1st FORTNIGHT
OCTOBER
2013
VAVNCO focus For Private Circulation Only
Learn > Equip > Enable > Shine > Prosper
A Fortnightly Newsletter; A humble attempt to bring about Commerce Insight, Financial Awareness, And Updation on Economic Advancements
Contents:
Page No.
Statutory Due Dates for October 2013
- 1
DTAA – Double Taxation Avoidance Agreements
- 2
Tax Accounting Standard – Construction Contracts - 3 Post office Savings Scheme
- 6
Who is He? – Mr. Raghuram Rajan
- 10
All efforts are made to keep the content of this newsletter correct and up-to-date. But, this newsletter does not make any claim regarding the information provided on its pages as correct and up-to-date. The contents of this newsletter cannot be treated or interpreted as a statement of law. In case, any loss or damage is caused to any person due to his/her treating or interpreting the contents of this newsletter or any part thereof as correct, complete and up-to-date statement of law out of ignorance or otherwise, this newsletter/author will not be liable in any manner whatsoever for such loss or damage.
Statutory Due Dates – October 2013 DATE
COMPLAINCE REQUIRED (Dates circled are Due Dates)
FORM NO. / CHALLAN NO.
OCTOBER 2013 SERVICE TAX: Payment of Service Tax for Sep 2013 by Corporates 5
GAR 7 SERVICE TAX: Payment of Service Tax for Quarter ending Sep 2013 by Non-Corporates INCOME TAX: Deposit of TDS/TCS collected during Sep 2013
ITNS 281
SERVICE TAX: E-Payment of Service Tax for Sep 2013 by Corporates 7
SERVICE TAX: E-Payment of Service Tax for Quarter ending Sep 2013 by Non-Corporates NOTE: E-Payment mandatory if ST/ED Paid>=10 Lakhs in FY 2012-13 INCOME TAX: Quarterly Statement of TDS from Interest, Dividend or any other sum payable to Non-Resident for Quarter ending Sep 2013 INCOME TAX: Quarterly Statement of TDS if the deductor is a person other than Office of the Government for Quarter ending Sep 2013 INCOME TAX: Quarterly Statement of TCS fro Quarter ending Sep 2013
27 Q
24Q/26Q 27EQ
15 EPF: Payment of EPF contribution for Sep 2013 EPF: Consolidated Statements of Dues and Remittances under EPF and EDLI for Sep 2013
12A
EPF: Monthly returns of Employees who Joined/Left the Organisation in Sep 2013
5/10
PT: Payment of Professional tax for the Half Year ending April to Sep 2013 20 CST/VAT: Monthly returns and Payment of CST and VAT collected during Sep 2013 SERVICE TAX: Half Yearly Return for the period ending 30th Sep 2013 25 SERVICE TAX: Half Yearly Returns for Memorandum of Provisional Deposits – Provisional Assessment cases INCOME TAX: Issues of TDS Certificate for TDS made for Quarter ending Sep 2013 except on Salaries COMPANIES ACT: Filing Compliance Certificate for Companies whose paid up Capital >=10 Lakhs 30
1 VAT 100, 110, 120, 126 ST 3 ST 3A 16A 66
COMPANIES ACT: Filing of books – Balance sheet and Profit and Loss Account for the Financial Year 2012-2013 (AGM conducted on 30th Sep 2013)
23AC & 23ACA
INCOME TAX: Quarterly Return of Non-deduction of Tax at source U/S 206A by Banking Company for Quarter ending Sep 2013
26QAA
INCOME TAX: Quarterly Statement of TDS if the deductor is an Office of Government for Quarter ending Sep 2013
24Q/26Q/27Q
INCOME TAX: Forwarding of Copies of declaration in Form 60/61 (not being received at the time of opening a Bank Account) received between 1st April and 30th Sep to DIT and CIT
COPY of 60/61
31
SERVICE TAX: E-filing of Half Yearly Statement by the Input service distributor under CENVAT Credit Rules
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ST 3
DTAA – Double Taxation Avoidance Agreements The Double Tax Avoidance Agreement (DTAA) are bilateral agreements entered into between two countries. The primary objective is to avoid double taxation of a given income in two countries. India has a comprehensive Double Taxation Avoidance Agreements (DTAA) with more than 85 countries. This means that there are agreed rates of tax and jurisdiction on specified types of income arising in a country to a tax resident of another country. Under the Income Tax Act 1961, there are two provisions, Section 90 and Section 91, which provide specific relief to taxpayers to save them from double taxation. Section 90 is for taxpayers who have paid the tax to a country with which India has signed DTAA, while Section 91 provides relief to tax payers who have paid tax to a country with which India has not signed a DTAA. Thus, India gives relief to both kinds of taxpayer. DTAAs facilitate mutual economic cooperation and provide tax certainty to the resident tax payers of both the countries. It simulates flow of investment, technology and services between countries. How to avail benefits under the DTAA Any NRI can avail benefits under the DTAA by submission of documents listed below to the deductor: 1. 2. 3. 4. 5.
Tax Residency Certificate (TRC) Self-attested copy of PAN Card Self-declaration cum indemnity format (formats of such letter are availabe in the bank website) Self-attested copy of Passport and Visa Copy of PIO Proof (applicable if the passport has been renewed during the Financial Year)
Mandatory details to be included in the TRC 1. 2. 3. 4. 5.
Name of the Assessee Status (individual, company, firm etc.) of the Assessee Nationality (in case of individual) Country or specified territory of incorporation or registration (in case of others) Assessee’s tax identification number in the country or specified territory of residence or in case no such number, then a unique number on the basis of which the person is identified by the Government of the country or the specified territory 6. Residential status for the purposes of tax 7. Period for which the certificate is applicable 8. Address of the applicant for the period for which the certificate is applicable
The certificate containing above details should be duly verified by the Government of the country or the specified territory of which the NRI claims to be a resident for the purposes of tax. Time frame for obtaining TRC The Tax laws do not prescribe the timeframe for obtaining the TRC i.e., whether it has to be obtained at the time of return filing or at the time of payment when the withholding happens. However, the Indian payer/employer may insist for furnishing a TRC at the stage of withholding to protect its interest and avoiding penalization or further consequences.
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Tax Accounting Standard - Construction Contracts Tax Accounting Standard should be applied in determination of income for a construction contract of a contractor for the purpose compliance under Income Tax Act, 1961. Construction Contract is a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use and includes : 1. Contract for the rendering of services which are directly related to the construction of the asset, for example, those for the services of project managers and architects; 2. Contract for destruction or restoration of assets, and the restoration of the environment following the demolition of assets. Fixed price contract is a construction contract in which the contractor agrees to a fixed contract price, or a fixed rate per unit of output, which may be subject to cost escalation clauses. Cost plus contract is a construction contract in which the contractor is reimbursed for allowable or otherwise defined costs, plus a mark up on these costs or a fixed fee. Retentions are amounts of progress billings which are not paid until the satisfaction of conditions specified in the contract for the payment of such amounts or until defects have been rectified. Progress billings are amounts billed for work performed on a contract whether or not they have been paid by the customer. Advances are amounts received by the contractor before the related work is performed. A construction contract may be negotiated for the construction of a single asset. A construction contract may also deal with the construction of a number of assets which are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use. Construction contracts are formulated in a number of ways which, for the purposes of this Tax Accounting Standard, are classified as fixed price contracts and cost plus contracts. Some construction contracts may contain characteristics of a fixed price contract and a cost plus contract, for example, in the case of a cost plus contract with an agreed maximum price. Combining and Segmenting Construction Contracts A contract covers a number of assets, the construction of each asset should be treated as a separate construction contract when: 1. Separate proposals have been submitted for each asset. 2. Each asset has been subject to separate negotiation and the contractor and customer have been able to accept or reject that part of the contract relating to each asset. 3. The costs and revenues of each asset can be identified.
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A group of contracts, whether with a single customer or with several customers, should be treated as a single construction contract when: • The group of contracts is negotiated as a single package; • The contracts are so closely interrelated that they are, in effect, part of a single project with an overall profit margin; and • The contracts are performed concurrently or in a continuous sequence. Where a contract provides for the construction of an additional asset at the option of the customer or is amended to include the construction of an additional asset, the construction of the additional asset should be treated as a separate construction contract when: • The asset differs significantly in design, technology or function from the asset or assets covered by the original contract, or • The price of the asset is negotiated without having regard to the original contract price. Contract Revenue 1. The initial amount of revenue agreed in the contract, including retentions. 2. Variations in contract work, claims and incentive payments: • To the extent that it is probable that they will result in revenue. • They are capable of being reliably measured. Where contract revenue already recognized as income is subsequently written off in the books of accounts as uncollectible, the same shall be recognized as an expense and not as an adjustment of the amount of contract revenue. Contract Costs 1. Costs that relate directly to the specific contract. 2. Costs that are attributable to contract activity in general and can be allocated to the contract. 3. Such other costs as are specifically chargeable to the customer under the terms of the contract. 4. Allocated borrowing costs in accordance with the Tax Accounting Standard on Borrowing Costs. These costs shall be reduced by any incidental income, not being in the nature of interest, dividends or capital gains that is not included in contract revenue. Costs that cannot be attributed to any contract activity or cannot be allocated to a contract shall be excluded from the costs of a construction contract. Contract costs include the costs attributable to a contract for the period from the date of securing the contract to the final completion of the contract. Costs that are incurred in securing the contract are also included as part of the contract costs, provided they can be separately identified and it is probable that the contract shall be obtained. When costs incurred in securing a contract are recognized as an expense in the period in which they are incurred, they are not included in contract costs when the contract is obtained in a subsequent period. Contract costs that relate to future activity on the contract are recognized as an asset. Such costs represent an amount due from the customer and are classified as contract work in progress.
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Recognition of Contract Revenue and Expenses Contract revenue and contract costs associated with the construction contract should be recognized as revenue and expenses respectively by reference to the stage of completion of the contract activity at the reporting date. The recognition of revenue and expenses by reference to the stage of completion of a contract is referred to as the percentage of completion method. Under this method, contract revenue is matched with the contract costs incurred in reaching the stage of completion, resulting in the reporting of revenue, expenses and profit which can be attributed to the proportion of work completed. The stage of completion of a contract shall be determined with reference to: • • •
The proportion that contract costs incurred for work performed upto the reporting date bear to the estimated total contract costs; or Surveys of work performed; or Completion of a physical proportion of the contract work.
Progress payments and advances received from customers are not determinative of the stage of completion of a contract. When the stage of completion is determined by reference to the contract costs incurred upto the reporting date, only those contract costs that reflect work performed are included in costs incurred up to the reporting date. Contract costs which are excluded are: • •
Contract costs that relate to future activity on the contract. Payments made to subcontractors in advance of work performed under the subcontract.
During the early stages of a contract, where the outcome of the contract cannot be estimated reliably contract revenue is recognized only to the extent of costs incurred. The early stage of a contract shall not extend beyond 25 % of the stage of completion. Changes in Estimates The percentage of completion method is applied on a cumulative basis in each accounting period to the current estimates of contract revenue and contract costs. Where there is change in estimates, the changed estimates shall be used in determination of the amount of revenue and expenses in the period in which the change is made and in subsequent periods. Disclosure • •
The amount of contract revenue recognized as revenue in the period; and The methods used to determine the stage of completion of contracts in progress.
In the Case where the Contracts are in progress: • • •
Amount of costs incurred and recognized profits (less recognized losses) The amount of advances received. The amount of retentions.
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Post Office Savings Schemes As the famous saying goes – “Little drops of water collectively forms a mighty ocean” – Our dear Ministry of Communication & Information Technology’s - India Post provides a humble yet reliable & dependable financial services. Some of their financial services include the various Small Savings Scheme. Small Savings Schemes are designed to provide safe and attractive investment options and at the same time to mobilize resources for development. Insight into various Post office Savings Schemes: Post Office Savings Account: • Any individual can open an account. • Cheque facility available. • Group Account, Institutional Account, other Accounts like Security Deposit account & Official Capacity account are not permissible • Rate of interest 4% per annum • Account can be opened by cash only. • Minimum balance to be maintained in a non-cheque facility account is INR 50/• Cheque facility available if an account is opened with INR 500/- and for this purpose minimum balance of INR 500/-in an account is to be maintained. • Cheque facility can be taken in an existing account also. • Interest earned is Tax Free up to INR 3500/- per year in single and INR 7000/- in Joint account up to 2011-12 and up to INR 10,000/- per year either in single or joint account for 2012-13. • Nomination facility is available at the time of opening and also after opening of account. • Account can be transferred from one post office to another. • One account can be opened in one post office • Account can be opened in the name of minor and a minor of 10 years and above age can open and operate the account. • Joint account can be opened by two or three adults. • At least one transaction of deposit or withdrawal in three financial years is necessary to keep the account active. • Single account can be converted into Joint and Vice Versa. • Minor after attaining majority has to apply for conversion of the account in his name. Recurring Deposit Account • Any individual (a single adult or two adults jointly) can open an account. • Advance Deposits earn rebate. • Four defaults are allowed. • Rate of interest 8.30% • Maturity value of a 5 Years RD account opened on or after 1.4.2013 with monthly deposit of INR.10/- shall be INR.744.53. • Defaults can be paid within two months. • Part withdrawal facility available. • Premature closure allowed after three years. • Pay Roll Savings Scheme is also available for employees of various Establishments. • Type of Account Minimum Deposit Maximum Deposit Individual Account INR. 10/- and in multiples of INR. No limit. 5/- thereafter
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Time Deposit Account • Any individual (a single adult or two adults jointly) can open an account. • Group Accounts, Institutional Accounts and Misc. account not permissible. • Trust, Regimental Fund or Welfare Fund not permissible to invest. • 1 Year, 2 Year, 3 Year and 5 Year Time Deposit can be opened. • In case of premature closure of 1 year, 2 Year, 3 Year or 5 Year account on or after 01.12.2011, if the deposit is withdrawn after 6 months but before the expiry of one year from the date of deposit, simple interest at the rate applicable to from time to time to post office savings account shall be payable. • In case of premature closure of 2 year, 3 year or 5 year account on or after 01.12.2011, if the deposit is withdrawn after the expiry of one year from the date of deposit, interest on such deposits shall be calculated at the rate, which shall be one per cent less than the rate specified for a period of deposit of 1 year, 2 year or 3 years as mentioned in the concerned table given under Rule 7 of Post office Time Deposit Rules. • Rate of interest - 8.20%, 8.20%, 8.30%, 8.40% compounded quarterly for 1,2,3 & 5 years TD account respectively. • The investment in the case of 5 years TD qualify for the benefit of Section 80C of the Income Tax Act, 1961 from 1.4.2007. Type of Account Minimum Deposit Maximum Deposit 1,2,3 & 5 Year TD INR.200/- and in multiples of INR. No limit. 200/- thereafter Monthly Income Scheme (MIS) Account • Safe & sure way to get a regular monthly income. • Especially suited for retired employees/ Senior Citizens or any one with high sum for investment. • Rate of interest 8.40%. • Maturity Period - Five Years. • No Bonus on Maturity w.e.f. 01.12.2011. • Auto credit facility to SB Account. Type of Account Minimum limit Maximum limit Single INR 1500/INR 4.5 lakhs Joint INR 1500/INR 9 lakhs Above scheme operates automatically, if you open a saving bank account and give a request for automatic transfer of Monthly Income Scheme interest to Recurring Deposit through Saving Bank account. Senior Citizen Savings Scheme (SCSS) Account • The account may be opened by an individual: Who has attained age of 60 years or above on the date of opening of the account. Who has attained the age 55 years or more but less than 60 years and has retired under a Voluntary Retirement Scheme or a Special Voluntary Retirement Scheme on the date of opening of the account within three months from the date of retirement. No age limit for the retired personnel of Defence services provided they fulfill other specified conditions. • The account may be opened in individual capacity or jointly with spouse. • Non-resident Indians (NRIs) and Hindu Undivided Family (HUF) are not eligible to open an account. • The individual may open one or more account in the multiple of INR.1000/-, subject to a maximum limit of INR.15 lakh.
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•
No withdrawal shall be permitted before the expiry of a period of five years from the date of opening of the account. The depositor may extend the account for a further period of 3 years. • Premature closure of account is permitted After one year but before 2 years on deduction of 1 ½ % of the deposit. After 2 years but before date of maturity on deduction of 1% of the deposit. • Premature closure allowed after three years. • In case of death of the depositor before maturity, the account shall be closed and deposit refunded without any deduction along with interest. • Interest @ 9.20% per annum from the date of deposit on quarterly basis. Interest can be automatically credited to savings account provided both the accounts stand in the same post office. • Interest rounded off to the nearest multiple of rupee one. • Post Maturity Interest at the rate applicable to the deposits under Post Office Savings Accounts from time to time is admissible for the period beyond maturity. • Nomination facility is available in the Scheme. • The investment under this scheme qualifies for the benefit of Section 80C of the Income Tax Act, 1961 from 1.4.2007. Invest in MIS / SCSS and transfer interest into RD account through SB account through written request and earn a combined interest of 10.5 % (approx.). Public Provident Fund Account • Ideal investment option for both salaried as well as self employed classes. • Non-Resident Indians (NRIs) are not eligible. • Investment up to INR. 1,00,000 per annum qualifies for IT Rebate under section 80 C of IT Act. • The rate of interest on the subscriptions made to the fund on or after 01.12.2011 and balances at credit of the subscriber in the existing PPF account shall bear interest at the rate of eight point seven per cent (8.70%) per annum. • Loan facility available from 3rd financial year upto 5th financial year. The rate of interest charged on loan taken by the subscriber of a PPF account on or after 01.12.2011 shall be 2% p.a. However, the rate of interest of 1% p.a. shall continue to be charged on the loans already taken or taken up to 30.11.2011. • Withdrawal permitted from 6th financial year. • Free from court attachment. • An individual cannot invest on behalf of HUF (Hindu Undivided Family) or Association of persons. Type of Account Public Provident Fund(Individual account on his behalf or on behalf of minor of whom he is the guardian)
Minimum limit INR. 500/- in a financial year
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Maximum limit INR. 1,00,000/- in a financial year
National Savings Certificates (NSC) NSC VIII Issue • Scheme specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses. • No maximum limit for investment. • No Tax deduction at source. • Certificates can be kept as collateral security to get loan from banks. • Investment up to INR 1,00,000/- per annum qualifies for IT Rebate under section 80C of Income Tax Act. • Trust and HUF cannot invest. • Rate of interest 8.50%. • Maturity value of a certificate of INR.100/- purchased on or after 1.4.2012 shall be INR. 151.62 after 5 years. NSC IX Issue • No maximum limit for investment. • INR. 100/- grows to INR 234.35 after 10 years. • Minimum INR. 100/- No maximum limit available in denominations of INR. 100/-, 500/-, 1000/-, 5000/- & INR. 10,000/-. • A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor. • Rate of interest 8.80%. • Maturity value of a certificate of INR.100/- purchased on or after 1.4.2012 shall be INR. 236.60 after 10 years.
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Who is He?
Mr. Raghuam Rajan •
Well for starters, he is the person who decides the key rates – cash reserve ratio (CRR), repo and reverse repo while reviewing the Monetary Policy. Changes in any of these rates could, in turn, prompt banks to fine tune their lending and borrowing rates.
•
If you haven’t guessed it till now, Raghuram Rajan is appointed as the Governor of the Reserve Bank of India (RBI) suceeding after Mr. Duvvuri Subbarao’s term.
•
Mr. Rajan is 50 years and six months old when he took charge for a period of three years as Governor of RBI.
•
As the 23rd governor of the RBI, Bhopal born Rajan, was chosen for role ahead of Arvind Mayaram, secretary department of economic affairs and Saumitra Chaudhuri, member, Planning Commission.
•
After studying electrical engineering at the Indian Institute of Technology, Delhi and business administration at the Indian Institute of Management Ahmedabad, Rajan did his PhD from the Massachusetts Institute of Technology.
•
He became the Economic Counselor and Director of Research (Chief Economist) of the International Monetary Fund in September 2003— the youngest ever to be appointed to this post.
•
In 2003, Rajan was awarded the inaugural Fischer Black Prize by the American Finance Association for contributions to finance by an economist under 40.
•
His most widely-read book, Saving Capitalism from the Capitalist, was co-authored with fellow Chicago GSB professor Luigi Zingales and published in 2004.
•
Credited for predicting the 2008 global financial crisis, Rajan was appointed as the youngest-ever Economic Counselor and Director of Research (chief economist) at the International Monetary Fund (IMF) from October 2003 to December 2006.
•
Rajan returned to the Graduate School of Business at the University of Chicago in 2007 where he is the Eric J Gleacher Distinguished Service Professor of Finance.
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