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Lesson Posted on 06 Mar IT Courses/SAP/SAP GST Financial Planning/Taxation IT Courses/Tally Software +1 Tuition/BBA Tuition/Financial Accounting less

Highlights Of Some Recent GST Council Meetings

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Highlights of 22nd GST Council Meeting at New Delhi on 6 Oct. 2017 GST Council in its 22nd Meeting at New Delhi has recommended certain facilitative changes to ease the burden of compliance on small and medium businesses, like quarterly returns filing by small taxpayers with turnover upto Rs. 1.5 crores,... read more

Highlights of 22nd GST Council Meeting at New Delhi on 6 Oct. 2017

GST Council in its 22nd Meeting at New Delhi has recommended certain facilitative changes to ease the burden of compliance on small and medium businesses, like quarterly returns filing by small taxpayers with turnover upto Rs. 1.5 crores, composition threshold increased from 75 lacs to Rs. 1 crore, RCM put on hold till 31 March, 2018, etc., as detailed here-under:

  • Quarterly Return for Small Taxpayers to Reduce Compliance Burden: MSMEs, Small Traders, Exporters, etc. having annual turnover of upto Rs. 1.5 crores have been given relief from monthly filing of GST Returns. Now they can file quarterly GST Returns and also they can pay taxes on quarterly basis.

CBEC Notifies Quarterly GST Return/ Tax Payment by Small Taxpayers.

  • Review of Threshold Limit for Composition Scheme: Threshold limit for registration under composition scheme has been increased from Rs. 75 lac to Rs. 1 crore. Now small traders having turnover upto Rs. 1 Crore can pay tax at flat rate (1% for traders, 2% for manufacturers and 5% for restaurants) under composition and can file their returns on quarterly basis.

Composition Scheme Threshold Limit Increased to Rs. 1 Crore notified by CBEC

  • Review of Reverse Charge Mechanism (RCM): For convenience of large taxpayers and survival of unregistered taxpayers, the Reverse Charge Mechanism (RCM) under GST has been put on hold till 31 March 2018.

Reverse Charge Mechanism (RCM) Suspended till 31 March 2018: CBEC Notification.

  • Relaxations for Exporters: releasing quicker refunds of duties to ease their working capital requirements. Govt. has already allowed them to make exports without payment of IGST by furnishing LUT. Refunds for July and August 2017 will be released from 10th Oct. / 18 Oct. 2017 respectively, by cheque.

Major Relief Package under GST for Exporters

0.1% GST Rate for Supply of Goods to Merchant Exporters notified by CBEC

  • TDS/ TCS: Registration and operationalization of TDS/TCS provisions shall be postponed till 31.03.2018.

Registration/ TDS-TCS Compliance under GST Suspended till 31 March, 2018.

  • Review of GST Rates: In the case of about 27 items of goods and services, the GST rates have been reduced. For details, please refer the link below:

Reduction/ Changes in GST Rates on Job work etc. Service

Cut in GST Rate of Goods (27 Domestic Supplies+3 Imports Items)

  • Extension of GST Return Due Dates: The last date for filing the return in FORM GSTR-4/ GST-5A/ GSTR-6 extended upto 15 Nov. 2017.

CBEC Extends Due Date for filing of GSTR-5A (July~Sept. 2017) by OIDAR Services Providers

CBEC Notifies Extended Due Dates for GST Returns (GSTR-4/ GSTR-6) upto 15 Nov. 2017

  • E-way Bill System: Deferred till 31 March 2018.

E-Way Bill System Implementation Deferred till 31 March 2018

  • No GST on Advance received by Small Taxpayers: No GST on Advance Payments received for Supply of Goods by Small Taxpayers having aggregate annual turnover of upto Rs. 1.5 crores.

No GST on Advance Payments for Goods received by Small Taxpayers.

  • Interstate services providers exempted from Registration: all inter state service providers shall be exempted from Registration, if turnover remains below the threshold limit.

CBEC Notifies Regn. Exemption for All Inter-state Service Providers.

(Below Threshold).

  • Services Provided by GTA to Unregistered Person Exempted: The services provided by a GTA to an unregistered person shall be exempted from GST.

Services Provided by GTA to Unregistered Person Exempted.

  • Petroleum & Oil Sector: To reduce the cascading of taxes on petrol, diesel, ATF, natural gas and crude oil, following recommendations have been made:
    1. Offshore works contract services and associated services relating to oil and gas exploration and production in the offshore areas beyond 12 nautical miles shall attract GST of 12%;
    2. Transportation of natural gas through pipeline will attract GST of 5% without input tax credits (ITC) or 12% with full ITC;
    3. Import of rigs and ancillary goods imported under lease will be exempted from IGST, subject to payment of appropriate IGST on the supply/import of such lease service and fulfilment of other specified conditions.

Further, GST rate on bunker fuel is to be reduced to 5%, both for foreign going vessels and coastal vessels.

  • Invoice Rules Simplification: Invoice Rules are being modified to provide relief to certain classes of registered persons.
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Lesson Posted on 24 Feb Financial Planning/Taxation Exam Coaching/CA Coaching Exam Coaching/CMA Coaching +1 Exam Coaching/Company Secratary (CS) Coaching less

Basis Of Charge Of GST

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The basis of ‘charge of tax’ as per any law is the ‘taxable event’. In case of GST, the ‘taxable event’ is the supply of goods or services. Supply of goods or services may be divided into 2 categories: Intra-State Supplies Inter-State Supplies. Intra-State... read more

The basis of ‘charge of tax’ as per any law is the ‘taxable event’. In case of GST, the ‘taxable event’ is the supply of goods or services.

Supply of goods or services may be divided into 2 categories:

  1. Intra-State Supplies
  2. Inter-State Supplies.

Intra-State Supplies: Intra-State Supplies cover the supply of goods and services where the location of the supplier and the place of supply are in the same State or Union Territory. The GST levied on Intra-State Supplies comprises of: CGST (Central GST) and SGST (State GST) / UTGST (Union Territory GST).

It is to be noted that there is single legislation, CGST Act, 2017, for levying CGST.  Whereas Union Territories without State legislatures (Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli, Daman and Diu and Chandigarh) are governed by UTGST Act, 2017 for levying UTGST. States and Union territories with their own legislatures (Delhi and Puducherry) have their own GST legislation for levying SGST.

Inter-State Supplies: Inter-State Supplies cover the supply of goods and services where services where the location of the supplier and the place of supply are in: (a). Two different States (b). Two different Union Territories (c). A State and a Union Territory. The GST levied on Intra-State Supplies comprises of IGST (Integrated Goods and Service Tax).  It is to be noted that IGST is approximately the sum total of CGST and SGST/UTGST.

In case of goods Imported into India, IGST is levied as per section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act.

Rates: In case of CGST the rates of tax are the rates as notified by the Government. (Maximum rate of CGST is 20%). In case of IGST the rate are approximately CGST rate + SGST/UTGST rate. (Maximum rate of IGST is 40%).

Supplies outside the purview of GST: The supply of alcoholic liquor for human consumption is outside the purview of CGST/UTGST/SGST/IGST. Whereas CGST/UTGST/SGST/IGST on supply of the following items is to be levied w.e.f. a notified date:

  • Petroleum crude.
  • High speed diesel.
  • Motor spirit (commonly known as petrol).
  • Natural gas and.
  • Aviation turbine fuel.

Note: GST is to be collected and paid by a Taxable Person (as defined as per the act). The Value for the levy of the tax will be the transaction value under Section 15 of the act.

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Lesson Posted on 19 Feb Financial Planning/Taxation

An Introduction To GST

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Gst or Goods And Services Tax is a form of Indirect Tax. Before we understand what GST is, we must understand the differences between direct and indirect taxes. Direct Taxes Vs Indirect Taxes: Tax can be defined as an obligatory contribution paid to the Government, which, in turn, provides public services... read more

Gst or Goods And Services Tax is a form of Indirect Tax. Before we understand what GST is, we must understand the differences between direct and indirect taxes. 

Direct Taxes Vs Indirect Taxes: Tax can be defined as an obligatory contribution paid to the Government, which, in turn, provides public services to the people. In India, taxes can be broadly classified as Direct Taxes and Indirect Taxes.

Direct Taxes:

  • The burden of tax is on the taxpayer and cannot be passed on.
  • Tax is paid directly to the Government.
  • Direct Taxes are Progressive in nature: Poor do not feel the burden of tax.
  • Tax is levied on Income not Consumption;
  • Income Tax comes under the purview of Direct Taxes.

Indirect Taxes:

  • The burden or the incidence of tax is passed on in stages, and is finally borne by the consumer.
  • At each stage, tax is paid to the Government, wherein, the taxpayer collects his tax debt from the next party.
  • The final customer pays the actual tax.
  • Indirect taxes are regressive in nature poor may feel the burden of tax.
  • These are taxes on Consumption and not on Income.
  • GST comes under the purview of Indirect Taxes.

GST is applicable on the “supply” of services or goods as opposed to the earlier concept of taxation on the manufacture of goods (Excise duty); sale of goods (Sales tax); or providing of service (Service Tax).

GST is a destination-based tax structure unlike the origin-based structure that existed previously. In order to implement GST, a dual GST system has been adopted which is imposed concurrently by the Centre and States.

As per the dual GST system, Goods and services are simultaneously taxed under GST by the Centre and States. GST extends to whole of India including the State of Jammu and Kashmir.

GST comprises of:

  • Central Goods and Service Tax (CGST): Levied and collected by Central Government.
  • State Goods and Service Tax (SGST): Levied and collected by State Governments/Union Territories with State Legislatures, on intra-State supplies of taxable goods and/or services.
  • Union Territory Goods and Service Tax (UTGST): Levied and collected by Union Territories without State Legislatures, on intra-State supplies of taxable goods and/or services. 
  • Integrated Goods and Service Tax (IGST): Levied by Central Government on all Inter-State supplies.
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Lesson Posted on 15/12/2017 Exam Coaching/CA Coaching Exam Coaching/CA Coaching/IPCC Group 1 Exam Coaching/CA Coaching/IPCC Group 2 +8 Exam Coaching/Company Secratary (CS) Coaching Exam Coaching/ICWA Coaching Tuition/BCom Tuition/Business Taxation Financial Planning/Taxation Tuition/BBA Tuition/Taxation Tuition/BBA Tuition Tuition/BCom Tuition Exam Coaching/CA Coaching/CPT less

What Is The Difference Between VAT And GST?

Ca Prashanth Reddy

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Q: What is the difference between VAT and GST? A: Following are the basic differences between VAT and GST: VAT was leviable only by the respective State Governments, while GST is leviable by Central and State Governments simultaneously. VAT was applicable only on goods, while GST is levied both... read more

Q: What is the difference between VAT and GST?

A: Following are the basic differences between VAT and GST:

  1. VAT was leviable only by the respective State Governments, while GST is leviable by Central and State Governments simultaneously.
  2. VAT was applicable only on goods, while GST is levied both on goods as well as services.
  3. VAT was levied on SALE of goods while GST is levied on SUPPLY of goods or services or both. (Sale is only A FORM OF supply. The definition of supply includes other forms as well, such as transfer, disposal, rent, lease, license, barter, exchange)
  4. The excise duty or service tax paid on inputs could not be set off against the output VAT, while GST ensures seamless flow of credit with prescribed conditions.

This being said, nature-wise both VAT and GST are quite similar, since both are the taxes levied on additional value created.

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Lesson Posted on 05/07/2017 Exam Coaching/CA Coaching Exam Coaching/ICWA Coaching Exam Coaching/Company Secratary (CS) Coaching +9 Exam Coaching/CA Coaching/CPT Exam Coaching/CA Coaching/IPCC Group 1 Exam Coaching/CA Coaching/IPCC Group 2 Tuition/BCom Tuition Tuition/BBA Tuition Tuition/BCom Tuition/Business Taxation Tuition/BBA Tuition/Taxation Financial Planning/Taxation Tuition/Class XI-XII Tuition (PUC) less

Why GST May Boost Gold Smuggling, Illegal Jewellery Sales?

Ca Prashanth Reddy

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Mumbai: A hike in taxes on gold under GST (Goods and Services Tax) could stoke under-the-counter buying and drive up appetite for precious metal smuggled into the country, where millions of people store big chunks of their wealth in bullion and jewellery.As part of a new nationwide tax regime that... read more

Mumbai: A hike in taxes on gold under GST (Goods and Services Tax) could stoke under-the-counter buying and drive up appetite for precious metal smuggled into the country, where millions of people store big chunks of their wealth in bullion and jewellery.

As part of a new nationwide tax regime that kicked in on July 1, the GST on gold has jumped to 3 per cent from 1.2 per cent previously, with traders and buyers saying the move will likely force more transactions into the black market.

"Three per cent is too much. I preferred to buy without receipts. The jeweller did not have any problem," said a middle-aged buyer, who declined to be identified after making purchases on Monday at the country's biggest bullion market, Zaveri Bazaar in Mumbai.

Smaller shops could be more inclined to sell without receipts, potentially hitting sales at big jewellers that keep to the rules, said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the eastern Indian city Kolkata.

"Just to save 1 per cent, some customers were earlier buying gold without receipts. With the 3 per cent GST, now many more will be tempted to make unofficial purchases from small jewellers," Ajmera said.

The tax hike could also encourage more smuggling into the world's second biggest gold consumer, which buys almost all its bullion abroad. Gold smuggling has been rife since India raised import duties on the metal to 10 per cent in a series of hikes to August 2013, looking to curb demand to narrow a gaping current account deficit

The World Gold Council estimates smuggling networks imported up to 120 tonnes of gold into India in 2016.

"The GST rate has increased the incentive to bring in smuggled gold. The government should reduce import duty and make smuggling unviable," said Aditya Pethe, a director at Waman Hari Pethe Jewellers in Mumbai.
 
The country's legal imports typically stand at around 800 tonnes a year, with the metal used in everything from investment to religious donations and wedding gifts.
 
"A lower import duty would increase legal imports and ultimately legal sales. Tax revenue would go up instead of going down," said Daman Prakash Rathod, director at wholesaler MNC Bullion in the southern city of Chennai.
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Lesson Posted on 04/07/2017 Exam Coaching/CA Coaching Exam Coaching/ICWA Coaching Exam Coaching/Company Secratary (CS) Coaching +11 Exam Coaching/ACCA Exam Coaching Exam Coaching/CA Coaching/CPT Exam Coaching/CA Coaching/IPCC Group 1 Exam Coaching/CA Coaching/IPCC Group 2 Tuition/BCom Tuition Tuition/BBA Tuition Tuition/MBA Tuition Tuition/MCom Tuition Tuition/Class XI-XII Tuition (PUC) Tuition/BCom Tuition/Business Taxation Financial Planning/Taxation less

Income Tax Basics

Ca Prashanth Reddy

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Everyone who earns or gets an income in India is subject to income tax. (Yes, Indians living abroad too). Your income could be salary, pension or could be from a savings account that’s quietly accumulating a 4% interest. Even, winners of ‘Kaun Banega Crorepati’ have to pay tax on their... read more

Everyone who earns or gets an income in India is subject to income tax. (Yes, Indians living abroad too). Your income could be salary, pension or could be from a savings account that’s quietly accumulating a 4% interest. Even, winners of ‘Kaun Banega Crorepati’ have to pay tax on their prize money. 
For simpler classification, the Income Tax Department breaks down income into five heads:

Income from Salary Income from salary and pension are covered under here
Income from House Property This is rental income mostly
Income from Capital Gains Income from sale of a capital asset such as mutual funds, shares, house property, agricultural land
Income from Business and Profession This is when you are self-employed, work as a freelancer or contractor, or you run a business. Life insurance agents, doctors and lawyers who have their own practice, tuition teachers,
Income from Other Sources Income from savings bank account interest, fixed deposits, winning KBC
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Lesson Posted on 01/07/2017 Exam Coaching/ACCA Exam Coaching Tuition/BBA Tuition Tuition/BCom Tuition +7 Exam Coaching/CA Coaching Tuition/Class XI-XII Tuition (PUC) Exam Coaching/Company Secratary (CS) Coaching Exam Coaching/ICWA Coaching Tuition/MBA Tuition Tuition/MCom Tuition Financial Planning/Taxation less

TDS TCS For AY 2018-19 (FY 2017-18)

Ca Prashanth Reddy

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Points to be considered: 1. Surcharge & Education Cess will not be considered for the purpose of TDS except in case of TDS on salary payment. 2. Higher rate of TDS for not furnishing correct PAN @ 20%. 3. Higher rate of TCS for not furnishing correct PAN @5% or twice of applicable rate whichever... read more

Points to be considered:

1. Surcharge & Education Cess will not be considered for the purpose of TDS except in case of TDS on salary payment.

2. Higher rate of TDS for not furnishing correct PAN @ 20%.

3. Higher rate of TCS for not furnishing correct PAN @5% or twice of applicable rate whichever is higher.

4. Form 15G/ 15H received for non deduction of TDS (including Nil return): Now needs to report online on quaterly basis

5. Quaterly Statement of TDS: 31st July, 31st Oct, 31st Jan, 31st May

6. Deposition of TDS / TCS:

  • TDS: March month: 30th April

  • Other Month 7th of next month

  • TCS: 7th of next month

7. Issue of TDS / TCS certificate: Within 15 Days from the due date of filing of quarterly TDS return Salary certificate in Form-16 upto 15th June of succeeding financial.

8. Fees of Rs. 200/- per day for late filing of TDS and TCS Return.

9. Fail to file TDS return within one year of due date or furnishing incorrect information penalty Rs.10,000/-.

10. Online generation of TDS certificate is mandatory in case of every person whose accounts are required to be audited u/s 44AB.

11. Declaration needs to be obtained while purchasing a software, from the transferor that TDS has been made u/s 194J or u/s 195 on payment for any previous transfer of such software from a resident or non-resident along with PAN, otherwise TDS u/s 194J is  required to be deducted.

12. While fling quarterly TDS return, information in respect of cases where no TDS is deducted due to obtaining self declaration or no deduction/ lower deduction certificate u/s 197 received from Income tax department is to be mandatory filed in TDS  return.

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Lesson Posted on 28/06/2017 Financial Planning/Taxation Tuition/BCom Tuition

Set-off And Carry Forward Of Business Losses

Ramasamy

Set-off & Carry Forward Of Business Losses: Set-Off means adjustment of certain losses against the income under other sources in the same assessment year. Carrying Forward of unadjusted losses to be set-off in subsequent years is called Carry Forward.How to adjust Business Losses?If there is... read more

Set-off & Carry Forward Of Business Losses:     

Set-Off means adjustment of certain losses against the income under other sources in the same assessment year. Carrying Forward of unadjusted losses to be set-off in subsequent years is called Carry Forward.

How to adjust Business Losses?

If there is a loss in the business, the same can be adjusted against profits made in any other business of the same tax payer. The Loss, if any, still remaining, can be adjusted against Income from any other source.

From A/Y 2005-2006 loss from Business cannot be set off against Salary Income.

However, Loss sustained in speculative business can be adjusted only against profits earned in another speculative business.

Business Loss can be carried forward for a maximum period of next 8 (Eight) Assessment Years and adjusted against Business Profit of the subsequent years.

Unabsorbed Depreciation can be Set-Off even if Business/Profession is discontinued and can be carried forward for unlimited number of years.

However, for claiming the benefit of carry forward of losses, the tax payer has to invariably file his returns within due date.

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Lesson Posted on 28/06/2017 Financial Planning/Taxation Tuition/BCom Tuition

Important Points / Characteristics For Computing Salary Income

Ramasamy

For any payment to be made taxable under the head ‘Salaries’ it must fulfill the following characteristics. In case any receipt is not covered under any of these features it will not come under this head 1. Relationship of Employer and Employee: For a payment to... read more

 

 

For any payment to be made taxable under the head ‘Salaries’ it must fulfill the following characteristics. In case any receipt is not covered under any of these features it will not come under this head

1. Relationship of Employer and Employee:

For a payment to fall under the head ‘Salaries’ the relationship of employer and emplqyee must exist between payee and the receiver of the salary. The employer may be a Government,\. a Local authority, a company or any other public body or an Association or H.U.F. or even an individual. Every kind of payment to every kind of servant, public or private, however high or low placed he may be, is covered under the provisions of this Act. Even the remuneration payable to an employee of a foreign Govt. falls within this section. Even servant is an employee, but an agent may or may not be employee. A detailing agent of a selling concern is its employee whereas the person holding an agency to sell the goods of such a concern will not be employee. The relationship of master and servant is the only test to establish the relationship of employer and employee. A director of a company, though holding an office, is not an. employee unless it is so provided in the independent contract, or the Articles of Association of the company provide for such a relationship.
[Ram Prashad v. C.I. T. (86 1. T.R. 122, 127 (S. C.)]

2. Salary from more than one Employer:

Any amount of salary received or due from one or more than one employer/source shall be taxable under this head. Such situation may arise when an employee is working with two employers simultaneously or has worked with one employer and later on serves with another employer after leaving service with, first employer, salary from both the employers shall be taxable under this head.

3. Salary from Present, Past or Prospective Employer:

Salary received or due from present, past or future employer is also taxable under this head.

4. Tax Free Salary:

Sometimes, the employer allows an employee to draw tax-free salary, e.g., the employer pays full salary to the employee and also pays tax on this directly to the department. The employee’s assessment is to be made not on the amount of salary he is drawing but on gross amount i.e., salary drawn plus the tax paid by the employer.

5. Salary Received as Member of Parliament:

Salary received by a member of Parliament is not taxable under the head ‘Salaries’. It is taxable as income from other sources’. Any allowance received by them is fully exempted from tax.

6. Receipts from Persons other than Employer:

Perquisites or benefits or any other remuneration received from persons other than the employer, would be taxable not under the head ‘Salaries’ but under the head ‘income from other sources’ even if they accrue to the employee by reason of his employment or while he was discharging his normal duties, e.g., amount received by a professor of a college for acting as an examiner in a university.

For example, Dr. Dhir is an employee of a leading physician of Delhi. In one case, the patient’s life was saved because of the hard work and intelligence of Dr. Dhir. The patient, therefore, gives 5,000 to Dr. Dhir in appreciation of his services. The amount in this case is not chargeable as ‘salary’ but constitutes income from other sources.

7. Place of Accrual of Salary Income:

Salary accrues at that place where the services are rendered. If the services are rendered in India, the salary accrues in India and if the services are rendered outside India, the salary accrues outside India. Thus, if a person employed in India goes on leave to England and gets his leave salary there, the salary is said to accrue in India and not in England, because it is paid for services rendered in India. Pension paid in a foreign country for services rendered in India, will be Indian income, as it is paid for the services rendered in India although in the past. On the other hand, if any person is employed in India and transferred to its branch in England, the salary received by him in England is not Indian income, but it is income arising in England as the service is rendered in England. Followings are the two exceptions to this rule

  1. A pension payable outside India to a person who has gone to foreign country for permanent settlement is not deemed to arise in India, if pension is payable to a person appointed by the Secretary of State or to a person who was appointed before 15th August 1947, as a judge of the Federal Court or of a High Court and who continued to serve on or after the commencement of the Constitution as a judge in India. This is a special concession granted to certain officials of Government, who were employees before independence but continued to serve after this.
  2. The Govt. of India employs Indian citizens for services to be rendered in foreign countries and salary paid outside India is deemed to accrue or arise in India. This provision helps in taxing the salaries received by Government servants posted abroad. But under Section 10(7) the allowances and perquisites paid or allowed by the Government outside India are to be excluded from total income.

8. Deductions made by the Employer:

If, an employer makes certain deductions out of the salary payable to an employee, amount so deducted is deemed to be received by the employee and the amount so deducted is also taken as application of income by the employee. Some important types of deductions made by the employer are as follows :

            1.         Deductions made to recover the loan advanced by the employer.

            2.         Employee’s contribution towards the provident fund, income-tax and profession tax.

            3.         Deduction made to pay the premium on life insurance policy of the employee.

            4.         Any other deduction for which the employee has authorised the employer.

In case an employee receives his salary after certain deductions made by employer on account of profession tax, contribution to provident fund, tax deducted at source, the ‘salary’ will not be the net amount received, rather it will be the gross salary due to the employee.

9. Salary or Pension received by UNO Employees:

It is fully exempted as per circular No. 293 Dt. 10-2-81.

10. Salary received by a teacherlresearcher from a SAARC member State:

Exempted upto 2 years.

11. Salary as Partner:

Any salary, commission or remuneration received by a working partner from a firm assessed as firm shall not be taxable under the head ‘Salaries’. It is taxable under the head Profits & Gains.

12. Payments received by Legal Heirs of a Deceased Employee:

Any ex-gratia payment or compensation given to widow or legal heirs of an employee who dies during service is not taxable as salary income but family pension received is taxable under ‘other sources’.

13. Payment made after Cessation of Employment;

Payment made by an employer to his employee after the cessation of his employment is also taxable under the head ‘Salaries’. It is taxable under this head because it represents remuneration for services rendered in the past.

14. Voluntary foregoing : Application of Salary:

Voluntary foregoing of salary by an employee is simply an application of income by him and, therefore, any voluntary foregoing of salary is taxable when it is due, whether paid or not (Section 15). The salary which is voluntarily foregone must be actually due in the name of the employee. Voluntary foregoing is different from voluntary surrender of salaries which is exempted from tax.

15. Previous year for Salaries:

The previous year for the income under the head ‘Salaries’ shall always be financial year of the Government of India (i.e., April to March).

16. Taxability of salary on due or receipt, whichever is earlier basis:

U/s 15(a) salary is taxable on due basis whether received or not. Salary becomes due after doing work and in India it is due on monthly basis. Every employee gets salary on completion of a month. As per our financial system the year starts on 1St April and ends on 31st March. As such first salary for the month of April becomes due on 1st day of next month. But in some cases salary becomes due

On the last day of the month and salary for the month of April shall be due on 30th April. This results into following two situations :

  1. If salary is due on 1 st. day of the month, during the financial year 2013-14 first salary shall be due on 1st April 2013 and it shall be for the month of March 2013 and last salary shall be due on 1st March 2014 for the month of February 2014.
  2. If salary is due on the last day of the month, during the financial year 2013-14 first salary shall be due on 30th April 2013 and it shall be for the month of April 2013 and last salary shall be due on 31st March 2014 for the month of March 2014.

17. Salary Grade / Pay Scale:

In some organisations like Government offices, Banks, Post Offices, Railways, Universities, Colleges etc. salary to employees is paid as per pay scales or salary grades. The pay sc,les fixes the starting salary of an employee and also the annual increment in future years of employment.

The annual increment is granted to employee after completion of one full year of service e.g. if an employee joins his service/job on 1st September 2010, he will be granted 1st annual increment w.e.f. 1st September 2011.

Example of Grade/Pay Scale:

Rs 8,000-Rs 300- Rs 11,000
Rs 12,000- Rs 500- Rs 20,000

The amount mentioned in between two big amounts is known as annual increment i.e. the salary of employee will increase by this amount on the completion of every 12 month of his job.

Example. Mr. A joined his job on 1st September 2009 in the grade of Rs 12,000- Rs 500- Rs 20,000. Find out his salary for the previous year 2013-14.

18. Advance salary received:

In case an assessee receives some salary in advance in a previous year which was actually not due in that year, it shall be taxable in the year of receipt. In case, any loan or advance is taken it is not treated as advance salary.

19. Arrears of salary received:

Any amount of salary received from present or past employer during relevant previous year and which relates to some earlier previous years, is treated as arrears of salary. It is taxable in the year in which received and not the year to which it belongs. [C.I.T. v. Gajapathy Naidu (1964) 58 I.T.R., 114 (S.C.)]. In case assessee has to pay tax at a rate higher than that at which he would have paid, had these arrears been received in the year to which they belong, assessee can apply to Income-tax Officer for relief u/s 89(1)

20. Salary in Lieu of notice:

To terminate the services of an employee it is essential to serve a notice as per service agreement. In case it is desired to relieve the employee immediately, he is given salary in lieu of such notice period. Such amount is fully taxable under the head ‘salaries’ on receipt basis.

 

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Lesson Posted on 28/06/2017 Financial Planning/Taxation Tuition/BCom Tuition

Rules Regarding Calculation Of Value Of 'Rent Free House' For Computing Salary Income

Ramasamy

I- For Unfurnished Accommodation (A) Owned by employer (a) Govt. Employees. The value of house is rent fixed : 24% of Salary (for the period or days for which accommodation is provided in hotel) or actual bill which ever is less is taxable. B. Hired by employer : ... read more
 
I- For Unfurnished Accommodation

(A) Owned by employer

(a) Govt. Employees. The value of house is rent fixed [license feel by the govt. for such house. It can be rent charged by Govt. from another employee of same status for similar type of house. Market rental value of this type of accommodation is not taken into account and hence ignored.

(b) Other employees. Value of house to be taxed is calculated in following manner :

(i) In cities the population of which is more than 25 lakhs as per census of 2001:

15% of Salary.

(ii) In cities the population of which is exceeding 10 lakhs but not exceeding 25 laths as per census of 2001 :

10% of Salary.

 

(iii) In cities and towns the population of which is 10 lakhs or less than 10 lakhs as per 2001 census :

7½% of Salary.

(iv) Hotel accommodation [for more than 15 days on transfer from one place to another ] :

24% of Salary (for the period or days for which accommodation is provided in hotel) or actual bill which ever is less is taxable.

B. Hired by employer :                 

15% of Salary or Actual rent paid or payable by employer which ever is less is taxable in all cities.

II - For furnished accommodation

In case of all types of employees calculate value of unfinished house.

If furniture is owned by employer add 10% p.a. of cost of furniture.

If furniture is hired actual hire charges paid or payable by employer are added.

The term ‘furniture’ includes usual items of furniture like sofas, beds, chairs, tables and other household appliances. It also includes modem electrical appliances like television, radio, refrigerator, air conditioner, geyser, etc.

 

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