Range 7 (Income Tax) jurisdiction is modified wef 01/05/2004

The jurisdiction of Income Tax Range 7, Bangalore has been modified as per information posted on the website of the Income Tax department, Bangalore

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PAN Forms Anywhere, Anytime

Application forms (Form 49A) for PAN and forms for ‘Request for new PAN card or /and changes or correction in PAN data’ can now be downloaded from www.incometaxindia.gov.in or tin.nsdl.com or from www.utiisl.co.in. These forms will continue to be available at IT PAN Service Centers and TIN FCs across the country. Photocopies of these forms will also be accepted at both IT PAN Service Centres and TIN FCs. Applicants can also obtain forms from local printers or stationers or from any other source. Recommended size of forms is A4 on 70 gsm copier paper. Addresses of both IT PAN Service Centres and TIN FCs are available at the above websites.

Source: www.incometaxindia.gov.in

PAN to be issued by NSDL also

In order to further enhance PAN services the Income Tax Department has associated National Securities Depository Limited (NSDL) in addition to UTIISL. Now TIN Facilitation Centers (TIN FCs), established by NSDL in 145 cities across the country, shall also provide PAN related services in the same manner and to the extent these have been available at present at IT PAN Service Centers. Applicants may approach either IT PAN Service Centers or TIN FCs for PAN related services. Very soon, the Income Tax department will also offer facility for web-filing of PAN applications.

Source: www.incometaxindia.gov.in

Remittance for maintenance of close relatives abroad - Requests of Indian Nationals on deputation to India from Overseas Companies

Circular No. 86, Dated 17-4-2004 issued by RBI under FEMA on the above subject is attached. The Circular permits Authorised Dealers to allow remittance of net salary (after deductions of taxes, contribution to provident fund and other deductions) of a citizen of India, who is on deputation to the office or branch or subsidiary or joint venture in India of such overseas company, for the maintenance of close relatives residing abroad

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Rates of Interest on loans charged by SBI - for reckoning perquisite value of interest free loans given by employers

The rates of interest charged by State Bank of India for the various loans as on 1.4.2003 and 1.4.2004 which may be considered for the purpose of valuation of perquisite in case of interest free or concessional interest loans given by employers is given in the attached Table (Source - The Chartered Accountant, May 2004).

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TDS on Deep Discount Bonds

CBDT has issued a Circular on TDS on Deep Discount Bonds
CIRCULAR NO 4/2004, Dated : May 13, 2004

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Bank Audit Empanelment Forms available on ICAI website

The Bank Audit Empanelment Form for 2004-05 (both the On-line version as well as the Downloadable version), and the comprehensive instructions for filling the form have been hosted on ICAI’s website and are now available at www.icaibefs.org.

ICAI revised Notification for minimum audit fee for audit firms having more than 4 partners

The Council of the Institute of Chartered Accountants of India has issued Notification dated 12th May 2004 revising the minimum audit fee acceptable by firms consisting of more than 4 partners having at least one partner holding a certificate of practice for five years or more.

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Some of the features of the proposed OLTAS Scheme are given in the attached announcement by NSDL. 3 new single page challans have also been specified.
ITNS 280 - for Income Tax, Corporation Tax and Wealth Tax
ITNS 281 - for Taxes deducted at Source
ITNS 282 - for Other Direct Taxes

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The Income Tax Department has issued some clarifications regarding filing of e TDS returns of Salaries in Form 24, when TDS has been deducted by more than one employer for the same employee.

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The Employees’ State Insurance (Central) (Second Amendment) Rules, 2003 have been notified whereby the ceiling of monthly salary for applicability of ESI has been enhanced from Rs.6,500 to Rs.7,500. The new limit becomes applicable from 1st April ’04. Notification No. G.S.R. 172(E), dated 4-3-2004, Ministry of Labour.

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The Companies (Acceptance of Deposits) Amendment Rules, 2003 have been notified by the DCA, vide G.S.R No. 189(E) dated 12.03.2004, amending Rule 2 (b) (ix), whereby any amount received from a person who, at the time of the receipt of the amount, was a director of the company, is not to be considered as a deposit. Prior to this amendment, vide Notification GSR 689 (E) dated 25th September, 2001, this exemption was available only for directors of private companies. This amendment restores the position prevailing prior to 25th September 2001.

For details of the notification refer www.dca.nic.in under Notifications

G.S.R 212 (E) dated 24th March 2004 has been issued by DCA whereby particulars of employees of companies engaged in “Information Technology” sector, posted and working in a country outside India, not being directors or their relatives, drawing more than rupees twenty four lakh per financial year or rupees two lakh per month, as the case may be, need not be included in the Board’s report under Section 217(2A) of the Companies Act, but such particulars shall be furnished to the Registrar of Companies. The term “Information Technology “ sector has been defined in the notification.

For details of the notification refer www.dca.nic.in under Notifications

The ICAI has released the final Statement on CARO,2003. The publication priced at Rs 250/- per copy is to be made available at the sales counters at the Regional Offices and branches thereof of the Institute.

The Statement contains detailed clause-by-clause guidance on all the reporting requirements under the Companies (Auditor's Report) Order 2003. In addition, the Statement, at appropriate places also contains illustrative wordings of the report under a particular clause of the Order. The Statements also deals extensively with other significant aspects of the Order.

The ICAI has passed a resolution under Regulation 190A specifying the permitted areas in which a member entitled to perform attest function may be engaged in.

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From 1.6.2004 the Income-tax Department will introduce a new system for payment of taxes called Online Tax accounting System (OLTAS). This system will not only simplify the procedure for payment at the collecting branches of designated banks it will be a breakthrough in accounting of direct tax payments. All collecting branches of various banks have been networked and integrated with Tax Information Network (TIN) and Income Tax Department. The taxpayer friendly features of OLTAS include a single copy challan-cum-acknowledgement form instead of the present four-copy challan. The new challan will have fewer fields that will require to be filled up. Every challan will have a unique identification number called Challan Identification Number (CIN). With the help of CIN and PAN every payment will be uniquely identified resulting in correct credit for payments by taxpayers and online transmission of details of tax payments to the Income Tax department will result in faster credit. Further, it will not be necessary to enclose a copy of challan along with the return of income.

Source: www.incometaxindia.nic.in (website of the Income Tax department)

Deposits by NRIs with persons other than Authorised Dealers/Authorised Banks out of inward remittances from overseas or by debit to NRE/FCNR (B) Accounts shall henceforth not be permissible. Existing deposits may however continue. Deposits out of NRO accounts of the non-residents may also be accepted by entities other than Authorised dealers and banks provided they were not credited to the NRO account from inward remittances after the relevant date.

NBFC’s and Companies will no longer be able to accept fresh deposits out of foreign inward remittances.
RBI [A.P.(DIR Series) Circular No.89, dated April 24, 2004]

No TDS on RBI 8% Taxable Bonds

The Reserve Bank of India has, apropos a notification from the Government of India, asked agency banks not to deduct tax at source on either the interest or the maturity proceeds of the 8% Savings (Taxable) Bonds, 2003.

It may be recalled that as per the original scheme for the 8% Savings (Taxable) Bonds, 2003, agency banks were required to deduct tax at source on the interest payable or due and on maturity proceeds of these bonds. The Government of India, in January this year, withdrew this requirement. As such, banks will no longer be required to deduct tax at source on either the interest or the maturity proceeds of the 8% Savings (Taxable) Bonds, 2003. RBI Press Release : 2003-2004/1201

Refer www.rbi.org.in

ICAI has announced revised norms for empanelment of firms for bank branch audits. The same is posted on the Institute’s website. Please refer www.icai.org under Announcements – Members.

Members can view the bank to which they have been allotted for audit for the year 2003-04 at the ICAI website at www.icai.org. The actual Branches allotted will be announced separately by the individual banks.

For details refer www.cbec.gov.in

CBEC has issued Circular No. regarding single registration for Service providers rendering multiple services. The Circular also says that Service Tax registration applications must be accepted by the Department without further inquiry if all the particulars specified in the application have been provided by the applicant. Circular No.72 dated 2.1.04

Refer http://www.servicetax.gov.in/servicetax/st-cirmainpg.htm

Electronic filing of Service Tax returns has been extended to all Services. Assessees have to apply for permission to do so. Procedure is set out in the Circluar No. 71 dated 2.1.04 of the CBEC

Refer http://www.servicetax.gov.in/servicetax/st-cirmainpg.htm

The CBDT has issued Circular F. No. 500/67/2003-FTD dated January 2, 2004 giving the guidelines for taxation of BPO units set up in India by non-residents or foreign companies. The circular states that the BPO unit will be considered as a PE of the non-resident or foreign company depending on whether the activities of the BPO or only “incidental” or “core revenue generating” activities with respect to the parent company. Once the BPO unit is considered a PE, some portion of the profits of the parent company will be attributed to the PE and taxed in India. Refer detailed circular attached

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The Department of Company Affairs has extended the provisions of the Simplified Exit Scheme by a further period of 3 months from 1.1.2004. For Text of Circular refer www.dca.nic.in

Bills to amend Chartered Accountants Act, Cost & Works Accountants Act and Co, Secretaries Act, introduced.

The Government has introduced 3 bills in the Rajya Sabha to amend the Chartered Accountants Act, Cost & Works Accountants Act and Co, Secretaries Act. The text of these bills are available at www.dca.nic.in.

Service Tax on Software maintenance exempted

Circular No. 70/19/2003-ST dated Dec 17, 2003 clarifying that repair and maintenance of computer software are exempted from Service Tax has been issued. Refer to Circulars Menu under www.cbec.gov.in

The Karnataka Tax on Lotteries Ordinance, 2003, has been promulgated to provide for the levy of tax on lotteries. The same has been gazetted and comes into effect from 6th December 2003.
For text of Ordinance and related notifications refer www.kar.nic.in/ctax

The Institute of Chartered Accountants' of India has put up the Draft of its proposed Statement on Companies (Auditor's Report) Order, 2003 on its website and has invited comments from members and others. For details pl. refer
http://www.icai.org/announ/draft_statement.html

The ICAI has decided, as a one-time exception, to extend the last date of 31.12.2003 upto 31st March 2004 to enable the members to accumulate the required number of CPE credit (i.e six hours) relating to the calendar year 2003.
Refer http://www.icai.org/announ/

DCA has notified the Unlisted Companies (Issue of Sweat Equity Shares) Rules, 2003 under section 79A of the Companies Act, 1956.
Notification No. G.S.R.923(E).
Refer www.dca.in

Notification No.21/2003 dated November 20, 2003 has been issued exempting taxable service provided to any person in respect of which payment is received in India in convertible foreign currency.

For text of notification refer: http://www.servicetax.gov.in/servicetax/servtax_notfns_idx.htm

Residential Status of Indian Students Abroad Revised

The Reserve Bank of India has revised the residential status of Indian students studying abroad to treat them henceforth as non-residents from the FEMA angle. As non-residents, students will, in any case, be eligible for receiving remittances from India, as follows : (i) up to USD 100,000 from close relatives from India on self-declaration towards maintenance, which could include remittances towards their studies also, (ii) up to USD 1 million out of sale proceeds/balances in their account maintained with an AD in India, (iii) all other facilities available for NRIs under FEMA, (iv) educational and other loans which were availed (as residents in India) by students would be allowed to continue.
RBI Press Release : 2003-2004/710 dated December 8,2003.

Refer www.rbi.org.in

FAQs on OCBs

Consequent to the derecognition of Overseas Corporate Bodies (OCBs) as an investor class, the Reserve Bank of India has been receiving several queries from the public. OCBs were derecognised as an investor class with effect from September 16, 2003. Queries have been relating to seeking clarifications on various operational issues associated with the transitional arrangements for OCBs. With a view to clarifying the stance on these issues, the Reserve Bank has prepared frequently asked questions (FAQs). The FAQs are available on the Reserve Bank’s website at (www.faqs.rbi.org.in). Any query not answered in these FAQs may be sent to the Reserve Bank at mrajeshwarrao@rbi.org.in
RBI Press Release:2003-2004/711dated December 8,2003.

Refer www.rbi.org.in

Last date for filing of TDS returns on Computer media extended to 31st January, 2004

Relaxation in respect of quoting of PAN Nos for returns filed upto 30th November 2003

Companies (Disqualification of Directors under section 274(1)(g) of the Companies Act, 1956) Rules, 2003.

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Note: The link given above is a Microsoft Word files. To open them you need to have Microsoft word compliant program installed in your system

DCA issues clarification on CARO, 2003

ICAI Announcement on revised CPE guidelines

ICAI Announcement on Applicability of Accounting Standards for SMEs

The Council of the ICAI, at its 236th meeting, held on September 16-18, 2003, considered the matter relating to applicability of Accounting Standards to Small and Medium Sized Enterprises (SMEs). The Council has formulated a scheme for applicability of accounting standards to SMEs which will come into effect in respect of accounting periods commencing on or after 1-4-2004. For the purpose of applicability of Accounting Standards, enterprises are classified into three categories, viz., Level I, Level II and Level III. Level II and Level III enterprises are considered as SMEs. The applicability of Accounting Standards to the various levels are given in the Scheme announced by the Institute and published on its website www.icai.org under Announcements – Members.

Companies (Appointment and Qualifications of Secretary) Rules, 1988, has been amended with effect from 14th October 2003, whereby companies with paid-up capital between Rs 2 crore and Rs 5 crore having their registered office, corporate office and works at places with population less than One lakh can appoint persons possessing the qualification specified in clauses (i) to(x) of sub rule 4 of the said Rules as whole-time secretaries. The qualifications mentioned includes Chartered Accountants. Refer Notification no. GSR No 804(E) 14.10.2003 at www.dca.nic.in

Date For Filing Of Returns Extended To 30 November 2003

The Central Board Of Direct Taxes has allowed one more month for filing of returns of income to Corporates and also those assessees whose accounts are required to be audited under Section 44AB of the IT Act, 1961. These assessees have been allowed time upto 30 November 2003 to file returns of income.

Source:www.incometaxindia.gov.in

Kara Samadhana Scheme under CST, KST and KTEG Acts

The Commercial Tax Department has introduced a Kara Samadhana Scheme for concessions in disputed tax demands including interest and penalties thereon. The details of the Scheme are available at www.dca.in
Readers may view the same and post their own responses at www.dca.nic.in/whitepaper_main.htm

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Recent RBI Press Releases

1. Current facilities to NRI investors – details of the various permitted investments for NRI’s.
2. Derecognition of OCBs as an eligible “class of investor” under various routes/schemes of the Foreign Exchange regulations.
3. Ceiling on Interest Rates on NRE deposits with NBFCs
4. Foreign exchange borrowing from close relatives abroad – further
   liberalization.

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Additional Clarifications on Simplified Exit Scheme

The DCA has issued additional clarifications on the Simplified Exit Scheme vide General Circular no 27/2003. This can be viewed under Circulars at the DCA website www.dca.in

White Paper on MultiNational Accounting Firms and ICAI’s response.

The DCA has put up the White paper on Multi National Accounting Firms and ICAI’s response to the same. Readers may view the same at

Simplified Central Excise Return Forms

Central Excise Department has prescribed revised, Unified, single and simplified one-page return forms for monthly and quarterly returns for manufacturers effective 1st October,2003 – Notification Nos. 71,72 and 73/2003. The notifications can be viewed at www.cbec.gov.in and the forms at http://www.cbec.gov.in/cae/new_cex-format.htm

SUPREME COURT JUDGMENT DATED 7-10-2003 IN CASE OF MAURITIUS BASED FIIs

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. OF 2003

(Arising out of S.L.P.(C) Nos.20192-20193 of 2002)
Union of India and Anr. …Appellants Vs. Azadi Bachao Andolan and Anr. …Respondents With Civil Appeal Nos.________ ____ of 2003 (@ S.L..P.(C) Nos. 22521-22522 of 2002)

J U D G M E N T

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Taxation Laws (Amendment) Ordinance, 2003 has been promulgated. This ordinance has revised the rates of interest payable to assessees and payable by assessees under the various provisions of The Income Tax Act, Wealth Tax Act and the Expenditure Tax Act. The rates for Tax Collection at Source under section 206C have also been reduced. Refer the text of the Ordinance for full details.

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Karnataka Entry Tax Act . Notification No.FD 34 CET 2003 dated 26.8.2003 has been issued inserting new Rule 9H and Form 43 in the Karnataka Entry of Good Act, 1979, regarding application forclarifications and advance rulings under Section 12C.
Refer www.kar.nic.in/ctax/kteg.doc

Service Tax exemption for services rendered in relation to maintenance or repair of computers, computer systems or computer peripherals. Notification no.20/2003 dated 21.8.03.
Refer http://www.servicetax.gov.in/servicetax/notifications/notfns-2k3/st_notfns_idx2k3.htm

Karnataka Sales Tax. Notification No. FD 183 CSL 2003 dated 8.8.2003 has been notified revising the Forms 3 and 4 for filing of Monthly and Annual Returns of Sales Tax and Entry Tax.
Refer www.kar.nic.in/ctax/ksta.doc

Income Tax 14^th Amendment Rules has been notified vide Notfn. No. S.O.886(E) dated 1.8.03, prescribing new Form 15H for declaration by Senior Citizens claiming certain receipts without deduction of tax.
Referhttp://www.incometaxindia.gov.in/Notifications/Incometaxact/2003.asp for the text of the Notification and the Form.

Income Tax 11th, 12th and 13th Amendment Rules have been notifiedvide Notfn.Nos. S.O 877(E), 878(E) and 879(E) dated 31.7.2003 . Vide these Notifications the Return forms for Tax Deducted at Source and Tax Collected at Source have been revised.

Only 3 return forms have been prescribed for TDS, viz. Form 24 for Salaries, Form 26 for all other payments to Resident payees and Form 27 for TDS on payments to Non residents. For TCS the prescribed Form is Form 27E.Existing Forms 25,26A,26B,26BB,26C.26D,26F,26G,26H,26J & 26K have been omitted.
Referhttp://www.incometaxindia.gov.in/Notifications/Incometaxact/2003.asp for the text of the Notifications and return forms.

ICAI has announced a new procedure for empanelment of Member firms for Statutory audits of Public Sector banks, RRBs and other authorities. According to this, from the year 2004-05 onwards, applications for empanelment will be invited on-line at the Institutes website and the requirement for annexing the financial statements and Income Tax Returns of the applicant and the IT Returns of the partner/proprietor would be done away with. 10% of the applicants, selected randomly by the computer, only shall have to submit their financial statements for detailed review.
Source: The Chartered Accountant, August 2003 issue, Page 167.

eFiling of Income Tax Returns

The CBDT has announced that the Income Tax Department will inaugurate electronic filing of returns from 8 August 2003 to allow salaried taxpayers to file their returns without having to come to the department. E-filing of returns will allow those who only have salary income to approach a designated bank with their tax challans or Form 16. For details refer www.incometaxindia.gov.in

Notification No. S.O.844 E dated 24th July, 2003 has been issued by the CBDT fixing the Cost Inflation Index for FY 2003-04 as 463. www.incometaxindia.gov.in

Naresh Chandra II released - Report On Pvt Cos and Partnerships

The Naresh Chandra Committee has submitted its Second Report on Report of the Committee on Regulation of Private Companies and Partnership. For full text of report see www.dca.nic.in. The Department has invited suggestions on the recommendations of the Naresh Chandra Committee. All suggestions must, however, reach the Department (by post or by e-mail at: dirv.dca@sb.nic.in ) latest by midnight of 12th September, 2003.

The Karnataka Commercial Taxes Department has notified draft amendment to Sales Tax Rules proposing to amend Forms 3 and 4. The Dept has called for opinions / objections from the general public. Notification No.FD 183 CSL dated 2.7.2003. For text of the notification and the proposed new forms, refer www.kar.nic.in/ctax.

RBI has further relaxed the limits upto which foreign exchange can be remitted by authorized dealers for certain specified purposes, based on mere self declarations by the applicants without insisting on supporting documents. In respect of remittances for employment abroad, emigration and maintenace of close relatives abroad, the limit has been raised from $5000 to $ 100,000, for education from $30,000 to $100,000 and for Medical treatment from $50,000 to $ 100,000.

The limit for remittance for Consultancy services has also been raised from $100,000 to $1 Million, but subject to supporting documents to be given to the authorized dealer.

The above details are contained in Circular No / 2003 dated 17-7-2003. Refer www.rbi.org.in. Members are advised to read the amendment Circular and the original Circulars for an understanding of the other conditions.

DCA may review audit guidelines (CARO)

The department of company affairs is likely to review some of the provisions in the Companies(Auditors Report) rules that have become applicable from July 1st.

Rajiv Mehrishi, joint secretary at DCA, informed an industry gathering that areas like reporting preferential allotment of shares to specified parties and use of long-term loans for short term investment by companies were beyond the realm of auditor’s report and needed to be reviewed. The other rules that, according to the official needed review included the issue of rate of interest and whether the conditions of loans taken by the company were prejudicial to the interest of the company and the pricing of the specified transactions, etc.

Source : Economic Times, July20th,2003

Tax Problems ? Let FM know

As part of the ongoing exercise to further simplify income tax procedures the Finance Ministry has decided to conduct a survey to find out the problems facing the tax payers. The responses can be e-mailed to the Finance Ministry before July 31, a release issued by the Ministry has said. The e-mail can be sent to the Ministry’s website opinion@finance.nic.in. The respondents have to state their age, occupation, annual salary, problems faced and preferred method to file tax returns.

Source: Deccan Herald July 19,2003

New Procedure for PAN Application

The Income Tax Department has introduced a new procedure for allotment of PAN and issue of PAN Cards. The application has now to be submitted only at IT PAN Service centers which are being handled by the UTI Investor Services Ltd. To whom the Dept has outsourced the entire activity.

The application has to be accompanied by proof of age and proof of address.

The details of the procedure is published on the website of the Dept. at www.incometaxindia.gov.in/pan/overview.asp .

The list of IT PAN Service Centres in Karnataka are given in the IT Dept. Bangalore’s website at www.incometaxbangalore.org

IT Department Bangalore has set up a Special Helpline Counter for PAN enquiries in respect of applications filed under the old procedure upto June 30, 2003. For details refer – www.incometaxbangalore.org

Last Date for OnLine IEC Trade Return filling has been extended upto 31st October 2003

Companies (Auditor's Report) Order, 2003 - CARO - Introduced w.e.f. July 1 2003

DCA has notified the Companies (Auditor's Report) Order, 2003  which is in supersession of the earlier Manufacturing And Other Companies(Auditor's Report) Order, 1988

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Service Tax – New services covered w.e.f. July 1, 2003

Provisions were made in the Finance Act, 2003 to levy service tax, from a date to be notified later on, on certain new services. In this regard, vide notification No. 7/2003-Service Tax, date 20th June 2003, the government has appointed 1^st July 2003, as the date from which the levy of Service tax on the above services would come into effect.

Certain important definitions and exemptions have also been listed out in the notifications nos. 8/2003 to 14/2003 in respect of the above services. These have been explained in Circular No. 59/8/2003 dated 20th June, 2003

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