CA Online

The Supreme Court last week dismissed a large number of appeals moved by the excise authorities and allowed the appeals of construction companies, ruling that service tax could not be levied on indivisible works contracts prior to the introduction, on June 1, 2007, of the Finance Act, 2007 which expressly made such works contracts liable to service tax. All these cases, led by Commissioner of Central Excise vs L & T, arose before the 2007 amendment was made, which introduced the concept of “works contract” as being a separate subject matter of taxation. Works contracts which were indivisible and composite were split so that only labour and service elements of such contracts would be taxed under service tax. The revenue authorities assailed the judgments of various tribunals and high courts which had decided against them. According to them, the various components of works contracts were already split and taxed since 1994. On the other hand, the companies argued that not only was t...

A discussion paper on the first set of tax exemptions to be phased out will be in public domain soon, finance minister Arun Jaitley said on Sunday. “As I said in my last budget speech, the Union government will bring down the corporate tax level from 30% to 25% gradually. A discussion paper on this will be in the public domain shortly,” Jaitley said at a gathering organised by the Indian Chamber of Commerce on Sunday. Earlier in the day, addressing the inaugural function of the newly-launched Bandhan Bank, Jaitley pitched for financial patronisation of small and medium enterprises (SMEs). Bandhan Bank began operations on Sunday, with 501 branches and 14.3 million accounts across India. “SMEs generate maximum employment, besides contributing the least towards bad loans or non-performing assets,” Jaitley said. “That is why the Union government has opened Mudra Agency, which will soon become Mudra Bank, to fund SMEs, which often do not have access to institutional financing,” he...

The government has speeded up tax refunds with some taxpayers getting them within a week of filing returns. The quick response has helped the tax department win accolades -a rarity given that in the past it has faced criticism for holding up refunds to show healthier government finances. “Historic! I-T refund in less than a month of filing! Jai Ho!“ tweeted Bhaskar Bhattacharya, a former MNC executive. Others such as chartered accountant Kamlesh Vikamsey and Krish tweeted that they received refunds within a week and 10 days, respectively . The government is now looking to improve the process further. “Have noted the other suggestions regarding I-T refunds. Will have them looked into,“ revenue secretary Shaktikanta Das tweeted. Times of India, New Delhi, 24th Augsut 2015

Two out of three taxpayers don't know the tax rules and could be filing faulty returns Filing your tax returns is very easy, but make sure you know the tax rules when you do so. An online survey conducted by economictimes.com indicates abysmal levels of tax literacy . The returns of almost 66% of the 2,158 respondents could have faulty information, and almost 34% could even get a notice because of the errors in their tax forms. Interest income is where many taxpayers are going wrong. Almost 30% of the respondents believe that interest of up to Rs.10,000 from bank FDs is tax free in a year. They should know that the exemption under Section 80TTA is only for the interest on their savings bank accounts. What they earn on FDs and recurring deposits is taxable. Similarly , almost 30% believe that the interest earned on tax-saving infrastructure bonds bought a few years ago under Section 80CCF is not taxable because they were tax saving instruments.Wrong again. The bonds may have h...

The government is set to unveil taxpayer service verticals for the direct and indirect tax wings to deal with grievances and also work out ways to make the system more consumerfriendly and address constant complaints. On Monday, the Central Board of Excise and Customs (CBEC) is expected to announce its taxpayer services vertical, headed by a director general, along with two other verticals, at a meeting of chief commissioners that will be also be attended by finance minister Arun Jaitley . “The entity will deal with grievances and make sure that services offered to taxpayers, both individuals and companies, improve,“ said an officer. In the coming weeks, the Central Board of Direct Tax es (CBDT) will also set up a similar entity within the department. The revenue department has identified improving taxpayer services as the main focus area in the work programme for the current year. The two steps come after the tax department faced flak for the way it dealt with taxpayers, issui...

Last week, the Supreme Court directed that an Aadhaar ( the unique citizen identification) card not be mandatory for direct benefit transfers such as a cooking gas subsidy or distribution of foodgrain; however, it can be used as one of the proofs. At the same time, this year onwards the income tax department has said, if the Aadhaar number is linked to the PAN number, taxpayers need not send their physical I- T return forms to the processing centre. The Aadhaar number is sufficient verification. Why the confusion regarding Aadhaar? Why is it allowed for some financial transactions but not for others? For instance, if you want to open a bank account, buy an insurance policy or invest in mutual funds, it it technically possible to do it with only your Aadhaar card. All regulators — Reserve Bank of India, Securities and Exchange Board of India ( Sebi) and Insurance and Regulatory Development Authority of India ( Irdai) – have said the Aadhaar card is sufficient as proof of both iden...

A circular may be issued soon saying tax demands not to be pursued; changes to the law may be carried out in the next budget to provide legal certainty, says a finmin official The government may soon tell tax officials to stop pursuing minimum alternate tax demands against foreign portfolio investors (FPIs), seeking through this one measure to give investor sentiment a sharp boost and head off further legal wrangles over the levy. It will also bring swift closure to the biggest tax controversy concerning foreign investors after the Vodafone case. The Narendra Modi government had promised a stable and fair tax regime soon after taking over and is therefore keen on resolving the matter quickly as it looks to attract investment to revive growth. The likely move on MAT will follow the recommendation of a highlevel panel that overseas investors should get relief even prior to April 1, 2015, and not just after that date as mandated in this year's budget. The government could intr...

Madhya Pradesh CM says win in local polls a sign that Vyapam's a non-issue, calls Rahul Gandhi immature If there's no political consensus on the Modi government's land acquisition law, then states that value the necessity of such a law should be allowed to go ahead and implement the rules, Shivraj Singh Chouhan, Madhya Pradesh chief minister and an influential voice in Bharatiya Janata Party, told ET. A central law is not a must for states focussed on development, the electorally successful Chouhan said. Fringe Hindu elements who have voiced extreme voiced extreme views aren't a part of either BJP's or India's idea of social arrangements, Chouhan, widely reckoned to be a Rashtriya Swayamsevak Sangh favourite, said over the course of an extensive interaction with ET. On Rahul Gandhi, who has been vocal about the land law as well as demanding Chouhan's resignation over the Vyapam controversy, the CM said the Congress vice-president is yet to be “politi...

1.  No service tax can be levied on indivisible works contracts prior to 01.06.2007. 2.  Tribunal has the Power to Grant Extension of stay beyond 365 days when the assessee is not responsible for delay in disposing of the appeal, under section 35C(2A) of the Central Excise Act. [Delhi High Court in CCE Delhi vs. Brew Force Machine Pvt. Ltd]. 3.  Provision for doubtful debts not required to be add back to arrive at book profit u/s 115JA of the Income Tax Act. [CIT vs. Salgaonkar Mining Industries Pvt. Ltd High Court of Goa]. 4.  Income earned from supply of software embedded in hardware is not royalty. Honorable Delhi High Court in the case of Alcatel Lucent Canada.