The Central Board of Excise and Customs (CBEC) announced that any service undertaken by the local authority or government is liable to tax. The service provided to a business company by the local authority or the government is taxable from April 1st, 2016. The service provided to the entities comes under the negative list under the Finance Act of 2015, and only the support service is taxable. Later they exclude the provision of tax exemption from this financial year.
The amount charged by the government or local power comes under tax liability, inspite of the service being mandatory under the law. Any income received is taxable under the Service tax. And the other liabilities are the payment to the local power or government, the penalties and liquid damages made by the entity. The registrations that are abiding by the law for testing, certification or safety check related to protection, calibration needed under the principle law exempt from the service tax, and any service that does not exceed five thousand are also exempt from tax.
The services provided by the local authority or the government for the importers and the exporters during the office hours or container stuffing or inspection during the holidays and the payment of overtime charges and payment of cargo on import and export goods are exempt from the tax. The importers and the exporters should note that the service amount received from the authority or government is greater than five thousand are liable to tax. And the settlement money and the fees for compounding penalties by the Settlement commission, the composition amount for the extension of export contract by the Export capital promotion goods are liable to tax.
The tax department released the new income tax return form for the financial year 2016-17 on April 1st, 2016, and there are a lot of changes made in the form. After the release of the income tax form, the Central Board of Direct Taxes (CBDT) further released the instructions on how to fill the tax return form, to ensure that the taxpayers do not have any difficulty in filling the ITR form. The tax experts said that the individuals would find it hard to fill the tax form because of the inclusion of new sections in the form. According to the new Financial budget, the individual whose annual income is more than fifty lakh has to fill the liabilities and assets section in the income tax return form.
The taxpayer should declare his immovable and movable assets along with the cost price in the section. So, an individual has to specify the rate at which he bought the asset. For example, if a person has a luxury car which he bought at a certain price and after a few weeks the value of the car devalues. Thus mentioning it in the return form would not be fair. The same way the value a jewelry bought ten years ago may have greater value, and showing it in the tax returns will lower the net value. In the previous form, they combined all the assets into a single asset called the business asset.
Individuals who receive lower income might see an increase in their threshold income because of a windfall or from sales of a property should also fill the return form. And another challenge faced by the taxpayer is the declaration of their inherited asset, because of the valuation difference of the asset.
The Income tax department revises the ITR forms every financial year to overcome tax evasion. The department released a new version of the income tax return form for the financial year 2016-17 on April 1st. The taxpayers have to file their tax return form before the end of July. The taxpayers should find out their basic limit and the deduction they can avail and then fill their forms. There are several tax free bonds started by the Government of India. And according to the Income tax Act under section 80C, there are several schemes like EPF, PPF, ELSS, NSC and life insurance premium, repayment of home loan, ULIP and school fees. And deductions of medical expense, mediclaim or dependent personal are exempt from the tax.
When a taxpayer calculates the overall income to file the tax return form, if he has any deductions based on the long term equity share, then those deductions are not deducted. And for taxpayers who do not have any taxable income in the year, but if the exemption income is more than the basic exemption amount, it is taxable in the return form.
If there is an error or if the taxpayers forgot to fill any section in the return form, they can modify the changes only when they submitted the form before the due date. Even though the tax department allows filing the tax within two years, the taxpayer cannot make any changes in the form, and they cannot carry forward losses. But the government gave the tax officials the permission to allow an individual to modify the changes in the tax form within fifteen days
The Union Budget for the financial year 2016-17 announced by the Ministry of Finance avail relaxation in home loans, which encourages many individuals to invest in property. According to the Income tax Act under section 24, a person who borrowed home loan can get tax benefits for up to two lakh depending on the amount of interest paid by him under the home loan. But you can receive a deduction if the property for which you have taken home loan is possessed by you within 3 years in which you took the first disbursement.
Many home loan borrowers forget to notice the conditions mentioned in the Income tax Act under section 24. The first condition mentioned is that, the tax deduction of the interest in home loan is valid if the person took the loan amount on or after April 1st, 1999. And the second condition says that the loan borrower can avail deduction only if the building construction ends within three years, by calculating the year in which the person took his home loan. New Indian Tax Consulting firm Uptra Consultancy services.
Since there is a delay in the completion of the construction project, the Ministry of Finance extended the year limit to five years from three years, so that the loan borrower can avail tax deduction even when the construction work is not completed. But this new rule comes into existence only from April 1st, 2017. Thus if a person pays EMI for his loan amount, there will be no change in the capital outstanding, but he can receive the tax benefit for two lakh paid within 3 years. And according to the revised rule, the time to get tax benefit is five years. The new rule gives tax relief for first time owners with Rs. 2.5 lakh with loan less than or equal to Rs. 35 lakh and property value about Rs.50 lakh. These benefits in loan repayment encourage the property owners to take loans.
The Hotel and Restaurant Association persuaded the government to cut down the hike on property tax several times.
APS Chatha, President of Amritsar Hotel and Restaurant Association (AHRS) met the government BJP and Shrionmani Akali Dal alliance several times on the hike in the property tax. He said that the property taxes for the upper floors are only half the amount of the tax for the ground floor according to the previous format. But in the revised format, there is only a single tax for all the floors and said that there is no reduction in the property tax.
Rajinder Singh Marwaha business sector leader Shrionmani Akali Dal and other officials from the hotel and Restaurant Association formed a committee to represent the hotelier’s case. He said that they formed the committee because of the notice brought by Sukhbir Singh Badal, who is the Deputy Chief Minister when he went on an official trip to the city. And the committee members spoke with the other hoteliers about the issue on the property tax in Chandigarh.
Bakshi Ram Arora, Mayor of the Amritsar Municipal Corporation said that many property owners fail to pay their property tax and requested all the people to pay their taxes, otherwise the Municipal Corporation will be bankrupt when government follows relaxation methodologies on the tax. He also said that people fight for metal roads, sewerage and water supply, streetlights, daily garbage lifting and clean roads, but when it comes to payment of their taxes large number of people does not respond. He said that the corporation charged only twenty eight paise to supply water to the residents, while they do not take the responsibility of paying their own taxes.
The rate of the property tax depends on the guidance value of the zone in which you have built the particular property. G Kumar Naik, the Commissioner of Bruhat Bengaluru Mahanagara Palike said that there are six zones, A, B, C, D, E and F. The guidance value is thousand rupees for per square feet for the F zone and the value for zone A the amount is above seven thousand rupees per square feet. He also said that if there is a serious change in the guidance value, then the owners have to pay the tax by the guidance value of the zone with higher tax value.
In an interview, Naik said the property owners can pay the tax amount in the Canara bank or they can log on to the official website and make payment online. He also said that the property tax amounts should not be paid in the zonal offices or Bruhat Bengaluru Mahanagara Palike help centers. The tax department decided to refund five percent of the property tax amount, if the taxpayers pay the amount before April 30, 2016.
The Commissioner said that the according to the Act by the Karnataka Municipal Corporation, they can increase the property tax rate from fifteen to thirty percent once every 3 years. After 2008, the department did not increase the rate of property tax. Thus department increased the tax rate for non-residential properties at twenty five percent and twenty percent for the residential properties from this financial year.
To encourage more owners to pay their property tax, the department has taken several steps; the taxpayers can pay their taxes in the bank as cash or as demand draft and receive the receipt for the amount paid. They can also pay the tax online, and the taxpayers can edit the changes in the property details according to the self awareness scheme.
The tax authorities and the taxpayers had several issues regarding the claim of credits lead to the chaos and the department was unable to control the situation. On April 18th, 2016 the Revenue Department said that the tax paid abroad by the entities and the service charges they pay in India now credited in MAT (Minimum alternative tax). Thus it will benefit the individual taxpayers and Indian entities who receive foreign income. The different ways to grant the foreign tax credit were dealt by a committee formed by the Ministry of Finance under the CBDT (Central Board of Direct Taxes).
The Ministry issued the draft rules for the Foreign tax credits on Monday , according to the rule specified in the draft, an assessee can claim credits for the tax he paid in a specific territory or a country were India signed an agreement on Double taxation avoidance agreement (DTAA). The credit is available under the minimum alternative tax and the cess and surcharges in India. The minimum alternative tax is nothing but the tax imposed on the entities that do not pay the corporate tax because of the incentives and the exemptions. But if an individual or an entity is subject to any penalty or interest, they cannot avail credits on foreign tax.
For an individual or an entity to avail credits on foreign tax should submit a certificate to the department from the tax authority of the foreign country specifying the details about the tax paid. And they should submit a declaration that states that there are no disputes on the claimed credits. The draft rule for FTC specifies a clear view on the fact that the FTC is available under minimum alternative tax liability and that the surcharges and cess are creditable.
A K Kanojia, the President of the IT Employees Federation, said that they start their walkout if their demands are not met. About ninety seven percent of the workforce of the Income tax department are the employees of the ITEF and the ITGOA, and only the remaining three percent comprises of Indian revenue services (IRS). The association said that, if their promotion demands and infrastructure demands are not adhered then the budget collection work and the tax service work will be on hold. They also said that they have put forward their demand to the government and the Central Board of direct taxes many times, but they have not addressed their demands. The employees association head reported that, this time the officers and staffs would hold a sit-in riot in front of their respective offices and in the capital and protest against the department. The association head, Kanojia said that they would send a draft about their service demand to the Secretary of the revenue department and to Central Board of Direct taxes’ Chairperson. And if meeting on the demand is not held, the association would start their walkout.
Revenue Secretary, Hasmukh Adhia said in an interview that the government is trying to increase the number of net taxpayers, at the same time they are trying to relieve the burden of the taxpayers who are at the lower level. The target for this financial year is 10million new taxpayers. The government plans to increase the total level, so that the individual gets more disposal income. Doing so can increase the economic growth of the country by moving the disposal income towards the consumption. Experts say that, the increase in the annual income from Rs.2.5 lakh for the taxpayers can lead the individuals towards the income connected deduction. These deductions are the schemes started by the government, like the mutual fund, provident fund, pension scheme and postal deposits.
But in the new rule, the fund manager can request the Income tax department for an approval before the process and can avail exemption. This mechanism is possible under the Income tax Act, Section 9A in which it deals with the revenue that the country should receive, and that amount is liable to taxation in India. The rule also specifies that,the fund investment from any foreign market undergoes an analysis process and determined depending on the company.The head of financial service and regulatory service, Sameer Gupta said that the new rule would enable the onshore marketing of foreign investment. He also said that the an application to the Central Board of Direct Taxes of the fund before the process signifies the eligibility criteria of the entity and provides guidelines. Both the foreign and the domestic marketing firm can use this assessment to identify their status. And the rule specifies that the eligibility of the entity matters only if the fund pays the manager, and determines whether any unrelated transactions made within 3 years in succession or any 3 out of 4 previous years.