Guidelines for selection of cases for Scrutiny During 2010-11
1. Selection of cases for scrutiny during the financial year 2010-11 will be done primarily through CASS this year. Manual Selection for scrutiny this year will be limited only to a few cases listed below.
2. List of cases selected during each month in accordance with selection criteria mentioned below shall be submitted by the Assessing officers to their respective Range heads by the 15th of the following month and also displayed on the notice Board of their offices .
3. These guidelines are meant only for the use of officers of the Income Tax Department .These are not to be disclosed even if a request is made under Right to Information Act, In view of the decision of the Central Information Commission in the case of Shri Kamal Vs Director (ITA-II), CBDT (order no CIC/AT/2007/00617 dated 21.02.2008)
Selection criteria Applicable to all return at all stations
a) Value of International transaction as defined in 92B exceeds 15 Crore.
b) Cases involving addition in an earlier assessment year in excess of Rs 10 lacs on a substantial and recurring question of law or fact which is confirmed in appeal or is pending before on appellate authority.
c) Cases involving addition in an earlier assessment year on the issue of transfer pricing in excess of Rs 10 Lakh or more.
d) Assessment in survey cases for the financial year in which survey was carried out. This criteria will not apply if all of the following conditions are fulfilled:
i. There are no impounded books or documents.
ii. There is no retraction of disclosure, if any, made during the survey.
iii. Declared income, excluding any disclosure made during the survey, is not less than the declared income of the preceding year.
e) Assessment in search & Seizure cases to be made under section 158B, 158BC, 158BD, 153A, 153C & 143(3) of the IT Act.
f) Assessment Initiated under section 147/148 of the IT Act.
g) Assessing officer may select any return for scrutiny after recording he reason and obtaining approval of the CCIT/DGIT. The cases under this category should be selected if, there are compelling reasons and the case is not selected through CASS. These cases should be watched by CCIT/CIT in respect of the quality of assessment.
(F.NO.225/93/2009/ITA.II)
Wednesday, November 17, 2010
A breif note on IT scrutiny
A breif note on IT scrutiny
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The below mentioned article broadly covers all important aspects relating to scrutiny proceedings carried out u/s 143(2)/(3) of the Income Act 1961.
What is a scrutiny?
It is not possible to the Income Tax Department to make regular assessment of all the returns filed by assesses in any assessment year. So, based on norms fixed by the CBDT and with the help of CASS (Computer Assisted Scrutiny System) Income Tax department selects some returns for regular assessment (scrutiny assessment) u/s 143(3).
The scheme of comprehensive scrutiny is as follows-
v A return of income (or loss) has been made u/s 139 or in response to the notice under section 142(1)
v The Assessing officer considers it necessary or expedient to ensure that the assessee has not-
• Understated the income (or)
• Computed excessive loss (or)
• Not under-paid tax in any manner
v A notice shall be served on the assessee under section 143(2) (ii). The notice requires the assessee to produce any evidence which the assessee may rely in support of the return.
Time Limit for serving notice Applicability
Notice is to be served within 6 months from the end of the FY in which return is furnished
From April 1, 2008
Notice was to be served with in 12 months from the end of the month in which return was filed
Up to March 31, 2008
If the notice u/s 143(2) is served beyond the prescribed time limit, the said assessment is invalid in law and has to be quashed, even though the assessee had not challenged the same- (CIT V. Mahi Valley Hotels & Resorts).
v After hearing such evidence produced by the assessee in response to the notice given u/s 143(2) the Assessing officer shall pass an assessment order in writing determining-
· The total income or loss of the assessee and
· The sum payable by the assessee (or refund of any amount due to him) on the basis of such assessment order
Aspects of income tax scrutiny
Objective
The main objective of the IT officer during scrutiny is to make sure that the income shown in the return is real and there is no tax evasion. The expenses incurred are also scrutinized to find out whether they were actually incurred and were not fictitious.
For this, the assessing officer generally calls for the following documents/information:
v Form 16 given by the employer and reason for deviations if any when compared with the details furnished in return of income.
v Details and proofs of rent paid during the year for which HRA has been claimed as exempt.
v Loan sanction letter and repayment schedule for the housing loans obtained, in cases where interest on housing loan and principal is claiming as a deduction.
v Details of additions to fixed assets with supporting bills/vouchers.
v Names and addresses of sundry debtors and sundry creditors for the amount exceeding a prescribed limit, for example Rs.1,00,000/- ( The limit may vary in case to case)
v Item wise break up and ledger extract copies of –
• Inventories (for manufacturing/trading concerns)
• Loans & Advances
v Investments made in immovable properties, FDRs, shares, debentures, bonds and sources of funds for making such investments by assessee and his family members.
v Summary of all the bank accounts and copies of the bank pass book/statement explaining each debit and credit.
v Details of secured loans obtained during the year with loan sanction letter from banks. In case, the facilities availed against the hypothecation, a copy of hypothecation document.
v Item wise break up and ledger extract copies of expenses as debited to P&L a/c-
• Sales
• Major expenditure like Power & Fuel
• Repairs & Maintenance
• Professional charges
• Interest
• Travelling expenses
• General expenses
v Ledger extract copies and item wise break up of
• Liabilities
• Provisions
• Other/miscellaneous expenses etc.
v Justification in regard to payments made u/s 43B
v Details of TDS made during the year and to justify payments made in provisions of sec 40(a) (ia) of the IT act.
v Nowadays most of the assessees are filing returns electronically, where it is not possible to furnish reports and other documents. So, at the time of scrutiny they may further ask to furnish-
• A copy of tax audit report along with annexure if any
• A copy of annual report pertaining to relevant AY under scrutiny
• Deductions claimed if any under chapter VI-A, a copy of the relevant receipts along with exemption certificates.
• A copy of computation sheet which shows the working of tax computed at normal rates and computed u/s 115JB of the IT Act.
v If the return contains capital gain income, the assessee may be asked to produce sale deed, documents supporting to cost of acquisition and supporting evidences relating to cost of development etc. and also the documents for claiming exemption if any.
v Details of debtors whose debts are written off as bad debts, documents relating to legal proceedings and steps taken against the debtors for collection.
v Details of all 12 months credit card statements and source of payment thereof.
v Details of loans accepted and given during the year especially friends and relatives, and also confirmation from borrowers along with their respective PANs.
v Details of gifts given and taken during the year along with gift deeds.
v Statement of expenditure debited to profit and loss account and covered for FBT and TDS as well as the compliance thereof.
v Reconciliation of income with TDS certificates.
Measures to be taken during assessment stage
Generally all the measures should be undertaken at the time of preparation of income tax return and presented before Assessing officer during scrutiny proceedings if called for. Few such measures are mentioned below-
v All the credits of income appearing in the bank statement/pass book must be matched with the income as shown in the return. A balance sheet should be prepared for each year which keeps a proper track of assets and incomes.
v Care should be taken that adequate withdrawals (cash or bank) are made for personal and household expenses. Generally an estimate can be made as to how much money a family would be requiring for household needs (based on the size of family and cost of living in the city) and compare it with withdrawals made by the assessee for the given purpose.
v Ensure that payment for the expenses charged on the credit cards is done through regular bank account.
v A proper record should be maintained of the investments made along with their sources and supporting documents. All unexplained investments would be added as income.
v Income of minor child should be included in the income of parent whose total income is higher, before including the income of minor child.
v If HRA exemption is claimed, then the proof of rent paid has to be furnished. Also ensure that if rent is paid to one’s parents or any relative and then ensure that the rent is shown in the return of income of the person receiving the rent.
v If any asset is purchased by spouse out of the money gifted by assessee then the income from such asset would be included in the income of assessee.
v One should generally not give interest-free loans when one has already borrowed money and is repaying that with interest. The most common disallowance/addition that is being made nowadays in the scrutiny assessment orders is the addition of notional interest on interest free loans given to someone. It has to be proved that the loans are genuine and reasons for giving interest-free loans are also genuine.
v Proper record should be maintained of the gifts received including gift deed, PAN and bank statement of donor.
With effect from April 1, 2006, gifts received in cash from non relatives in excess of Rs.50,000/- would be taxable as income of receiver. However, gifts from relatives and those received on occasion of marriage of individual are exempt irrespective of the limit.
From the AY 2010-2011, gifts received in kind are also liable for tax, so details of persons from whom gifts received in kind are also required to be maintained.
Time limit for completion of scrutiny
The scrutiny assessment must be completed within 21 months from the end of the relevant assessment year. For instance, the scrutiny for assessment year 2007-08 has to be completed by December 31, 2009.
Other important points relating to scrutiny
v The assessing officer may call for the information relating to the FY which is under scrutiny. However he cannot call for earlier year’s information.
v Maintenance of books of accounts is compulsory only in case of incomes received from business or profession or income from other sources.
v According to Sec 44AA specified professionals and others who satisfy conditions specified therein are required to maintain books of accounts. If these persons face scrutiny, they are supposed to produce books of accounts maintained by them at the time of scrutiny if required by assessing officer.
v The assessee is not permitted to produce any record or evidence before the Appellate Authority which was not produced before the assessing officer during the course of proceedings before him. Hence care should be taken that all the evidences are filed before the Assessing Officer only.
However the Appellate Authority may allow production of additional evidence by the assessee if the conditions specified in Rule 46A of Income Tax rules are satisfied.
Provisions Amended by Finance Act, 2008
The old procedure of processing of returns under section 143(1)(a) has come back with wider scope but without the sting of additional tax. From 01-04-2008 all returns have to be processed wherein arithmetical mistakes and incorrect claims apparent from the information in the return will be added back and intimation will be issued demanding the additional demand or refunding the excess taxes paid. Such intimation can be issued only within one year from the end of the financial year in which such return was filed. No intimation will be issued if no demand or refund is due. Provisions for making centralized processing of Returns were also made.
Incorrect claims is defined as-
· Inconsistency in figures in the entries in return
· Where evidence is required to be filed as per various provisions of the act, but not filed
· Where deduction exceeds the limits prescribed under various provisions of the act
No doubt, the scrutiny process causes hardship to the assessee as the main focus of the IT department is to recover as much tax as possible. But taking proper measures from the beginning it can mitigate the trouble.
--------------------------------------------------------------------------------
The below mentioned article broadly covers all important aspects relating to scrutiny proceedings carried out u/s 143(2)/(3) of the Income Act 1961.
What is a scrutiny?
It is not possible to the Income Tax Department to make regular assessment of all the returns filed by assesses in any assessment year. So, based on norms fixed by the CBDT and with the help of CASS (Computer Assisted Scrutiny System) Income Tax department selects some returns for regular assessment (scrutiny assessment) u/s 143(3).
The scheme of comprehensive scrutiny is as follows-
v A return of income (or loss) has been made u/s 139 or in response to the notice under section 142(1)
v The Assessing officer considers it necessary or expedient to ensure that the assessee has not-
• Understated the income (or)
• Computed excessive loss (or)
• Not under-paid tax in any manner
v A notice shall be served on the assessee under section 143(2) (ii). The notice requires the assessee to produce any evidence which the assessee may rely in support of the return.
Time Limit for serving notice Applicability
Notice is to be served within 6 months from the end of the FY in which return is furnished
From April 1, 2008
Notice was to be served with in 12 months from the end of the month in which return was filed
Up to March 31, 2008
If the notice u/s 143(2) is served beyond the prescribed time limit, the said assessment is invalid in law and has to be quashed, even though the assessee had not challenged the same- (CIT V. Mahi Valley Hotels & Resorts).
v After hearing such evidence produced by the assessee in response to the notice given u/s 143(2) the Assessing officer shall pass an assessment order in writing determining-
· The total income or loss of the assessee and
· The sum payable by the assessee (or refund of any amount due to him) on the basis of such assessment order
Aspects of income tax scrutiny
Objective
The main objective of the IT officer during scrutiny is to make sure that the income shown in the return is real and there is no tax evasion. The expenses incurred are also scrutinized to find out whether they were actually incurred and were not fictitious.
For this, the assessing officer generally calls for the following documents/information:
v Form 16 given by the employer and reason for deviations if any when compared with the details furnished in return of income.
v Details and proofs of rent paid during the year for which HRA has been claimed as exempt.
v Loan sanction letter and repayment schedule for the housing loans obtained, in cases where interest on housing loan and principal is claiming as a deduction.
v Details of additions to fixed assets with supporting bills/vouchers.
v Names and addresses of sundry debtors and sundry creditors for the amount exceeding a prescribed limit, for example Rs.1,00,000/- ( The limit may vary in case to case)
v Item wise break up and ledger extract copies of –
• Inventories (for manufacturing/trading concerns)
• Loans & Advances
v Investments made in immovable properties, FDRs, shares, debentures, bonds and sources of funds for making such investments by assessee and his family members.
v Summary of all the bank accounts and copies of the bank pass book/statement explaining each debit and credit.
v Details of secured loans obtained during the year with loan sanction letter from banks. In case, the facilities availed against the hypothecation, a copy of hypothecation document.
v Item wise break up and ledger extract copies of expenses as debited to P&L a/c-
• Sales
• Major expenditure like Power & Fuel
• Repairs & Maintenance
• Professional charges
• Interest
• Travelling expenses
• General expenses
v Ledger extract copies and item wise break up of
• Liabilities
• Provisions
• Other/miscellaneous expenses etc.
v Justification in regard to payments made u/s 43B
v Details of TDS made during the year and to justify payments made in provisions of sec 40(a) (ia) of the IT act.
v Nowadays most of the assessees are filing returns electronically, where it is not possible to furnish reports and other documents. So, at the time of scrutiny they may further ask to furnish-
• A copy of tax audit report along with annexure if any
• A copy of annual report pertaining to relevant AY under scrutiny
• Deductions claimed if any under chapter VI-A, a copy of the relevant receipts along with exemption certificates.
• A copy of computation sheet which shows the working of tax computed at normal rates and computed u/s 115JB of the IT Act.
v If the return contains capital gain income, the assessee may be asked to produce sale deed, documents supporting to cost of acquisition and supporting evidences relating to cost of development etc. and also the documents for claiming exemption if any.
v Details of debtors whose debts are written off as bad debts, documents relating to legal proceedings and steps taken against the debtors for collection.
v Details of all 12 months credit card statements and source of payment thereof.
v Details of loans accepted and given during the year especially friends and relatives, and also confirmation from borrowers along with their respective PANs.
v Details of gifts given and taken during the year along with gift deeds.
v Statement of expenditure debited to profit and loss account and covered for FBT and TDS as well as the compliance thereof.
v Reconciliation of income with TDS certificates.
Measures to be taken during assessment stage
Generally all the measures should be undertaken at the time of preparation of income tax return and presented before Assessing officer during scrutiny proceedings if called for. Few such measures are mentioned below-
v All the credits of income appearing in the bank statement/pass book must be matched with the income as shown in the return. A balance sheet should be prepared for each year which keeps a proper track of assets and incomes.
v Care should be taken that adequate withdrawals (cash or bank) are made for personal and household expenses. Generally an estimate can be made as to how much money a family would be requiring for household needs (based on the size of family and cost of living in the city) and compare it with withdrawals made by the assessee for the given purpose.
v Ensure that payment for the expenses charged on the credit cards is done through regular bank account.
v A proper record should be maintained of the investments made along with their sources and supporting documents. All unexplained investments would be added as income.
v Income of minor child should be included in the income of parent whose total income is higher, before including the income of minor child.
v If HRA exemption is claimed, then the proof of rent paid has to be furnished. Also ensure that if rent is paid to one’s parents or any relative and then ensure that the rent is shown in the return of income of the person receiving the rent.
v If any asset is purchased by spouse out of the money gifted by assessee then the income from such asset would be included in the income of assessee.
v One should generally not give interest-free loans when one has already borrowed money and is repaying that with interest. The most common disallowance/addition that is being made nowadays in the scrutiny assessment orders is the addition of notional interest on interest free loans given to someone. It has to be proved that the loans are genuine and reasons for giving interest-free loans are also genuine.
v Proper record should be maintained of the gifts received including gift deed, PAN and bank statement of donor.
With effect from April 1, 2006, gifts received in cash from non relatives in excess of Rs.50,000/- would be taxable as income of receiver. However, gifts from relatives and those received on occasion of marriage of individual are exempt irrespective of the limit.
From the AY 2010-2011, gifts received in kind are also liable for tax, so details of persons from whom gifts received in kind are also required to be maintained.
Time limit for completion of scrutiny
The scrutiny assessment must be completed within 21 months from the end of the relevant assessment year. For instance, the scrutiny for assessment year 2007-08 has to be completed by December 31, 2009.
Other important points relating to scrutiny
v The assessing officer may call for the information relating to the FY which is under scrutiny. However he cannot call for earlier year’s information.
v Maintenance of books of accounts is compulsory only in case of incomes received from business or profession or income from other sources.
v According to Sec 44AA specified professionals and others who satisfy conditions specified therein are required to maintain books of accounts. If these persons face scrutiny, they are supposed to produce books of accounts maintained by them at the time of scrutiny if required by assessing officer.
v The assessee is not permitted to produce any record or evidence before the Appellate Authority which was not produced before the assessing officer during the course of proceedings before him. Hence care should be taken that all the evidences are filed before the Assessing Officer only.
However the Appellate Authority may allow production of additional evidence by the assessee if the conditions specified in Rule 46A of Income Tax rules are satisfied.
Provisions Amended by Finance Act, 2008
The old procedure of processing of returns under section 143(1)(a) has come back with wider scope but without the sting of additional tax. From 01-04-2008 all returns have to be processed wherein arithmetical mistakes and incorrect claims apparent from the information in the return will be added back and intimation will be issued demanding the additional demand or refunding the excess taxes paid. Such intimation can be issued only within one year from the end of the financial year in which such return was filed. No intimation will be issued if no demand or refund is due. Provisions for making centralized processing of Returns were also made.
Incorrect claims is defined as-
· Inconsistency in figures in the entries in return
· Where evidence is required to be filed as per various provisions of the act, but not filed
· Where deduction exceeds the limits prescribed under various provisions of the act
No doubt, the scrutiny process causes hardship to the assessee as the main focus of the IT department is to recover as much tax as possible. But taking proper measures from the beginning it can mitigate the trouble.
Wednesday, April 7, 2010
TDS Rate Applicability : Frequently Asked Questions
What is the date when the Finance Bill became Finance Act 2009 ?
•19-08-2009
In which cases surcharge on TDS rates is NOT applicable ?
•On all payment to residents
•On all payment to non-corporate non-residents
•On all payments to foreign corporate if total payment is less than 1 Crore
In which cases surcharge on TDS rates is applicable ?
•On all payments to foreign corporate if total payment is more than 1 Crore
In which cases Education Cess, Secondary and Higher Education Cess is NOT applicable ?
•On all payments to residents except salaries payment
In which cases Education Cess, Secondary and Higher Education Cess is applicable ?
•On salaries
•On all payment to non-residents and foreign companies
What is the effective date for above changes in applicability of surcharge and education cess?
•These changes are applicable on the passing of Finance Bill . This date is 19-08-2009. However there are different views on applicability date. One view is that since these changes are for the full financial year, one can take benefit of Section 294 of the income tax Act and start applying this rate from the date of presentation of finance bill.(in my view its applicable from 01.04.2009 , same view is given in The Chartered Accountant Journal released by ICAI)
There has been change in TDS Rates for 94C- Contractual Payments and 94I- rental payments. What is the effective date for the same ?
•These changes are applicable from 01-10-2009.
Apart from the above , is there any other change in the TDS Rates ?
•Yes. The maximum rate of TDS is normalised to 10% in most cases. Please refer to the TDS Rate Chart for FY 2009-10
What about penal rate of 20% where valid PAN is not given ?
•This provision is applicable from 01-04-2010. Till such time even if valid PAN is not given , normal rate will be applied.
What is your source of above information.
•Applicability of surcharge is mentioned in Clause (5), (6), (7) and (8) in Chapter II of the Finance ( No 2) Act , 2009.
•Applicability of Education Cess : Clause (11). Applicability of Secondary and Higher Education Cess : Clause (12).
What are the changes about section 194C about Job work (work according to specification)
•the detailed reply to this question is available hereTDS ON JOB WORK U/S 194C AMENDED FROM 01.10.2009
•19-08-2009
In which cases surcharge on TDS rates is NOT applicable ?
•On all payment to residents
•On all payment to non-corporate non-residents
•On all payments to foreign corporate if total payment is less than 1 Crore
In which cases surcharge on TDS rates is applicable ?
•On all payments to foreign corporate if total payment is more than 1 Crore
In which cases Education Cess, Secondary and Higher Education Cess is NOT applicable ?
•On all payments to residents except salaries payment
In which cases Education Cess, Secondary and Higher Education Cess is applicable ?
•On salaries
•On all payment to non-residents and foreign companies
What is the effective date for above changes in applicability of surcharge and education cess?
•These changes are applicable on the passing of Finance Bill . This date is 19-08-2009. However there are different views on applicability date. One view is that since these changes are for the full financial year, one can take benefit of Section 294 of the income tax Act and start applying this rate from the date of presentation of finance bill.(in my view its applicable from 01.04.2009 , same view is given in The Chartered Accountant Journal released by ICAI)
There has been change in TDS Rates for 94C- Contractual Payments and 94I- rental payments. What is the effective date for the same ?
•These changes are applicable from 01-10-2009.
Apart from the above , is there any other change in the TDS Rates ?
•Yes. The maximum rate of TDS is normalised to 10% in most cases. Please refer to the TDS Rate Chart for FY 2009-10
What about penal rate of 20% where valid PAN is not given ?
•This provision is applicable from 01-04-2010. Till such time even if valid PAN is not given , normal rate will be applied.
What is your source of above information.
•Applicability of surcharge is mentioned in Clause (5), (6), (7) and (8) in Chapter II of the Finance ( No 2) Act , 2009.
•Applicability of Education Cess : Clause (11). Applicability of Secondary and Higher Education Cess : Clause (12).
What are the changes about section 194C about Job work (work according to specification)
•the detailed reply to this question is available hereTDS ON JOB WORK U/S 194C AMENDED FROM 01.10.2009
LATE DEPOSIT TDS -PAY INTEREST 1.5 % PM
The Finance Bill proposes to create a separate class of default in respect of tax deducted but not paid to levy interest at a higher rate of 1.5 per cent per month, i.e. 18 per cent p.a. as against 1 per cent p.m., i.e. 12 per cent p.a., applicable in case the tax is deducted late after the due date. The rationale behind this amendment is that the tax once deducted belongs to the government and the person withholding the same needs to be penalized by charging higher
It may further be noted that the benefit of the proposed amendment under the Section 40a(ia) of making the payment before the due date of filing the return shall be available only in those cases where tax has been deducted during the previous year but paid after the end of the previous year and before the due date of filing the return. Accordingly, all such persons in terms of the Section 201(1A) need to pay a higher rate of interest, i.e. 18 per cent, from the date of deduction of tax till the date it is actually paid before furnishing the statement under the Section 200(3) of the Act.In case any person claims that tax has been deducted after the end of the previous year and hence a higher interest rate of 18 per cent is not applicable, such a person will not be eligible for the benefit of the proposed amendment to the Section 40a(ia), as this benefit is available only when the tax has been deducted during the previous year itself.
So pay your TDS deduction on time ,otherwise you have to bear heavy interest cost.
Summary of New provision
Interest up to 30.06.2010
• For late deduction of Tax deduction at source-(rate 1 % per month or part thereof)
• For late deposit of TDS after deduction (rate 1 % per month or part thereof)
Interest from 01.07.2010
• For late deduction of Tax deduction at source-(period date from tax deductible to date of actual deduction )(rate 1 % per month or part thereof)
• For late deposit of TDS after deduction (period :date from tax deducted and date of actual deposit)(rate 1.5 % per month or part thereof)
Separate Rounding of month for both clause ? :From plain reading every one under stand that only rate is increased by 0.5 % per month but one point you should not that now two default period has been bifurcated in two sets and each period has been upper rounded off to a month.Means even a default of one day means loss of interest for one month .
This amendment is proposed to take effect from 1st July, 2010.
It may further be noted that the benefit of the proposed amendment under the Section 40a(ia) of making the payment before the due date of filing the return shall be available only in those cases where tax has been deducted during the previous year but paid after the end of the previous year and before the due date of filing the return. Accordingly, all such persons in terms of the Section 201(1A) need to pay a higher rate of interest, i.e. 18 per cent, from the date of deduction of tax till the date it is actually paid before furnishing the statement under the Section 200(3) of the Act.In case any person claims that tax has been deducted after the end of the previous year and hence a higher interest rate of 18 per cent is not applicable, such a person will not be eligible for the benefit of the proposed amendment to the Section 40a(ia), as this benefit is available only when the tax has been deducted during the previous year itself.
So pay your TDS deduction on time ,otherwise you have to bear heavy interest cost.
Summary of New provision
Interest up to 30.06.2010
• For late deduction of Tax deduction at source-(rate 1 % per month or part thereof)
• For late deposit of TDS after deduction (rate 1 % per month or part thereof)
Interest from 01.07.2010
• For late deduction of Tax deduction at source-(period date from tax deductible to date of actual deduction )(rate 1 % per month or part thereof)
• For late deposit of TDS after deduction (period :date from tax deducted and date of actual deposit)(rate 1.5 % per month or part thereof)
Separate Rounding of month for both clause ? :From plain reading every one under stand that only rate is increased by 0.5 % per month but one point you should not that now two default period has been bifurcated in two sets and each period has been upper rounded off to a month.Means even a default of one day means loss of interest for one month .
This amendment is proposed to take effect from 1st July, 2010.
Thursday, March 25, 2010
Procedure for Electronic filing of Service Tax
In continuation of its efforts for trade facilitation, CBEC has rolled-out a new centralized, web-based and workflow-based software application called Automation of Central Excise and Service Tax (ACES) in all 104 Commissionerates of Central Excise, service Tax and large Tax Payer Units (LTUs) as on 23rd December, 2009. ACES is a Mission Mode project (MMP) of the Govt. of India under the national e-governance plan and it aims at improving tax-payer services, transparency, accountability and efficiency in the indirect tax administration in India. This application has replaced the current applications of SERMON, SACER, and SAPS used in Central Excise and Service Tax for capturing returns and registration details of the assessees and hence, in supercession of the CBEC Circular No.791/24/2004-CX. dated 1.6.2004 and CBEC Circular No. ST 52/1/2003 dated 11.03.2003, this revised circular is being issued.
II. Modules
The ACES application has interface for:
Ø Central Excise Assessees
Ø Service Tax Assessees
Ø Central Excise Departmental Officers and
Ø Service Tax Departmental Officers.
It has automated the major processes of Central Excise and Service Tax - registration, returns, accounting, refunds, dispute resolution, audit, provisional assessment, exports, claims, intimations and permissions. It is divided into the following modules:
Access Control of Users (ACL)
Registration (REGN): Registration of assessees of Central Excise & Service Tax including on-line amendment.
Returns (RET): Electronic filing of Central Excise & Service Tax Returns
CLI: Electronic filing of claims, intimations and permissions by assessees and their processing by the departmental officers
Refund (REF): Electronic filing of Refund Claims and their processing
Provisional Assessment (PRA): Electronic filing of request for provisional assessment and its processing by the departmental officers.
Assessee Running Account
Dispute Settlement Resolution (DSR): Show Cause Notices, Personal Hearing Memos, Adjudication Orders, Appellate and related processes.
Audit Module
Export Module for processing export related documents
III. Benefits to the Assessees
1. Reduce Physical Interface with the Department
2. Save Time
3. Reduce Paper Work
4. Online Registration and Amendment of Registration Details
5. Electronic filing of all documents such as applications for registration, returns [On-line and off-line downloadable versions of ER 1,2,3,4,5,6, Dealer Return, and ST3], claims, permissions and intimations; provisional assessment request, export-related documents, refund request
6. System-generated E-Acknowledgement
7. Online tracking of the status of selected documents
8. Online view facility to see selected documents
9. Internal messaging system on business-related matters
IV. Registration Process:
To transact business on ACES a user has to first register himself/herself with ACES through a process called ‘Registration with ACES’. This registration is not a statutory registration as envisaged in Acts/Rules governing Central Excise and Service Tax but helps the application in recognizing the bonafide users. Described below are steps for taking registration by a new assessee, existing assessee, non-assessee and a Large Tax Payer Unit (LTU).
(a) New Assessee
1. The user needs to log onto the system, through internet at http://www.aces.gov.in
2. He/she chooses the Central Excise/Service Tax button from the panel appearing on the left of the webpage.
3. Clicks the button “New Users Click here to Register with ACES” in the Log-in screen that appears after clicking Central Excise/Service Tax button.
4. Fills in and submits the form “Registration with ACES”, by furnishing a self-chosen user ID and e-mail ID. User ID, once chosen is final and cannot be changed by the assessee in future.
5. The system will check for availability of the chosen User ID and then generate a password and send it by e-mail, mentioned by him/her in the Form.
6. ACES provides assistance of ‘Know your location code’ for choosing correct jurisdictional office.
7. The user then re-logs-in and proceeds with the statutory registration with Central Excise/Service Tax, by filling-in the appropriate Form namely A-1, A-2 or ST-1 etc. by clicking the “Reg” link in the Menu bar that appears on the top of the screen. For security reasons, the password should be changed immediately.
8. The system instantaneously generates an acknowledgement number after which the registration request goes to the jurisdictional Assistant or Deputy Commissioner (AC/DC). Depending on the instructions in force, assessees may be required to submit certain documents to the department for verification. After due processing, the AC/DC, in case of Central Excise and Superintendent /Commissioner (for centralized registration only), in case of Service Tax, generates Registration Certificate (RC) and a message to this effect is sent to the assessees electronically. The assessee can view this and take a print-out of this.
9. Depending on the option chosen by the assessee, the signed copy of the RC can be sent by post or can be collected by assessee in person.
10. While submitting registration form, if the assessee makes a mistake in choosing a wrong jurisdiction (Commissionerate/Division/ Range), ACES provides a facility to the AC/DC to forward the application to the correct jurisdictional officer to issue registration and a message to this effect is sent to the assesseefor information.
11. The registration number will be same as the current 15-digit format with minor change such as
For-PAN based Assessees
1-10 digits – PAN of the Assessee
11-12 digits–EM (Excise Manufacturer), ED (Excise Dealer), SD (Service Tax)
13-15–Systems generated alphanumeric serial number
For non-PAN based assessees
1-4 digits TEMP
5-10 Systems generated alpha numeric number
11-12 EM (Excise Manufacturer) or ED (Excise Dealer), SD (Service Tax)
13-15–Systems generated alphanumeric serial number
(b) Existing Assessee
The existing assessees will not have to take fresh registrations. They will have to only register with the ACES application. This can be done in the following manner :
·ACES application will automatically send mails to the e-mail IDs of the assessee, as available in the existing registration data base, indicating a TPIN number, and password. The mail will contain a hyperlink to the website.
· Assessee clicks on the hyperlink and is taken to ACES application
· Assessee submits the form after filling the requisite information including the password provided in the e-mail, a new User ID and new password. User ID, once chosen is final and cannot be changed by the assessee in future.
· On successful registration with ACES, the assessee can transact business through ACES.
Existing assessees should note that they should register with ACES by following the procedure at (1) above and they should not register with ACES through the direct method, meant for new assessees, as discussed under (a) above. They should also not fill-in registration forms again as it will lead to allotment of new registration numbers by the system.
Assessees should ensure that their contact details in the department’s registration data base are updated to include their valid and current e-mail ids, otherwise they will not receive any such mail. Those assessees who have not yet furnished their email IDs to the department or even after furnishing the ID have not received the TPIN mail from ACES are advised to contact the jurisdictional Range Officers or LTU Client Executives and furnish their email IDs in writing. The officer will thereafter incorporate the email ID in the ACES registration database of the assessee and arrange to send the TPIN mail to the assessee’s email ID.
(c) Non-Assessee
This category of registration is given in ACES to any individual, firm or company which requires to transact with the Central Excise or Service Tax Department, though not an assessee such as (a) merchant exporter, (b) co-noticee, (c) refund applicant, (d) persons who have failed to obtain CE/ST registration as required under the law and against whom the Department has initiated proceedings and (e) persons who are required to tender any payment under CE/ST Act /Rules. The Non-assessees are not required to file any tax returns.
Where such persons desire to seek non-assessee registration they follow same steps as in case of new assessee except that while choosing the registration form in step (vii) they have to choose and fill in the Non-assessee form.
In case the assessee is taking such registration for claiming any refund or rebate it is mandatory to furnish his/her valid PAN.
A Non-assessee registration can also be done by the designated officer of the Commissionerate, on behalf of the non-assessee.
(d) Large Tax Payer Unit (LTU) Assessee/Client
The consent form will have to be submitted manually by the New LTU assessees to the jurisdictional LTU office which will be processed off line
The approved consent form will be uploaded by the competent officer of the Group LTU (GLTU) into ACES
Any new unit of an existing LTU, which applies for registration with ACES will be automatically attached with the LTU Commissionerate based upon PAN details in the registration form
As soon as the new or existing unit is attached with the LTU Commissionerate, a suitable intimation will be automatically sent by the ACES to the existing jurisdictional Commissionerate and the pending items of work will be transferred to the LTU Commissionerate
For existing LTU assessees, the process of registration is same as explained in Sub Para (b) above.
IMPORTANT:
i. The user ID once selected will be permanent and cannot be changed. However, it is desirable to frequently change passwords
ii. The User ID should be of 6-12 alphanumeric characters, no special character such as !@#$%*&( )+ or spaces except underscore ‘-‘ shall be allowed.
iii. New assessee seeking registrations in Central Excise and Service Tax will also submit to the jurisdictional Range officer, a printout of the application form submitted online duly signed by the authorized signatory along with required documents.
iv. Assessees should note that the e-mail ID is furnished to the department in writing, and they will be responsible for all communications to and from this email ID. Currently, ACES provides for communication to one email ID only. After registration with the ACES, assessees, on their own, can modify their registration details online, including their e-mail ID.
v. In the interest of security and data protection, assessees are advised to change their passwords regularly and not to share it with unauthorized persons. In case of any dispute, the person whose user ID and Password has been used to access the application will be held liable for the action and any other consequences.
V. E-filing of Returns
The assesses can electronically file statutory returns of Central Excise and Service Tax by choosing one of the two facilities being offered by the department at present: (a) they can file it online, or (b) download the off-line return utilities which can be filled-in off-line and uploaded to the system through the internet.
a. Steps for preparing and filing returns
(i) Returns can be prepared and filed on line by selecting the ‘File Return’ option under RET module after logging into the ACES.
(ii) All validations are thrown up during the preparation of the return in this mode and the status of the return filed using the online mode is instantaneously shown by ACES.
(iii) Returns can also be prepared and filed off-line. Assessee downloads the Offline return preparation utility available at http://www.aces.gov.in (Under Download)
(iv) Prepares the return offline using this utility. The return preparation utility contains preliminary validations which are thrown up by the utility from time to time.
(v) Assessee logs in using the User ID and password.
(vi) Selects RET from the main menu and uploads the return. Instructions for using the offline utilities are given in detail in the Help section, under ‘Download’ link and assessees are advised to follow them.
(vii) Returns uploaded through this procedure are validated by the ACES before acceptance into the system which may take up to one business day. Assesseecan track the status of the return by selecting the appropriate option in the RET sub menu. The status will appear as “uploaded” meaning under process by ACES, “Filed” meaning successfully accepted by the system or “Rejected” meaning the ACES has rejected the return due to validation error. The rejected returns can be resubmitted after corrections.
(viii) Once the Central Excise returns are filed online in ACES or uploaded to the system using the off-line utility, the same can not be modified or cancelled by the assessee. The Service Tax returns, however, can be modified once as per rules up to 90 days from the date of filing the initial return.
(ix) Self-assessed CE returns, after scrutiny by the competent officer, may result into modification. Both the ‘Original’ and the ‘Reviewed’ return can be viewed by the assessee online.
b. Using XML Schema for filing Dealers Return
Currently, the ACES Application allows on-line filing of Quarterly Returns by the Registered Dealers accessing the site www.aces.gov.in by using the excel utility. Some assesses who use their own software application in their offices find the process of manual entry of data in the excel format of Returns as a time consuming and avoidable exercise. A new feature of XML schema has now been introduced. Now using the schema, assessees, after making necessary modifications in their own software application, can generate their return from their application. Below mentioned steps elaborate the process to prepare, validate and upload the Dealer’s Return.
Steps to prepare the XML
Step 1: ACES application accepts the return in XML format. Prepare the Dealer return XML and validate it against the schema ACES_DLR.xsd provided.
Step 2: Login to the ACES application and upload the XML for processing. XML will be again validated against same XSD again before processing.
XML File only will be considered valid if it satisfies the requirements of the schema (predefined XSD) with which it has been associated. These requirements typically include such constraints as:
Elements and attributes that must/may be included, and their permitted structure
The structure as specified by regular expression syntax
Instructions for using the schema are given in detail in the Help section, under ‘Download’ link. Assessees are advised to follow them.
c. Filing of Returns and other documents through the ACES Certified Facilitation Centres (CFCs)
Very soon, CBEC will be setting up ACES Certified Facilitation Centres (CFCs) with the help of professional bodies like Institute of Chartered Accountants of India (ICAI), Institute of Cost and Works Accountants of India (ICWAI) etc. These CFCc will provide a host of services to the assessees such as digitization of paper documents like returns etc. and uploading the same to ACES. Assessees requiring the services of the CFCs may be required to pay service fees to the CFCs. CBEC will approve the maximum rates at which CFCs can charge their customers for the services rendered by them. For this purpose, assessees are required to write to the department authorizing one of the CFCs, from the approved list, to work in ACES on their behalf. They have to furnish the name and other details of the CFCs, including the registration No issued by the ICAI/ICWAI etc. At any given time, one assessee can authorize one CFC, while one CFC can provide services to more than one assessee throughout India. In case the assessee wants to withdraw the authorization, it can do so by intimating the department. However, an assessee will be held liable for all actions of omission or commission of the CFC, during the period they are authorized by him/her to work in ACES.
d. Validation of the entries made while filling return
At the time of making entry in the electronic format of the relevant return, the software does some preliminary validation for ensuring correctness of data, either concurrently or at the time of saving / submitting the return. This validation process is automated. The user is prompted by the application software to correct the particulars entered wherever required. In respect of certain entries, although the application alerts the assessee about any entry found erroneous or inconsistent, as per the automated validation process, the assessee is still allowed to proceed further to complete data entry of the return and finally submit it electronically. But in some cases the assessees are not allowed to proceed further unless the error indicated is corrected.
A return filed electronically is subject to automatic verification process by the application and defective returns are marked to the departmental officer for review and correction. While reviewing the return the officer may seek some clarification from the assessee, call for some information, records or documents which should be furnished by the assessee. In case of review and correction of returns by the departmental officers, assesses will receive a message from the application and they can log in to the application to view the reviewed returns online.
Returns, captured off-line using the Downloadable utility and uploaded later on, are further subjected to certain validation checks. Processing of uploaded returns, using the off-line versions, is done at the end of one business day and the status can be viewed by the assessees under the ‘VIEW STATUS’ link under ‘RET’ module. Status is described as ‘UPLOADED’, ‘FILED’ or ‘REJECTED’ and they denote as follows:
Ø UPLOADED denotes that return is uploaded and under processing (assessees are advised to view the status after the end of a business day).
Ø FILED denotes that uploaded return is accepted by system.
Ø REJECTED denotes that return is rejected due to errors. (The assessees are required to correct the return and upload it again.)
There is no provision in ACES application to allow assessees to make corrections to the returns filed by them. Once the return is accepted by the system as successfully ‘filed’, no modification can be made by the assessee. However, if the return is rejected, the assessee can correct the errors and upload it again. Theassessees are, therefore, advised to take utmost care while fill-in in the returns. They may, however, bring it to the notice of the departmental officers.
e. Acknowledgement of E-Filing of the return
In the case of a Central Excise or service Tax return filed on-line, ACES application software acknowledges it by displaying an Acknowledgement message. A unique document reference number is generated which consist of 15-digit registration number of the assessee, name of the return filed, the period for which return is filed etc. This is also automatically communicated to the email id of the assessee by the application. In the case of an uploaded Central Excise return, using offline utility, similar acknowledgement is generated and sent after the acceptance of the return by the system as a valid return i.e. when the status changes to ‘FILED’.
f. Class of Assessees for whom e-filing of returns and e-payment is mandatory with effect from 1st April, 2010:
In terms of Notification No 04/2010-Central Excise (N.T.) dated the 19th February, 2010, an assessee, who has paid total duty of rupees ten lakhs or more including the amount of duty paid by utilization of CENVAT credit in the preceding financial year, is required to file the monthly or quarterly return, as the case may be, electronically, under sub-rule (1) of Rule 12 of the Central Excise Rules, 2002 and deposit the duty electronically through internet banking under sub-rule (1) of Rule 8 of the Central Excise Rules, 2002.
Similarly, in terms of Notification No. 01/2010 – Service Tax dated the 19th February, 2010, an assessee who has paid a total Service Tax of rupees ten lakhs or more including the amount paid by utilization of CENVAT credit, in the preceding financial year, is required to file the return electronically under sub-rule (2) of Rule 7 of the Service Tax Rules, 1994 and deposit the service Tax liable to be paid by him electronically, through internet banking under sub-rule (2) of Rule 6 of the Service Tax Rules, 1994.
The earlier facility of e-filing on the website (http://exciseandservicetax.nic.in), as provided in the CBEC Circular No.791/24/2004-CX. Dated 1.6.2004 is no more available and the assessees are required to file their returns online or by uploading the downloadable off-line return utilities to the new ACES website (http://www.aces.gov.in). Data structure for writing programmes to cull out the required return data (currently available for Dealer return) from the assessees’scomputers in XML format has also been provided. Such schema for ER 2 and ER 1 returns will be published in due course. For complete details and instructions,assessees can visit the aforesaid website. Assessees who are required to or opted to file returns electronically but are unable to file electronically, for any technical difficulty in filing the returns, on account of difficulties at the department’s end viz. server/application is down or due to some defect in the software, should file their returns manually within the due date.
g. e-payment
For e-payment, assessees should open a net banking account with one of the authorized banks (currently there are 28 banks, list of which is available on the EASIEST (Electronic Accounting System in Excise and service Tax) website of CBEC, maintained by NSDL (https://cbec.nsdl.com/EST/). Payment through ICICI Bank, HDFC Bank and Axis Bank can be done by assesses for select Commissionerates only, list of which is published in the aforesaid EASIEST website. Payment through all other authorized banks can be made for all Commissionerates.
For effecting payment, assessees can access the ACES website (http://www.aces.gov.in/) and click on the e-payment link that will take them to the EASIEST portal (https://cbec.nsdl.com/EST/) or they can directly visit the EASIEST portal.
Procedure for e-Payment:
To pay Excise Duty and Service Tax online, the assessee has to enter the 15 digit Assessee Code allotted by the department under erstwhile SACER/SAPS or the current application ACES.
There will be an online check on the validity of the Assessee Code entered.
If the Assessee code is valid, then corresponding assessee details like name, address, Commissionerate Code etc. as present in the Assessee Code Master will be displayed.
Based on the Assessee Code, the duty / tax i.e. Central Excise duty or Service Tax to be paid will be automatically selected.
The assessee is required to select the type of duty / tax to be paid by clicking on Select Accounting Codes for Excise or Select Accounting Codes for Service Tax, depending on the type of duty / tax to be paid.
At a time the assessee can select up to six Accounting Codes.
The assessee should also select the bank through which payment is to be made.
On submission of data entered, a confirmation screen will be displayed. If the taxpayer confirms the data entered in the screen, it will be directed to the net-banking site of the bank selected.
The taxpayer will login to the net-banking site with the user id/ password, provided by the bank for net-banking purpose, and will enter payment details at the bank site.
On successful payment, a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment made.
h. Responsibility of the Assessee
It is the legal responsibility of the assessees, who are required to file returns, to file it within the due date as prescribed under law. The electronic filing of returns is mandatory for select class of Central Excise and Service Tax assessees, as mentioned in Notification No 04/2010-Central Excise (N.T.) dated the 19th February, 2010, and Notification No. 01/2010 – Service Tax dated the 19th February, 2010 respectively. Other assessees can also use ACES and file their returns electronically. It may, however, be noted that merely uploading the returns will not be considered as returns having been filed with the department. A return will be considered as filed, when the same is successfully accepted by the application as ‘Filed’ and the relevant date for determining the date of filing of return will be the date of uploading of such successfully ‘filed’ returns. In case a return is ‘rejected’ by the application, the date of uploading of the rejected return will not be considered as the date of filing, rather the date of uploading of the successfully ‘filed’, return (after the assessee carries out necessary corrections and uploads it again) will be considered as the actual date of filing.
In case the assessee experiences any difficulty in transacting in ACES such as filing of return, the assessees may lodge a complaint with the ACES Service Desk or the department by e-mail and/or by telephone, details of which are given below and obtain a ticket no. as an acknowledgement from the department. However, mere lodging of complaints with the ACES service desk will not be a valid ground to justify late filing of returns. If the difficulty is not on account of problems at theassessee’s end, and can be clearly attributed to the department’s IT infrastructure such as problems in accessing CBEC’s ACES application due to server, network or application being down, proportionate time will be deducted from the date of uploading of successfully ‘filed’ returns to ascertain the actual date and time of filing of the return. Since the department maintains logs of such technical failures, in case of any dispute, the decision of the department will be final.
VI. Digital Signatures
The ACES application is designed to accept digitally signed documents. However, in the beginning this functionality is not going to be activated. Pending its activation the electronic returns will be filed into ACES without digital signatures. Hence, wherever the returns are submitted through ACES there will not be any requirement to submit signed hard copy separately.
VII. System Requirements for ACES
To use ACES following systems requirements are recommended:
Ø Processor: Intel Pentium III and higher
Ø RAM: 256 MB and higher
Ø HDD: 80 GB and more
Ø Web Browser: IE 6.0 and above, Netscape 6.2 and above
Ø MS Excel 2003 and above for using offline utilities
Ø Sound Card, Speakers/Headphones, Colour Monitor for using Learning Management Systems ( LMS)
VIII. Help for Assessees
CBEC has set up a Service Desk with National toll-free No. 1800 425 4251, which can be accessed by between 9 AM to 7 PM on all working days (Monday to Friday). Besides, e-mails can be sent to aces.servicedesk@icegate.gov.in. All the calls/e-mails will be issued a unique ticket number, which will be attended to by the Service Desk agents for appropriate response.
A Learning Management Software (LMS) has been provided on the ACES website, which is a multimedia-based self-learning online tutorial guiding the aseesees in a step-by-step processes to use ACES. The downloadable version of Learning Management Software is also provided on the website. Besides, User Manuals, Frequently Asked Questions (FAQs), Power Point Presentation, and a Brochure have also been provided on the website to help the assessees use ACES
II. Modules
The ACES application has interface for:
Ø Central Excise Assessees
Ø Service Tax Assessees
Ø Central Excise Departmental Officers and
Ø Service Tax Departmental Officers.
It has automated the major processes of Central Excise and Service Tax - registration, returns, accounting, refunds, dispute resolution, audit, provisional assessment, exports, claims, intimations and permissions. It is divided into the following modules:
Access Control of Users (ACL)
Registration (REGN): Registration of assessees of Central Excise & Service Tax including on-line amendment.
Returns (RET): Electronic filing of Central Excise & Service Tax Returns
CLI: Electronic filing of claims, intimations and permissions by assessees and their processing by the departmental officers
Refund (REF): Electronic filing of Refund Claims and their processing
Provisional Assessment (PRA): Electronic filing of request for provisional assessment and its processing by the departmental officers.
Assessee Running Account
Dispute Settlement Resolution (DSR): Show Cause Notices, Personal Hearing Memos, Adjudication Orders, Appellate and related processes.
Audit Module
Export Module for processing export related documents
III. Benefits to the Assessees
1. Reduce Physical Interface with the Department
2. Save Time
3. Reduce Paper Work
4. Online Registration and Amendment of Registration Details
5. Electronic filing of all documents such as applications for registration, returns [On-line and off-line downloadable versions of ER 1,2,3,4,5,6, Dealer Return, and ST3], claims, permissions and intimations; provisional assessment request, export-related documents, refund request
6. System-generated E-Acknowledgement
7. Online tracking of the status of selected documents
8. Online view facility to see selected documents
9. Internal messaging system on business-related matters
IV. Registration Process:
To transact business on ACES a user has to first register himself/herself with ACES through a process called ‘Registration with ACES’. This registration is not a statutory registration as envisaged in Acts/Rules governing Central Excise and Service Tax but helps the application in recognizing the bonafide users. Described below are steps for taking registration by a new assessee, existing assessee, non-assessee and a Large Tax Payer Unit (LTU).
(a) New Assessee
1. The user needs to log onto the system, through internet at http://www.aces.gov.in
2. He/she chooses the Central Excise/Service Tax button from the panel appearing on the left of the webpage.
3. Clicks the button “New Users Click here to Register with ACES” in the Log-in screen that appears after clicking Central Excise/Service Tax button.
4. Fills in and submits the form “Registration with ACES”, by furnishing a self-chosen user ID and e-mail ID. User ID, once chosen is final and cannot be changed by the assessee in future.
5. The system will check for availability of the chosen User ID and then generate a password and send it by e-mail, mentioned by him/her in the Form.
6. ACES provides assistance of ‘Know your location code’ for choosing correct jurisdictional office.
7. The user then re-logs-in and proceeds with the statutory registration with Central Excise/Service Tax, by filling-in the appropriate Form namely A-1, A-2 or ST-1 etc. by clicking the “Reg” link in the Menu bar that appears on the top of the screen. For security reasons, the password should be changed immediately.
8. The system instantaneously generates an acknowledgement number after which the registration request goes to the jurisdictional Assistant or Deputy Commissioner (AC/DC). Depending on the instructions in force, assessees may be required to submit certain documents to the department for verification. After due processing, the AC/DC, in case of Central Excise and Superintendent /Commissioner (for centralized registration only), in case of Service Tax, generates Registration Certificate (RC) and a message to this effect is sent to the assessees electronically. The assessee can view this and take a print-out of this.
9. Depending on the option chosen by the assessee, the signed copy of the RC can be sent by post or can be collected by assessee in person.
10. While submitting registration form, if the assessee makes a mistake in choosing a wrong jurisdiction (Commissionerate/Division/ Range), ACES provides a facility to the AC/DC to forward the application to the correct jurisdictional officer to issue registration and a message to this effect is sent to the assesseefor information.
11. The registration number will be same as the current 15-digit format with minor change such as
For-PAN based Assessees
1-10 digits – PAN of the Assessee
11-12 digits–EM (Excise Manufacturer), ED (Excise Dealer), SD (Service Tax)
13-15–Systems generated alphanumeric serial number
For non-PAN based assessees
1-4 digits TEMP
5-10 Systems generated alpha numeric number
11-12 EM (Excise Manufacturer) or ED (Excise Dealer), SD (Service Tax)
13-15–Systems generated alphanumeric serial number
(b) Existing Assessee
The existing assessees will not have to take fresh registrations. They will have to only register with the ACES application. This can be done in the following manner :
·ACES application will automatically send mails to the e-mail IDs of the assessee, as available in the existing registration data base, indicating a TPIN number, and password. The mail will contain a hyperlink to the website.
· Assessee clicks on the hyperlink and is taken to ACES application
· Assessee submits the form after filling the requisite information including the password provided in the e-mail, a new User ID and new password. User ID, once chosen is final and cannot be changed by the assessee in future.
· On successful registration with ACES, the assessee can transact business through ACES.
Existing assessees should note that they should register with ACES by following the procedure at (1) above and they should not register with ACES through the direct method, meant for new assessees, as discussed under (a) above. They should also not fill-in registration forms again as it will lead to allotment of new registration numbers by the system.
Assessees should ensure that their contact details in the department’s registration data base are updated to include their valid and current e-mail ids, otherwise they will not receive any such mail. Those assessees who have not yet furnished their email IDs to the department or even after furnishing the ID have not received the TPIN mail from ACES are advised to contact the jurisdictional Range Officers or LTU Client Executives and furnish their email IDs in writing. The officer will thereafter incorporate the email ID in the ACES registration database of the assessee and arrange to send the TPIN mail to the assessee’s email ID.
(c) Non-Assessee
This category of registration is given in ACES to any individual, firm or company which requires to transact with the Central Excise or Service Tax Department, though not an assessee such as (a) merchant exporter, (b) co-noticee, (c) refund applicant, (d) persons who have failed to obtain CE/ST registration as required under the law and against whom the Department has initiated proceedings and (e) persons who are required to tender any payment under CE/ST Act /Rules. The Non-assessees are not required to file any tax returns.
Where such persons desire to seek non-assessee registration they follow same steps as in case of new assessee except that while choosing the registration form in step (vii) they have to choose and fill in the Non-assessee form.
In case the assessee is taking such registration for claiming any refund or rebate it is mandatory to furnish his/her valid PAN.
A Non-assessee registration can also be done by the designated officer of the Commissionerate, on behalf of the non-assessee.
(d) Large Tax Payer Unit (LTU) Assessee/Client
The consent form will have to be submitted manually by the New LTU assessees to the jurisdictional LTU office which will be processed off line
The approved consent form will be uploaded by the competent officer of the Group LTU (GLTU) into ACES
Any new unit of an existing LTU, which applies for registration with ACES will be automatically attached with the LTU Commissionerate based upon PAN details in the registration form
As soon as the new or existing unit is attached with the LTU Commissionerate, a suitable intimation will be automatically sent by the ACES to the existing jurisdictional Commissionerate and the pending items of work will be transferred to the LTU Commissionerate
For existing LTU assessees, the process of registration is same as explained in Sub Para (b) above.
IMPORTANT:
i. The user ID once selected will be permanent and cannot be changed. However, it is desirable to frequently change passwords
ii. The User ID should be of 6-12 alphanumeric characters, no special character such as !@#$%*&( )+ or spaces except underscore ‘-‘ shall be allowed.
iii. New assessee seeking registrations in Central Excise and Service Tax will also submit to the jurisdictional Range officer, a printout of the application form submitted online duly signed by the authorized signatory along with required documents.
iv. Assessees should note that the e-mail ID is furnished to the department in writing, and they will be responsible for all communications to and from this email ID. Currently, ACES provides for communication to one email ID only. After registration with the ACES, assessees, on their own, can modify their registration details online, including their e-mail ID.
v. In the interest of security and data protection, assessees are advised to change their passwords regularly and not to share it with unauthorized persons. In case of any dispute, the person whose user ID and Password has been used to access the application will be held liable for the action and any other consequences.
V. E-filing of Returns
The assesses can electronically file statutory returns of Central Excise and Service Tax by choosing one of the two facilities being offered by the department at present: (a) they can file it online, or (b) download the off-line return utilities which can be filled-in off-line and uploaded to the system through the internet.
a. Steps for preparing and filing returns
(i) Returns can be prepared and filed on line by selecting the ‘File Return’ option under RET module after logging into the ACES.
(ii) All validations are thrown up during the preparation of the return in this mode and the status of the return filed using the online mode is instantaneously shown by ACES.
(iii) Returns can also be prepared and filed off-line. Assessee downloads the Offline return preparation utility available at http://www.aces.gov.in (Under Download)
(iv) Prepares the return offline using this utility. The return preparation utility contains preliminary validations which are thrown up by the utility from time to time.
(v) Assessee logs in using the User ID and password.
(vi) Selects RET from the main menu and uploads the return. Instructions for using the offline utilities are given in detail in the Help section, under ‘Download’ link and assessees are advised to follow them.
(vii) Returns uploaded through this procedure are validated by the ACES before acceptance into the system which may take up to one business day. Assesseecan track the status of the return by selecting the appropriate option in the RET sub menu. The status will appear as “uploaded” meaning under process by ACES, “Filed” meaning successfully accepted by the system or “Rejected” meaning the ACES has rejected the return due to validation error. The rejected returns can be resubmitted after corrections.
(viii) Once the Central Excise returns are filed online in ACES or uploaded to the system using the off-line utility, the same can not be modified or cancelled by the assessee. The Service Tax returns, however, can be modified once as per rules up to 90 days from the date of filing the initial return.
(ix) Self-assessed CE returns, after scrutiny by the competent officer, may result into modification. Both the ‘Original’ and the ‘Reviewed’ return can be viewed by the assessee online.
b. Using XML Schema for filing Dealers Return
Currently, the ACES Application allows on-line filing of Quarterly Returns by the Registered Dealers accessing the site www.aces.gov.in by using the excel utility. Some assesses who use their own software application in their offices find the process of manual entry of data in the excel format of Returns as a time consuming and avoidable exercise. A new feature of XML schema has now been introduced. Now using the schema, assessees, after making necessary modifications in their own software application, can generate their return from their application. Below mentioned steps elaborate the process to prepare, validate and upload the Dealer’s Return.
Steps to prepare the XML
Step 1: ACES application accepts the return in XML format. Prepare the Dealer return XML and validate it against the schema ACES_DLR.xsd provided.
Step 2: Login to the ACES application and upload the XML for processing. XML will be again validated against same XSD again before processing.
XML File only will be considered valid if it satisfies the requirements of the schema (predefined XSD) with which it has been associated. These requirements typically include such constraints as:
Elements and attributes that must/may be included, and their permitted structure
The structure as specified by regular expression syntax
Instructions for using the schema are given in detail in the Help section, under ‘Download’ link. Assessees are advised to follow them.
c. Filing of Returns and other documents through the ACES Certified Facilitation Centres (CFCs)
Very soon, CBEC will be setting up ACES Certified Facilitation Centres (CFCs) with the help of professional bodies like Institute of Chartered Accountants of India (ICAI), Institute of Cost and Works Accountants of India (ICWAI) etc. These CFCc will provide a host of services to the assessees such as digitization of paper documents like returns etc. and uploading the same to ACES. Assessees requiring the services of the CFCs may be required to pay service fees to the CFCs. CBEC will approve the maximum rates at which CFCs can charge their customers for the services rendered by them. For this purpose, assessees are required to write to the department authorizing one of the CFCs, from the approved list, to work in ACES on their behalf. They have to furnish the name and other details of the CFCs, including the registration No issued by the ICAI/ICWAI etc. At any given time, one assessee can authorize one CFC, while one CFC can provide services to more than one assessee throughout India. In case the assessee wants to withdraw the authorization, it can do so by intimating the department. However, an assessee will be held liable for all actions of omission or commission of the CFC, during the period they are authorized by him/her to work in ACES.
d. Validation of the entries made while filling return
At the time of making entry in the electronic format of the relevant return, the software does some preliminary validation for ensuring correctness of data, either concurrently or at the time of saving / submitting the return. This validation process is automated. The user is prompted by the application software to correct the particulars entered wherever required. In respect of certain entries, although the application alerts the assessee about any entry found erroneous or inconsistent, as per the automated validation process, the assessee is still allowed to proceed further to complete data entry of the return and finally submit it electronically. But in some cases the assessees are not allowed to proceed further unless the error indicated is corrected.
A return filed electronically is subject to automatic verification process by the application and defective returns are marked to the departmental officer for review and correction. While reviewing the return the officer may seek some clarification from the assessee, call for some information, records or documents which should be furnished by the assessee. In case of review and correction of returns by the departmental officers, assesses will receive a message from the application and they can log in to the application to view the reviewed returns online.
Returns, captured off-line using the Downloadable utility and uploaded later on, are further subjected to certain validation checks. Processing of uploaded returns, using the off-line versions, is done at the end of one business day and the status can be viewed by the assessees under the ‘VIEW STATUS’ link under ‘RET’ module. Status is described as ‘UPLOADED’, ‘FILED’ or ‘REJECTED’ and they denote as follows:
Ø UPLOADED denotes that return is uploaded and under processing (assessees are advised to view the status after the end of a business day).
Ø FILED denotes that uploaded return is accepted by system.
Ø REJECTED denotes that return is rejected due to errors. (The assessees are required to correct the return and upload it again.)
There is no provision in ACES application to allow assessees to make corrections to the returns filed by them. Once the return is accepted by the system as successfully ‘filed’, no modification can be made by the assessee. However, if the return is rejected, the assessee can correct the errors and upload it again. Theassessees are, therefore, advised to take utmost care while fill-in in the returns. They may, however, bring it to the notice of the departmental officers.
e. Acknowledgement of E-Filing of the return
In the case of a Central Excise or service Tax return filed on-line, ACES application software acknowledges it by displaying an Acknowledgement message. A unique document reference number is generated which consist of 15-digit registration number of the assessee, name of the return filed, the period for which return is filed etc. This is also automatically communicated to the email id of the assessee by the application. In the case of an uploaded Central Excise return, using offline utility, similar acknowledgement is generated and sent after the acceptance of the return by the system as a valid return i.e. when the status changes to ‘FILED’.
f. Class of Assessees for whom e-filing of returns and e-payment is mandatory with effect from 1st April, 2010:
In terms of Notification No 04/2010-Central Excise (N.T.) dated the 19th February, 2010, an assessee, who has paid total duty of rupees ten lakhs or more including the amount of duty paid by utilization of CENVAT credit in the preceding financial year, is required to file the monthly or quarterly return, as the case may be, electronically, under sub-rule (1) of Rule 12 of the Central Excise Rules, 2002 and deposit the duty electronically through internet banking under sub-rule (1) of Rule 8 of the Central Excise Rules, 2002.
Similarly, in terms of Notification No. 01/2010 – Service Tax dated the 19th February, 2010, an assessee who has paid a total Service Tax of rupees ten lakhs or more including the amount paid by utilization of CENVAT credit, in the preceding financial year, is required to file the return electronically under sub-rule (2) of Rule 7 of the Service Tax Rules, 1994 and deposit the service Tax liable to be paid by him electronically, through internet banking under sub-rule (2) of Rule 6 of the Service Tax Rules, 1994.
The earlier facility of e-filing on the website (http://exciseandservicetax.nic.in), as provided in the CBEC Circular No.791/24/2004-CX. Dated 1.6.2004 is no more available and the assessees are required to file their returns online or by uploading the downloadable off-line return utilities to the new ACES website (http://www.aces.gov.in). Data structure for writing programmes to cull out the required return data (currently available for Dealer return) from the assessees’scomputers in XML format has also been provided. Such schema for ER 2 and ER 1 returns will be published in due course. For complete details and instructions,assessees can visit the aforesaid website. Assessees who are required to or opted to file returns electronically but are unable to file electronically, for any technical difficulty in filing the returns, on account of difficulties at the department’s end viz. server/application is down or due to some defect in the software, should file their returns manually within the due date.
g. e-payment
For e-payment, assessees should open a net banking account with one of the authorized banks (currently there are 28 banks, list of which is available on the EASIEST (Electronic Accounting System in Excise and service Tax) website of CBEC, maintained by NSDL (https://cbec.nsdl.com/EST/). Payment through ICICI Bank, HDFC Bank and Axis Bank can be done by assesses for select Commissionerates only, list of which is published in the aforesaid EASIEST website. Payment through all other authorized banks can be made for all Commissionerates.
For effecting payment, assessees can access the ACES website (http://www.aces.gov.in/) and click on the e-payment link that will take them to the EASIEST portal (https://cbec.nsdl.com/EST/) or they can directly visit the EASIEST portal.
Procedure for e-Payment:
To pay Excise Duty and Service Tax online, the assessee has to enter the 15 digit Assessee Code allotted by the department under erstwhile SACER/SAPS or the current application ACES.
There will be an online check on the validity of the Assessee Code entered.
If the Assessee code is valid, then corresponding assessee details like name, address, Commissionerate Code etc. as present in the Assessee Code Master will be displayed.
Based on the Assessee Code, the duty / tax i.e. Central Excise duty or Service Tax to be paid will be automatically selected.
The assessee is required to select the type of duty / tax to be paid by clicking on Select Accounting Codes for Excise or Select Accounting Codes for Service Tax, depending on the type of duty / tax to be paid.
At a time the assessee can select up to six Accounting Codes.
The assessee should also select the bank through which payment is to be made.
On submission of data entered, a confirmation screen will be displayed. If the taxpayer confirms the data entered in the screen, it will be directed to the net-banking site of the bank selected.
The taxpayer will login to the net-banking site with the user id/ password, provided by the bank for net-banking purpose, and will enter payment details at the bank site.
On successful payment, a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment made.
h. Responsibility of the Assessee
It is the legal responsibility of the assessees, who are required to file returns, to file it within the due date as prescribed under law. The electronic filing of returns is mandatory for select class of Central Excise and Service Tax assessees, as mentioned in Notification No 04/2010-Central Excise (N.T.) dated the 19th February, 2010, and Notification No. 01/2010 – Service Tax dated the 19th February, 2010 respectively. Other assessees can also use ACES and file their returns electronically. It may, however, be noted that merely uploading the returns will not be considered as returns having been filed with the department. A return will be considered as filed, when the same is successfully accepted by the application as ‘Filed’ and the relevant date for determining the date of filing of return will be the date of uploading of such successfully ‘filed’ returns. In case a return is ‘rejected’ by the application, the date of uploading of the rejected return will not be considered as the date of filing, rather the date of uploading of the successfully ‘filed’, return (after the assessee carries out necessary corrections and uploads it again) will be considered as the actual date of filing.
In case the assessee experiences any difficulty in transacting in ACES such as filing of return, the assessees may lodge a complaint with the ACES Service Desk or the department by e-mail and/or by telephone, details of which are given below and obtain a ticket no. as an acknowledgement from the department. However, mere lodging of complaints with the ACES service desk will not be a valid ground to justify late filing of returns. If the difficulty is not on account of problems at theassessee’s end, and can be clearly attributed to the department’s IT infrastructure such as problems in accessing CBEC’s ACES application due to server, network or application being down, proportionate time will be deducted from the date of uploading of successfully ‘filed’ returns to ascertain the actual date and time of filing of the return. Since the department maintains logs of such technical failures, in case of any dispute, the decision of the department will be final.
VI. Digital Signatures
The ACES application is designed to accept digitally signed documents. However, in the beginning this functionality is not going to be activated. Pending its activation the electronic returns will be filed into ACES without digital signatures. Hence, wherever the returns are submitted through ACES there will not be any requirement to submit signed hard copy separately.
VII. System Requirements for ACES
To use ACES following systems requirements are recommended:
Ø Processor: Intel Pentium III and higher
Ø RAM: 256 MB and higher
Ø HDD: 80 GB and more
Ø Web Browser: IE 6.0 and above, Netscape 6.2 and above
Ø MS Excel 2003 and above for using offline utilities
Ø Sound Card, Speakers/Headphones, Colour Monitor for using Learning Management Systems ( LMS)
VIII. Help for Assessees
CBEC has set up a Service Desk with National toll-free No. 1800 425 4251, which can be accessed by between 9 AM to 7 PM on all working days (Monday to Friday). Besides, e-mails can be sent to aces.servicedesk@icegate.gov.in. All the calls/e-mails will be issued a unique ticket number, which will be attended to by the Service Desk agents for appropriate response.
A Learning Management Software (LMS) has been provided on the ACES website, which is a multimedia-based self-learning online tutorial guiding the aseesees in a step-by-step processes to use ACES. The downloadable version of Learning Management Software is also provided on the website. Besides, User Manuals, Frequently Asked Questions (FAQs), Power Point Presentation, and a Brochure have also been provided on the website to help the assessees use ACES
Wednesday, January 20, 2010
Deduction for Higher Educatoin Loan 80E on Sons Education
80E. (1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his relative.
from above main points to avail the deduction are
1.Eduction loan should be taken by Assessee.
2.The amount eligible for deduction is repayment of eduction loan interest.
3.There is no limit for amount of repayment of interest.Unlimited amount of interest can be deducted under this section.
4.This deduction is available in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest is paid by the assessee in full, whichever is earlier.
5.Initial Assessment year means previous year in which assessee starts paying the interest amount.
6.The loan should be taken for the purpose of higher eduction,and higher eduction means " any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognised by the Central Government or State Government or local authority or by any other authority authorised by the Central Government or State Government or local authority to do so;
7.The loan should be taken from any financial institution or any approved charitable institution.(in simple main Banks are covered)
8.The loan should be taken for higher study of himself or studies of relative
9.Relative under this section means the in relation to an individual, means the spouse and children of that individual the student for whom the individual is the legal guardian.
10.Earlier to previous year 2006-07 the above deduction is available for loan taken and repaid by the assessee only but after finance act 2007 ,"the deduction is available for the purpose of higher education of his relative also.relative, in relation to an individual, means the spouse and children of that individual or the student for whom the individual is the legal guardian.
11.There is no deduction available for repayment of principal ,this deduction is available to only for interest.
12.This deduction is available for individual only and not for other type of assessee .
13.The loan should be for pursuing higher studies means loans taken not only for tuition or college fees but also loan taken other incidental expenses for pursuing such studies like hostel charges,transport charges etc etc is also covered under this deduction,
14.There is no condition that the course should be in India .
please read some hypothetical examples for clarification.
Qus: Ram has taken a Eduction loan for his higher studies on 20.06.2005 and started paying installments including interest from 20.06.2007.
Ans:In above example Ram will get tax benefit under section 8o E from p.y 2007-08 i.e initial year of payment and next seven year i.e upto previous year 2014-15 or upto full payment of loan which ever is earlier.
Ques:Ram has taken a loan for his higher studies on 20.06.2005 and paid 20000 interest in previous year and his father has paid 15000 interest payment in previous year 2007-08.who can claim benefit of deduction.
Ans:Only ram will be eligible for deduction of 20000 rs .His father is not eligible for deduction the reason behind this is that loan has been taken by the Ram and not by his father as mentioned in point one above ,though his father is satisfy the condition of relative and paid the interest also but he has not taken the loan
Ques:Can son /daughter can claim the benefit of deduction for loan taken for higher studies of his /her father/mother.
Ans: No,on the reverse ,parents can claim the benefit for payment of interest for higher studies of their children.
Ques:Ram has taken a loan for his higher studies ,and has repaid the laon interest amount but unfortunately he has not succeeded in exams and could not complete his higher studies.
Ans:As per section loan should be for "pursuing his higher education or for the purpose of higher education of his relative"and ram has pursued the higher course so he should be eligible for the deduction as he has fulfilled all the conditions and there is no condition that the course assessee has persuaded should b completed or assessee should be passed definitely in the course the main dedmand of the section is purpose of the loan should be higher eduction and it should be drawn and used for the purpose of higher studies for his or his relatives
from above main points to avail the deduction are
1.Eduction loan should be taken by Assessee.
2.The amount eligible for deduction is repayment of eduction loan interest.
3.There is no limit for amount of repayment of interest.Unlimited amount of interest can be deducted under this section.
4.This deduction is available in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest is paid by the assessee in full, whichever is earlier.
5.Initial Assessment year means previous year in which assessee starts paying the interest amount.
6.The loan should be taken for the purpose of higher eduction,and higher eduction means " any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognised by the Central Government or State Government or local authority or by any other authority authorised by the Central Government or State Government or local authority to do so;
7.The loan should be taken from any financial institution or any approved charitable institution.(in simple main Banks are covered)
8.The loan should be taken for higher study of himself or studies of relative
9.Relative under this section means the in relation to an individual, means the spouse and children of that individual the student for whom the individual is the legal guardian.
10.Earlier to previous year 2006-07 the above deduction is available for loan taken and repaid by the assessee only but after finance act 2007 ,"the deduction is available for the purpose of higher education of his relative also.relative, in relation to an individual, means the spouse and children of that individual or the student for whom the individual is the legal guardian.
11.There is no deduction available for repayment of principal ,this deduction is available to only for interest.
12.This deduction is available for individual only and not for other type of assessee .
13.The loan should be for pursuing higher studies means loans taken not only for tuition or college fees but also loan taken other incidental expenses for pursuing such studies like hostel charges,transport charges etc etc is also covered under this deduction,
14.There is no condition that the course should be in India .
please read some hypothetical examples for clarification.
Qus: Ram has taken a Eduction loan for his higher studies on 20.06.2005 and started paying installments including interest from 20.06.2007.
Ans:In above example Ram will get tax benefit under section 8o E from p.y 2007-08 i.e initial year of payment and next seven year i.e upto previous year 2014-15 or upto full payment of loan which ever is earlier.
Ques:Ram has taken a loan for his higher studies on 20.06.2005 and paid 20000 interest in previous year and his father has paid 15000 interest payment in previous year 2007-08.who can claim benefit of deduction.
Ans:Only ram will be eligible for deduction of 20000 rs .His father is not eligible for deduction the reason behind this is that loan has been taken by the Ram and not by his father as mentioned in point one above ,though his father is satisfy the condition of relative and paid the interest also but he has not taken the loan
Ques:Can son /daughter can claim the benefit of deduction for loan taken for higher studies of his /her father/mother.
Ans: No,on the reverse ,parents can claim the benefit for payment of interest for higher studies of their children.
Ques:Ram has taken a loan for his higher studies ,and has repaid the laon interest amount but unfortunately he has not succeeded in exams and could not complete his higher studies.
Ans:As per section loan should be for "pursuing his higher education or for the purpose of higher education of his relative"and ram has pursued the higher course so he should be eligible for the deduction as he has fulfilled all the conditions and there is no condition that the course assessee has persuaded should b completed or assessee should be passed definitely in the course the main dedmand of the section is purpose of the loan should be higher eduction and it should be drawn and used for the purpose of higher studies for his or his relatives
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