Govt Worried At Tax Not Being Deducted At Source- March 26, 2009

There remains a concern for the government as the employers are not deducting tax at source has resulted in a loss of more than Rs 1,000 crore to the exchequer. In the past few months, the Income-Tax Department has written to more than 1,000 employers on complying with rules on tax deducted at source (TDS) as well as the advance tax depository. More than Rs 1,000 crore tax in TDS and advance taxes are in the process (of being) extracted from deductors to be deposited in the government accounts. We have written letters to such assessees to ensure tax compliance under this head, told Saroj Bala, CBDT Member (Revenue).

However, the department has also given Commissioners as well as other officials at field formations CDs on TDS returns for streamlining the tax accrued under this head.

No Tax For Expatriate For Work Discrete - March 9, 2009

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) informed that if the expatriate employee will be able to authenticate that while working outside India, he has not involved in any activity relating to Indian operations, the salary for that time period would not be taxable here.

As per Income Tax Act, if an individual has been in India during that year (the year for which tax liability is being calculated) for 182 days or more, is a resident in a previous year. He is also treated as a resident if he is in India for 60 days or more in a year provided that he has also been in India for 365 days or more in the prior four years.

Vikas Vasal, executive director (tax and regulatory services), KPMG, said, based on this ruling a position could be taken that individual is not taxable for the period for which he has rendered service outside India. But, the documentary proof would be critical for taking this position.

Highest Advance Tax - June 24, 2008

After a string of bad news on the economic front starting with spiraling fuel prices to a double digit rate of inflation, finally there seems to be something for the Finance Minister P Chidambaram to cheer about.

The advance tax payments for the first quarter of 2008-09 are up 27 per cent to Rs 20,700 crore in spite of interest rate pressure. The banking sector is doing well with ICICI Bank paying in Rs 340 crore and SBI''s advance tax increasing 31.8 per cent to Rs 663 crore.

With crude prices reaching for the sky, the upstream oil companies are cashing in with ONGC paying the highest advance tax at Rs 1342 crore and GAIL paying Rs 335 crore.

But all is not well in India Inc just as ONGC is raking in the moolah those who depend on coal and oil are a worried lot. The metal and mining companies have also put up a good show like Tata Steel which has benefited from a price hike at Corus paying Rs 356 crore in taxes and the National Mineral Development Corporation posting a figure of Rs 400 crore.

CBDT Come Up With New Instructions For The Tax Department

The Central Board of Direct Taxes (CBDT) has come up with new instructions for the tax department on the issue of filing of its appeals before the Income Tax Appellate Tribunals (ITAT), High Courts and Supreme Court, giving greater clarity on the matter. The latest instructions spell out elaborately the monetary restrictions and the conditions under which the department could prefer appeals before the Appellate Tribunals, High Courts and Supreme Court. Although the monetary limits were spelt out in CBDT''s earlier instructions in 2005 and 2007, tax experts said that clarity was missing on issues like treatment of penalty orders. The department can file appeals in those cases where the tax effect surpasses the monetary limit prescribed under the latest instructions. While the monetary limit for appeal before appellate tribunal has been estimated at Rs 2 lakh, the limit for appeal under Section 260A before the High Court is Rs 4 lakh and before the Supreme Court is Rs 10 lakh.

FM Likely To Reinstate Tax Holiday On Oil, Gas Production

The finance ministry is likely to continue providing a seven-year income-tax holiday on production of oil and gas. The continuation of the tax holiday will come as a relief to oil and gas companies, which have already infused huge money in exploration of hydrocarbons. It will also assist the petroleum ministry, which has been promising the tax holiday while marketing the auction of oil and gas block under the New Exploration and Licensing Policy (Nelp). Petroleum Minister Murli Deora met Finance Minister P Chidambaram. The proposal to remove the income tax holiday had put in question the auction of oil and gas blocks under Nelp VII.

Tax Sops Proposed For Long-Term Insurance

NEW DELHI: A recent Planning Commission report which iterated the need for relaxing the capital regulations for insurance players and de-tariffing of all insurance products, also pitched for a separate income tax exemption limit for savings in long-term life insurance and pension products.

The high-level group headed by Commission member Anwarul Hoda recommended that health insurance premia be made eligible for tax exemptions, to increase the penetration of health insurance products, especially in rural areas.

The group said a separate exemption limit could be considered for investments in dedicated close-ended infrastructure mutual funds and long-term bank deposits.

Further, the group attempted to make out a case for fiscal incentives for agriculture insurance, underscoring the importance of risk mitigation in agriculture, which is essential for spurring investments in this low growth area.

At present, savings are encouraged through tax exemption under Section 80(C) of the Income tax Act. However, short-term and long-term savings instruments are clubbed under the same fungible exemption limit. Calling for capital requirement to enter insurance business to be set at 100% of the solvency margin requirement, the group said this would promote growth and reduce the cost of insurance for policy holders.

Referring to the financial markets, the high-level group stressed that exchange traded derivatives market be developed soon. Pointing out that currency and interest rate derivatives market, along with deep and liquid bond market, is the key missing market in India, the group said exchange traded derivatives play a complementary role to OTC derivatives.

It said steps should be taken for trading of vanilla derivative products on existing exchanges to enhance liquidity and depth of the markets. Structured and exotic products could continue to be transacted on an OTC basis, it added.

“There is widespread recognition that the liberalisation of the Indian economy has been uneven, with the liberalisation of the real sector far outpacing that of the financial sector, as evidenced by the continuing licensing requirements for expansion as well as entry, and fairly intensive regulation over operational matters,” the group emphasised in its report.

On Populist Track, Income Tax Slabs Raised

New Delhi: Finance Minister P Chidambaram announced major – and arguably populist – changes in the income tax slab.

The threshold of exemption for all income tax assesses has been raised from Rs 1,10,000 to Rs 1,50,000.

The minimum benefit to a person with an annual income of Rs 1.5 lakh at the threshold will be around Rs 4,000.

New tax slabs will be:

* 10 per cent for 1,50,000 to 3,00,000

* 20 per cent for 3,00,000 to 5,00,000

* 30 per cent above 5,00,000

Threshold for small service providers has been raised from Rs 8 lakh to Rs 10 lakh.

For women, the income tax limit goes up from Rs 1.45 lakh to Rs 1.80 lakh.

An additional deduction of Rs 15,000 under Section 80D has been allowed to an individual who pays medical insurance premium for his/her parents.

Senior Citizens Saving Scheme 2004 and the Post Office Term Deposit Account have been added to the basket of saving instruments under Sec.80(C) of the Income Tax Act.

Chidambaram also introduced an additional deduction of Rs 15,000 for taxpayers towards payment of medical insurance for parents. This would be in addition to the Rs 1 lakh limit for savings under Section 80C of the Income Tax Act.

Budget Likely To Give Relief To Income Tax Payers

Income tax payers are likely to get a major relief in the Budget 2008-09, as the government prepares itself to please the middle class in the election year.Finance Minister P Chidambaram can give a marginal but visible relief to personal income tax assessees this year, as tax collections have substantially improved over the past three years. With buoyant tax collections in 2007-08, there is significant pressure on Chidambaram to reduce the effective rates. The Minister himself has acknowledged that with better tax compliance, there could be a case for cut in rates. The minimum income threshold limit for income tax payer could be raised from Rs 1,10,000 to Rs 1,25,000 or Rs 1,30,000, sources said. Similarly, the income threshold for 30 per cent tax rate could be raised from the current Rs 2,50,000 per annum, sources said, adding that this had been kept constant since fiscal year 2005-06.