RBI/2007-2008/ 260
DPSS No.1405 / 02.10.02 / 2007-2008
March 10, 2008
The Chairman / Chief Executive Officer
(All Scheduled commercial banks including RRBs)
Dear Sir
Customer charges for use of ATMs for cash withdrawal and balance enquiry
1. Automated Teller Machines (ATMs) have gained prominence as a delivery channel for banking transactions in India. Banks have been deploying ATMs to increase their reach. While ATMs facilitate a variety of banking transactions for customers, their main utility has been for cash withdrawal and balance enquiry. As at the end of December 2007, the number of ATMs deployed in India was 32,342. Commensurate with the branch network, larger banks have deployed more ATMs. Most banks prefer to deploy ATMs at locations where they have a large customer base or expect considerable use. To increase the usage of ATMs as a delivery channel, banks have also entered into bilateral or multilateral arrangements with other banks to have inter-bank ATM networks.
2. It is evident that the charges levied on the customers vary from bank to bank and also vary according to the ATM network that is used for the transaction. Consequently, a customer is not aware, before hand, of the charges that will be levied for a particular ATM transaction, while using an ATM of another bank. This generally discourages the customer from using the ATMs of other banks. It is, therefore, essential to ensure greater transparency
Friday, March 27, 2009
The levy under section 234B is compensatory in nature and is not in the nature of penalty: HC Delhi
CASE LAW DETAILS
Decided by: HIGH COURT OF DELHI
In The case of: CIT v Anand Prakash
Appeal No. : ITA No. 116/2007
Decided on: February 27, 2009
RELEVENT PARAGRAPH
11. We have examined the decisions cited by the counsel on both sides and after considering the submissions made by them, we agree with the learned counsel for the Revenue that the levy under Section 234B of the said Act is compensatory in nature and is not in the nature of penalty. We may also note the decision of the Bombay High Court in the case of CIT v. Kotak Mahendra Finance Ltd: 265 ITR 119 (Bom), wherein the Bombay High Court observed that it was well settled that interest under Section 234B was compensatory in character and that it was not penal in nature. Another decision which would be relevant is of a Division Bench of this Court in the case of Dr Prannov Roy v. Commissioner of Income-tax and Another : 254 ITR 755 (Del.). In that case, the provisions of Section 234A were in issue. The question before the court was whether interest could be charged under Section 234A when, though the return had not been filed in time, the tax had been paid. The argument raised on behalf of the Revenue that such payment of tax did not strictly comply with the meaning of advance tax and would therefore, have to be disregarded for the purposes of charging interest under Section 234A, was rejected. The * Court also held that interest under section 234A was compensatory in nature and unless any loss was caused to the Revenue, the same could not be charged from the assessee. It may be relevant to point out that the matter was taken up in appeal before the Supreme Court and by its decision dated 17.09.2008 in CIT v. Prannov Roy /Civil ‘Appeal No. 448/2003L the Supreme Court noted that: “the High Court, while accepting the writ petition and setting aside the interest charged under section 234A of the Act, has come to the conclusion that interest is not a penalty and that the interest is levied by way of compensation to compensate the revenue in order to avoid it from being deprived of the payment of tax on the due date.
“Having heard counsel on both the sides we entirely agree with the finding recorded by the High Court as also the interpretation of Section 234′A of the Act as it stood at the relevant time. ”
12. Coming back to the present appeals, we are of the view that Section 234A, Section 234B and Section 234C are of the same class. On going through these provisions, it is clear that interest’ is sought to be charged on account of the fact that the Government is deprived of its revenue. Under Section 234A, interest is charged if tax whichever to be paid at the time of filing of the return is not paid at that point of time, Section 234B provides for levy of interest for default in payment of advance tax and Section 234C stipulates the charging of interest for default in the payments of advance tax on the appointed dates of payment. It is clear that under the said Act tax is payable at different dates and, through different modes. Where specific dates of payment of tax are not adhered to, it can be said that the Government is deprived of tax on those dates. Interest is chargeable under the provisions of the Act such a Sections 234A, 234B and 234C in order to compensate the Government for such deprivation. It is clear from the scheme of the Act and the nature of these provisions that they are compensatory and not penal. We, therefore, conclude that the levy of interest under Section 234B of the Income Tax Act is compensatory in nature. The Tribunal, having taken a contrary view has clearly erred.
Decided by: HIGH COURT OF DELHI
In The case of: CIT v Anand Prakash
Appeal No. : ITA No. 116/2007
Decided on: February 27, 2009
RELEVENT PARAGRAPH
11. We have examined the decisions cited by the counsel on both sides and after considering the submissions made by them, we agree with the learned counsel for the Revenue that the levy under Section 234B of the said Act is compensatory in nature and is not in the nature of penalty. We may also note the decision of the Bombay High Court in the case of CIT v. Kotak Mahendra Finance Ltd: 265 ITR 119 (Bom), wherein the Bombay High Court observed that it was well settled that interest under Section 234B was compensatory in character and that it was not penal in nature. Another decision which would be relevant is of a Division Bench of this Court in the case of Dr Prannov Roy v. Commissioner of Income-tax and Another : 254 ITR 755 (Del.). In that case, the provisions of Section 234A were in issue. The question before the court was whether interest could be charged under Section 234A when, though the return had not been filed in time, the tax had been paid. The argument raised on behalf of the Revenue that such payment of tax did not strictly comply with the meaning of advance tax and would therefore, have to be disregarded for the purposes of charging interest under Section 234A, was rejected. The * Court also held that interest under section 234A was compensatory in nature and unless any loss was caused to the Revenue, the same could not be charged from the assessee. It may be relevant to point out that the matter was taken up in appeal before the Supreme Court and by its decision dated 17.09.2008 in CIT v. Prannov Roy /Civil ‘Appeal No. 448/2003L the Supreme Court noted that: “the High Court, while accepting the writ petition and setting aside the interest charged under section 234A of the Act, has come to the conclusion that interest is not a penalty and that the interest is levied by way of compensation to compensate the revenue in order to avoid it from being deprived of the payment of tax on the due date.
“Having heard counsel on both the sides we entirely agree with the finding recorded by the High Court as also the interpretation of Section 234′A of the Act as it stood at the relevant time. ”
12. Coming back to the present appeals, we are of the view that Section 234A, Section 234B and Section 234C are of the same class. On going through these provisions, it is clear that interest’ is sought to be charged on account of the fact that the Government is deprived of its revenue. Under Section 234A, interest is charged if tax whichever to be paid at the time of filing of the return is not paid at that point of time, Section 234B provides for levy of interest for default in payment of advance tax and Section 234C stipulates the charging of interest for default in the payments of advance tax on the appointed dates of payment. It is clear that under the said Act tax is payable at different dates and, through different modes. Where specific dates of payment of tax are not adhered to, it can be said that the Government is deprived of tax on those dates. Interest is chargeable under the provisions of the Act such a Sections 234A, 234B and 234C in order to compensate the Government for such deprivation. It is clear from the scheme of the Act and the nature of these provisions that they are compensatory and not penal. We, therefore, conclude that the levy of interest under Section 234B of the Income Tax Act is compensatory in nature. The Tribunal, having taken a contrary view has clearly erred.
Depreciation @ 60% is allowed on Computer peripherals and accessories: ITAT New Delhi
CASE LAW DETAILS
Decided by: ITAT, DELHI BENCH `B’: NEW DELHI
In The case of: ACIT v Container Corporation of India Ltd.
Appeal No. : ITA Nos. 2851 & 3680/Del/2007
Decided on: February 27, 2009
SUMMARY OF CASE LAW
Printers, scanners and other peripherals are part and parcel of computer and depreciation against such asset are allowable @ 60 per cent.
RELEVANT PARAGRAPHS:
40. The accessories and peripherals of computers provide input processing, storage and various output devices. The output devices such as printer, scanner etc. are computer peripherals and form essential parts of PC. These output devices cannot work in isolation and also working on computer system without an output device such as printer would be futile. In view of the above, the claim of depreciation at 60% on printer, scanner and other computer peripherals is completely justified. The claim of depreciation of 60% further gets justified in view of the fact that even computer software which is installed on computer system supports the computer hardware and is eligible for depreciation at 60%.
41. As held by the Calcutta High Court decision in Jokai India Ltd. 251 ITR 39. in view of decision of Kolkata, ITAT in the case of ITO Vs. Sa Majumdar-2804TR~ 74, we hold that printers, scanners and other peripherals were part and parcel of computer and depreciation against such asset are allowable @ 60%. This ground is to be decided in favour of the assessee and against the revenue in view of the decision of the Kolkata Bench `B’ of the Tribunal in the case of ITO vs. Samiran Majumdar (2006) 98 ITD 119 (Kol) wherein the Tribunal allowed the claim by observing as under :
“Therefore, the printer and scanner were integral part of the computer system and were to be treated as computer for the purposes of allowing higher rate of depreciation, i.e., 60 per cent and accordingly, no interference was required in the order passed by the Commissioner (Appeals) on that account.” Therefore, the effective ground remains with regard to deduction under section 80IA in respect of inland ports.
42. We accordingly uphold the order of the CIT(A) in allowing depreciation @ 60% on computer peripherals and accessories by treating them as computers.
Decided by: ITAT, DELHI BENCH `B’: NEW DELHI
In The case of: ACIT v Container Corporation of India Ltd.
Appeal No. : ITA Nos. 2851 & 3680/Del/2007
Decided on: February 27, 2009
SUMMARY OF CASE LAW
Printers, scanners and other peripherals are part and parcel of computer and depreciation against such asset are allowable @ 60 per cent.
RELEVANT PARAGRAPHS:
40. The accessories and peripherals of computers provide input processing, storage and various output devices. The output devices such as printer, scanner etc. are computer peripherals and form essential parts of PC. These output devices cannot work in isolation and also working on computer system without an output device such as printer would be futile. In view of the above, the claim of depreciation at 60% on printer, scanner and other computer peripherals is completely justified. The claim of depreciation of 60% further gets justified in view of the fact that even computer software which is installed on computer system supports the computer hardware and is eligible for depreciation at 60%.
41. As held by the Calcutta High Court decision in Jokai India Ltd. 251 ITR 39. in view of decision of Kolkata, ITAT in the case of ITO Vs. Sa Majumdar-2804TR~ 74, we hold that printers, scanners and other peripherals were part and parcel of computer and depreciation against such asset are allowable @ 60%. This ground is to be decided in favour of the assessee and against the revenue in view of the decision of the Kolkata Bench `B’ of the Tribunal in the case of ITO vs. Samiran Majumdar (2006) 98 ITD 119 (Kol) wherein the Tribunal allowed the claim by observing as under :
“Therefore, the printer and scanner were integral part of the computer system and were to be treated as computer for the purposes of allowing higher rate of depreciation, i.e., 60 per cent and accordingly, no interference was required in the order passed by the Commissioner (Appeals) on that account.” Therefore, the effective ground remains with regard to deduction under section 80IA in respect of inland ports.
42. We accordingly uphold the order of the CIT(A) in allowing depreciation @ 60% on computer peripherals and accessories by treating them as computers.
Change in Format of Service Tax Return Form ST-3
Service Tax (Amendment) Rules, 2009 - Amendment in Form ST-3
Notification No. 10/2009-ST, dated 17-3-2009
In exercise of the powers conferred by section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994 namely : -
1. (1) These rules may be called the Service Tax (Amendment) Rules, 2009.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Service Tax Rules, 1994, in Form ST-3, after S. No. 7 and the entries relating thereto, the following shall be inserted, namely,-
“8. If the return has been prepared by a Service Tax Return Preparer (STRP), furnish further details as below:
(a) Identification No. of STRP
(b) Name of STRP
Signatures of Service Tax Return Preparer”
Download New ST-3 after Amendment
Notification No. 10/2009-ST, dated 17-3-2009
In exercise of the powers conferred by section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994 namely : -
1. (1) These rules may be called the Service Tax (Amendment) Rules, 2009.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Service Tax Rules, 1994, in Form ST-3, after S. No. 7 and the entries relating thereto, the following shall be inserted, namely,-
“8. If the return has been prepared by a Service Tax Return Preparer (STRP), furnish further details as below:
(a) Identification No. of STRP
(b) Name of STRP
Signatures of Service Tax Return Preparer”
Download New ST-3 after Amendment
Commerce Department backs tax exemption for SEZ services
Commerce Department backs tax exemption for SEZ services
The finance ministry should exempt companies in special economic zones (SEZ) from paying tax on the services they consume instead of making them seek refunds, according to the commerce department.
Earlier this month, the finance ministry had notified that instead of being exempt, companies within SEZs would have to claim refunds for the tax they pay on services. “We have written to the revenue department asking it to allow SEZs exemption on service tax within the zone as was being done earlier. For services outside the zone, developers and units could be given reimbursements on the taxes paid,” said a commerce department official. The industry prefers exemptions over reimbursements as the latter takes time, besides locking up funds with the government for a considerable period. A 10% tax is imposed by the government on 100 services. Initially, the government exempted companies from tax on services consumed within SEZs.
SEZs then demanded that exemption should be extended to authorised services consumed outside the zones such as port-handling, in-land transportation, courier and banking. Following months of discussions between the commerce and revenue departments, a notification was issued allowing refunds on services availed both outside and inside the zones. But the exemption was short-lived. It was laid down that SEZ developers and units will have to claim reimbursements. “We have pointed out to the revenue department that this change is unfair especially at a time when the industry is already starved of funds,” the official said. The revenue department has, however, not yet responded to the commerce department’s request.
The finance ministry should exempt companies in special economic zones (SEZ) from paying tax on the services they consume instead of making them seek refunds, according to the commerce department.
Earlier this month, the finance ministry had notified that instead of being exempt, companies within SEZs would have to claim refunds for the tax they pay on services. “We have written to the revenue department asking it to allow SEZs exemption on service tax within the zone as was being done earlier. For services outside the zone, developers and units could be given reimbursements on the taxes paid,” said a commerce department official. The industry prefers exemptions over reimbursements as the latter takes time, besides locking up funds with the government for a considerable period. A 10% tax is imposed by the government on 100 services. Initially, the government exempted companies from tax on services consumed within SEZs.
SEZs then demanded that exemption should be extended to authorised services consumed outside the zones such as port-handling, in-land transportation, courier and banking. Following months of discussions between the commerce and revenue departments, a notification was issued allowing refunds on services availed both outside and inside the zones. But the exemption was short-lived. It was laid down that SEZ developers and units will have to claim reimbursements. “We have pointed out to the revenue department that this change is unfair especially at a time when the industry is already starved of funds,” the official said. The revenue department has, however, not yet responded to the commerce department’s request.
Income-tax (Sixth Amendment) Rules, 2009-Insertion of rules 37 BA and 37-I-Rules regarding credit for TDS/TCS
Notification No. 28/2009, dt. 16-3-2009 [F.No. 133/93/2008-TPL]
In exercise of the powers conferred by section 295 read with sub-section (3) of section 199 and sub-section (4) of section 206C of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely :-
1. (1) these rules may be called the Income-tax (Sixth Amendment) Rules, 2009.
(2) They shall come into force with effect from the 1st day of April, 2009.
2. In the Income-tax Rules, 1962,-
(A) After rule 37B, the following rule shall be inserted, namely:
37BA.
(1) Credit for tax deducted at source for the purposes of section 199-Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority.
(2) (i) If the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for tax deducted at source shall be given to the other person in cases where–
(a) the income of the deductee is included in the total income of another person under the provisions of section 60, section 61, section 64, section 93 or section 94;
(b) the income of a deductee being an association of persons or a trust is assessable in the hands of members of the association of persons, or in the hands of trustees, as the case may be;
(c) the income from an asset held in the name of a deductee, being a partner of a firm or a karta of a Hindu undivided family, is assessable as the income of the firm, or Hindu undivided family, as the case may be;
(d) the income from a property, deposit, security, unit or share held in the name of a deductee is owned jointly by the deductee and other persons and the income is assessable in their hands in the same proportion as their ownership of the asset:
Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1).
(ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person.
(iii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody.
(3) (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable.
(ii) Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax.
(4) Credit for tax deducted at source and paid to the account of the Central Government shall be granted on the basis of -
(i) the information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorized by such authority: and
(ii) the information in the return of income in respect of the claim for the credit,
subject to verification in accordance with the risk management strategy formulated by the Board from time to time.”
(B) after rule 37H, the following rule shall be inserted, namely:–
37-I.(1) Credit for tax collected a source for the purposes of sub-section (4) of section 206C.-Credit for tax collect at source and paid to the Central Government in accordance with provisions of section 260C of the Act, shall be given to the person form whom the tax has been collected, on the basis of the information relating to collection of tax at source (hereinafter referred to as the collector) to the income-tax authority or the person authorized by such authority.
(2) (i) Where tax has been collected at source and paid to the Central Government, credit for such tax shall be given for the assessment year for which the income is assessable to tax.
(iii) Where tax has been collected at source and paid to the Central Government and the lease or license is relatable to more than one year, credit for tax collected at source shall be allowed across those years to which the lease or license relates in the same proportion.
(3) Credit for tax collected at source and paid to the account of the Central Government shall be granted on the basis of -
(i) the information relating to collection of tax furnished by the collector to the income-tax authority or the person authorized by such authority; and
(ii) the information in the return of income in respect of the claim for the credit,
subject to verification in accordance with the risk management strategy formulated by the Board from time to time.”
In exercise of the powers conferred by section 295 read with sub-section (3) of section 199 and sub-section (4) of section 206C of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely :-
1. (1) these rules may be called the Income-tax (Sixth Amendment) Rules, 2009.
(2) They shall come into force with effect from the 1st day of April, 2009.
2. In the Income-tax Rules, 1962,-
(A) After rule 37B, the following rule shall be inserted, namely:
37BA.
(1) Credit for tax deducted at source for the purposes of section 199-Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority.
(2) (i) If the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for tax deducted at source shall be given to the other person in cases where–
(a) the income of the deductee is included in the total income of another person under the provisions of section 60, section 61, section 64, section 93 or section 94;
(b) the income of a deductee being an association of persons or a trust is assessable in the hands of members of the association of persons, or in the hands of trustees, as the case may be;
(c) the income from an asset held in the name of a deductee, being a partner of a firm or a karta of a Hindu undivided family, is assessable as the income of the firm, or Hindu undivided family, as the case may be;
(d) the income from a property, deposit, security, unit or share held in the name of a deductee is owned jointly by the deductee and other persons and the income is assessable in their hands in the same proportion as their ownership of the asset:
Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1).
(ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person.
(iii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody.
(3) (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable.
(ii) Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax.
(4) Credit for tax deducted at source and paid to the account of the Central Government shall be granted on the basis of -
(i) the information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorized by such authority: and
(ii) the information in the return of income in respect of the claim for the credit,
subject to verification in accordance with the risk management strategy formulated by the Board from time to time.”
(B) after rule 37H, the following rule shall be inserted, namely:–
37-I.(1) Credit for tax collected a source for the purposes of sub-section (4) of section 206C.-Credit for tax collect at source and paid to the Central Government in accordance with provisions of section 260C of the Act, shall be given to the person form whom the tax has been collected, on the basis of the information relating to collection of tax at source (hereinafter referred to as the collector) to the income-tax authority or the person authorized by such authority.
(2) (i) Where tax has been collected at source and paid to the Central Government, credit for such tax shall be given for the assessment year for which the income is assessable to tax.
(iii) Where tax has been collected at source and paid to the Central Government and the lease or license is relatable to more than one year, credit for tax collected at source shall be allowed across those years to which the lease or license relates in the same proportion.
(3) Credit for tax collected at source and paid to the account of the Central Government shall be granted on the basis of -
(i) the information relating to collection of tax furnished by the collector to the income-tax authority or the person authorized by such authority; and
(ii) the information in the return of income in respect of the claim for the credit,
subject to verification in accordance with the risk management strategy formulated by the Board from time to time.”
Tuesday, March 17, 2009
IT MINISTRY MOOTS EXTENSION OF STPI BENEFITS TILL 2015
The Union IT ministry is keen on extending the tax benefits to the Software Technologies Parks of India (STPI) by another five years till 2015, and is in talks with the finance ministry. Jainder Singh, Union IT secretary, said, “We have already taken up the matter with the finance ministry as we believe that the extension is important for the IT units, especially the small and medium exterprises.” The Interim Budget announced this month did not spell out any relief for the export-oriented Indian IT industry, where the tax exemptions available under the STPI scheme were slated to come to an end in March 2010.
The income tax benefits under section 10-A and 10-B were extended till 2010 in last year’s Union budget from the earlier scheduled 2009.
The income tax benefits under section 10-A and 10-B were extended till 2010 in last year’s Union budget from the earlier scheduled 2009.
Tally released ERP Version, Download for Free
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ERP empowers the enterprise to gain a competitive edge in a global business environment. The NOW Generation ERP demystifies all the preconceived notions of complexity and high cost of a traditional ERP. It should serve as a company’s primary business management application right from the day you start implementation, assuring new levels of efficiency and control, while ensuring low cost of ownership and high return on investment.
Tally (India), a market leader in business software solutions introduces ‘TallyAscent’ - a fully integrated Enterprise Resource Planning suite. A solution that helps you visualize critical information, enhance productivity and seamlessly integrate all your business processes, helping you to stay in complete control of your businesses, irrespective of the magnitude of change or growth. Simplifying growth and fulfilling the needs of growing businesses with amazing flexibility and incredible speed, this robust suite from Tally enables a true and unified picture of critical up-to-the-minute business information.
TallyAscent helps you to adapt quickly to business changes on the fly. It follows iterative implementation enabling its usage from day one of implementation. It is very simple to use, requires minimal user training and demands least resource utilization.
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Manage your business
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Integration of Business Functions
TallyAscent ERP
Functional Areas
• Dashboard
• Financials
• Inventory Management
• Payroll & HR
• Manufacturing
• Sales
• Purchase
TallyAscent ERP- DROOT Technology
• Dynamic Recursive Object Oriented ( DROOT) Technology
• Workflows and Alerts across all functional areas
• High Scalability and Flexible Deployment Architecture
• Roles, Authorizations and Security
• Multilanguage support
The Past
• Traditional ERP = Previous Generation ERP
Not Suitable for medium and large enterprises (MLE) of emerging economies, like India
• Previous Generation ERP does not cater to changing needs of MLE
The Present
• MLE’s need a ‘Now Generation ERP’ that suits to their requirements and can adapt to the continuous changes
9 Compelling Reasons to adopt to
TallyAscent – The “Now Generation” ERP
1. Self Implementable
2. Infrastructure Proof
3. LAN Licensing
4. Interoperability
5. Powerful Dashboard Reporting
6. Real-time Data Synchronization
7. World’s first Concurrent Multilingual ERP
8. OODBMS – D:ROOT Technology
9. Cost of Ownership (TCO)
#1: Self Implementable
Previous Generation ERPs
• Few months to few years
• Long and complex Implementation Process
• Few Weeks to few months to start using
TallyAscent
• Go live on day 1
• Its just few hours to few days
Previous Generation ERPs
• Extensive Infrastructure required
• Sophisticated Back Up Systems
• Sophisticated Environment Control Systems
TallyAscent
• Just a Desktop is enough
#3: LAN Licensing Previous Generation ERPs
• License Raj
• Application License
• User License
• DB License etc.
TallyAscent
• Client Raj
• LAN Licensing
#4: Interoperability
Previous Generation ERPs
• Almost Impossible
• Shockingly Expensive
• Very Time Consuming
• High Vendor Dependency
TallyAscent
• User Friendly
• Fast
• Easiest and Interoperable flexibility Platform
#5: Powerful Dashboard Reporting
Previous Generation ERPs
• Rigid Reporting Mechanism
TallyAscent
• Flexible & Powerful Reporting System
• Complete Visibility Across Organization
• Transparency across branches
• Complete up to the minute
• Drill Down to the last detail
• Allows online information scan
#6:Real-time Data Synchronization
Previous Generation ERP
• Centralized Application & Database
• Dedicated 24×7 Connectivity
• Very High Data Load
• Connectivity Breakdown means restart synchronization from beginning
TallyAscent
• Hub & Spoke Concept
• Occasional Connectivity
• Negligible Data Load
• Connectivity Breakdown leads to data sync starting from the point of breakdown
#7: World’s First
Concurrent Multilingual ERP
Previous Generation ERPs
• Concurrent Multilingual Concept Not Even Heard
TallyAscent
• World’s First Concurrent Multilingual ERP
• Conduct your business in multiple languages
• Enter Data in any Indian Language
• Generate Reports in Language of your choice
#8:OODBMS – DROOT Technology
Previous Generation ERPs
• Rigid RDBMS (Relational Database Management System)
• Objects saved in broken down form/shape
• Complex Object Retrieval process
• Large Databases cause DB handling problems
• Prone to Database Corruption
TallyAscent
• OODBMS (Object Oriented Database Management System) powered with DROOT (Dynamic Recursive Object Oriented Technology)
• Melleable
• Agile and flexible
• Objects saved in their original form/shape
• Simple and quick object retrieval process
• Capable of Handling Large DBs
• Database Corruption Proof
#9:TCO (Total Cost-of-Ownership) of
Previous Generation ERP
Many hidden facets of TCO
1. Application License – Applicable & Very High
2. User License – Applicable & Very High
3. Database License– Applicable & Very High
4. Business Study – Applicable
5. Workflow Process Study - Applicable
6. Change Analysis - Applicable
7. Change Management - Applicable
8. Application Mapping Study - Applicable
9. Application Customization – Applicable & Very High
10. User Training - Applicable
11. Technical Training - Applicable
12. ERP Consultant Charges - Applicable & Very High
13. IT Infrastructure - Applicable & Very High
14. Ongoing Infrastructure Maintenance - Applicable
15. Dedicated Connectivity - Applicable & Very High
16. Integration Costs – Applicable & Very High
17. Cost of Client Manpower Involved until Implementation & Use - Applicable
All TCO aspects resulted in very high unaffordable TCO for Medium & Large Enterprises
TCO of TallyAscent
• Many facets of TCO
1. Application License Cost – Applicable
2. User License –Not Applicable
3. Database License – Not Applicable
4. Business Study – Client Dependent / Optional
5. Workflow Process Study - Client Dependent / Optional
6. Change Analysis – Not Applicable
7. Change Management – Not Applicable
8. Application Mapping Study – Client Dependent / Optional
9. Application Customization - Client Dependent / Optional
10. User Training – Not Applicable
11. Technical Training - Negligible
12. ERP Consultant Charges – Not Applicable
13. IT Infrastructure – A Desktop
14. Ongoing Infrastructure Maintenance – Desktop Maintenance
15. Dedicated Connectivity – Not Applicable
16. Integration Costs – Not Applicable
17. Cost of Client Manpower Involved until Implementation & Use - Negligible
TallyAscent – Lowest Total Cost of Ownership
Tally Ascent Unique Value Proposition
• The ‘Power of Simplicity’ will be pervasive in all our offerings, our business model, our practices and our engagement with our eco-system
• Our Product strategy assumes:
– Minimum technical learning and competency
– An obsession with ease of use and flexibility
– Business environments with poor technical infrastructure
– Low affordability
•Our product will offer all that is desired by an SMB in an Emerging market:
– The desired User experience
– The desired Functional Richness
– The lowest TCO and highest ROI
Tailored for your specific requirements
TallyAscent is designed to cater to the rapidly growing and fast changing needs of small and medium business segments in emerging economies around the world. TallyAscent adds immense value to specific vertical segments such as Manufacturing, Retail and Distribution, Public Sector, Service Providers and Construction Infrastructure.
Adapt to changeeasily and effectively
TallyAscent allows users to easily re-configure their solutions as their businesses grow and change.Amazing Simplicity: TallyAscent is one of the world’s most easy to use, complete and affordable Enterprise Solutions, providing customers with configurable enterprise solutions, which can be implemented in short time frames. To learn, configure and use TallyAscent, only basic computer knowledge is required, thereby enabling rapid implementation at the lowest cost.Amazing Affordability: TallyAscent offers amazing price performance too. It is easily one of the world’s most cost effective enterprise solutions, offering the lowest cost of ownership. A full blown TallyAscent implementation needs minimum computing resources and is easy to implement. It is user-friendly and user-programmable and can be implemented by any end user. Value-Added Support: TallyAscent is supported by an empowered Tally ecosystem, which is fully geared to provide customers world-class support. TallyAscent Partners are committed to delivering a significant return on investment and positioning your business to meet the challenges of new strategic imperatives.
Download Tally.ERP 9
ERP empowers the enterprise to gain a competitive edge in a global business environment. The NOW Generation ERP demystifies all the preconceived notions of complexity and high cost of a traditional ERP. It should serve as a company’s primary business management application right from the day you start implementation, assuring new levels of efficiency and control, while ensuring low cost of ownership and high return on investment.
Tally (India), a market leader in business software solutions introduces ‘TallyAscent’ - a fully integrated Enterprise Resource Planning suite. A solution that helps you visualize critical information, enhance productivity and seamlessly integrate all your business processes, helping you to stay in complete control of your businesses, irrespective of the magnitude of change or growth. Simplifying growth and fulfilling the needs of growing businesses with amazing flexibility and incredible speed, this robust suite from Tally enables a true and unified picture of critical up-to-the-minute business information.
TallyAscent helps you to adapt quickly to business changes on the fly. It follows iterative implementation enabling its usage from day one of implementation. It is very simple to use, requires minimal user training and demands least resource utilization.
TallyAscent is available in variants of TallyAscent Enterprise and TallyAscent Remote which can be deployed at the Head Offices/ Main Locations and Regional Offices/ Branches.
TallyAscent can be deployed as Client Server, Web Server, and Terminal Server.
TallyAscent has inbuilt Web and Mobility support with SMS alerts. Critical information can be accessed through WAP devices. Behind the remarkable business agility offered by TallyAscent, is the powerful Dynamic Recursive Object Oriented Technology- DROOT TM, a breakthrough in ERP engineering,. While your business is recursive in nature, DROOT TM empowers TallyAscent into a technological marvel that allows continuous classifications and reclassifications of business data on a recursive basis.
The result of an innovative technology coupled with the power of simplicity, TallyAscent is a perfect fit for growing businesses that needs ‘business defined controls in system’ rather than ’system defined controls in businesses.
TallyAscent. Enterprise Solutions that fit your budget, keep pace with your growth, lower ownership costs and increase return on your investment.
Simplify your business processes
TallyAscent, an enterprise management software suite from Tally Solutions, now provides enterprises end-to-end solution components for automation, integration and optimisation of business processes and workflow.Built on a robust foundation technology, TallyAscent enables greater scalability, flexibility and agility of all business processes for companies across a wide spectrum of industries.All Tally products are built using a simple philosophy – Power of Simplicity. Leading-edge technology is harnessed to offer high system availability in a disconnected environment and to deliver solutions that are simple to use, easy to implement, highly flexible and versatile.
Manage your business
With your business running on TallyAscent, you now have the power to gain complete control of all the functions and processes of your enterprise. From financial accounting to inventory management, manufacturing, sales and distribution, purchase, costing and projects management.
Integration of Business Functions
TallyAscent ERP
Functional Areas
• Dashboard
• Financials
• Inventory Management
• Payroll & HR
• Manufacturing
• Sales
• Purchase
TallyAscent ERP- DROOT Technology
• Dynamic Recursive Object Oriented ( DROOT) Technology
• Workflows and Alerts across all functional areas
• High Scalability and Flexible Deployment Architecture
• Roles, Authorizations and Security
• Multilanguage support
The Past
• Traditional ERP = Previous Generation ERP
Not Suitable for medium and large enterprises (MLE) of emerging economies, like India
• Previous Generation ERP does not cater to changing needs of MLE
The Present
• MLE’s need a ‘Now Generation ERP’ that suits to their requirements and can adapt to the continuous changes
9 Compelling Reasons to adopt to
TallyAscent – The “Now Generation” ERP
1. Self Implementable
2. Infrastructure Proof
3. LAN Licensing
4. Interoperability
5. Powerful Dashboard Reporting
6. Real-time Data Synchronization
7. World’s first Concurrent Multilingual ERP
8. OODBMS – D:ROOT Technology
9. Cost of Ownership (TCO)
#1: Self Implementable
Previous Generation ERPs
• Few months to few years
• Long and complex Implementation Process
• Few Weeks to few months to start using
TallyAscent
• Go live on day 1
• Its just few hours to few days
Previous Generation ERPs
• Extensive Infrastructure required
• Sophisticated Back Up Systems
• Sophisticated Environment Control Systems
TallyAscent
• Just a Desktop is enough
#3: LAN Licensing Previous Generation ERPs
• License Raj
• Application License
• User License
• DB License etc.
TallyAscent
• Client Raj
• LAN Licensing
#4: Interoperability
Previous Generation ERPs
• Almost Impossible
• Shockingly Expensive
• Very Time Consuming
• High Vendor Dependency
TallyAscent
• User Friendly
• Fast
• Easiest and Interoperable flexibility Platform
#5: Powerful Dashboard Reporting
Previous Generation ERPs
• Rigid Reporting Mechanism
TallyAscent
• Flexible & Powerful Reporting System
• Complete Visibility Across Organization
• Transparency across branches
• Complete up to the minute
• Drill Down to the last detail
• Allows online information scan
#6:Real-time Data Synchronization
Previous Generation ERP
• Centralized Application & Database
• Dedicated 24×7 Connectivity
• Very High Data Load
• Connectivity Breakdown means restart synchronization from beginning
TallyAscent
• Hub & Spoke Concept
• Occasional Connectivity
• Negligible Data Load
• Connectivity Breakdown leads to data sync starting from the point of breakdown
#7: World’s First
Concurrent Multilingual ERP
Previous Generation ERPs
• Concurrent Multilingual Concept Not Even Heard
TallyAscent
• World’s First Concurrent Multilingual ERP
• Conduct your business in multiple languages
• Enter Data in any Indian Language
• Generate Reports in Language of your choice
#8:OODBMS – DROOT Technology
Previous Generation ERPs
• Rigid RDBMS (Relational Database Management System)
• Objects saved in broken down form/shape
• Complex Object Retrieval process
• Large Databases cause DB handling problems
• Prone to Database Corruption
TallyAscent
• OODBMS (Object Oriented Database Management System) powered with DROOT (Dynamic Recursive Object Oriented Technology)
• Melleable
• Agile and flexible
• Objects saved in their original form/shape
• Simple and quick object retrieval process
• Capable of Handling Large DBs
• Database Corruption Proof
#9:TCO (Total Cost-of-Ownership) of
Previous Generation ERP
Many hidden facets of TCO
1. Application License – Applicable & Very High
2. User License – Applicable & Very High
3. Database License– Applicable & Very High
4. Business Study – Applicable
5. Workflow Process Study - Applicable
6. Change Analysis - Applicable
7. Change Management - Applicable
8. Application Mapping Study - Applicable
9. Application Customization – Applicable & Very High
10. User Training - Applicable
11. Technical Training - Applicable
12. ERP Consultant Charges - Applicable & Very High
13. IT Infrastructure - Applicable & Very High
14. Ongoing Infrastructure Maintenance - Applicable
15. Dedicated Connectivity - Applicable & Very High
16. Integration Costs – Applicable & Very High
17. Cost of Client Manpower Involved until Implementation & Use - Applicable
All TCO aspects resulted in very high unaffordable TCO for Medium & Large Enterprises
TCO of TallyAscent
• Many facets of TCO
1. Application License Cost – Applicable
2. User License –Not Applicable
3. Database License – Not Applicable
4. Business Study – Client Dependent / Optional
5. Workflow Process Study - Client Dependent / Optional
6. Change Analysis – Not Applicable
7. Change Management – Not Applicable
8. Application Mapping Study – Client Dependent / Optional
9. Application Customization - Client Dependent / Optional
10. User Training – Not Applicable
11. Technical Training - Negligible
12. ERP Consultant Charges – Not Applicable
13. IT Infrastructure – A Desktop
14. Ongoing Infrastructure Maintenance – Desktop Maintenance
15. Dedicated Connectivity – Not Applicable
16. Integration Costs – Not Applicable
17. Cost of Client Manpower Involved until Implementation & Use - Negligible
TallyAscent – Lowest Total Cost of Ownership
Tally Ascent Unique Value Proposition
• The ‘Power of Simplicity’ will be pervasive in all our offerings, our business model, our practices and our engagement with our eco-system
• Our Product strategy assumes:
– Minimum technical learning and competency
– An obsession with ease of use and flexibility
– Business environments with poor technical infrastructure
– Low affordability
•Our product will offer all that is desired by an SMB in an Emerging market:
– The desired User experience
– The desired Functional Richness
– The lowest TCO and highest ROI
Tailored for your specific requirements
TallyAscent is designed to cater to the rapidly growing and fast changing needs of small and medium business segments in emerging economies around the world. TallyAscent adds immense value to specific vertical segments such as Manufacturing, Retail and Distribution, Public Sector, Service Providers and Construction Infrastructure.
Adapt to changeeasily and effectively
TallyAscent allows users to easily re-configure their solutions as their businesses grow and change.Amazing Simplicity: TallyAscent is one of the world’s most easy to use, complete and affordable Enterprise Solutions, providing customers with configurable enterprise solutions, which can be implemented in short time frames. To learn, configure and use TallyAscent, only basic computer knowledge is required, thereby enabling rapid implementation at the lowest cost.Amazing Affordability: TallyAscent offers amazing price performance too. It is easily one of the world’s most cost effective enterprise solutions, offering the lowest cost of ownership. A full blown TallyAscent implementation needs minimum computing resources and is easy to implement. It is user-friendly and user-programmable and can be implemented by any end user. Value-Added Support: TallyAscent is supported by an empowered Tally ecosystem, which is fully geared to provide customers world-class support. TallyAscent Partners are committed to delivering a significant return on investment and positioning your business to meet the challenges of new strategic imperatives.
Download Tally.ERP 9
SEZ developers and units allowed exemption from service tax
It’s a move that is bound to raise the hackles of the special economic zones (SEZ) lobby. On Tuesday, the Finance Ministry came out with a new notification on the levy of service tax for SEZ developers and units.
As per the new norms, SEZ developers and units will get an exemption on service tax. However, they will have to first pay the service tax, and then file for refunds.
The norms also state that the claims can be filed within 6 months of actual payment of service tax.
Tax experts say the move is fraught with complications, and could increase the procurement cost for developers and units. It also means the money will take a while to come back to the SEZ’s kitty.
In addition, SEZ Commissioners will decide on which operations are entitled for service tax exemption.
Experts say this move will give the commissioners significant discretionary power.
But the controversy does not end here. The new notification effectively makes a change to a taxation rule for SEZs which are covered under a separate act. Experts say this could well become another bone of contention.
SEZ units demand procedural changes for refund of service tax
Welcoming the government&aposs decision to broaden the ambit of services exempted from tax for SEZs, Export Promotion Council for EOUs and SEZs today said the Finance Ministry should also streamline the procedure to encourage exports.
The Export Promotion Council for EOUs and SEZs (EPCES) Director General L B Singhal here said as per the Finance Ministry notification service tax has to be paid first and then refund has to be claimed.
“It will result into unnecessary blockage of funds, paper work and transaction cost. Hence it would be appropriate if ab-initio exemption could be provided,” Singhal said.
At present services under the ambit of SEZs are already exempted from service tax.” This needs to be clarified that on services rendered within SEZ, no service tax is to be paid,”he said.
A specific time frame of maximum of seven days should be provided for the refund of service tax, he said adding that the tax refund should be provided either from the office of the Development Commissioner in the zone or from Customs officer posted in the zone.
“SEZ units or developers must not be asked to go outside the SEZ for taking this refund, Singhal added.
The government, so far, has given formal nod to 513 SEZs, of which 250 have been notified and 87 zones are operational.
As per the new norms, SEZ developers and units will get an exemption on service tax. However, they will have to first pay the service tax, and then file for refunds.
The norms also state that the claims can be filed within 6 months of actual payment of service tax.
Tax experts say the move is fraught with complications, and could increase the procurement cost for developers and units. It also means the money will take a while to come back to the SEZ’s kitty.
In addition, SEZ Commissioners will decide on which operations are entitled for service tax exemption.
Experts say this move will give the commissioners significant discretionary power.
But the controversy does not end here. The new notification effectively makes a change to a taxation rule for SEZs which are covered under a separate act. Experts say this could well become another bone of contention.
SEZ units demand procedural changes for refund of service tax
Welcoming the government&aposs decision to broaden the ambit of services exempted from tax for SEZs, Export Promotion Council for EOUs and SEZs today said the Finance Ministry should also streamline the procedure to encourage exports.
The Export Promotion Council for EOUs and SEZs (EPCES) Director General L B Singhal here said as per the Finance Ministry notification service tax has to be paid first and then refund has to be claimed.
“It will result into unnecessary blockage of funds, paper work and transaction cost. Hence it would be appropriate if ab-initio exemption could be provided,” Singhal said.
At present services under the ambit of SEZs are already exempted from service tax.” This needs to be clarified that on services rendered within SEZ, no service tax is to be paid,”he said.
A specific time frame of maximum of seven days should be provided for the refund of service tax, he said adding that the tax refund should be provided either from the office of the Development Commissioner in the zone or from Customs officer posted in the zone.
“SEZ units or developers must not be asked to go outside the SEZ for taking this refund, Singhal added.
The government, so far, has given formal nod to 513 SEZs, of which 250 have been notified and 87 zones are operational.
TDS Provisions not applicable to Hotel Rent: Mumbai HC
TDS Provisions not applicable to Hotel Rent: Mumbai HC
Providing respite to city hotels, especially five stars and business hotels, the B o m b ay high court, in a landmark judgment, has ruled that Tax Deducted at Source (TDS) would not be applicable to the services they provide. The verdict, by a division bench of Justices Ranjana Desai and J P Devadhar, quashed a circular issued by the Central Board of Direct Taxes (CBDT) and set to rest a 15-year-old controversy.
“The verdict will provide a huge relief to hotels,” Hotel Restaurant Association of Western India (HRAWI) secretary S M Korde told to a leading newspaper.
The 1994 circular said customers (usually corporates), while paying hotels for rooms and availing of facilities and amenities, would have to deduct tax at source under the Income Tax (I-T) Act. The TDS required to be cut was around 10%. Corporates form around two-thirds of the business of five-star hotels.
“The rule ensured that the daily cash flow was blocked and the hotels could claim any refunds only later,” Korde said. The HRAWI said the Bombay high court judgment would help hotels across India. A petition filed by the association’ s parent body is pending in the Delhi high court. Korde added that the judgment would be cited as a precedent to get a favourable order.
The petition challenging the circular was filed by East India Hotels Ltd. It runs the Oberoi and the Trident on Marine Drive and has a chain of five-star hotels in other parts of the country. Besides rooms, the company said it provided a range of amenities to its clients, including highly trained and experienced multi-lingual staff, 24-hour service for reception, information and telephones, house-keeping, select restaurants, bank counters, beauty salons, barber shops, car rental services, shopping centres, health clubs and business centres. The issue was whether these services came under the definition of “carrying out work” under Section 194 C of the IT Act, which the CBDT insisted it did.
But the high court did not agree. “Services rendered by a hotel to its customers by providing certain facilities and amenities do not constitute work (as defined by the Act),” the judges said.
The controversy over the provision has a long history. Initially, the contracts for rendering professional services by lawyers, physicians, surgeons, engineers, accountants, architects and consultants were kept out of the ambit of the Act. In 1994, the CBDT said all types of contracts, including transport, service, advertisement, broadcasting, telecasting, labour, material and work contracts, would be liable to pay TDS.
When the courts held that such an interpretation was illegal, in 1995, the law was changed to include four types of service contracts within the purview of Section 194 C: advertising, broadcast, transport and catering contracts. The court held that the service provided by hotels did not fall under any of these categories.
Providing respite to city hotels, especially five stars and business hotels, the B o m b ay high court, in a landmark judgment, has ruled that Tax Deducted at Source (TDS) would not be applicable to the services they provide. The verdict, by a division bench of Justices Ranjana Desai and J P Devadhar, quashed a circular issued by the Central Board of Direct Taxes (CBDT) and set to rest a 15-year-old controversy.
“The verdict will provide a huge relief to hotels,” Hotel Restaurant Association of Western India (HRAWI) secretary S M Korde told to a leading newspaper.
The 1994 circular said customers (usually corporates), while paying hotels for rooms and availing of facilities and amenities, would have to deduct tax at source under the Income Tax (I-T) Act. The TDS required to be cut was around 10%. Corporates form around two-thirds of the business of five-star hotels.
“The rule ensured that the daily cash flow was blocked and the hotels could claim any refunds only later,” Korde said. The HRAWI said the Bombay high court judgment would help hotels across India. A petition filed by the association’ s parent body is pending in the Delhi high court. Korde added that the judgment would be cited as a precedent to get a favourable order.
The petition challenging the circular was filed by East India Hotels Ltd. It runs the Oberoi and the Trident on Marine Drive and has a chain of five-star hotels in other parts of the country. Besides rooms, the company said it provided a range of amenities to its clients, including highly trained and experienced multi-lingual staff, 24-hour service for reception, information and telephones, house-keeping, select restaurants, bank counters, beauty salons, barber shops, car rental services, shopping centres, health clubs and business centres. The issue was whether these services came under the definition of “carrying out work” under Section 194 C of the IT Act, which the CBDT insisted it did.
But the high court did not agree. “Services rendered by a hotel to its customers by providing certain facilities and amenities do not constitute work (as defined by the Act),” the judges said.
The controversy over the provision has a long history. Initially, the contracts for rendering professional services by lawyers, physicians, surgeons, engineers, accountants, architects and consultants were kept out of the ambit of the Act. In 1994, the CBDT said all types of contracts, including transport, service, advertisement, broadcasting, telecasting, labour, material and work contracts, would be liable to pay TDS.
When the courts held that such an interpretation was illegal, in 1995, the law was changed to include four types of service contracts within the purview of Section 194 C: advertising, broadcast, transport and catering contracts. The court held that the service provided by hotels did not fall under any of these categories.
TDS Provisions not applicable to Hotel Rent: Mumbai HC
TDS Provisions not applicable to Hotel Rent: Mumbai HC
Providing respite to city hotels, especially five stars and business hotels, the B o m b ay high court, in a landmark judgment, has ruled that Tax Deducted at Source (TDS) would not be applicable to the services they provide. The verdict, by a division bench of Justices Ranjana Desai and J P Devadhar, quashed a circular issued by the Central Board of Direct Taxes (CBDT) and set to rest a 15-year-old controversy.
“The verdict will provide a huge relief to hotels,” Hotel Restaurant Association of Western India (HRAWI) secretary S M Korde told to a leading newspaper.
The 1994 circular said customers (usually corporates), while paying hotels for rooms and availing of facilities and amenities, would have to deduct tax at source under the Income Tax (I-T) Act. The TDS required to be cut was around 10%. Corporates form around two-thirds of the business of five-star hotels.
“The rule ensured that the daily cash flow was blocked and the hotels could claim any refunds only later,” Korde said. The HRAWI said the Bombay high court judgment would help hotels across India. A petition filed by the association’ s parent body is pending in the Delhi high court. Korde added that the judgment would be cited as a precedent to get a favourable order.
The petition challenging the circular was filed by East India Hotels Ltd. It runs the Oberoi and the Trident on Marine Drive and has a chain of five-star hotels in other parts of the country. Besides rooms, the company said it provided a range of amenities to its clients, including highly trained and experienced multi-lingual staff, 24-hour service for reception, information and telephones, house-keeping, select restaurants, bank counters, beauty salons, barber shops, car rental services, shopping centres, health clubs and business centres. The issue was whether these services came under the definition of “carrying out work” under Section 194 C of the IT Act, which the CBDT insisted it did.
But the high court did not agree. “Services rendered by a hotel to its customers by providing certain facilities and amenities do not constitute work (as defined by the Act),” the judges said.
The controversy over the provision has a long history. Initially, the contracts for rendering professional services by lawyers, physicians, surgeons, engineers, accountants, architects and consultants were kept out of the ambit of the Act. In 1994, the CBDT said all types of contracts, including transport, service, advertisement, broadcasting, telecasting, labour, material and work contracts, would be liable to pay TDS.
When the courts held that such an interpretation was illegal, in 1995, the law was changed to include four types of service contracts within the purview of Section 194 C: advertising, broadcast, transport and catering contracts. The court held that the service provided by hotels did not fall under any of these categories.
Providing respite to city hotels, especially five stars and business hotels, the B o m b ay high court, in a landmark judgment, has ruled that Tax Deducted at Source (TDS) would not be applicable to the services they provide. The verdict, by a division bench of Justices Ranjana Desai and J P Devadhar, quashed a circular issued by the Central Board of Direct Taxes (CBDT) and set to rest a 15-year-old controversy.
“The verdict will provide a huge relief to hotels,” Hotel Restaurant Association of Western India (HRAWI) secretary S M Korde told to a leading newspaper.
The 1994 circular said customers (usually corporates), while paying hotels for rooms and availing of facilities and amenities, would have to deduct tax at source under the Income Tax (I-T) Act. The TDS required to be cut was around 10%. Corporates form around two-thirds of the business of five-star hotels.
“The rule ensured that the daily cash flow was blocked and the hotels could claim any refunds only later,” Korde said. The HRAWI said the Bombay high court judgment would help hotels across India. A petition filed by the association’ s parent body is pending in the Delhi high court. Korde added that the judgment would be cited as a precedent to get a favourable order.
The petition challenging the circular was filed by East India Hotels Ltd. It runs the Oberoi and the Trident on Marine Drive and has a chain of five-star hotels in other parts of the country. Besides rooms, the company said it provided a range of amenities to its clients, including highly trained and experienced multi-lingual staff, 24-hour service for reception, information and telephones, house-keeping, select restaurants, bank counters, beauty salons, barber shops, car rental services, shopping centres, health clubs and business centres. The issue was whether these services came under the definition of “carrying out work” under Section 194 C of the IT Act, which the CBDT insisted it did.
But the high court did not agree. “Services rendered by a hotel to its customers by providing certain facilities and amenities do not constitute work (as defined by the Act),” the judges said.
The controversy over the provision has a long history. Initially, the contracts for rendering professional services by lawyers, physicians, surgeons, engineers, accountants, architects and consultants were kept out of the ambit of the Act. In 1994, the CBDT said all types of contracts, including transport, service, advertisement, broadcasting, telecasting, labour, material and work contracts, would be liable to pay TDS.
When the courts held that such an interpretation was illegal, in 1995, the law was changed to include four types of service contracts within the purview of Section 194 C: advertising, broadcast, transport and catering contracts. The court held that the service provided by hotels did not fall under any of these categories.
Duties and Functions of a Company Secretary
Statutory Duties
1. To sign any document requiring authentication under any statute.
2. To arrange for filing statement in lieu of prospectus
3. To deliver share or debenture certificate within 3 months of allotment or within 2 months of registration of transfer
4. To file notice of situation of the registered office of the company
5. To make a statutory declaration for getting the certificate of commencement of business and file it with the Registrar.
6. To sign the annual return
7. To send notices of general meetings to every member of the company
8. To prepare minutes of every general and Board meetings or meetings of every committee of the Board within 30 days.
9. To maintain a number of statutory books such as register of members, register of debenture holders, etc.,
General Duties
1 To discharge his duties most diligently and honestly and not to act beyond the scope of his authorities.
2 To maintain secrecy of confidential matters
Functions
1. As a head of the Secretarial department, the secretary controls and supervises the activities of the department under his control. As a principal officer of the company, he signs documents requiring authentication.
2. He performs all such acts as authorized by the Board.
3. The secretary arranges for the Board meeting, in consultation with the chairman of the Board, fixes a day, place and time of the meeting and prepares agenda and issues the notices of meetings.
4. He ensures that the actions of the Board do not infringe the provisions of the Companies Act and are not beyond the scope of Memorandum and Articles of association.
5. The secretary functions in the best interest of the shareholders. He has to deal with the shareholders with tact.
6. He performs all legal formalities connected with the conduct of general meetings of shareholders and records the proceedings of the minutes in the Minute book.
7. He should ensure that all correspondence with shareholders is dealt with promptly and their queries answered carefully keeping in view the statutory provisions in this regard.
8. His functions in relation to issue of allotment letters, share certificates, dividend warrants, share transfers, forfeiture of shares and a host of other things are also important.
9. As a chief officer closely connected with the Board, he has to coordinate the work of different departments.
1. To sign any document requiring authentication under any statute.
2. To arrange for filing statement in lieu of prospectus
3. To deliver share or debenture certificate within 3 months of allotment or within 2 months of registration of transfer
4. To file notice of situation of the registered office of the company
5. To make a statutory declaration for getting the certificate of commencement of business and file it with the Registrar.
6. To sign the annual return
7. To send notices of general meetings to every member of the company
8. To prepare minutes of every general and Board meetings or meetings of every committee of the Board within 30 days.
9. To maintain a number of statutory books such as register of members, register of debenture holders, etc.,
General Duties
1 To discharge his duties most diligently and honestly and not to act beyond the scope of his authorities.
2 To maintain secrecy of confidential matters
Functions
1. As a head of the Secretarial department, the secretary controls and supervises the activities of the department under his control. As a principal officer of the company, he signs documents requiring authentication.
2. He performs all such acts as authorized by the Board.
3. The secretary arranges for the Board meeting, in consultation with the chairman of the Board, fixes a day, place and time of the meeting and prepares agenda and issues the notices of meetings.
4. He ensures that the actions of the Board do not infringe the provisions of the Companies Act and are not beyond the scope of Memorandum and Articles of association.
5. The secretary functions in the best interest of the shareholders. He has to deal with the shareholders with tact.
6. He performs all legal formalities connected with the conduct of general meetings of shareholders and records the proceedings of the minutes in the Minute book.
7. He should ensure that all correspondence with shareholders is dealt with promptly and their queries answered carefully keeping in view the statutory provisions in this regard.
8. His functions in relation to issue of allotment letters, share certificates, dividend warrants, share transfers, forfeiture of shares and a host of other things are also important.
9. As a chief officer closely connected with the Board, he has to coordinate the work of different departments.
ICAI tightens auditing norms to prevent frauds
To prevent recurrence of Satyam-like frauds, the ICAI on Monday tightened the auditing standards by introducing new guidelines which will enable auditors interlink information and reports of other stakeholders and evaluate them.
The two new standards on auditing, said Atul Kumar Gupta, member of the regional council of Institute of Chartered Accountants of India (ICAI), “will enable auditors to interlink the information and reports of other stakeholders, evaluate them, and substantiate the credibility of financial statement.”
The Standard of Accounting (SA 720), introduced for the first time by the ICAI, deals with auditor’s responsibilities in relation to information, other than audited financial statements, provided by companies in annual reports. These auditing standards, Gupta said, will also help auditors “to go beyond just receiving the evidences by evaluating them on prudence principles.”
So, auditors will now play a wider role in the affairs of a company and apart from financial statements, they will also inspect ‘other information’ to look for possible material inconsistencies. Other information includes a report by management or those charged with governance on operations; financial summaries or highlights; planned capital expenditures; financial ratios and selected quarterly data.
The standard (SA 720) specifies an auditor’s responsibility in relation to other information in documents containing audited financial statements like an annual report. The standard is a first of its kind for Indian auditors who need to study other information to identify any material inconsistencies vis-a-vis the audited financial statements to make the audit reports fool-proof.
The standard effective for audits of all financial statements for periods beginning on or after April 1, 2010 said the auditor shall make appropriate arrangements with management or those charged with governance to obtain the other information before preparing report. “If it is not possible to obtain all the other information prior to the date of the auditors report, the auditor shall read such other information as soon as practicable, ” the standard says.
The two new standards on auditing, said Atul Kumar Gupta, member of the regional council of Institute of Chartered Accountants of India (ICAI), “will enable auditors to interlink the information and reports of other stakeholders, evaluate them, and substantiate the credibility of financial statement.”
The Standard of Accounting (SA 720), introduced for the first time by the ICAI, deals with auditor’s responsibilities in relation to information, other than audited financial statements, provided by companies in annual reports. These auditing standards, Gupta said, will also help auditors “to go beyond just receiving the evidences by evaluating them on prudence principles.”
So, auditors will now play a wider role in the affairs of a company and apart from financial statements, they will also inspect ‘other information’ to look for possible material inconsistencies. Other information includes a report by management or those charged with governance on operations; financial summaries or highlights; planned capital expenditures; financial ratios and selected quarterly data.
The standard (SA 720) specifies an auditor’s responsibility in relation to other information in documents containing audited financial statements like an annual report. The standard is a first of its kind for Indian auditors who need to study other information to identify any material inconsistencies vis-a-vis the audited financial statements to make the audit reports fool-proof.
The standard effective for audits of all financial statements for periods beginning on or after April 1, 2010 said the auditor shall make appropriate arrangements with management or those charged with governance to obtain the other information before preparing report. “If it is not possible to obtain all the other information prior to the date of the auditors report, the auditor shall read such other information as soon as practicable, ” the standard says.
CIRCULAR NO. - 112/06/2009-ST., Dated: March 12, 2009
Circular on Filing of claim for refund of service tax paid under notification No. 41/2007-ST dated 6/10/2007
Sub:- Filing of claim for refund of service tax paid under notification No. 41/2007-ST dated 6/10/2007 - reg.
Notification No. 41/2007-ST, dated 6/10/2007 allows refund of service tax paid on specified services used for export of goods. To resolve the procedural difficulties arising in implementation of this refund scheme the Board has earlier issued circulars No. 101/4/2008-ST, dated 12.5.2008 and No. 106/9/2008-ST dated 11.12.2008.
2. The Board has received further references from field formations and trade seeking clarification on other procedural issues. These issues and the clarification are discussed in the following Table.
TABLE
S. No. Issue Raised Clarification
I Notification No. 41/07- ST has been amended by notification Nos. 32/2008-ST, dated 18.11.2008 and 33/2008-ST, dated 7.12.2008 to (i) extend the limitation period from 60 days from the end of quarter to six month; (ii) to omit the condition of nonavailment of drawback. Whether, in view of amended conditions, refund for the quarter Mar-Jun 08 would be allowed to be filed till Dec 08? It is clarified that consequent upon revision of limitation period, any refund claim that is filed within such revised limitation period would be admissible if it is otherwise in order. Therefore, refund claims of service tax on specified taxable services used for exports of goods made in the quarter Mar-Jun 08 could be filed till 31 st Dec 08.
II The bank deducts certain commissions from the export remittance in lieu of service provided by them. Refund is not allowed on such deduction. Refund should be allowed on the gross remittances. Refund is admissible on the basis of gross amount received for the exports and deductions made by the banks from export remittances, in lieu of services provided by bank, should not be deducted while granting refund.
III For exporters exporting to a customer regularly, the foreign exchange remittance certificates (FIRC) are made on running account basis by the banks. Therefore, it is often not possible to show the linkage between the export invoice and the remittance. This has resulted in denial of refund.Further in case where payments are received by cheque, banks do not issue FIRC and refunds are denied. In such cases where FIRCs are issued on consolidated basis, the exporters should submit self-certified statement alongwith FIRC showing the details of export in respect of which the FIRC pertains. Refunds should be allowed on such certified statements. However, exporters should maintain a register showing running account which should be reconciled between the export and the remittance periodically.In cases where banks do not issue FIRC for the reason that payments are received by cheque, refund may be allowed on the basis of duly certified bank statement.
IV Whether the limitation period of six month would be counted from the date of exports or from the date of receipt of remittances? It is clearly prescribed in the notification that limitation period of six month is to be computed from the date of exports.
V Whether refund would be admissible on specified taxable service received prior to the date it is notified in the said notification, if such services are used in relation to goods which are exported subsequent to the date on which such taxable services are notified under notification No. 41/2007- ST. Being prospective in nature refund is not admissible on such services received prior to the date they are notified in the said notification, even if the goods, in relation to which these services are used, are exported after the date when such services are notified under notification No. 41/2007-ST.
VI Authorities granting refund are insisting on original documents such as invoice, BL, SB, BRC etc. Such documents are required under the law to be kept in the Head office for audit. Refunds are denied on this ground. Normally certified copy of the documents should be accepted. Only in case of in-depth enquiry original documents can be verified.
VII The service provider providing services to the exporter provides various services. But he has registration of only one service. The refund is being denied on the grounds that the taxable services that are not covered under the registration are not eligible for such refunds. Notification No. 41/2007 ST provides exemption by way of refund from specified taxable services used for export of goods. Granting refund to exporters, on taxable services that he receives and uses for export do not require verification of registration certificate of the supplier of service. Therefore, refund should be granted in such cases, if otherwise in order. The procedural violations by the service provider need to be dealt separately, independent of the process of refund.
VIII Whether refunds under notification No. 41/2007-ST, dated 6.10.2007 would be admissible for the quarter July-Sep 2007. The notification No.41/2007-ST exempts service tax on specified taxable services used for export of goods. This exemption is operated through the route of refund. Being prospective in nature, refund could only be sanctioned on taxable services provided on or after the date they are notified in the said notification, i.e., 6.10.2007.
3. The pending refund claims may be decided accordingly. It is once again reiterated that refund claims be sanctioned expeditiously within the time prescribed by the Board. Any difficulty faced in processing of refund claims under aforesaid notification may be immediately brought to the notice of the undersigned
Sub:- Filing of claim for refund of service tax paid under notification No. 41/2007-ST dated 6/10/2007 - reg.
Notification No. 41/2007-ST, dated 6/10/2007 allows refund of service tax paid on specified services used for export of goods. To resolve the procedural difficulties arising in implementation of this refund scheme the Board has earlier issued circulars No. 101/4/2008-ST, dated 12.5.2008 and No. 106/9/2008-ST dated 11.12.2008.
2. The Board has received further references from field formations and trade seeking clarification on other procedural issues. These issues and the clarification are discussed in the following Table.
TABLE
S. No. Issue Raised Clarification
I Notification No. 41/07- ST has been amended by notification Nos. 32/2008-ST, dated 18.11.2008 and 33/2008-ST, dated 7.12.2008 to (i) extend the limitation period from 60 days from the end of quarter to six month; (ii) to omit the condition of nonavailment of drawback. Whether, in view of amended conditions, refund for the quarter Mar-Jun 08 would be allowed to be filed till Dec 08? It is clarified that consequent upon revision of limitation period, any refund claim that is filed within such revised limitation period would be admissible if it is otherwise in order. Therefore, refund claims of service tax on specified taxable services used for exports of goods made in the quarter Mar-Jun 08 could be filed till 31 st Dec 08.
II The bank deducts certain commissions from the export remittance in lieu of service provided by them. Refund is not allowed on such deduction. Refund should be allowed on the gross remittances. Refund is admissible on the basis of gross amount received for the exports and deductions made by the banks from export remittances, in lieu of services provided by bank, should not be deducted while granting refund.
III For exporters exporting to a customer regularly, the foreign exchange remittance certificates (FIRC) are made on running account basis by the banks. Therefore, it is often not possible to show the linkage between the export invoice and the remittance. This has resulted in denial of refund.Further in case where payments are received by cheque, banks do not issue FIRC and refunds are denied. In such cases where FIRCs are issued on consolidated basis, the exporters should submit self-certified statement alongwith FIRC showing the details of export in respect of which the FIRC pertains. Refunds should be allowed on such certified statements. However, exporters should maintain a register showing running account which should be reconciled between the export and the remittance periodically.In cases where banks do not issue FIRC for the reason that payments are received by cheque, refund may be allowed on the basis of duly certified bank statement.
IV Whether the limitation period of six month would be counted from the date of exports or from the date of receipt of remittances? It is clearly prescribed in the notification that limitation period of six month is to be computed from the date of exports.
V Whether refund would be admissible on specified taxable service received prior to the date it is notified in the said notification, if such services are used in relation to goods which are exported subsequent to the date on which such taxable services are notified under notification No. 41/2007- ST. Being prospective in nature refund is not admissible on such services received prior to the date they are notified in the said notification, even if the goods, in relation to which these services are used, are exported after the date when such services are notified under notification No. 41/2007-ST.
VI Authorities granting refund are insisting on original documents such as invoice, BL, SB, BRC etc. Such documents are required under the law to be kept in the Head office for audit. Refunds are denied on this ground. Normally certified copy of the documents should be accepted. Only in case of in-depth enquiry original documents can be verified.
VII The service provider providing services to the exporter provides various services. But he has registration of only one service. The refund is being denied on the grounds that the taxable services that are not covered under the registration are not eligible for such refunds. Notification No. 41/2007 ST provides exemption by way of refund from specified taxable services used for export of goods. Granting refund to exporters, on taxable services that he receives and uses for export do not require verification of registration certificate of the supplier of service. Therefore, refund should be granted in such cases, if otherwise in order. The procedural violations by the service provider need to be dealt separately, independent of the process of refund.
VIII Whether refunds under notification No. 41/2007-ST, dated 6.10.2007 would be admissible for the quarter July-Sep 2007. The notification No.41/2007-ST exempts service tax on specified taxable services used for export of goods. This exemption is operated through the route of refund. Being prospective in nature, refund could only be sanctioned on taxable services provided on or after the date they are notified in the said notification, i.e., 6.10.2007.
3. The pending refund claims may be decided accordingly. It is once again reiterated that refund claims be sanctioned expeditiously within the time prescribed by the Board. Any difficulty faced in processing of refund claims under aforesaid notification may be immediately brought to the notice of the undersigned
ICAI may defer AS 11 relaxation which may take its toll on the bottom lines of Indian companies
The upcoming general elections could take its toll on the bottom lines of a host of Indian companies that have accessed overseas debt.
The Institute of Chartered Accountants of India (ICAI) has deferred a decision on relaxing accounting standard 11 (AS 11), which mandates mark-to-market (MTM) provisioning in the profit and loss account for foreign exchange-related gains and losses.
A decision was being awaited by Indian companies as a large number of them would have had to book further MTM losses with the rupee touching 51 against the US dollar. Most of them raised debt when the Indian currency was at sub-Rs 42 levels against the greenback. Companies have been booking losses over the past few quarters as well and had sought relaxation to book the losses till the loans matured.
The move will also impact over 150 companies that raised funds through foreign currency convertible bonds (FCCBs) and many of these companies were awaiting clarity from ICAI before deciding on buying back the bonds at a discount.
Last week, the statutory body postponed the decision on the grounds that it should not do anything that will be seen as benefitting a section of the society or the industry, an ICAI office-bearer said.
ICAI put off the decision although it, as a statutory body, is not subject to the model code of conduct that restrains the government from taking policy decisions that could benefit certain groups or sections.
“There were two views on this issue and a consensus could not be reached in the ICAI council meeting,” said Uttam Prakash Agarwal, president of ICAI. However, discussions were still on and a decision would be taken soon, he added.
An ICAI member said the question was not about changing one accounting standard alone. It was more about whether the statutory body should change accounting standards due to the prevalent conditions.
“It is not an extraordinary situation as globally companies have had to deal with exchange rate fluctuations,” said another member.
Several large companies, based on legal opinion, were not following AS 11 and had instead decided to follow Schedule VI of the Companies Act, which said that as a result of exchange rate fluctuation, any change in the repayment needed to be added or deducted from the cost of fixed assets. Schedule VI allows the capitalisation of such losses.
Meanwhile, the ministry of corporate affairs that has a nominee on the ICAI council, the apex decision-making body, wanted the agency to review the role of auditors which had allowed companies to use the provisions of Schedule VI.
Later, however, it started seeing merit in the relief sought by companies, sources privy to the discussions said.
With the issue proving to be tricky, the Accounting Standards Board (ASB) referred the issue to a sub-committee, which recommended that relief could be given and companies could book the losses over a period of time.
The sources said that ASB referred the issue to the ICAI council without giving a verdict. When the ICAI council met last week, the issue was debated for nearly two hours but the members were divided over the issue.
“There was no unanimity. Also it was felt that the elections process is underway and any agency should not be seen as giving relief. The matter will now be taken up after May 15,” said an ICAI council member.
The law, however, mandates that companies have to announce unaudited fourth quarter results by April 30 and many companies are expected to go ahead with it despite no clarity on the issue.
“As a regulator it is our duty to consider requests and look into their merits. We are having a dialogue on the issue. As of today, companies have to book the gains and the losses. The government always has the option to go to the National Advisory Committee on Accounting Standard (NACAS),” said Agarwal.
NACAS is set up under the Companies Act and accounting standards prepared by ICAI are notified after they are referred to the body.
The Institute of Chartered Accountants of India (ICAI) has deferred a decision on relaxing accounting standard 11 (AS 11), which mandates mark-to-market (MTM) provisioning in the profit and loss account for foreign exchange-related gains and losses.
A decision was being awaited by Indian companies as a large number of them would have had to book further MTM losses with the rupee touching 51 against the US dollar. Most of them raised debt when the Indian currency was at sub-Rs 42 levels against the greenback. Companies have been booking losses over the past few quarters as well and had sought relaxation to book the losses till the loans matured.
The move will also impact over 150 companies that raised funds through foreign currency convertible bonds (FCCBs) and many of these companies were awaiting clarity from ICAI before deciding on buying back the bonds at a discount.
Last week, the statutory body postponed the decision on the grounds that it should not do anything that will be seen as benefitting a section of the society or the industry, an ICAI office-bearer said.
ICAI put off the decision although it, as a statutory body, is not subject to the model code of conduct that restrains the government from taking policy decisions that could benefit certain groups or sections.
“There were two views on this issue and a consensus could not be reached in the ICAI council meeting,” said Uttam Prakash Agarwal, president of ICAI. However, discussions were still on and a decision would be taken soon, he added.
An ICAI member said the question was not about changing one accounting standard alone. It was more about whether the statutory body should change accounting standards due to the prevalent conditions.
“It is not an extraordinary situation as globally companies have had to deal with exchange rate fluctuations,” said another member.
Several large companies, based on legal opinion, were not following AS 11 and had instead decided to follow Schedule VI of the Companies Act, which said that as a result of exchange rate fluctuation, any change in the repayment needed to be added or deducted from the cost of fixed assets. Schedule VI allows the capitalisation of such losses.
Meanwhile, the ministry of corporate affairs that has a nominee on the ICAI council, the apex decision-making body, wanted the agency to review the role of auditors which had allowed companies to use the provisions of Schedule VI.
Later, however, it started seeing merit in the relief sought by companies, sources privy to the discussions said.
With the issue proving to be tricky, the Accounting Standards Board (ASB) referred the issue to a sub-committee, which recommended that relief could be given and companies could book the losses over a period of time.
The sources said that ASB referred the issue to the ICAI council without giving a verdict. When the ICAI council met last week, the issue was debated for nearly two hours but the members were divided over the issue.
“There was no unanimity. Also it was felt that the elections process is underway and any agency should not be seen as giving relief. The matter will now be taken up after May 15,” said an ICAI council member.
The law, however, mandates that companies have to announce unaudited fourth quarter results by April 30 and many companies are expected to go ahead with it despite no clarity on the issue.
“As a regulator it is our duty to consider requests and look into their merits. We are having a dialogue on the issue. As of today, companies have to book the gains and the losses. The government always has the option to go to the National Advisory Committee on Accounting Standard (NACAS),” said Agarwal.
NACAS is set up under the Companies Act and accounting standards prepared by ICAI are notified after they are referred to the body.
Exporters want refunds from October 2007
There could be further relaxation in service tax refund rules for exporters, albeit with a time lag. Exporters claiming input duty reimbursements under the duty drawback scheme may be allowed to claim service tax refunds with retrospective effect. Such exporters had been disqualified from claiming service tax refunds till December last year when the government decided to amend rules to include them under the scheme.
However, finance ministry officials say it will be difficult to make the changes before the new government is in place as the amendments have to be part of the Finance Bill. The full Budget for 2009-10 is likely to be announced in July.
A delegation from the Federation of Indian Export Organisations (FIEO) met finance ministry officials on Friday to discuss refund issues which were not addressed by the clarification issued by the Central Board of Excise & Customs (CBEC) on Thursday.
Exporters pointed out that the circular had not sorted out the problems of exporters who had exported under the drawback scheme as no clarification had been issued about the date from which the amendment allowing grant of service tax refund to them would be applicable. “We want the refunds should be made not from December 2008, when the notification was issued, but with retrospective effect from the time the government decided to give service tax refunds in October 2007,” FIEO director-general Ajay Sahai said.
The finance ministry, while open to the idea, may not be able to make the required changes in rules immediately. “We would need to make changes in the Finance Bill if we amend rules further to allow exporters claiming drawback to get service tax refunds with retrospective effect. This can be done only when the new government announces the full Budget for the fiscal in July,” a finance ministry official said.
FIEO has also demanded that the government should allow service tax refund of all eligible services irrespective of their date of inclusion from the time when the facility was notified in October 2007. The government has, till now, allowed refund of taxes on 19 services. However, the announcements have been made in batches over the last two years.
In a clarification issued on Thursday, the finance ministry eased regulations for filing by a number of steps including increasing the time period for filing claims from two months to six months for past cases and allowing certified copies of documents for filing instead of the originals.
Services on which refunds are allowed include banking and other financial services, port services, transport of goods by road and railways, general insurance, technical testing & analysis, storage & warehousing, business exhibition services and specialised cleaning services.
However, finance ministry officials say it will be difficult to make the changes before the new government is in place as the amendments have to be part of the Finance Bill. The full Budget for 2009-10 is likely to be announced in July.
A delegation from the Federation of Indian Export Organisations (FIEO) met finance ministry officials on Friday to discuss refund issues which were not addressed by the clarification issued by the Central Board of Excise & Customs (CBEC) on Thursday.
Exporters pointed out that the circular had not sorted out the problems of exporters who had exported under the drawback scheme as no clarification had been issued about the date from which the amendment allowing grant of service tax refund to them would be applicable. “We want the refunds should be made not from December 2008, when the notification was issued, but with retrospective effect from the time the government decided to give service tax refunds in October 2007,” FIEO director-general Ajay Sahai said.
The finance ministry, while open to the idea, may not be able to make the required changes in rules immediately. “We would need to make changes in the Finance Bill if we amend rules further to allow exporters claiming drawback to get service tax refunds with retrospective effect. This can be done only when the new government announces the full Budget for the fiscal in July,” a finance ministry official said.
FIEO has also demanded that the government should allow service tax refund of all eligible services irrespective of their date of inclusion from the time when the facility was notified in October 2007. The government has, till now, allowed refund of taxes on 19 services. However, the announcements have been made in batches over the last two years.
In a clarification issued on Thursday, the finance ministry eased regulations for filing by a number of steps including increasing the time period for filing claims from two months to six months for past cases and allowing certified copies of documents for filing instead of the originals.
Services on which refunds are allowed include banking and other financial services, port services, transport of goods by road and railways, general insurance, technical testing & analysis, storage & warehousing, business exhibition services and specialised cleaning services.
ICWAI will get more statuary recognition : MCA
In order to give due recognition to the Institute of Cost and Works Accounts of India (ICWAI), an apex body to regulate the profession of cost and management accountancy in India, the Ministry of Corporate Affairs (MCA) is in the process of reviewing the existing cost accounting rules and the cost accounting standards of ICWAI.
“As compared to other professional bodies, ICWAI has got lesser statuary recognition, which needs to be rectified,” said Anurag Goel secretary of MCA. ICWAI hasn’t been utilised to its full potential because of the notion that cost and management accountancy is internal to the industry/corporate sector, added Goel who was speaking at an ICWAI function in New Delhi.
In order to enhance the country’s competitiveness, the ministry had constituted an expert group to restructure the framework of cost accounting records, cost audit mechanism and cost accounting standards.
The group has already submitted its report to the ministry, which would now invite suggestions and comments from all stakeholders, said Goel.
The report has recommended that regulators should move from the compliance oriented framework to a performance management framework with enterprise governance in mind. This shift becomes very important in the context of the Rs 7,000 crore Satyam fraud, said Kunal Banerjee, president of ICWAI. On January 7, founder of Satyam Computer Services, B Ramalinga Raju confessed to fudging the company’s accounts and left the fourth largest IT company in the lurch.
“The ministry should get the report examined at the earliest so that the issues of enterprise governance, corporate competitiveness and strengthening the hands of regulatory bodies are addressed to avoid another corporate financial catastrophe, ” added Banerjee.
“As compared to other professional bodies, ICWAI has got lesser statuary recognition, which needs to be rectified,” said Anurag Goel secretary of MCA. ICWAI hasn’t been utilised to its full potential because of the notion that cost and management accountancy is internal to the industry/corporate sector, added Goel who was speaking at an ICWAI function in New Delhi.
In order to enhance the country’s competitiveness, the ministry had constituted an expert group to restructure the framework of cost accounting records, cost audit mechanism and cost accounting standards.
The group has already submitted its report to the ministry, which would now invite suggestions and comments from all stakeholders, said Goel.
The report has recommended that regulators should move from the compliance oriented framework to a performance management framework with enterprise governance in mind. This shift becomes very important in the context of the Rs 7,000 crore Satyam fraud, said Kunal Banerjee, president of ICWAI. On January 7, founder of Satyam Computer Services, B Ramalinga Raju confessed to fudging the company’s accounts and left the fourth largest IT company in the lurch.
“The ministry should get the report examined at the earliest so that the issues of enterprise governance, corporate competitiveness and strengthening the hands of regulatory bodies are addressed to avoid another corporate financial catastrophe, ” added Banerjee.
FAQ on reduction of service tax rate in view of Notification No 8/2009 – ST dated 24.02.2009
Notification No 8/2009 – ST dated 24.02.2009 has been issued to exempt the service tax that is in excess of 10%. On the other hand this is reduction of service tax rate from the existing rate of 12% to 10%.
1. What is the effective date for the new rate?
Ans. The new rate is effective from 24.02.2009 on all services.
1. Whether all the receipts that is to be received after 24.02.2009 is taxable at 10%?
Ans. No, the receipts pertaining to service provided after 24.02.2009 is liable for service tax at 10% and not for the receipts pertaining to service provided prior to that rate.
1. In case the service is provided on 10.02.2009 and the bill is also raised on the same day charging service tax at the rate of 12%, and amount is to be realized in March. At what rate service tax has to be paid to the department?
Ans. It is very important to note that in case of service tax, the point of levy is on the service provided and point of collection is on realization. Therefore the service tax has to be paid at the rate prevailing at the time of provision of service on the date of realization. Therefore the service tax has to be paid at 12%.
1. In case consideration was received in advance and the service tax was paid on the same at 12% for the service to be provide in March 2009, whether service tax can be refunded?
Ans. Any service provided or to be provided is covered under the taxable service. Therefore when the consideration is received in advance for provision of certain service, it is deemed taxable service that is provided, therefore the same is not eligible for refund.
1. In case the bill is to be raised on 25.02.2009 for the service provided on 10.02.2009, then the service tax has to be charged at what rate?
Ans. The date of billing is not the criteria for deciding the rate of service tax, but the rate prevailing on the date of provision of service ( completion of service) is rate to be adopted. In this case since the service was provided on 10/02/2009, when the rate of service tax was at 12%, therefore 12% has to be charged although billed and to be realized after 24.02.2009. However services provided from 10th till 25th Feb would be at 10%.
1. X, a security agency has to Rs. 3000 for its client for proving the taxable service for the month of February 2009.How the service tax has to be charged?
Ans. In such case the consideration has to be bifurcated from 01.02.2009 to 24.02.2009 and has to charge service tax at 12% (Rs. 2379) and for the balance at 10%.
1. In case an ongoing turnkey or a composite contract. How the rate reduction is to be given effect?
Ans. In case of turnkey or a composite contract the works executed till 23.02.2007 has to be charged at 12% and the work done there after can be charged at 10%. Usually the time gap between the completion of work and raising of RA Bills (Running Bill) will be more than 30days, therefore the bill raised after 24.02.2009 can also have 12%. No changes if opted for composition.
1. In the construction industry, usually the retention amount shall be with hold by the principle and shall be released only after the completion of the project. Now if the retention pertaining to RA Bills raised prior is 24.02.2009 is paid in March 2009, at what rate service tax has to be paid?
Ans. Since the service tax has to be paid on the rate applicable as on the date of provision of service for the retention amount paid in March 2009 service tax has to be paid at 12% itself.
1. Whether there is any reduction in composition rate of service tax of 4% for the contractors and also the special rate of 0.6 and 1.2 in case of Air travel agent?
Ans. No, there is no any reduction in these special rates of service tax. However rates that arise out of the abatement under 1/2006-ST dated 01.03.2006 will change accordingly.
1. Whether the rate reduction is applicable in case of Import of Service also?
Ans. Yes, this if for the reason that section 66A deems the service provided in case of import of service as taxable service in the hands of recipient and all the provision of the Chapter V is applicable for the same. Since the reduction is by way of exemption to section 66, reduction is applicable to import of service also.
Case Rate prevailing at the time of provision of service Rate prevailing at the time of Billing/Invoicing Rate prevailing at the time Realization of the consideration Applicable rate of service tax
I 12% 12% 10% 12%
II 12% 10% 10% 12%
III 10% 10% 10% 10%
IV 10% 12% 10% 12%
V 10% 10% 12% 12%
1. What is the effective date for the new rate?
Ans. The new rate is effective from 24.02.2009 on all services.
1. Whether all the receipts that is to be received after 24.02.2009 is taxable at 10%?
Ans. No, the receipts pertaining to service provided after 24.02.2009 is liable for service tax at 10% and not for the receipts pertaining to service provided prior to that rate.
1. In case the service is provided on 10.02.2009 and the bill is also raised on the same day charging service tax at the rate of 12%, and amount is to be realized in March. At what rate service tax has to be paid to the department?
Ans. It is very important to note that in case of service tax, the point of levy is on the service provided and point of collection is on realization. Therefore the service tax has to be paid at the rate prevailing at the time of provision of service on the date of realization. Therefore the service tax has to be paid at 12%.
1. In case consideration was received in advance and the service tax was paid on the same at 12% for the service to be provide in March 2009, whether service tax can be refunded?
Ans. Any service provided or to be provided is covered under the taxable service. Therefore when the consideration is received in advance for provision of certain service, it is deemed taxable service that is provided, therefore the same is not eligible for refund.
1. In case the bill is to be raised on 25.02.2009 for the service provided on 10.02.2009, then the service tax has to be charged at what rate?
Ans. The date of billing is not the criteria for deciding the rate of service tax, but the rate prevailing on the date of provision of service ( completion of service) is rate to be adopted. In this case since the service was provided on 10/02/2009, when the rate of service tax was at 12%, therefore 12% has to be charged although billed and to be realized after 24.02.2009. However services provided from 10th till 25th Feb would be at 10%.
1. X, a security agency has to Rs. 3000 for its client for proving the taxable service for the month of February 2009.How the service tax has to be charged?
Ans. In such case the consideration has to be bifurcated from 01.02.2009 to 24.02.2009 and has to charge service tax at 12% (Rs. 2379) and for the balance at 10%.
1. In case an ongoing turnkey or a composite contract. How the rate reduction is to be given effect?
Ans. In case of turnkey or a composite contract the works executed till 23.02.2007 has to be charged at 12% and the work done there after can be charged at 10%. Usually the time gap between the completion of work and raising of RA Bills (Running Bill) will be more than 30days, therefore the bill raised after 24.02.2009 can also have 12%. No changes if opted for composition.
1. In the construction industry, usually the retention amount shall be with hold by the principle and shall be released only after the completion of the project. Now if the retention pertaining to RA Bills raised prior is 24.02.2009 is paid in March 2009, at what rate service tax has to be paid?
Ans. Since the service tax has to be paid on the rate applicable as on the date of provision of service for the retention amount paid in March 2009 service tax has to be paid at 12% itself.
1. Whether there is any reduction in composition rate of service tax of 4% for the contractors and also the special rate of 0.6 and 1.2 in case of Air travel agent?
Ans. No, there is no any reduction in these special rates of service tax. However rates that arise out of the abatement under 1/2006-ST dated 01.03.2006 will change accordingly.
1. Whether the rate reduction is applicable in case of Import of Service also?
Ans. Yes, this if for the reason that section 66A deems the service provided in case of import of service as taxable service in the hands of recipient and all the provision of the Chapter V is applicable for the same. Since the reduction is by way of exemption to section 66, reduction is applicable to import of service also.
Case Rate prevailing at the time of provision of service Rate prevailing at the time of Billing/Invoicing Rate prevailing at the time Realization of the consideration Applicable rate of service tax
I 12% 12% 10% 12%
II 12% 10% 10% 12%
III 10% 10% 10% 10%
IV 10% 12% 10% 12%
V 10% 10% 12% 12%
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