agmt and not as on
date of registration will be considered.
• However, exception shall apply only in those cases
where amount of Consideration or a part thereof has
been received either in cash or on or before date of
agreement.
24

New section 43CA
• May Overrule the case reported in CIT vs. Kan
Constructions and Collonisers Ltd 2012 208
Taxman 478 (ALLAHABAD) held that section 50C
has no application as it was a case of transfer of
plots which was stock in trade. An income earned
from such transaction is liable to be taxed as
income from business activity.

25


Taxability of Property recd w/o cons’n
• Existing section 56(2)(vii)(b): Any immovable
property received by an INDIVIDUAL/HUF without
consideration, where stamp duty value > `50,ooo,
then such value is taxed in the hands of Ind/HUF.
• This provision did not cover a situation of in-
adequate consideration.
• New amendment proposed where any immovable
property received for a consideration < SDV by
`50,ooo, then such value as exceeds cons’n is
taxable in the hands of Ind/HUF
• Where date of Agmt. is different from date of
registration, SDV as on date of Agmt. to be taken.
• Applicable with effect from 1.4.2014. 26


TDS on Trf. of certain Immo. properties
• May Overrule the case reported CIT vs.
Khubsoorat Resorts P Ltd (2012) 211 Taxman 510
(DELHI) , Section 50C enabling the revenue to treat
the value declared by an assessee for payment of
stamp duty, ipso facto, cannot be a legitimate
ground for concluding that there was
undervaluation, in the acquisition of immovable
property.

27


Some other amendments
• Tax on distributed income by M-Funds increased
from 12.5% to 25% u/s.115R.
• New sections 14A & 14B in Wealth Tax Act on the
lines of sec 139C & 139D of IT Act for e-filing.
with effect from 1.6.2013.
• Disallowance of certain fee, charge etc
appropriated by SG from State Govt U/t. sec 40.
• Extension of time to a Provident Fund for approval
in Part A of Fourth Schedule of the act to retain
recognition. Applicable with effect from 1.4.2013 28


Amendment in Definition of Capital Asset
• Existing section 2(14) defines “capital asset”
• Sec 2 (14)(iii) provides that
a) agricultural land in any area within the
jurisdiction of a municipality or cantonment board
with a population of less than 10,000 or;
b) agricultural land in any area within such
distance not exceeding 8Kms from local limits of
municipality or cantonment board as notified.,
forms part of capital asset.
• Contd…
29


Amendment in Definition of Capital Asset
• Now it is proposed to amend item b) of sub clause
iii of clause 14 of section 2 so as to provide that:
• Land situated in any area within the
distance measured Aerially (Shortest Distance)

-Not being >2kms -Not being >6kms -Not being >8kms
from local limits ; from local limits ; from local limits ;
& & &
popultion>10K popultion >1L popultion
but <1Lakh but <10 Lakhs 10Lakhs & above

• Also proposed: define population as per last census
30
• Similar amendments in sec2(1A) of WT Act

Keyman Insurance Policy
• Existing section 10(10D) covers Keyman policy;
• It is noticed that policies taken as keyman are
being assigned to keyman before it’s maturity;
• The keyman pays the remaining premium and
claims the sum received under the policy as
exempt saying it is no longer keyman policy after
assignment;
• Thus exemption u/s.10(10D) is wrongly claimed.
• To plug this loophole, the proposed amendment
states that a keyman policy which has been
assigned during the term of policy with or without 31
consideration shall be treated as Keyaman.

Keyman Insurance Policy
• May Overrule the case Escorts Heart Institute & Research
Centre v. CIT (2013) 30 Taxman 4(DELHI) Held that, The insurance
company has itself clarified that on assignment, it does not
remain a keyman policy and gets converted into an ordinary
policy. It is not open to the Revenue to still allege that the policy
in question is keyman policy and when it matures, the advantage
drawn there from is taxable; no doubt, the parties here, viz., the
company as well as the individual taken huge benefit of these
provisions, but it cannot be treated as the case of tax evasion. It
is a case of arranging the affairs in such a manner as to avail the
state exemption as provided in Section 10(10D); law is clear.
Every assessee has right to plan its affairs in such a manner which
may result in payment of least tax possible, albeit, in conformity
with the provisions of Act. It is also permissible to the assessee to
take advantage of the gaping holes in the provisions of the Act.
The job of the Court is to simply look at the provisions of the Act
and t see whether these provisions allow the assessee to arrange
their affairs to ensure lesser payment of tax. If that is permissible,
no further scrutiny is required and this would not amount to tax 32
evasion.

Deduction u/s. 80GGB, 80GGC
• Both the above sections deal with deductions with
respect to contribution to political party or
electoral trust made by a company or any other
person.
• It is proposed to that no deduction will be allowed
is such sum is contributed by cash.

33


Clarification on “Tax Due”
• Existing section 179 states that a director of a
Private Ltd Co. is jointly and severally responsible
for irrecoverable tax dues of the company unless
he proves that such non-recovery cannot be
attributed to gross neglect, misfeasance or breach
of trust on his part;
• Courts have interpreted “tax due” used in section
179 to hold that it does not include penalty, interest
or any other sum.
• Now amendment proposes to include the same
with effect from 1.4.2014
34


Clarification on “Tax Due”
• May Overrule the case of Sanjay Ghai (2012) 26Taxman203
(DELHI) where the Court is of the opinion that the structure
and construct of the Act has consciously used different
words to create constructive liability on third parties, in the
case of default in payment of taxes by an assessee. The
treatment of the same subject matter by using different
terms - in some instances expansive and in others,
restrictive, mean that the Court has to adopt a circumspect
approach and limit itself to the words used in the given case
(in the present case, "tax due" under Section 179) and not
"travel outside them on a voyage of discovery“ (Magor &
St. Mellons RDC v. Newport Corporation 1951 (2) All ER
839). Therefore, the petitioner cannot be made liable for
anything more than the tax (defined under Section 2 (43)).
The respondent is consequently directed to determine the
liability of the Petitioner, in the light of the finding. 35


Deduction u/s.80JJAA
• Existing section 80JJAA provides deduction of 30%
of additional wages subject to certain conditions;
• It was intended for blue collared workers, but
found to be used for other section of workers also.
• Therefore now proposed to amend so as to
provide that deduction shall be available to “Indian
company deriving profits from manufacture of
goods in factory”
• The deduction is equal to 30% of additional wages
paid to new regular workmen for 3 AYs
• Applicable with effect from 1.4.2014 36


Deduction u/s.80JJAA
• May overrule the case of M/s Texas Instruments
(India) The Deputy Pvt. Ltd., 66/3, Bagmane Tech
Commissioner of Income Park, C V Raman Nagar,
vs Tax (LTU), Bangalore

37


Application of Seized Assets u/s.132B
• Existing provisions state that seized assets may be
adjusted against existing liability towards IT, WT,
Expenditure tax, Gift Tax & Interest Tax Act;
• Various courts have taken a view that the term
“existing liability” includes advance tax liability of
the assessee which is not in consonance with the
intention of the legislature.
• The legislative intent behind the this provision is to ensure the recovery of
O/s tax/interest/penalty and also to provide for recovery of
tax/interest/penalty, which may arise subsequent to the assessment
pursuant to search.
• Accordingly, it is proposed to amend the aforesaid
section to clarify that “existing liability” does not
include Advance Tax liability. 38


Application of Seized Assets u/s.132B
• May Overrule an Bombay High court ruling in the
case of Shri Jyotindra B. Mody, Whether the ITAT
was justified in holding that the seized cash
amounting to Rs. 18,00,000/and the amount of
Rs.1.98 Crores deposited by the Assessee on 31st
January, 2007 could be adjusted against the
Advance Tax liability while computing the interest
under sections 234B and 234C of the Income Tax
Act, 1961? Held, yes

39


Return of income w/o SA Tax=Invalid
• Existing 139(9) provides that AO may intimate
defect to assessee.
• It is now proposed to amend the explanation to
the section so to provide that the return of income
shall be regarded as defective unless the tax
together with interest if any , payable with
accordance with sec 140A has been paid on or
before date of furnishing of the return.

40


Tax Residency Certificate
• It was held by the hon’ble SC in Union of India vs
Azadi Bachao Andolan(2003)263 ITR706 that CBDT
circular no.789 dt.13.4.2000 (stating Certificate of
Residence will constitute sufficient evidence for
accepting the status as well as beneficial
ownership for applying DTAA agreement) is valid.
• It is proposed to amend Sec90 & Sec 90A in order
to provide that submission of tax residency
certificate is a necessary but not a sufficient
condition for claiming benefits of agreements
referred to in sections 90 and 90A.
• These amendments will take effect retrospectively
from 1.4.2013 and will accordingly apply to AY 2013- 41

14 and subsequent assessment years.

Direction of Special Audit u/s.142(2A)
• Existing section provides that the AO having
regard to the nature, complexity of accounts and in
the interest of revenue, with approval of CC or
Commissioner may direct the assessee to get his
accounts accounted by an accountant and furnish
report.
• Nature & Complexity have been interpreted in a
restrictive manner by various courts.
• Hence proposed to amend sub-section to provide
that if at any stage of proceedings before him…
• Contd…
42


• AO having regard to:
• nature, complexity of accounts;
• Volume of accounts;
• Doubts about correctness of accounts;
• Multiplicity of transactions;
• Specialised nature of business;
• and in the interest of revenue,

is of the opinion that it is necessary
to do so, he may with the Prior approval of CC or
Commissioner may direct the assessee to get his
accounts accounted by an accountant and furnish
report.


• May Overrule the case of Delhi Development
Authority (DELHI High court) where it was held,
Irregularities can be examined and verified by the
Assessing Officer and for this purpose, special
audit is not required.

44


Exclusion in period of Limitation
• Existing provisions of sec 153 provide time limit for
assmt or re-assmt by the ITO.
• Explanation to section provides exclusions of certain
periods.
• Under section 153(1)(iii), period starting on the date on
which AO directs special audit and ending with the last
date for submission of report is excluded.
• However, no exclusion in case direction is set aside by
a court.
• It is proposed to amend explanation to clause (iii) to
change the period ending to the last date for
submission of report or where such direction is
challenged before a court, ending with the date of
such order of setting aside received by commissioner
45

• Contd…

Exclusion in period of Limitation
• Similarly under section 153(1)(vii), period starting
on the date on which AO makes a reference for
exchange of information u/s.90 & 90A and ending
date of receipt of such reference is excluded.
• Sometimes, more than one reference is made.
• Hence, It is proposed to amend above clause so a
as to provide that the period commencing from the
date on which a reference or first of the references
is made and ending with the date on which the info
requested is last received by the Commissioner or a
period of one year, whichever is less, shall be
exluded. Similar amendments proposed to sec153B


Penalty u/s. 271FA for non-filing AIR
• Existing provision provides that if a person who is
required to furnish AIR as required under sub section(1)
of sec 285BA, fails to furnish such return with the time
prescribed under that sub-section, the Income Tax
Authority may direct that such person shall pay, by way
of penalty, a sum of `100 for every day during which
the failure continues;
• It is proposed to amend the aforesaid sub-section so as
to provide that if a person fails to furnish such return
with the time prescribed under sub-section (2), the
Income Tax Authority may direct that such person shall
pay, by way of penalty, a sum of `100 for every day
during which the failure continues;
• Contd… 47


Penalty u/s. 271FA for non-filing AIR
• It is further proposed to provide that where such
person fails to furnish the return under sub section
(5) of section 285BA, he shall pay by way of penalty
a sum of `500 for every day during which the
failure continues, beginning with the day
immediately following the day on which the time
specified in such notice for furnishing the return
expires.

48


Bad debts in case of Banks
• Existing section 36(1)(viia) provides a deduction of bad debts
subject to limits;
• 7.5% of GTI of co-operative Banks;
• 10% of aggregate average advances made by rural branches
• This limit is 5% of GTI(before deduction under this clause) under
sub clause (b) and (c) for banks incorporated outside India &
certain Fin. Inst’ns.
• Clause (vii) provides for deduction of B/d actually w/off as
irrecoverable in books.
• The proviso for this clause provides that for an assessee, to which
clause (viia) applies, deduction under clause (vii) shall be limited
to the amount by which the B/d w/off exceeds the cr.bal in
Provision for BDD made clause (viia).
• The provisions of clause (vii) are subject to provision of section
36(2)(v) which provides that the assesee to which 36(1)(viia)
applies, should debit the amount of B/d w/off to the Provision to
BDD account u/s. 36(1)(viia).
• Therefore banks or FI are entitled to claim deduction for B/d 49
actually w/off under clause (vii) only to the extent it is in excess
of the cr. Bal in the Provision for BDD account made clause (viia).

• However, certain judicial pronouncements have
created doubts about the scope and applicability of
proviso to section 36(1)(vii) and held that the
proviso applies only to provision for BDD made for
rural advances.
• In order to clarify the scope and applicability of
provision of clause (vii),(viia) of subsection (1) and
subection (2), it is proposed to insert an
explanation in clause (vii) of sec 36(1) stating that
for the purposes of of proviso to sec 36(1)(vii) &
36(2)(v), only one account is made for Provision for
BDD u/s. 36(1)(viia) & such account relates to all
types of advances, whether rural or other adv. 50


• Therefore, for an assessee to which clause(viia)
applies, the amount of deduction for B/d actually
w/off under clause (vii) shall be limited to the
amount by which such B/d exceeds the cr.bal in the
Provision for BDD account made under clause(viia)
WITHOUT ANY DISTINCTION between rural
advances and other advances.

51


• May overrule the case Catholic Syrian Bank Ltd (343)
ITR 270 (SC) where hon’ble SC had considered whether
a bank was eligible to claim a deduction for bad debts
u/s 36(1)(vii) in respect of its (rural & urban) advances
and also claim a provision for bad and doubtful debts
u/s 36(1)(viia) in respect of its rural advances in view of
the Proviso to s. 36(1)(vii) which provides that only the
excess over the credit balance in the provision for bad
and doubtful debts account made u/s 36(1)(viia) can be
claimed and held that bad debts written off in respect
of urban debts were eligible for deduction u/s 36(1)(vii)
without any limits specified in proviso thereto, as the
same were not covered by the provisions of Sec 52

36(1)(viia).

Amnesty Scheme for Service Tax
• To increase compliance and encourage assessee to voluntarily
pay service tax and file returns on timely basis, the Government
has come up with Voluntary Compliance Encouragement
Scheme, 2013 with following key features:
i. The scheme can be availed of by non-filers or stop-filers or
persons who have not made a truthful declaration in their return.
However it will not be applicable to persons against whom any
inquiry or investigation is pending by the issue of search warrant or
summon or by way of audit;

ii. The defaulter will be required to make a truthful declaration
of all his pending tax dues (from 01.10.2007 to 31.12.2012) and pay at
least half of that before 31.12.2013; remaining half to be paid by:
(a) 30.06.2014 without interest; or
(b) By 31.12.2014 with interest from 01.07.2014 onwards;
Contd…
53


Amnesty Scheme for Service Tax
iii. On compliance with all the requirements the
person will have immunity from interest (as
specified), penalties and other proceedings;

Comments: This is indeed an appreciable step taken
by FM in a country where out of 17 Lakh registered
assesses only 7 Lakh file returns regularly (Budget
Speech). This will encourage genuine assessees to
come forward admit their tax dues without payment
of any interest and penalty. TRU letter has clarified
that tax-payers will need to settle their dues for the
period after 31.12.2012 under the present law. 54


From the papers…

55


A message received on whatsapp…

56


From the papers…

57


From the papers…
Opinion of the former member of CBEC…

58


From the papers…
Summary bullets of an article on Service Tax changes

59


From the papers…
What better way to end than with the most discussed
statistic of the Budget 2013only 42,800 persons…!

60


CA. Kalyan Chakravarthy Vennety
B.COM, ACA, DISA(ICAI), CISA
(Proud Member of Jalna CPE Study Chapter of WIRC of ICAI)

Partner
V R Jogeswara Rao & Co.,
Chartered Accountants, Jalna 61
Phone: 9970088669 email: ca.vkalyanc@gmail.com

Kalyan finance act 2013 14

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Kalyan finance act 2013 14