Tuesday, 29 July 2014
Tuesday, 22 July 2014
How to Represent before PF Authorities for Non-Applicability of EPF to Casual Labor - case study of Event Management Company
In our Organization we do the Event Management Services, where in
different contractors does the work of erecting a set while other contractor
will do the work of Coloring the Set, the work of erecting walls may be done by
third contractor while woodwork may be done by still different
person/contractor. The electrification, fixing of stage and its finishing, will
each be done by still other contractors. In addition there would be host of
casual labors working on the Event Management Sites, on per day wage basis.
Labor force working with each contractor is different and they work for very
short period and after finishing one site they move to other site with
their contractor or coming to them. Such casual or temporary or site-workers
are not employed in their establishment and as such we cannot be forced to
cover them under PF Act as our employees. It is pointed out that under earlier
paragraph 26 of 1952 scheme an employee who had put in particular length of
service alone was required to be treated as covered under the scheme. Attention
is invited to 1990 amendment to said paragraph 26 to show that such waiting
period has been removed and from day one the employee is supposed to be covered
under the scheme.
How ever we have to state that such casual labor / employees
cannot be treated "as employed" with our organization and therefore
are not covered by definition of Employee under Section 2(f) of PF Act.
Paragraph 26(2) as it originally stood read: 26 (2). After this paragraph comes
into force in the factory or other establishment, every employee employed in or
in connection with the work of the factory or establishment, other than an
excluded employee, who has not become a member already, shall also be entitled
and required to become a member from the beginning of the month following that
in which he completes six months continuous service or has actually worked for
not less than 60 days within the period of three months or less in that factory
or other establishment or in any factory or establishment to which the Act
applies under the same employer, or partly in one and partly in the other or
has been declared permanent in any such factory or other establishment
whichever is earliest.
On 16 January 1981 period of six months in above clause was
substituted by "three months". By later notification dated 1/11/1990
this para is amended as under:
26 (2). After this paragraph comes into force in a factory or
other establishment, every employee employed in or in connection with the work
of that factory or establishment other than an excluded employee who has not
become a member already, shall also be entitled and required to become a member
of the fund from the date of joining the factory or establishment.
When the question about the constitutional
validity of this amendment came to Honorable Apex Court has in case between
J.P. Tobacco Products etc. v. Union of India reported at 1995(II) C.L.R. 369
upheld the constitutional validity of this amendment. The controversy mentioned
briefly above arises in this background, wherein it is pointed out that
constitutional validity of amendment in Paragraph 26 of the scheme was
challenged before Madhya Pradesh High Court and in ruling reported at 1995(II)
C.L.R. 360 Khemchand Motilal Tobaco Products Ltd and Ors. v. Union of India Honble Apex Court Honble
Apex Court
Thereafter on 22/6/1995 the provident fund
department issued circular by placing reliance upon this Apex Court
He states that Section 19-A of PF Act permits
Central Government to remove difficulties in implementation of the provisions
of PF Act and to clarify the doubts in its implementation. In exercise of that
powers delegated to him Legal Adviser of Central Government issued order on
8/2/ 1994 and clarified that the site workers employed in building and
construction industry must be covered by Section 2(f) of PF Act and further
stated that if such workers are casual workers they would not be governed by PF
Act. He further clarified that laborers who are not obliged to report for
duty every day and can change their employer of their own choice and therefore
there is no element of any permanency or semi permanency in their employment
are not included and are not governed by PF Act.
In our Event Management Site also, casual labor
employed by us are just for that day, and they are not obliged to report for
duty every day, and may or may not come to our Event Management Sites, the next
day, there for there is no element of any permanency or semi permanency in
working for us, hence they are not included and are not governed by PF Act,
accordingly we request you to remove your claim for deduction of PF on Casual
Labor, we use for Event Management
sites.
Monday, 21 July 2014
Practicle problems relating to partition of HUF
(a) Relating to witness
While getting
the document attested by witness care should be taken in the selection of
witness and in recording their full names and address on the instrument itself.
In order to prove a document in the court of law, it is necessary that at least
one of the attesting witness is called to prove the deed.
Whenever full
name and address or not noted or strangers or less known persons are taken as
attesting witnesses it become a problem to recall as to who signed after a
lapse of time when the need to prove the document arises, besides when they are
to be summoned in a court of law to prove the document by means of their
deposition. Such strangers and unknown persons are neither co-operative nor
willing witness so as to readily come forward and take the botheration of
deposing and proving the document.
It is always
prudent to have the attestation of a document only by such person who are
either well acquainted or are relatives and friends and it is an act of
prudence to specify their full names and addresses at the time of the execution
of the document and its attestation by the witness.
(b) Availability of documents to each co-owner
In the case of
partition deed properties are allotted to several members of the joint Hindu
family by means of non instrument only and each of the co-owners or members of
a joint Hindu family who is allotted a share as a result of the partition, so affected
derives its title to the absolute ownership of the specified property. The
instrument of partition is required to be compulsorily registered under the
provisions of Indian registration Act and it is the registered document which
is required to be produced as an evidence and proof of partition or as a proof
of the absolute ownership of the specified property. The original registered
document is, there fore, of grate importance and at times is indispensable.
In the case of
any partition there has necessarily to be two or more persons to whom the
property is allotted by means of one instrument only, while the original
instrument can remain in the possession of one of the parties only and all the
remaining parties have to depend upon the party in whose custody the original
document remains.
In such cases a
duplicate certificates certified copy should be obtained from the registrar
office. Under the provision of Indian stamp act a counter part or a duplicate
of any instrument, chargeable with duty and in respect of which the proper duty
has been paid can be obtained by making the stamp paper of requisite value
available which is quite negligible in most of the states.
The counterpart
or the duplicate of the instrument can also be offered for registration, which
attract the same registration fee as payable on the original instrument and
each counterpart so registered carries the same weight and value as the
original instrument which is written on the full stamp value applicable for a
partition deed.
The deed
partition can as a matter of prudence be made out in as many counterparts. As
the members amongst whom the partition is to be effected and each co-owner or
member can thus be provided with a separate registered instrument which can
remain in their possession and is readily available to them for all possible
eventualities.
(c) How registration possible at a place where property not situated
Section 30 of
Indian registration Act empowers the registrar of the district by the persons
seeking permission, starting the reasons as to why the concerned document is
being offered for registration before him. One of the plausible reasons can be
that either all or most the parties to the document are residing where the
document is being offered for registration, while the property which is the
subject-matter of registration is situated outside.
There can be
many other reasons for which registration may be allowed. The discretion to
register the document vested with the registrar without any fetters and thus
very wide. The registrar is without any fetter and thus very wide. The
registrar is at liberty as well as under an obligation to register the document
for any reasonable cause or ground.
The
basic principle is that stamp duty payable is the one which applied to the
state where the document is executed. This provision can, there fore, be
fruitfully enjoyed in all such cases where the stamp duty payable in other
towns is lower as compared to the stamp duty payable at the actual place of
transaction.
Precautions to be taken
(i) While
drafting a deed partition, all the members who are entitled to have a share in
the joint Hindu family property are to be made parties. Karta’s wife or the
widowed mother through not entitled to claim partition, are nevertheless
entitled to, a share when a partitions takes place between father and sons, the
wife of the karta is entitled to an equal share and like wise when a partition
takes place between brothers, the windowed mother becomes a necessary party to
the document.
(ii) When
partition is made by a father in the exercise of his paternal right and there
are minor son is to be represented through the natural guardian and the mother
guardian is to sign for and on behalf of the minor.
(iii) when the
partition takes place between brother and there are unmarried sisters, a
provision is necessarily required to be made for the maintenance and marriages
of the unmarried daughters and/ or sisters as the case may be.
(iv) A deed of
partition should give full recitals of the ownership of the property as well as
the content of the relevant documents which go to establish the ownership of
the property by the joint Hindu family.
(v)As earlier
mentioned, while choosing witnesses, the parties should choose such witness,
who is either close relative or friends so that they are readily available when
ever so required. Further it shall be an act of prudence that the witnesses
chosen are younger persons and not of old age, so that with the lapse of time
or at a time when witnesses are needed such persons are available to prove the
document.
(vi)Whenever the
document is executed in a number of counterparts as it ought to be when there
are several persons who are allotted shares, the document should recite the
number of counter parts is handed over and also the names of the person to whom
the first counterpart is handed over and also the names of the persons to whom
the other counterparts are to be handed over.
(v). When ever
the parties are effecting a total partition, it should be so specified that all
assets and liabilities exiting or contingent, should be divided.
Friday, 11 July 2014
Budget is the Blue print of the
Government, present team of Narendra Modi’s team headed by Arun Jaitly, Finance
Minister has done tremendous job, in conceptualizing and making in to an
effective blue print for the Indian Inc. It is practically not possible to
address all Sectors, Industries, Projects of Public Interest in one single
policy document and blue print of plan of action for running the government of
a Country with largest Democracy.
It is pertinent to not that this
Budget has taken enough care about the lager canvass of the country as a whole.
Lets have a look at the best measures taken up in the Budget:
- Industries
- Setting up on eBiz Platform, where all business and investment related clearances and compliances are available in one window. All the Central Government Ministries and Departments will integrate their services on this platform, by December 31. Thought it is a welcome measure, time means money, and six months is a very big time, if this kind of platform is going to boost the Industry as a whole and in turn it’s going to boos the revenues of the Government, then its imperative that it should be completed in at best three months time, we are sure that there are capable corporate in India, who can deliver the same sans fixing the deadline of 6 months.
- Investment allowance @15% for the Investments by Manufacturing Companies in New Plant and Machinery exceeding Rs.25 Crores in a year, is definitely a blessing for fuelling the additional investments in Manufacturing Sector, how ever if the MAT is rationalized, by reducing further the rate of tax presently it is 18.5%, there would be more takers, better still if this benefit is restricted to the Investments which generate employment opportunities.
- Proposal to set up a Rs.10,000 Crores venture capital fund, for providing equity, quai equity, soft loans and other risk capital for start-up companies is a welcome move, how ever the name of the game is Implementation and administration, till the proposal is effectively planned and implemented, we have noting to cheer up on this proposal.
- Entrepreneur Friendly Exit norms and legal bankruptcy framework would be developed for SME’s to enable easy exit. This is definitely a best proposal if and when implemented would help the SME.
- Individuals
- Basic Exemption raised from Rs. 2 lacs to Rs.2.5 lacs corresponding limit for Senior Citizens raised from Rs.2.5 lacs to Rs.3 Lacs.
- Additional Tax break on home loan interest of Rs.50,000/-, this is a welcome measure for assesses who have taken higher home loan, whose annual interest is crossing or about to cross Rs.2 lacs.
- Investment Threshold for PPF Investment raised to 1,50,000/-.
- KVP, Kisan Vikas Patra’s allowed as Investment option u/s 80C.
new tax slab structure for individuals stands as:
|
Individual (Other than Senior Citizen)
|
Senior Citizens (aged 60 years & above but below 80 years)
|
Very Senior Citizen (aged 80 years & above)
|
|
Income upto Rs. 250,000 – Nil tax
|
Income upto Rs. 300,000 – Nil tax
|
Income upto Rs. 500,000 – Nil tax
|
|
Income from Rs. 250,001 to Rs. 500,000 – 10% tax
|
Income from Rs. 300,001 to Rs. 500,000 – 10% tax
|
Income from Rs. 500,0001 to Rs. 10,00,000 – 20% tax
|
|
Income from Rs. 500,0001 to Rs. 10,00,000 – 20% tax
|
Income from Rs. 500,0001 to Rs. 10,00,000 – 20% tax
|
Income above Rs. 10,00,000 – 30% tax
|
|
Income above Rs. 10,00,000 – 30% tax
|
Income above Rs. 10,00,000 – 30% tax
|
- Capital Markets
- Debt Mutual Funds Taxed as Bank Deposits, hither to the dividend from mutual funds used to be tax free, needing the Investors to shift towards Equity oriented Mutual Funds
- Profits of Foreign Portfolio Investors be taxed as capital gains, this is a move to bring now boost towards capital market investments, but considering the complex Double Tax Avoidance treaties, and their implementation in India, there is a fair chance to Pull out their Investments out of Indian Markets than, entering India as a Porfolio Investors, hope the government should carefully have a re-look on this. Hope this gives lot of business for the Professionals Involved in DTA.
- International
Taxation
For reducing litigation in Indian
Transfer Pricing regime by introducing
- Roll Back provision in Advance Pricing Agreements (APA). Roll back mechanism in the APA Scheme for a period of four years preceeding the first previous year for which the APA is applied, subject to prescribed conditions.
- Range Concept for determining arm’s length price
- Allowing multiple year data for comparable analysis. One year data is used for comparable analysis with some exception as per the current regulation. It is proposed to amend regulations to allow the use of multiple year data for comparability analysis.
- TPO would now have the authority to levy penalty under section 271G of two per cent of the value of international transactions or specified domestic transactions for failure to furnish prescribed information or documentation w.ef.1 October 2014.
- Corporate
Taxation
a. Section 80-IA: Extension of 10-year tax holiday to
undertaking which begin generation, distribution and transmission of power by March 31, 2017.
b. Section 115-O & 115R: Dividend declared by a domestic
Company must be grossed up for applying DDT resulting in an effective rate
increase from 16.99 per cent to 20.47 per cent (including surcharge and cess).
This amendment shall take effect from 1 October 2014.
c. Section 40(a)(i): In respect of disallowance for nonpayment
of tax from payment to non-resident, the time limit of payment of withholding
tax into the government treasury has been extended till date of filing of return
of income similar to the timelimit available for payment of withholding taxes
in respect of payments to resident.
d. Section 40a(ia):
Disallowance of expenditure due to non-withholding of tax on payments made to
resident taxpayers is restricted to 30 per cent instead of 100 per cent under
existing provisions. Further, the disallowance under this category has been
extended to all payments made to resident taxpayers which are subject to
withholding tax (e.g. salary, director’s fees, etc.)
e. Section 115JC: The adjusted total income for AMT shall be
computed by adding investment linked deduction on capital expenditure for
specified business (Section 35AD) net of depreciation.
f. REITs and Infrastructure Investment Trusts
shall enjoy tax pass through status.
g. Section 112:
Concessional rate of 10% has been proposed to withdrawnfor debt oriented mutual
funds.
h. Section 220: Liability of assessee to pay interest on amounts
specified in the notice of demand extended up to the disposal of appeal by the last
appellate authority or disposal of proceedings. In cases where tax payable was
reduced due to orders of the settlement commission, etc. but was restored to
earlier levels, interest under Section 220 of the Act shall be payable from the
date of first notice of demand upto the date when the demand is paid.
i. Section 200A: The
deductor was permitted to make corrections in the statement pursuant to
Centralized Processing of Statements of Tax Deducted at Source Scheme, 2013.
However, there was no provision in the Act enabling filing of the correction
statement. The act of correction and processing the statement has now been
codified and shall came into effect from 1 October 2014.
j. Section 201: The
period for passing an order deeming a person to be an assessee in default for
failure to deduct the whole or any part of tax on payment to a resident has
been extended to seven years from the end of the FY in which payment is made or
credit is given w.e.f. 1 October 2014.
The above
measures would go a long way in clearing litigations in International Taxation,
involving Transfer Pricing.
Overall it is
matured Budget with a larger goal of containing fiscal deficit, which gave
marginal relief to Middle Income group, how ever what is expected of this is
reduction of Inflation and rationalization of tax laws in India, which would
not only increase the tax compliance, but supports the exchequer by way of
additional revenue through taxes only thing is Government should decide whether
they want More from Few or Few from More.
PARTITION OF JOINT HINDU FAMILY PROPERTIES-HUF
Partition of
joint Hindu family property has an important bearing in the matter of taxation
under the direct tax laws. On partition of the joint Hindu family property, the
incomes arising from the shares allotted to the different members of the family
becomes assessable to income-tax in their respective hands has individuals or
if the coparceners are married a new status of joint family is brought in to
existence for all such members.
The partition
can be either of a joint family property or that of joint properties. There is
essentially a difference between the joint family properties and the joint properties.
In the former case it is the partitioning of properties belonging to the joint
Hindu family and in the letter case it is partitioning of properties belonging
to the co-owners.
1.
Writing not
necessary but advisable
It is not
necessary that a partition of the joint Hindu family be effected by means of an
instrument of writing. A partition of joint property is neither a sale within
the meaning of section 54 of the transfer of property Act nor on exchange as
defined Under section 118 of the transfer of property Act. As such the
condition that it has to be necessarily in writing does not apply.
A partition can
thus be effected orally or by an instrument in writing. If the partition of
immovable properties of the value of Rs.100 or more is effected in writing, the
instrument must be registered in accordance with the provisions of the Indian
Registration act.
The term of an
oral partition made by the consent of
the parties can be reduced ton writing in the form of memorandum as a record of
something already done and achieved. An instrument of memorandum although
reduced to writing is not required to be registered nor the instrument has the
bear the stamps required on a deed of partition. The memorandum can be on a
plain paper or a stamp paper or a stamp paper required for an affidavit, since
it can be devised as declaration and a record of something which is completed
or an act which already stands accomplished.
2. Admissibility of memorandum – saving stamp duty
A partition of
the immovable property of joint Hindu family can be effected by an oral
agreement irrespective of the value of the property. There fore a memorandum
recording the fact of the partition which has already taken place is admissible
in law, even if it is not registered under the Indian registration Act.
It has been held
that a document acknowledging the previous partitions of a Hindu Undivided
family does not require registration Act.
It has been held
that a document acknowledging a previous partition of a Hindu undivided family
does not require registration. Such a Document is admissible in evidence as
proof of partition.
3. Necessary parties in a deed of partition
The parties
necessary in a deed of partition are those who are entitled to share at the
time when the partition is to take place. In case the parties who are to be
allotted shares are minors, they are required to be represented by their
natural guardian, the natural guardians are firstly the father and secondly the
mother . if the father is alive, then father has to represent the minors and if
father is dead or is otherwise incapacitated then the mother is to represent
the minors, while in the absence of both the natural guardians, the parties can
be represented by a guardian appointed by the court, who can be his next
friend.
4. Necessary recitals in a Deed of partition
The necessary
recitals in a deed of partition are:
(a) Whether the
properties to be partitioned are the joint property or the joint family
property of the parties.
(b) In case of
joint property the source and mode of its acquisition, the rights and the
respective shares of the parties among whom the partitions is to take place.
(c) In case
joint family property , the family to whom it belongs, branch or branches of
the family among whom the partitions is to take place.
(d) In case
partition among the members of a specific branch the members entitled to
share and their respective shares.
(e) Whether
partitions is total or partial.
(f) In case of a
total partition, a list of properties sought to be partitioned and a separate
list of the properties which have to continue to remain the joint family
properties of the family.
5. Registration of partition deed
When a deed of
partition effecting immovable property is reduced to writing or deed of
partition effecting any immovable property valued at Rs.100 or more is reduced
to writing, the document is required to be compulsorily registered under the
provisions of section 17 of the Indian registration Act.
According to
section 23 of the registration act, the deed of partition is required to be
presented for registration before the registering authorities within a period
of four months from the date of its execution.
A document
effecting the partition of an immovable property has to be presented for
registration in the office of sub-registrar within whose sub-district the whole
or some portion of the properties to which such document relates is situate,
which implies that if the properties which are the subject-matter of partition
are situated in more than one state, the document can be presented for
registration in any one of the sub-strict within whose jurisdiction the
property is situate.
6. Stamp duty payable
The stamp duty
payable an a partition deed according to the provision of article 45 of the
first schedule of the Indian stamps Act is to be calculated on the total sum of
the value of the property which is the subject matter of partition, after
excluding one major share. For instance, if a partition is effected between the
two branches of a family and also an inter se partition amongst the members of
one of the branches, the major share being that one of the branches, who
continue to remain joint and his allotted the property as such has to be
excluded out of the total value of the property and the stamp duty shall be
calculated on the balance amount arrived at from the total value after
exclusion of one major share.
The stamp Act is
Central act and applies to the whole of India excepting the state of Jammu and
Kashmir and the formula for arriving at the value on which stamp duty is
payable remains the same, but so far as the rate of stamp duty is concerned, it
varies from state to state as the states are vested with the legislative
territories.
7. Witnessing of documents
According to the
transfer of property Act, the instrument of partition is required to be
attested by two or more witnesses each of whom has seen the executant sign or
affix his mark to the instrument or has seen some other person signing the
instrument in the presence or by the direction of the executant or has received from the executant a person
acknowledgement of his signature or mark of the signature of such other person.
Each of the attesting witness is also required to sign the instrument in the
presence of the executant.
It is not
necessary that more than one of such witness shall have been present at the
same time.Attestation need
not be in any particular form; a mere
signature is sufficient. The attesting required to sign After execution of the
document and not earlier. A party to a deed cannot be an attesting witnesses.
For, the object of attestation is protection against fraud and undue influence.
WAKE UP POTENTIAL NON-FILERS OF IT RETURNS
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
Dated 21st February, 2014PRESS RELEASE
The Income Tax Department had initiated a business intelligence project in February,
2013 to identify PAN holders who have not filed Income Tax Return and about whom
specific information is available in Annual Information Return (AIR), Central
Information Branch (CIB) data and TDS/TCS Returns. In the first round of data
matching, 12.19 lakh non-filers were identified. Letters have been sent in these cases
by the Compliance Management Cell and Assessing officers seeking the response of
the taxpayer. The results of this initiative is very encouraging and 5,36,220 returns
have been received from the target segment. Self assessment tax of Rs.1017.87 Cr.
and advance tax of Rs. 898.22 Cr. has also been paid by the target segment.
The Income Tax Department has now conducted the second round of data matching
which has identified additional 21.75 lakh potential non-filers. The Department has
sent letters to the 50,000 potential non filers in the first batch. The information relating
to the 21.75 lakh new non filers has been made available on the ‘Compliance Module’
on the e-filing portal of the Income Tax Department. The information will be shown
only to the specific PAN holder when the PAN holder logs into e-filing portal at
https://incometaxindiaefiling.gov.in. The PAN holder will be able to submit the
response electronically and keep a printout of the submitted response for record
purposes.
While the Government urges all tax payers to disclose their true income and pay
appropriate taxes, the Tax Department would continue to pursue the non filers
vigorously till all the high potential non filers are covered.
Commissioner of Income Tax(C&S)
CBDT, North Block
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