Thursday, April 19, 2012
Friday, March 23, 2012
Negative List of 17 sweet Services:Budget 2012
In the existing system, only the services specified in clause (105) of section 65 of the Finance Act, 1994 are taxed under the charging section 66. In the new system, all services, other than services specified in the negative list, provided or agreed to be provided in the taxable territory by a person to another would be taxed under section 66B. (effective date yet not notified )
Service’ has been defined in clause (44) of the new section 65B and means –
any activity
for consideration
carried out by a person for another
and includes a declared service.
The said definition further provides that ‘Service’ does not include –
any activity that constitutes only a transfer in title of (i) goods or (ii) immovable property by way of sale, gift or in any other manner
a transaction only in (iii) money or (iv) actionable claim
any service provided by an employee to an employer in the course of the employment.
fees payable to a court or a tribunal set up under a law for the time being in force
In terms of Section 66B of the Act, service tax will be leviable on all services provided in the taxable territory by a person to another for a consideration other than the services specified in the negative list. The services specified in the negative list therefore go out of the ambit of chargeability of service tax. The negative list of service is specified in the Act itself in Section 66 D. For sake of ease of reference the negative list of services is given in Exhibit A1. In all, there are seventeen heads of services that have been specified in the negative list. The scope and ambit of these is explained in paras below
Negative List of Services not liable for service tax :Union budget 2012
Services by Government or a local authority excluding the following services to the extent they are not covered elsewhere:(i) services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government;(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;(iii) transport of goods or passengers; or(iv) support services, other than services covered under clauses (i) to (iii) above, provided to business entities.
Services by the Reserve Bank of India.
Services by a foreign diplomatic mission located in India.
Services relating to agriculture by way of –(i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing;(ii) supply of farm labour;(iii) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter essential characteristics of agricultural produce but make it only marketable for the primary market;(iv) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;(v) loading, unloading, packing, storage or warehousing of agricultural produce;(vi) agricultural extension services;(vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce.
Trading of goods.
Any process amounting to manufacture or production of goods.
Selling of space or time slots for advertisements other than advertisements broadcast by radio or television.
Service by way of access to a road or a bridge on payment of toll charges.
Betting, gambling or lottery.
Admission to entertainment events or access to amusement facilities.
Transmission or distribution of electricity by an electricity transmission or distribution utility.
Services by way of –(i) pre-school education and education up to higher secondary school or equivalent;(ii) education as a part of a curriculum for obtaining a qualification recognized by law;(iii) education as a part of an approved vocational education course.
Services by way of renting of residential dwelling for use as residence;
Services by way of –(i) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount;(ii) inter-se sale or purchase of foreign currency amongst banks or authorized dealers of foreign exchange or amongst banks and such dealers;
Service of transportation of passengers, with or without accompanied belongings, by –(i) a stage carriage;(ii) railways in a class other than –(A) first class; or(B) an air conditioned coach;(iii) metro, monorail or tramway;(iv) inland waterways;(v) public transport in a vessel of less than fifteen tonne net, other than predominantly for tourism purpose; and(vi) metered cabs, radio taxis or auto rickshaws;
Services by way of transportation of goods –(i) by road except the services of –(A) a goods transportation agency; or(B) a courier agency;(ii) by an aircraft or a vessel from a place outside India to the first customs station of landing in India; or(iii) by inland waterways;
Funeral, burial, crematorium or mortuary services including transportation of the deceased.
Details of Negative List of services.
4.1 Services provided by Government or local authority
4.1.1 Are all services provided by Government or local authority covered in the negative list?
No. Most services provided by the Central or state Government or local authorities are in the negative list except the following:
a) services provided by the Department of Posts by way of speed post, express parcel post, life insurance and agency services carried out on payment of commission on non government business;
b) services in relation to a vessel or an aircraft inside or outside the precincts of a port or an airport;
c) transport of goods and/or passengers;
d) support services, other than those covered by clauses (a) to (c) above, to business entities.
4.1.2 Would the taxable services provided by the Government be charged to tax if they are otherwise exempt or specified elsewhere in the negative list?
No. If the services provided by the government or local authorities that have been excluded from the negative list entry are otherwise specified in the negative list then such services would also not be taxable.
4.1.3 ‘Government’ has not been defined in the Act. What is the meaning of Government?
Since ‘Government’ has not been defined in the Act, the definition of ‘Government’ as contained in the General Clauses Act, 1897 would be applicable as per which ‘Government’ includes both State Government and Central Government. Further as per the General Clause Act 1897, State includes Union Territory.
4.1.4 Are various corporations formed under Central Acts or State Acts or various government companies registered under the Companies Act, 1956 or autonomous institutions set up by a special Acts covered under the definition of ‘Government’?
No. In terms of the definition of ‘Government’ as contained in the General Clause Act, 1857 and as per the settled position of law such corporations or authorities or companies are not included in the definition of ‘Government’. Services provided by such entities would, therefore, not be entitled to the negative list entry relating to the ‘Government’. It would also not include regulatory bodies.
4.1.5 What entities are then covered under ‘Government’?
‘Government’ would include various departments and offices of the Central or State Government or the U.T. Administrations which carry out their functions in the name and by order of the President of India or the Governor of a State.
4.1.6 Would a department of the Government need to get itself registered for each of the services listed in answer to Q. No.4.1.1 above?
For the support services provided by the Government to business entities government departments will not have to get registered because service tax will be payable on such services by the service receiver i.e. the business entities receiving the service under reverse charge mechanism in terms of the provisions of section the Act and the notification proposed to be issued under the said section. For services mentioned at (a) to (c) of the list (point 4.1.1 above refers) tax will be payable by the concerned department.
4.1.7 What is the meaning of “support services” which appears to be a phrase of wide ambit?
Support services have been defined in section 65B of the Act as ‘infrastructural, operational, administrative, logistic marketing or any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever and shall include advertisement and promotion, construction or works contract, renting of movable or immovable property, security, testing and analysis’. Thus services which are provided by government in terms of their sovereign right to business entities are not support services e.g. grant of mining or licensing rights.
4.1.8 What is the meaning of local authority?
Local authority is defined in 65B and means the following:-
A Panchayat as referred to in clause (d) of article 243 of the Constitution
A Municipality as referred to in clause (e) of article 243P of the Constitution
A Municipal Committee and a District Board, legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund
A Cantonment Board as defined in section 3 of the Cantonments Act, 2006
A regional council or a district council constituted under the Sixth Schedule to the Constitution
A development board constituted under article 371 of the Constitution, or
A regional council constituted under article 371A of the Constitution.
4.2 Services provided by Reserve Bank of India
4.2.1 Are all services provided by the Reserve Bank of India in the negative list?
Yes. All services provided by the Reserve Bank of India are in the negative list.
4.2.2 What about services provided to the Reserve Bank of India?
Services provided to the Reserve Bank of India are not in the negative list and would be taxable unless otherwise covered in any other entry in the negative list.
4.3 Services by a foreign diplomatic mission located in India
Any service that is provided by a diplomatic mission of any country located in India are in the negative list. This entry does not cover services, if any, provided by any office or establishment of an international organization.
4.4 Services relating to agriculture
The services relating to agriculture that are specified in the negative list are services relating to –
agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing;
supply of farm labour;
processes carried out at the agricultural farm including tending, pruning, cutting, harvesting, drying cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter essential characteristics of agricultural produce but makes it only marketable for the primary market;
renting of agro machinery or vacant land with or without a structure incidental to its use;
loading, unloading, packing, storage and warehousing of agricultural produce;
agricultural extension services;
services provided by any Agricultural Produce Marketing Committee or Board or services provided by commission agent for sale or purchase of agricultural produce;
4.4.1 What is the meaning of ‘agriculture’?
‘Agriculture’ has been defined in the Act as cultivation of plants and rearing or breeding of animals and other species of life forms for foods, fibre, fuel, raw materials or other similar products but does not include rearing of horses.
4.4.2 Are activities like breeding of fish (pisciculture), rearing of silk worms (sericulture), cultivation of ornamental flowers (floriculture) and horticulture, forestry included in the definition of agriculture?
Yes. These activities are included in the definition of agriculture.
4.4.3 What is the meaning of agricultural produce?
Agricultural produce has also been defined in section 65B of the Act which means any produce of agriculture on which either no processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. It also includes specified processes in the definition like tending, pruning, grading, sorting etc. which may be carried out at the farm or elsewhere as long as they do not alter the essential characteristics.
4.4.4 Would plantation crops like rubber, tea or coffee be also covered under agricultural produce?
Yes. Such plantation crops are also covered under agricultural produce.
4.4.5 Would potato chips or tomato ketchup qualify as agricultural produce?
No. In terms of the definition of agricultural produce, only such processing should be carried out as is usually done by cultivator producers which does not alter its essential characteristics but makes it marketable for primary market. Potato chips of tomato ketchup are manufactured through processes which alter the essential characteristic of farm produce (potatoes and tomatoes in this case).
4.4.6 Would leasing of vacant land with a green house or a storage shed meant for agricultural produce be covered in the negative list?
Yes. In terms of the specified services relating to agriculture ‘leasing’ of vacant land with or without structure incidental to its use’ is covered in the negative list. Therefore, if vacant land has a structure like storage shed or a green house built on it which is incidental to its use for agriculture then its lease would be covered under the negative list entry.
4.4.7 What is the meaning of agricultural extension services?
Agricultural extension services have also been defined in section 65B of the Act as application of scientific research and knowledge to agricultural practices through farmer education or training.
4.4.8 What are the services referred to in the negative list entry pertaining to Agricultural Produce Marketing Committee or Board?
Agricultural Produce Marketing Committees or Boards are set up under a State Law for purpose of regulating the marketing of agricultural produce. Such marketing committees or boards have been set up in most of the States and provide a variety of support services for facilitating the marketing of agricultural produce by provision of facilities and amenities like shops, sheds, water, light, electricity, grading facilities etc. They also take measures for prevention of sale or purchase of agricultural produce below the minimum support price. APMCs collect market fees, license fees, rents etc. Services provided by such Agricultural Produce Marketing Committee or Board are covered in the negative list.
4.5 Trading of goods
4.5.1 Would activities of a commission agent or a clearing and forwarding agent who sells goods on behalf of another for a commission be included in trading of goods?
No. The services provided by commission agent or a clearing and forwarding agent are not in the nature of trading of goods. These are auxiliary for trading of goods. In terms of the provision of clause (1) of section 66F reference to service does not include reference to a service used for providing such service.(For guidance on clause (1) of section 66F please refer to point no 7.1.1 of this Guidance Paper) Moreover the title in the goods never passes on to such agents to come within the ambit of trading of goods.
4.5.2 Would future contracts in commodities be covered under trading of goods?
Yes. Futures contracts would be covered under trading of goods as these are contracts which involve transfer of title in goods on a future date at a pre-determined price.
4.5.3 Would commodity futures be covered under trading of goods?
Yes. In commodity futures actual delivery of goods does not normally take place and the purchaser under a futures contract normally offsets all obligations or closes out by selling an equal quantity of goods of the same description under another contract for delivery on the same date. There are, therefore, two contracts of sale/purchase involved which would fall in the category of trading of goods.
4.5.4 Would auxiliary services relating to future contracts or commodity futures be covered in the negative list entry relating to trading of goods?
No. Such services provided by commodity exchanges clearing houses or agents would not be covered in the negative list entry relating to trading of goods.
4.6 Processes amounting to manufacture or production of goods
The phrase ‘processes amounting to manufacture or production of goods’ has been defined in section 65B of the Act as a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944 (1 of 1944) or any process amounting to manufacture of alcoholic liquors for human consumption, opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any State Act. This entry, therefore, covers manufacturing activity carried out on contract or job work basis provided duties of excise are leviable on such processes under the Central Excise Act, 1944 or any of the State Acts.
4.6.1 Would service tax be leviable on processes which do not amount to manufacture or production of goods?
Yes. Service tax would be levied on processes, unless otherwise specified in the negative list, not amounting to manufacture or production of goods carried out by a person for another for consideration. Some of such services relating to processes not amounting to manufacture are exempt as specified in entry no. 30 of Exhibit A2.
4.6.2 Would service tax be leviable on processes on which Central Excise Duty is leviable under the Central Excise Act, 1944 but are otherwise exempted?
No. If Central Excise duty is leviable on a particular process as the same amounts to manufacture then such process would be covered in the negative list even if there is a central excise duty exemption for such process.
4.7 Selling of space or time slots for advertisements other than advertisements broadcast by radio or television
‘Advertisement’ has been defined in section 65 B of the Act as form of presentation for promotion of, or bringing awareness about, any event, idea, immovable property, person, service, goods or actionable claim through newspaper, television, radio or any other means but does not include any presentation made in person.
4.7.1 Sale of space of time for advertisements not including sale of space for advertisement in print media and sale of time by a broadcasting agency or organization is currently taxed under clause (zzzm) of sub-section (105) of the Finance Act,1944. So what kind of sale of space or time would become taxable and what would be not taxable?
Taxable
Non-taxable
Sale of space or time for advertisement
to be broadcast on radio or television
Sale of space for advertisement in print
media
Sale of time slot by a broadcasting
organization.
Sale of space for advertisement in bill
boards, public places, buildings, conveyances, cell phones, automated teller machines, internet
Aerial advertising
4.7.2 Would services provided by advertisement agencies relating to preparation of advertisements be covered in the negative list entry relating to sale of space for advertisements?
No. Services provided by advertisement agencies relating to making or preparation of advertisements would not be covered in this negative list entry and would thus be taxable. This would also not cover commissions received by advertisement agencies from the broadcasting or publishing companies for facilitating business, which may also include some portion for the preparation of advertisement.
4.7.3 In case a person provides a composite service of providing space for advertisement that is covered in the negative list entry coupled with taxable service relating to design and preparation of the advertisement how will its taxability be determined?
This would be a case of bundled services taxability of which has to be determined in terms of the principles laid down in section 66F of the Act.
Bundled services have been defined in the said section as provision of one type of service with another type or types of services.
If such services are bundled in the ordinary course of business then the bundle of services will be treated as consisting entirely of such service which determines the dominant nature of such a bundle.
If such services are not bundled in the ordinary course of business then the bundle of services will be treated as consisting entirely of such service which attracts the highest liability of service tax.
For guidance on how to determine whether or not a bundle of services is bundled in the ordinary course of business please refer to Guidance Note 7 of this Guidance Paper.
4.8 Access to a road or a bridge on payment of toll charges
4.8.1 Is access to national highways or state highways also covered in this entry?
Yes. National highways or state highways are also roads and hence covered in this entry.
4.8.2. Are collection charges or service charges paid to any toll collecting agency also covered?
No. The negative list entry only covers access to a road or a bridge on payment of toll charges. Services of toll collection on behalf of an agency authorized to levy toll are in the nature of services used for providing the negative list services. As per the principle laid down in sub section (1) of section 66F of the Act the reference to a service by nature or description in the Act will not include reference to a service used for providing such service.
4.9 Betting, gambling or lottery
“Betting or gambling’ has been defined in section 65B of the Act as ‘putting on stake something of value, particularly money, with consciousness of risk and hope of gain on the outcome of a game or a contest, whose result may be determined by chance or accident, or on the likelihood of anything occurring or not occurring’.
4.9.1. Are auxiliary services that are used for organizing or promoting betting or gambling events also covered in this entry?
No. These services are in the nature of services used for providing the negative list services of betting or gambling. As per the principle laid down in sub section (1) of section 66F of the Act the reference to a service by nature or description in the Act will not include reference to a service used for providing such service.
4.10 Entry to Entertainment Events and Access to Amusement Facilities.
‘Entertainment events’ has been defined in section 65B of the Act ‘as an event or a performance which is intended to provide recreation, pastime, fun or enjoyment, such as exhibition of cinematographic films, circus, concerts, sporting events, fairs, pageants, award functions, dance performances, musical performances, theatrical performances including cultural programs, drama, ballets or any such event or programme’.
‘Amusement facility’ has been defined in the Act as ‘a facility where fun or recreation is provided by means of rides, gaming devices or bowling alleys in amusement parks, amusement arcades, water parks, theme parks or such other place but does not include a place within such facility where other services are provided’.
4.10.1 If a cultural programme, drama or a ballet is held in an open garden and not in a theatre would it qualify as an entertainment event?
Yes. The words used in the definition are ‘theatrical performances’ and not ‘performances in theatres’. A cultural programme, drama or a ballet preformed in the open does not cease to be a theatrical performance provided it is preformed in the manner it is preformed in a theatre, i.e. before an audience.
4.10.2 Would a standalone ride set up in a mall qualify as an amusement facility?
Yes. A standalone amusement ride in a mall is also a facility in which fun or recreation is provided by means of a ride. Access to such amusement ride on payment of charges would be covered in the negative list.
4.10.3 Would entry to video parlors exhibiting movies played on a DVD player and displayed through a TV screen be covered in the entry?
Yes. Such exhibition is an exhibition of cinematographic film.
4.10.4 Would membership of a club qualify as access to an amusement facility?
No. A club does not fall in the definition of an amusement facility.
4.10.5 Would auxiliary services provided by a person, like an event manager, for organizing an entertainment event or by an entertainer for providing the entertainment to an entertainment event organizer be covered in this entry?
No. Such services are in the nature of services used for providing the service specified in this negative list entry and w2ould not be covered in the ambit of such specified service by operation of the rule of interpretation contained in clause (1) of section 66F of the Act. For guidance on the rules of interpretation please refer to Guidance Note 7.
4.11 Transmission or distribution of electricity
4.11.1 What is the meaning of electricity transmission or distribution utility?
An ‘electricity transmission or distribution utility’ has also been defined in section 65B of the act. It includes the following –
the Central Electricity Authority
a State Electricity Board
the Central Transmission Utility (CTU)
a State Transmission Utility (STU) notified under the Electricity Act, 2003 (36 of 2003)
a distribution or transmission licensee licensed under the said Act
any other entity entrusted with such function by the Central or State Government
4.11.2 If charges are collected by a developer or a housing society for distribution of electricity within a residential complex then are such services covered under this entry?
No. The developer or the housing society would be covered under this entry only if it is entrusted with such function by the Central or a State government or if it is, for such distribution, a distribution licensee licensed under the Electricity Act, 2003.
4.11.3 If the services provided by way installation of gensets or similar equipment by private contractors for distribution of electricity covered by this entry?
No. the entry does not cover services provided by private contractors. Moreover the services provided are not by way of transmission or distribution of electricity.
4.12 Specified services relating to education
The following services relating to education are specified in the negative list –
pre-school education and education up to higher secondary school or equivalent
education as a part of a prescribed curriculum for obtaining a qualification recognized by law for the time being in force;
education as a part of an approved vocational education course
4.12.1 Are services provided by international schools giving international certifications like IB also covered in this entry?
Yes. Services by way of education up to higher secondary school or equivalent are covered in this entry.
4.12.2 Are services provided by boarding schools covered in this entry?
Boarding schools provide service of education coupled with other services like providing dwelling units for residence and food. This may be a case of bundled services if the charges for education and lodging and boarding are inseparable. Their taxability will be determined in terms of the principles laid down in section 66F of the Act. Such services in the case of boarding schools are bundled in the ordinary course of business. Therefore the bundle of services will be treated as consisting entirely of such service which determines the dominant nature of such a bundle. In this case since dominant nature is determined by the service of education other dominant service of providing residential dwelling is also covered in a separate entry of the negative list, the entire bundle would be treated as a negative list service.
4.12.3 Are services provided to educational institutions also covered in this entry?
No. Such services are not covered under the negative list entry. However certain services provided to educational institutions are separately exempted by a notification:
Services to an educational institution by way of catering under the centrally assisted mid – day meals scheme sponsored by government.
Transport to and fro such exempt institutes.
Services to or by an institution in relation to educational services, where the educational services are exempt from the levy of service tax, by way of services in relation to admission to such education.
4.12.4 Are private tuitions covered in the entry relating to education?
No. However, private tutors can avail the benefit of threshold exemption.
4.12.5 Are services provided by way of education as a part of a prescribed curriculum for obtaining a qualification recognized by a law of a foreign country covered in the negative list entry?
No. To be covered in the negative list a course should be recognized by an Indian law.
4.12.6 If a course in a college leads to dual qualification only one of which is recognized by law would the service provided by the college by way of such education be covered in this entry?
Provision of dual qualifications is in the nature of two separate services as the curriculum and fees for each of such qualifications are prescribed separately. Service in respect of each qualification would, therefore, be assessed separately. If an artificial bundle of service is created by clubbing two courses together, only one of which leads to a qualification recognized by law, then by application of the rule of determination of taxability of a service which is not bundled in the ordinary course of business contained in section 66F of the Act it is liable to be treated as a course which attracts the highest liability of service tax. However incidental auxiliary courses provided by way of hobby classes or extra-curricular activities in furtherance of overall well being will be an example of naturally bundled course. One relevant consideration in such cases will be the amount of extra billing being done for the unrecognized component viz-a-viz the recognized course. (For guidance on ‘bundled services’ please refer to Guidance Note 7).
4.12.7 Are placement services provided to educational institutions for securing job placements for the students covered in this negative list entry?
No. Such services do n0t fall in the category of exempt services provided to educational institutions (please refer to point no 4.12.3 above).
4.12.8 Are services of conducting admission tests for admission to colleges exempt?
Yes in case the educational institutions are providing qualification recognized by law for the time being in force (please refer to point no 4.12.3 above).
4.12.9 In addition to the services specified in the negative list, which
educational services are exempt if provided by a charitable organization?
Please refer to point no 6.3
4.12.10 What are the courses which would qualify as an approved vocational education courses?
Approved vocational education courses have been specified in section 65B of the Act. These are –
a course run by an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training, offering courses in designated trades as notified under the Apprentices Act, 1961(52 of 1961)
a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Employment and Training, Ministry of Labour and Employment, Government of India;
a course run by an institute affiliated to the National Skill Development Corporation set up by the Government of India.
4.13 Services by way of renting of residential dwelling for use as residence
‘Renting’ has been defined in section 65B as ‘‘allowing, permitting or granting access, entry, occupation, usage or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property’.
4.13.1 What is a ‘residential dwelling’?
The phrase ‘residential dwelling’ has not been defined in the Act. It has therefore to be interpreted in terms of the normal trade parlance as per which it is any residential accommodation, but does not include hotel, motel, inn, guest house, camp–site, lodge, house boat, or like places meant for temporary stay.
4.13.2 Would renting of a residential dwelling which is for use partly as a residence and partly for non residential purpose like an office of a lawyer or the clinic of a doctor be covered under this entry?
This would also be a case of bundled services as renting service is being provided both for residential use and for non residential use. Taxability of such bundled services has to be determined in terms of the principles laid down in section 66F of the Act. (Please refer to Guidance Note 7).
4.13.3 Would the nature of renting transactions explained in column 1 of the table below be covered in this negative list entry?
If…..
Then……
(i) a residential house taken on rent is
used only or predominantly for commercial or non-residential use.
the renting transaction is not covered in
this negative list entry.
(ii) if a house is given on rent and the
same is used as a hotel or a lodge
the renting transaction is not covered in
this negative list entry because the person taking it on rent is using it for a commercial purpose.
(iii) rooms in a hotel or a lodge are let out
whether or not for temporary stay
the renting transaction is not covered in
this negative list entry because a hotel or a lodge is not a residential dwelling.
(iv) government department allots
houses to its employees and charges a license fee
such service would be covered in the
negative list entry relating to services provided by government and hence non- taxable.
(v) furnished flats given on rent for temporary stay
these are in the nature of lodges or guest houses and hence not treatable as a residential dwelling
4.14 Financial sector
4.14.1 What are the “services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount”?
Illustrations of such services are -
Fixed deposits or saving deposits or any other such deposits in a bank for which return is received by way of interest.
Providing a loan or over draft facility for in consideration for payment of interest.
Mortgages or loans with a collateral security to the extent that the consideration for advancing such loans or advances are represented by way of interest.
Corporate deposits to the extent that the consideration for advancing such loans or advances are represented by way of interest or discount.
4.14.2 If any service charges or administrative charges or entry charges are recovered in addition to interest on a loan, advance or a deposit would such charges be also a part of this negative list entry?
No. The services of loans, advances or deposits are exempt in so far as the consideration is represented by way of interest or discount. Any charges or amounts collected over and above the interest or discount amounts would represent taxable consideration.
4.14.3 To what extent is invoice discounting covered in the negative list entry?
Invoice discounting is covered only to the extent consideration is represented by way of discount.
4.14.4 Would services provided by banks or authorized dealers of foreign exchange by way of sale of foreign exchange to general public be covered in this entry?
No. This entry only covers sale and purchase of foreign exchange between banks or authorized dealers of foreign exchange or between banks and such dealers
4.15 Service relating to transportation of passengers
The following services relating to transportation of passengers, with or without accompanied belongings, have been specified in the negative list.
Services by:
a stage carriage;
railways in a class other than (i) first class; or (ii) an AC coach;
metro, monorail or tramway;
inland waterways;
public transport, other than predominantly for tourism purpose, in a vessel of less than fifteen tonne net; and
metered cabs, radio taxis or auto rickshaws.
Following terms have been defined in section 65B of the Act –
stage carriage
inland waterways
metered cab
4.15.1 Are services by way of giving on hire of motor vehicles to state transport undertakings covered in this negative list entry?
No. However such services provided by way of hire of motor vehicle meant to carry more than 12 passengers to a State transport undertaking is exempt (refer entry no. 22 of Exhibit A2).
4.15.2 In some cases contract carriages get permission or temporary permits to ply as stage carriages. Would such services be taxable?
Specific exemption is available to services of transport passengers by a contract carriage for transportation of passengers, excluding tourism, conducted tours, charter or hire. (Refer entry No. 23 of Exhibit A2).
4.15.3 Are national waterways covered in the definition of inland waterways?
Yes.
4.16 Service relating to transportation of goods
The following services provided in relation to transportation of goods are specified in the negative list. Services:-
by road except the services of (i) a goods transportation agency; or (ii) a courier agency
by aircraft or vessel from a place outside India to the first customs station of landing in India; or
by inland waterways.
4.16.1 Are all services provided by goods transport agency excluded from the negative list?
Yes. However, there are separate exemptions available to the services provided by the goods transport agency. These are services by way of transportation of –
fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage;
goods where gross amount charged on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or
goods where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty.
4.16.2 Are goods transport agencies liable to pay tax in all cases or are provisions relating to reverse charge also applicable after introduction of negative list?
The provisions relating to reverse charge, i.e. service tax is liable to be paid by the consigner or consignee in specified cases, are applicable even after the introduction of negative list.
4.16.3 Are the following services of transportation of goods covered in the negative list entry?
Nature of service relating to transportation of goods
Whether covered in the negative list entry?
By railways
No
By air within the country or abroad
No
By a vessel in the coastal waters
No
By a vessel on a national waterway
Yes
Services provided by a GTA
No
4.16.4 Are services provided as agents for inland waterways covered by this entry?
No. these are in the nature of services used for providing the negative list entry service of transport of goods on inland waterways and would not be covered by application of the rule for interpretation where services are specified by way of description contained in clause (1) of section 66F of the Act.(for guidance on this rule please refer to Guidance Note 7)
4.16.5 If transportation of goods takes place from Delhi to Jammu by road then how would the taxability of such transportation be determined considering that Jammu is located in at a place outside taxable territory?
Please refer to Guidance Paper: GPB on Place of Provision of service.
4.17 Funeral, burial, crematorium or mortuary services including transportation of the deceased
This negative list entry is self-explanatory.
Service’ has been defined in clause (44) of the new section 65B and means –
any activity
for consideration
carried out by a person for another
and includes a declared service.
The said definition further provides that ‘Service’ does not include –
any activity that constitutes only a transfer in title of (i) goods or (ii) immovable property by way of sale, gift or in any other manner
a transaction only in (iii) money or (iv) actionable claim
any service provided by an employee to an employer in the course of the employment.
fees payable to a court or a tribunal set up under a law for the time being in force
In terms of Section 66B of the Act, service tax will be leviable on all services provided in the taxable territory by a person to another for a consideration other than the services specified in the negative list. The services specified in the negative list therefore go out of the ambit of chargeability of service tax. The negative list of service is specified in the Act itself in Section 66 D. For sake of ease of reference the negative list of services is given in Exhibit A1. In all, there are seventeen heads of services that have been specified in the negative list. The scope and ambit of these is explained in paras below
Negative List of Services not liable for service tax :Union budget 2012
Services by Government or a local authority excluding the following services to the extent they are not covered elsewhere:(i) services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government;(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;(iii) transport of goods or passengers; or(iv) support services, other than services covered under clauses (i) to (iii) above, provided to business entities.
Services by the Reserve Bank of India.
Services by a foreign diplomatic mission located in India.
Services relating to agriculture by way of –(i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing;(ii) supply of farm labour;(iii) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter essential characteristics of agricultural produce but make it only marketable for the primary market;(iv) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;(v) loading, unloading, packing, storage or warehousing of agricultural produce;(vi) agricultural extension services;(vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce.
Trading of goods.
Any process amounting to manufacture or production of goods.
Selling of space or time slots for advertisements other than advertisements broadcast by radio or television.
Service by way of access to a road or a bridge on payment of toll charges.
Betting, gambling or lottery.
Admission to entertainment events or access to amusement facilities.
Transmission or distribution of electricity by an electricity transmission or distribution utility.
Services by way of –(i) pre-school education and education up to higher secondary school or equivalent;(ii) education as a part of a curriculum for obtaining a qualification recognized by law;(iii) education as a part of an approved vocational education course.
Services by way of renting of residential dwelling for use as residence;
Services by way of –(i) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount;(ii) inter-se sale or purchase of foreign currency amongst banks or authorized dealers of foreign exchange or amongst banks and such dealers;
Service of transportation of passengers, with or without accompanied belongings, by –(i) a stage carriage;(ii) railways in a class other than –(A) first class; or(B) an air conditioned coach;(iii) metro, monorail or tramway;(iv) inland waterways;(v) public transport in a vessel of less than fifteen tonne net, other than predominantly for tourism purpose; and(vi) metered cabs, radio taxis or auto rickshaws;
Services by way of transportation of goods –(i) by road except the services of –(A) a goods transportation agency; or(B) a courier agency;(ii) by an aircraft or a vessel from a place outside India to the first customs station of landing in India; or(iii) by inland waterways;
Funeral, burial, crematorium or mortuary services including transportation of the deceased.
Details of Negative List of services.
4.1 Services provided by Government or local authority
4.1.1 Are all services provided by Government or local authority covered in the negative list?
No. Most services provided by the Central or state Government or local authorities are in the negative list except the following:
a) services provided by the Department of Posts by way of speed post, express parcel post, life insurance and agency services carried out on payment of commission on non government business;
b) services in relation to a vessel or an aircraft inside or outside the precincts of a port or an airport;
c) transport of goods and/or passengers;
d) support services, other than those covered by clauses (a) to (c) above, to business entities.
4.1.2 Would the taxable services provided by the Government be charged to tax if they are otherwise exempt or specified elsewhere in the negative list?
No. If the services provided by the government or local authorities that have been excluded from the negative list entry are otherwise specified in the negative list then such services would also not be taxable.
4.1.3 ‘Government’ has not been defined in the Act. What is the meaning of Government?
Since ‘Government’ has not been defined in the Act, the definition of ‘Government’ as contained in the General Clauses Act, 1897 would be applicable as per which ‘Government’ includes both State Government and Central Government. Further as per the General Clause Act 1897, State includes Union Territory.
4.1.4 Are various corporations formed under Central Acts or State Acts or various government companies registered under the Companies Act, 1956 or autonomous institutions set up by a special Acts covered under the definition of ‘Government’?
No. In terms of the definition of ‘Government’ as contained in the General Clause Act, 1857 and as per the settled position of law such corporations or authorities or companies are not included in the definition of ‘Government’. Services provided by such entities would, therefore, not be entitled to the negative list entry relating to the ‘Government’. It would also not include regulatory bodies.
4.1.5 What entities are then covered under ‘Government’?
‘Government’ would include various departments and offices of the Central or State Government or the U.T. Administrations which carry out their functions in the name and by order of the President of India or the Governor of a State.
4.1.6 Would a department of the Government need to get itself registered for each of the services listed in answer to Q. No.4.1.1 above?
For the support services provided by the Government to business entities government departments will not have to get registered because service tax will be payable on such services by the service receiver i.e. the business entities receiving the service under reverse charge mechanism in terms of the provisions of section the Act and the notification proposed to be issued under the said section. For services mentioned at (a) to (c) of the list (point 4.1.1 above refers) tax will be payable by the concerned department.
4.1.7 What is the meaning of “support services” which appears to be a phrase of wide ambit?
Support services have been defined in section 65B of the Act as ‘infrastructural, operational, administrative, logistic marketing or any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever and shall include advertisement and promotion, construction or works contract, renting of movable or immovable property, security, testing and analysis’. Thus services which are provided by government in terms of their sovereign right to business entities are not support services e.g. grant of mining or licensing rights.
4.1.8 What is the meaning of local authority?
Local authority is defined in 65B and means the following:-
A Panchayat as referred to in clause (d) of article 243 of the Constitution
A Municipality as referred to in clause (e) of article 243P of the Constitution
A Municipal Committee and a District Board, legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund
A Cantonment Board as defined in section 3 of the Cantonments Act, 2006
A regional council or a district council constituted under the Sixth Schedule to the Constitution
A development board constituted under article 371 of the Constitution, or
A regional council constituted under article 371A of the Constitution.
4.2 Services provided by Reserve Bank of India
4.2.1 Are all services provided by the Reserve Bank of India in the negative list?
Yes. All services provided by the Reserve Bank of India are in the negative list.
4.2.2 What about services provided to the Reserve Bank of India?
Services provided to the Reserve Bank of India are not in the negative list and would be taxable unless otherwise covered in any other entry in the negative list.
4.3 Services by a foreign diplomatic mission located in India
Any service that is provided by a diplomatic mission of any country located in India are in the negative list. This entry does not cover services, if any, provided by any office or establishment of an international organization.
4.4 Services relating to agriculture
The services relating to agriculture that are specified in the negative list are services relating to –
agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing;
supply of farm labour;
processes carried out at the agricultural farm including tending, pruning, cutting, harvesting, drying cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter essential characteristics of agricultural produce but makes it only marketable for the primary market;
renting of agro machinery or vacant land with or without a structure incidental to its use;
loading, unloading, packing, storage and warehousing of agricultural produce;
agricultural extension services;
services provided by any Agricultural Produce Marketing Committee or Board or services provided by commission agent for sale or purchase of agricultural produce;
4.4.1 What is the meaning of ‘agriculture’?
‘Agriculture’ has been defined in the Act as cultivation of plants and rearing or breeding of animals and other species of life forms for foods, fibre, fuel, raw materials or other similar products but does not include rearing of horses.
4.4.2 Are activities like breeding of fish (pisciculture), rearing of silk worms (sericulture), cultivation of ornamental flowers (floriculture) and horticulture, forestry included in the definition of agriculture?
Yes. These activities are included in the definition of agriculture.
4.4.3 What is the meaning of agricultural produce?
Agricultural produce has also been defined in section 65B of the Act which means any produce of agriculture on which either no processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. It also includes specified processes in the definition like tending, pruning, grading, sorting etc. which may be carried out at the farm or elsewhere as long as they do not alter the essential characteristics.
4.4.4 Would plantation crops like rubber, tea or coffee be also covered under agricultural produce?
Yes. Such plantation crops are also covered under agricultural produce.
4.4.5 Would potato chips or tomato ketchup qualify as agricultural produce?
No. In terms of the definition of agricultural produce, only such processing should be carried out as is usually done by cultivator producers which does not alter its essential characteristics but makes it marketable for primary market. Potato chips of tomato ketchup are manufactured through processes which alter the essential characteristic of farm produce (potatoes and tomatoes in this case).
4.4.6 Would leasing of vacant land with a green house or a storage shed meant for agricultural produce be covered in the negative list?
Yes. In terms of the specified services relating to agriculture ‘leasing’ of vacant land with or without structure incidental to its use’ is covered in the negative list. Therefore, if vacant land has a structure like storage shed or a green house built on it which is incidental to its use for agriculture then its lease would be covered under the negative list entry.
4.4.7 What is the meaning of agricultural extension services?
Agricultural extension services have also been defined in section 65B of the Act as application of scientific research and knowledge to agricultural practices through farmer education or training.
4.4.8 What are the services referred to in the negative list entry pertaining to Agricultural Produce Marketing Committee or Board?
Agricultural Produce Marketing Committees or Boards are set up under a State Law for purpose of regulating the marketing of agricultural produce. Such marketing committees or boards have been set up in most of the States and provide a variety of support services for facilitating the marketing of agricultural produce by provision of facilities and amenities like shops, sheds, water, light, electricity, grading facilities etc. They also take measures for prevention of sale or purchase of agricultural produce below the minimum support price. APMCs collect market fees, license fees, rents etc. Services provided by such Agricultural Produce Marketing Committee or Board are covered in the negative list.
4.5 Trading of goods
4.5.1 Would activities of a commission agent or a clearing and forwarding agent who sells goods on behalf of another for a commission be included in trading of goods?
No. The services provided by commission agent or a clearing and forwarding agent are not in the nature of trading of goods. These are auxiliary for trading of goods. In terms of the provision of clause (1) of section 66F reference to service does not include reference to a service used for providing such service.(For guidance on clause (1) of section 66F please refer to point no 7.1.1 of this Guidance Paper) Moreover the title in the goods never passes on to such agents to come within the ambit of trading of goods.
4.5.2 Would future contracts in commodities be covered under trading of goods?
Yes. Futures contracts would be covered under trading of goods as these are contracts which involve transfer of title in goods on a future date at a pre-determined price.
4.5.3 Would commodity futures be covered under trading of goods?
Yes. In commodity futures actual delivery of goods does not normally take place and the purchaser under a futures contract normally offsets all obligations or closes out by selling an equal quantity of goods of the same description under another contract for delivery on the same date. There are, therefore, two contracts of sale/purchase involved which would fall in the category of trading of goods.
4.5.4 Would auxiliary services relating to future contracts or commodity futures be covered in the negative list entry relating to trading of goods?
No. Such services provided by commodity exchanges clearing houses or agents would not be covered in the negative list entry relating to trading of goods.
4.6 Processes amounting to manufacture or production of goods
The phrase ‘processes amounting to manufacture or production of goods’ has been defined in section 65B of the Act as a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944 (1 of 1944) or any process amounting to manufacture of alcoholic liquors for human consumption, opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any State Act. This entry, therefore, covers manufacturing activity carried out on contract or job work basis provided duties of excise are leviable on such processes under the Central Excise Act, 1944 or any of the State Acts.
4.6.1 Would service tax be leviable on processes which do not amount to manufacture or production of goods?
Yes. Service tax would be levied on processes, unless otherwise specified in the negative list, not amounting to manufacture or production of goods carried out by a person for another for consideration. Some of such services relating to processes not amounting to manufacture are exempt as specified in entry no. 30 of Exhibit A2.
4.6.2 Would service tax be leviable on processes on which Central Excise Duty is leviable under the Central Excise Act, 1944 but are otherwise exempted?
No. If Central Excise duty is leviable on a particular process as the same amounts to manufacture then such process would be covered in the negative list even if there is a central excise duty exemption for such process.
4.7 Selling of space or time slots for advertisements other than advertisements broadcast by radio or television
‘Advertisement’ has been defined in section 65 B of the Act as form of presentation for promotion of, or bringing awareness about, any event, idea, immovable property, person, service, goods or actionable claim through newspaper, television, radio or any other means but does not include any presentation made in person.
4.7.1 Sale of space of time for advertisements not including sale of space for advertisement in print media and sale of time by a broadcasting agency or organization is currently taxed under clause (zzzm) of sub-section (105) of the Finance Act,1944. So what kind of sale of space or time would become taxable and what would be not taxable?
Taxable
Non-taxable
Sale of space or time for advertisement
to be broadcast on radio or television
Sale of space for advertisement in print
media
Sale of time slot by a broadcasting
organization.
Sale of space for advertisement in bill
boards, public places, buildings, conveyances, cell phones, automated teller machines, internet
Aerial advertising
4.7.2 Would services provided by advertisement agencies relating to preparation of advertisements be covered in the negative list entry relating to sale of space for advertisements?
No. Services provided by advertisement agencies relating to making or preparation of advertisements would not be covered in this negative list entry and would thus be taxable. This would also not cover commissions received by advertisement agencies from the broadcasting or publishing companies for facilitating business, which may also include some portion for the preparation of advertisement.
4.7.3 In case a person provides a composite service of providing space for advertisement that is covered in the negative list entry coupled with taxable service relating to design and preparation of the advertisement how will its taxability be determined?
This would be a case of bundled services taxability of which has to be determined in terms of the principles laid down in section 66F of the Act.
Bundled services have been defined in the said section as provision of one type of service with another type or types of services.
If such services are bundled in the ordinary course of business then the bundle of services will be treated as consisting entirely of such service which determines the dominant nature of such a bundle.
If such services are not bundled in the ordinary course of business then the bundle of services will be treated as consisting entirely of such service which attracts the highest liability of service tax.
For guidance on how to determine whether or not a bundle of services is bundled in the ordinary course of business please refer to Guidance Note 7 of this Guidance Paper.
4.8 Access to a road or a bridge on payment of toll charges
4.8.1 Is access to national highways or state highways also covered in this entry?
Yes. National highways or state highways are also roads and hence covered in this entry.
4.8.2. Are collection charges or service charges paid to any toll collecting agency also covered?
No. The negative list entry only covers access to a road or a bridge on payment of toll charges. Services of toll collection on behalf of an agency authorized to levy toll are in the nature of services used for providing the negative list services. As per the principle laid down in sub section (1) of section 66F of the Act the reference to a service by nature or description in the Act will not include reference to a service used for providing such service.
4.9 Betting, gambling or lottery
“Betting or gambling’ has been defined in section 65B of the Act as ‘putting on stake something of value, particularly money, with consciousness of risk and hope of gain on the outcome of a game or a contest, whose result may be determined by chance or accident, or on the likelihood of anything occurring or not occurring’.
4.9.1. Are auxiliary services that are used for organizing or promoting betting or gambling events also covered in this entry?
No. These services are in the nature of services used for providing the negative list services of betting or gambling. As per the principle laid down in sub section (1) of section 66F of the Act the reference to a service by nature or description in the Act will not include reference to a service used for providing such service.
4.10 Entry to Entertainment Events and Access to Amusement Facilities.
‘Entertainment events’ has been defined in section 65B of the Act ‘as an event or a performance which is intended to provide recreation, pastime, fun or enjoyment, such as exhibition of cinematographic films, circus, concerts, sporting events, fairs, pageants, award functions, dance performances, musical performances, theatrical performances including cultural programs, drama, ballets or any such event or programme’.
‘Amusement facility’ has been defined in the Act as ‘a facility where fun or recreation is provided by means of rides, gaming devices or bowling alleys in amusement parks, amusement arcades, water parks, theme parks or such other place but does not include a place within such facility where other services are provided’.
4.10.1 If a cultural programme, drama or a ballet is held in an open garden and not in a theatre would it qualify as an entertainment event?
Yes. The words used in the definition are ‘theatrical performances’ and not ‘performances in theatres’. A cultural programme, drama or a ballet preformed in the open does not cease to be a theatrical performance provided it is preformed in the manner it is preformed in a theatre, i.e. before an audience.
4.10.2 Would a standalone ride set up in a mall qualify as an amusement facility?
Yes. A standalone amusement ride in a mall is also a facility in which fun or recreation is provided by means of a ride. Access to such amusement ride on payment of charges would be covered in the negative list.
4.10.3 Would entry to video parlors exhibiting movies played on a DVD player and displayed through a TV screen be covered in the entry?
Yes. Such exhibition is an exhibition of cinematographic film.
4.10.4 Would membership of a club qualify as access to an amusement facility?
No. A club does not fall in the definition of an amusement facility.
4.10.5 Would auxiliary services provided by a person, like an event manager, for organizing an entertainment event or by an entertainer for providing the entertainment to an entertainment event organizer be covered in this entry?
No. Such services are in the nature of services used for providing the service specified in this negative list entry and w2ould not be covered in the ambit of such specified service by operation of the rule of interpretation contained in clause (1) of section 66F of the Act. For guidance on the rules of interpretation please refer to Guidance Note 7.
4.11 Transmission or distribution of electricity
4.11.1 What is the meaning of electricity transmission or distribution utility?
An ‘electricity transmission or distribution utility’ has also been defined in section 65B of the act. It includes the following –
the Central Electricity Authority
a State Electricity Board
the Central Transmission Utility (CTU)
a State Transmission Utility (STU) notified under the Electricity Act, 2003 (36 of 2003)
a distribution or transmission licensee licensed under the said Act
any other entity entrusted with such function by the Central or State Government
4.11.2 If charges are collected by a developer or a housing society for distribution of electricity within a residential complex then are such services covered under this entry?
No. The developer or the housing society would be covered under this entry only if it is entrusted with such function by the Central or a State government or if it is, for such distribution, a distribution licensee licensed under the Electricity Act, 2003.
4.11.3 If the services provided by way installation of gensets or similar equipment by private contractors for distribution of electricity covered by this entry?
No. the entry does not cover services provided by private contractors. Moreover the services provided are not by way of transmission or distribution of electricity.
4.12 Specified services relating to education
The following services relating to education are specified in the negative list –
pre-school education and education up to higher secondary school or equivalent
education as a part of a prescribed curriculum for obtaining a qualification recognized by law for the time being in force;
education as a part of an approved vocational education course
4.12.1 Are services provided by international schools giving international certifications like IB also covered in this entry?
Yes. Services by way of education up to higher secondary school or equivalent are covered in this entry.
4.12.2 Are services provided by boarding schools covered in this entry?
Boarding schools provide service of education coupled with other services like providing dwelling units for residence and food. This may be a case of bundled services if the charges for education and lodging and boarding are inseparable. Their taxability will be determined in terms of the principles laid down in section 66F of the Act. Such services in the case of boarding schools are bundled in the ordinary course of business. Therefore the bundle of services will be treated as consisting entirely of such service which determines the dominant nature of such a bundle. In this case since dominant nature is determined by the service of education other dominant service of providing residential dwelling is also covered in a separate entry of the negative list, the entire bundle would be treated as a negative list service.
4.12.3 Are services provided to educational institutions also covered in this entry?
No. Such services are not covered under the negative list entry. However certain services provided to educational institutions are separately exempted by a notification:
Services to an educational institution by way of catering under the centrally assisted mid – day meals scheme sponsored by government.
Transport to and fro such exempt institutes.
Services to or by an institution in relation to educational services, where the educational services are exempt from the levy of service tax, by way of services in relation to admission to such education.
4.12.4 Are private tuitions covered in the entry relating to education?
No. However, private tutors can avail the benefit of threshold exemption.
4.12.5 Are services provided by way of education as a part of a prescribed curriculum for obtaining a qualification recognized by a law of a foreign country covered in the negative list entry?
No. To be covered in the negative list a course should be recognized by an Indian law.
4.12.6 If a course in a college leads to dual qualification only one of which is recognized by law would the service provided by the college by way of such education be covered in this entry?
Provision of dual qualifications is in the nature of two separate services as the curriculum and fees for each of such qualifications are prescribed separately. Service in respect of each qualification would, therefore, be assessed separately. If an artificial bundle of service is created by clubbing two courses together, only one of which leads to a qualification recognized by law, then by application of the rule of determination of taxability of a service which is not bundled in the ordinary course of business contained in section 66F of the Act it is liable to be treated as a course which attracts the highest liability of service tax. However incidental auxiliary courses provided by way of hobby classes or extra-curricular activities in furtherance of overall well being will be an example of naturally bundled course. One relevant consideration in such cases will be the amount of extra billing being done for the unrecognized component viz-a-viz the recognized course. (For guidance on ‘bundled services’ please refer to Guidance Note 7).
4.12.7 Are placement services provided to educational institutions for securing job placements for the students covered in this negative list entry?
No. Such services do n0t fall in the category of exempt services provided to educational institutions (please refer to point no 4.12.3 above).
4.12.8 Are services of conducting admission tests for admission to colleges exempt?
Yes in case the educational institutions are providing qualification recognized by law for the time being in force (please refer to point no 4.12.3 above).
4.12.9 In addition to the services specified in the negative list, which
educational services are exempt if provided by a charitable organization?
Please refer to point no 6.3
4.12.10 What are the courses which would qualify as an approved vocational education courses?
Approved vocational education courses have been specified in section 65B of the Act. These are –
a course run by an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training, offering courses in designated trades as notified under the Apprentices Act, 1961(52 of 1961)
a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Employment and Training, Ministry of Labour and Employment, Government of India;
a course run by an institute affiliated to the National Skill Development Corporation set up by the Government of India.
4.13 Services by way of renting of residential dwelling for use as residence
‘Renting’ has been defined in section 65B as ‘‘allowing, permitting or granting access, entry, occupation, usage or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property’.
4.13.1 What is a ‘residential dwelling’?
The phrase ‘residential dwelling’ has not been defined in the Act. It has therefore to be interpreted in terms of the normal trade parlance as per which it is any residential accommodation, but does not include hotel, motel, inn, guest house, camp–site, lodge, house boat, or like places meant for temporary stay.
4.13.2 Would renting of a residential dwelling which is for use partly as a residence and partly for non residential purpose like an office of a lawyer or the clinic of a doctor be covered under this entry?
This would also be a case of bundled services as renting service is being provided both for residential use and for non residential use. Taxability of such bundled services has to be determined in terms of the principles laid down in section 66F of the Act. (Please refer to Guidance Note 7).
4.13.3 Would the nature of renting transactions explained in column 1 of the table below be covered in this negative list entry?
If…..
Then……
(i) a residential house taken on rent is
used only or predominantly for commercial or non-residential use.
the renting transaction is not covered in
this negative list entry.
(ii) if a house is given on rent and the
same is used as a hotel or a lodge
the renting transaction is not covered in
this negative list entry because the person taking it on rent is using it for a commercial purpose.
(iii) rooms in a hotel or a lodge are let out
whether or not for temporary stay
the renting transaction is not covered in
this negative list entry because a hotel or a lodge is not a residential dwelling.
(iv) government department allots
houses to its employees and charges a license fee
such service would be covered in the
negative list entry relating to services provided by government and hence non- taxable.
(v) furnished flats given on rent for temporary stay
these are in the nature of lodges or guest houses and hence not treatable as a residential dwelling
4.14 Financial sector
4.14.1 What are the “services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount”?
Illustrations of such services are -
Fixed deposits or saving deposits or any other such deposits in a bank for which return is received by way of interest.
Providing a loan or over draft facility for in consideration for payment of interest.
Mortgages or loans with a collateral security to the extent that the consideration for advancing such loans or advances are represented by way of interest.
Corporate deposits to the extent that the consideration for advancing such loans or advances are represented by way of interest or discount.
4.14.2 If any service charges or administrative charges or entry charges are recovered in addition to interest on a loan, advance or a deposit would such charges be also a part of this negative list entry?
No. The services of loans, advances or deposits are exempt in so far as the consideration is represented by way of interest or discount. Any charges or amounts collected over and above the interest or discount amounts would represent taxable consideration.
4.14.3 To what extent is invoice discounting covered in the negative list entry?
Invoice discounting is covered only to the extent consideration is represented by way of discount.
4.14.4 Would services provided by banks or authorized dealers of foreign exchange by way of sale of foreign exchange to general public be covered in this entry?
No. This entry only covers sale and purchase of foreign exchange between banks or authorized dealers of foreign exchange or between banks and such dealers
4.15 Service relating to transportation of passengers
The following services relating to transportation of passengers, with or without accompanied belongings, have been specified in the negative list.
Services by:
a stage carriage;
railways in a class other than (i) first class; or (ii) an AC coach;
metro, monorail or tramway;
inland waterways;
public transport, other than predominantly for tourism purpose, in a vessel of less than fifteen tonne net; and
metered cabs, radio taxis or auto rickshaws.
Following terms have been defined in section 65B of the Act –
stage carriage
inland waterways
metered cab
4.15.1 Are services by way of giving on hire of motor vehicles to state transport undertakings covered in this negative list entry?
No. However such services provided by way of hire of motor vehicle meant to carry more than 12 passengers to a State transport undertaking is exempt (refer entry no. 22 of Exhibit A2).
4.15.2 In some cases contract carriages get permission or temporary permits to ply as stage carriages. Would such services be taxable?
Specific exemption is available to services of transport passengers by a contract carriage for transportation of passengers, excluding tourism, conducted tours, charter or hire. (Refer entry No. 23 of Exhibit A2).
4.15.3 Are national waterways covered in the definition of inland waterways?
Yes.
4.16 Service relating to transportation of goods
The following services provided in relation to transportation of goods are specified in the negative list. Services:-
by road except the services of (i) a goods transportation agency; or (ii) a courier agency
by aircraft or vessel from a place outside India to the first customs station of landing in India; or
by inland waterways.
4.16.1 Are all services provided by goods transport agency excluded from the negative list?
Yes. However, there are separate exemptions available to the services provided by the goods transport agency. These are services by way of transportation of –
fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage;
goods where gross amount charged on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or
goods where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty.
4.16.2 Are goods transport agencies liable to pay tax in all cases or are provisions relating to reverse charge also applicable after introduction of negative list?
The provisions relating to reverse charge, i.e. service tax is liable to be paid by the consigner or consignee in specified cases, are applicable even after the introduction of negative list.
4.16.3 Are the following services of transportation of goods covered in the negative list entry?
Nature of service relating to transportation of goods
Whether covered in the negative list entry?
By railways
No
By air within the country or abroad
No
By a vessel in the coastal waters
No
By a vessel on a national waterway
Yes
Services provided by a GTA
No
4.16.4 Are services provided as agents for inland waterways covered by this entry?
No. these are in the nature of services used for providing the negative list entry service of transport of goods on inland waterways and would not be covered by application of the rule for interpretation where services are specified by way of description contained in clause (1) of section 66F of the Act.(for guidance on this rule please refer to Guidance Note 7)
4.16.5 If transportation of goods takes place from Delhi to Jammu by road then how would the taxability of such transportation be determined considering that Jammu is located in at a place outside taxable territory?
Please refer to Guidance Paper: GPB on Place of Provision of service.
4.17 Funeral, burial, crematorium or mortuary services including transportation of the deceased
This negative list entry is self-explanatory.
Service Tax Changes
RATE OF SERVICE TAX (applicable w.e.f. 01.04.2012):
1. The rate of service tax is being increased from ten per cent. to twelve per cent.
2. Works contract service:-
Rate of tax under Composition Scheme has been changed from 4% to 4.8% plus cess.
1. The rate of service tax is being increased from ten per cent. to twelve per cent.
2. Works contract service:-
Rate of tax under Composition Scheme has been changed from 4% to 4.8% plus cess.
INCOME TAX CHANGES
1. Income Tax slabs Rates After Budget 2012
2. Income Tax calculator After Budget 2012
3. Deduction u/s 80C changes in budget Insurance policy
4. Deduction on interest on savings accounts
5. Deduction on preventive health check-up u/s 80D
6. Deduction on Rajiv Gandhi Equity Savings Scheme Launched
7. Senior citizens age For 80D, 80DDB ,Form 15H reduced to 60 Years
8. Good Bye to 80CCF Infra Bonds from FY 2012-13
9. Deduction 80G (donations) 80GGA over 10K must be paid in other than cash
10.Changes proposed in TDS in Budget 2012
11.Change In TCS(tax collection at source ) in union Budget 2012
12.TDS on transfer of certain immovable properties (other than agricultural land)
13.TCS on cash sale of bullion and jewellery
14.Alternate Minimum Tax (AMT) on all persons other than companies:Budget 2012
15.TAX AUDIT LIMIT 44AB ENHANCED 60 LAKH TO 100 LAKH ,15LAKH TO 25 LAKH
16.Income tax changes clause by clause :Budget 2012
17.ULIP will be costlier after Budget
2. Income Tax calculator After Budget 2012
3. Deduction u/s 80C changes in budget Insurance policy
4. Deduction on interest on savings accounts
5. Deduction on preventive health check-up u/s 80D
6. Deduction on Rajiv Gandhi Equity Savings Scheme Launched
7. Senior citizens age For 80D, 80DDB ,Form 15H reduced to 60 Years
8. Good Bye to 80CCF Infra Bonds from FY 2012-13
9. Deduction 80G (donations) 80GGA over 10K must be paid in other than cash
10.Changes proposed in TDS in Budget 2012
11.Change In TCS(tax collection at source ) in union Budget 2012
12.TDS on transfer of certain immovable properties (other than agricultural land)
13.TCS on cash sale of bullion and jewellery
14.Alternate Minimum Tax (AMT) on all persons other than companies:Budget 2012
15.TAX AUDIT LIMIT 44AB ENHANCED 60 LAKH TO 100 LAKH ,15LAKH TO 25 LAKH
16.Income tax changes clause by clause :Budget 2012
17.ULIP will be costlier after Budget
TAX AUDIT LIMIT 44AB ENHANCED 60 LAKH TO 100 LAKH ,15LAKH TO 25 LAKH
Under the existing provisions of section 44AB, every person carrying on business is required to get his accounts audited if the total sales, turnover or gross receipts in the previous year exceed sixty lakh rupees. Similarly, a person carrying on a profession is required to get his accounts audited if the total sales, turnover or gross receipts in the previous year exceed fifteen lakh rupees.
In order to reduce the compliance burden on small businesses and on professionals, it is proposed to increase the threshold limit of
total sales, turnover or gross receipts, specified under section 44AB for getting accounts audited, from sixty lakh rupees to one crore rupees in the case of persons carrying on business and
from fifteen lakh rupees to twenty five lakh rupees in the case of persons carrying on profession.
It is also proposed that for the purposes of presumptive taxation under section 44AD, the threshold limit of total turnover or gross receipts would be increased from sixty lakh rupees to one crore rupees.
Year wise limit for section 44AB tax audit from financial year 2009-10 is given here under .Two years back the limit was extended by 50 %
SR N0 FINANCIAL YEAR LIMIT (BUSINESS) PROFESSIONAL
1 2009-10 40 LAKH 10 LAKH
2 2010-11,2011-12 60 LAKH 15 LAKH
3 2012-13 ONWARDS 100 LAKH 25 LAKH
These amendments will take effect from 1st April, 2013 and will, accordingly, apply to the assessment year 2013-14 and subsequent assessment years.
In order to reduce the compliance burden on small businesses and on professionals, it is proposed to increase the threshold limit of
total sales, turnover or gross receipts, specified under section 44AB for getting accounts audited, from sixty lakh rupees to one crore rupees in the case of persons carrying on business and
from fifteen lakh rupees to twenty five lakh rupees in the case of persons carrying on profession.
It is also proposed that for the purposes of presumptive taxation under section 44AD, the threshold limit of total turnover or gross receipts would be increased from sixty lakh rupees to one crore rupees.
Year wise limit for section 44AB tax audit from financial year 2009-10 is given here under .Two years back the limit was extended by 50 %
SR N0 FINANCIAL YEAR LIMIT (BUSINESS) PROFESSIONAL
1 2009-10 40 LAKH 10 LAKH
2 2010-11,2011-12 60 LAKH 15 LAKH
3 2012-13 ONWARDS 100 LAKH 25 LAKH
These amendments will take effect from 1st April, 2013 and will, accordingly, apply to the assessment year 2013-14 and subsequent assessment years.
Monday, September 12, 2011
How many times can I furnish a correction TDS/TCS statement?
A correction TDS/TCS statement can be furnished multiple times to incorporate changes in the regular TDS/TCS statement whereas a regular TDS/TCS statement will be accepted at the TIN central system only once.
What are the important points to be kept in mind while preparing correction statement more than once on the same regular statement?
You have to kept in mind, the following points while preparing correction statement more than once on the same regular statement:
1. The TDS/TCS statement on which correction is to be prepared should be updated with details as per all previous corrections.
2. Modifications/addition/deletion in correction statements accepted at the TIN central system only should be considered.
The first correction filed by me contains three types of correction (three PRNs / Token Number) and one of the types of correction has got rejected at the TIN central system. What should I do?
The steps as under should be followed:
1. You have to update modifications as per the accepted corrections in the TDS statement.
2. Identify the record for which correction was rejected earlier by its sequence no. and fields for identification
3. Correct the said record.
4. Correction statement should contain updated values as well as value of identification field as per regular statement.
Which Provisional Receipt Number / Token Number should I quote while preparing correction statement more than once on the same regular statement?
There are two fields for Provisional Receipt Number (PRN) / Token Number in a correction statement as under:
a. Original Provisional Receipt Number / Token Number - PRN of the regular statement should be mentioned in this field.
b. Previous Provisional Receipt Number / Token Number - PRN of the last accepted correction statement should be mentioned in this field. In case the value in this field is incorrectly mentioned, the statement will get rejected at TIN central system for the reason: "Either Previous Provisional Receipt No. provided is incorrect or combination of Original Provisional Receipt Number / Token Number and Previous Provisional Receipt Number / Token Number is not in sequence"
Example:
Single batch correction statement - Only one type of correction in the file
a. You have filed a regular statement having PRN / Token Number 010010200083255 and subsequently filed a single batch correction statement having PRN / Token Number 010010300074112. While preparing correction statement, you have to mention PRN / Token Number 010010200083255 in the field original PRN and the PRN / Token Number 010010300074112 in the field Previous PRN.
Multiple batch correction statement - different types of correction in a single file
b. You have filed a regular statement having PRN / Token Number 010010200083255 and subsequently filed a multi batch correction statement having three batches and corresponding PRNs / Token Numbers as 010010300074112, 010010300074123 and 010010300074134. While preparing the correction statement, you have to mention PRN / Token Number 010010200083255 in the field original PRN and check the status of all the three PRNs of correction statement.
If all the three PRNs / Token Numbers are accepted at the TIN central system, you may mention any of the three PRNs / Token Numbers in the field previous PRN.
If any of the three PRNs / Token Numbers is rejected, then you should mention the PRN / Token Number which has been accepted at the TIN central system in the field Previous PRN.
If all the three PRNs / Token Numbers are rejected, then you must mention the PRN / Token Number of the regular statement, i.e. 010010200083255 in the field Previous PRN.
How many times can I update PAN of a deductee/transacting party?
Structurally valid PAN of a deductee in the regular statement can be updated to another structurally valid PAN only once.
When does a statement get ‘Partially Accepted’?
A correction statement containing updates in PAN of deductee/employee may get Partially Accepted. This is possible when the PAN in the any of the records being updated by you in the correction statement is invalid, i.e. PAN not present in PAN Master Database. In such a scenario, the said record gets rejected resulting in partial acceptance of the statement.
What should I do if the status of correction statement filed by me is ‘Partially accepted’?
In case correction statement is in status ‘Partially accepted’, you have follow steps as under:
1. You have to update modifications as per the accepted records in the TDS statement.
2. Identify the deductee/salary record which has got rejected due to invalid PAN.
3. Rectify the incorrect PAN
4. Correction statement should contain value of identification keys as per regular statement along with the updated values.
What could be the cause of rejection of TDS/TCS statement for the reason “Total Deposit amount of deductees is more than Challan amount actually deposited in bank”?
The total tax deposited amount as per challan should be greater than or equal to the total tax deposited amount as per deductee details, else a regular TDS/TCS statement will not get validated through FVU.
If you file a correction statement for adding deductee records under a particular challan, the total tax deposited as per challan in regular statement should be greater than or equal to the total tax deposited in deductee details as per regular as well as correction statement.
Note: Amount in the fields Interest and others in the challan is not considered in the total tax deposited as per challan.
Provisional Receipt Number is now referred as Token Number with effect from FY. 2010-11 onwards.
What are the important points to be kept in mind while preparing correction statement more than once on the same regular statement?
You have to kept in mind, the following points while preparing correction statement more than once on the same regular statement:
1. The TDS/TCS statement on which correction is to be prepared should be updated with details as per all previous corrections.
2. Modifications/addition/deletion in correction statements accepted at the TIN central system only should be considered.
The first correction filed by me contains three types of correction (three PRNs / Token Number) and one of the types of correction has got rejected at the TIN central system. What should I do?
The steps as under should be followed:
1. You have to update modifications as per the accepted corrections in the TDS statement.
2. Identify the record for which correction was rejected earlier by its sequence no. and fields for identification
3. Correct the said record.
4. Correction statement should contain updated values as well as value of identification field as per regular statement.
Which Provisional Receipt Number / Token Number should I quote while preparing correction statement more than once on the same regular statement?
There are two fields for Provisional Receipt Number (PRN) / Token Number in a correction statement as under:
a. Original Provisional Receipt Number / Token Number - PRN of the regular statement should be mentioned in this field.
b. Previous Provisional Receipt Number / Token Number - PRN of the last accepted correction statement should be mentioned in this field. In case the value in this field is incorrectly mentioned, the statement will get rejected at TIN central system for the reason: "Either Previous Provisional Receipt No. provided is incorrect or combination of Original Provisional Receipt Number / Token Number and Previous Provisional Receipt Number / Token Number is not in sequence"
Example:
Single batch correction statement - Only one type of correction in the file
a. You have filed a regular statement having PRN / Token Number 010010200083255 and subsequently filed a single batch correction statement having PRN / Token Number 010010300074112. While preparing correction statement, you have to mention PRN / Token Number 010010200083255 in the field original PRN and the PRN / Token Number 010010300074112 in the field Previous PRN.
Multiple batch correction statement - different types of correction in a single file
b. You have filed a regular statement having PRN / Token Number 010010200083255 and subsequently filed a multi batch correction statement having three batches and corresponding PRNs / Token Numbers as 010010300074112, 010010300074123 and 010010300074134. While preparing the correction statement, you have to mention PRN / Token Number 010010200083255 in the field original PRN and check the status of all the three PRNs of correction statement.
If all the three PRNs / Token Numbers are accepted at the TIN central system, you may mention any of the three PRNs / Token Numbers in the field previous PRN.
If any of the three PRNs / Token Numbers is rejected, then you should mention the PRN / Token Number which has been accepted at the TIN central system in the field Previous PRN.
If all the three PRNs / Token Numbers are rejected, then you must mention the PRN / Token Number of the regular statement, i.e. 010010200083255 in the field Previous PRN.
How many times can I update PAN of a deductee/transacting party?
Structurally valid PAN of a deductee in the regular statement can be updated to another structurally valid PAN only once.
When does a statement get ‘Partially Accepted’?
A correction statement containing updates in PAN of deductee/employee may get Partially Accepted. This is possible when the PAN in the any of the records being updated by you in the correction statement is invalid, i.e. PAN not present in PAN Master Database. In such a scenario, the said record gets rejected resulting in partial acceptance of the statement.
What should I do if the status of correction statement filed by me is ‘Partially accepted’?
In case correction statement is in status ‘Partially accepted’, you have follow steps as under:
1. You have to update modifications as per the accepted records in the TDS statement.
2. Identify the deductee/salary record which has got rejected due to invalid PAN.
3. Rectify the incorrect PAN
4. Correction statement should contain value of identification keys as per regular statement along with the updated values.
What could be the cause of rejection of TDS/TCS statement for the reason “Total Deposit amount of deductees is more than Challan amount actually deposited in bank”?
The total tax deposited amount as per challan should be greater than or equal to the total tax deposited amount as per deductee details, else a regular TDS/TCS statement will not get validated through FVU.
If you file a correction statement for adding deductee records under a particular challan, the total tax deposited as per challan in regular statement should be greater than or equal to the total tax deposited in deductee details as per regular as well as correction statement.
Note: Amount in the fields Interest and others in the challan is not considered in the total tax deposited as per challan.
Provisional Receipt Number is now referred as Token Number with effect from FY. 2010-11 onwards.
Sunday, September 11, 2011
Correction in OLTAS Income Tax/TDS challan after payment
Recently I faced a situation where the tax demand on regular assessment of my client for A.Y 2008-09 was deposited with a nationalized bank but wrongly the said payment of demand was done towards A.Y 2010-11. This situation may have been faced by many assessees because there may always a possibility of mentioning wrong Assessment year or wrong PAN/TAN etc in the TDS Challan or in Income Tax Challans.
In such situation the first thing that comes to mind is how one can get the challan corrected after the payment of tax so that right credit of tax is given to the assessee/deductor concerned. The power to amend such wrong details in challan after payment of tax in OLTAS has been given to Assessing officer and Bank depending upon the type of correction, which has been provided as follows for the benefit of all concerneds.
NSDL receives tax collection data as uploaded by the bank. It is not authorized to carry out any changes in the data sent by the bank to TIN.
The fields that can be corrected and the entity authorized to carry out corrections are as below:
Sl. No. Type of Correction on Challan Performed By
1 PAN/TAN - Assessing Officer
2 Assessment Year - Assessing Officer
3 Major Head - Assessing Officer /Bank
4 Minor Head - Assessing Officer
5 Nature of Payment - Assessing Officer
6 Total Amount - Bank
7 Name - Bank
Thus application should be made for correction to the A.O or Bank in case of any mistake in Income Tax/TDS Challan depending upon the type of correction as mentioned above.
In such situation the first thing that comes to mind is how one can get the challan corrected after the payment of tax so that right credit of tax is given to the assessee/deductor concerned. The power to amend such wrong details in challan after payment of tax in OLTAS has been given to Assessing officer and Bank depending upon the type of correction, which has been provided as follows for the benefit of all concerneds.
NSDL receives tax collection data as uploaded by the bank. It is not authorized to carry out any changes in the data sent by the bank to TIN.
The fields that can be corrected and the entity authorized to carry out corrections are as below:
Sl. No. Type of Correction on Challan Performed By
1 PAN/TAN - Assessing Officer
2 Assessment Year - Assessing Officer
3 Major Head - Assessing Officer /Bank
4 Minor Head - Assessing Officer
5 Nature of Payment - Assessing Officer
6 Total Amount - Bank
7 Name - Bank
Thus application should be made for correction to the A.O or Bank in case of any mistake in Income Tax/TDS Challan depending upon the type of correction as mentioned above.
Wednesday, August 3, 2011
Form 24G to be filed by Government Account Office
The Pay and Accounts Office (PAO)/ District Treasury Office (DTO)/ Cheque Drawing and Disbursing Office (CDDO) are required to file Form 24G as per Income-tax Department Notification no. 41/2010 dated May 31, 2010. In case of an office of the Government, where tax has been paid to the credit of Central Government without the production of a challan associated with deposit of the tax in a bank, the PAO / CDDO / DTO or an equivalent office (herein after called as AO in this document) government is required to file Form 24G.
Form 24G is to be furnished only in electronic form.
A unique seven digit Accounts Office Identification Number (AIN) shall be allotted by the Directorate of Income Tax (Systems), Delhi, to every AO. Each AO will be identified in the system by this number.
Each DDO will be identified in the system by a Tax Deduction and Collection Account Number (TAN). This number is allotted by Income Tax Department.
Every AO shall furnish one complete, correct and consolidated Form 24G every month having details of all type of deduction / collection viz. TDS-Salary / TDS-Non Salary / TDS-Non Salary Non Residents / TCS.
Every Form 24G shall be prepared in accordance with the data structure prescribed by the Income Tax Department (ITD).
The contents of Form 24G should be as follows:
1. Details of the AO filing Form 24G (AIN, name, demographic information, contact details)
2. Category of AO (Central / State Government) along with details of ministry / state.
3. Statement details (month and year for which Form 24G is being filed)
4. Payment summary; nature of deduction wise (TDS – Salary /TDS Non-salary / TDS – Non-salary Non-resident / TCS)
5. DDO wise payment details (TAN of DDO, name, demographic details, total tax deducted and remitted to the Government account (A.G. / Pr.CCA)
6. DDOs which are associated with the AO. If the DDO wants to add/delete or update details of DDO, same should be mentioned in the statement.
AO can prepare the statement either using his own software or using the Form 24G Preparation Utility developed by National Securities Depository Limited (NSDL) and freely available at Tax Information Network (TIN) website (www.tin-nsdl.com) or ITD website (www.incometaxindia.gov.in). You can click here to download the Form 24G Preparation Utility.
Once the statement is prepared, the AO shall validate the same by using File Validation Utility (FVU) developed by National Securities Depository Limited (NSDL) and freely available at Tax Information Network (TIN) or ITD website. You can click here to download the Form 24G FVU.
The statement can be furnished in Compact Disk (CD) at any of the TIN-Facilitation Centers (TIN-FC) managed by National Securities Depository Limited (NSDL) (list available at Tax Information Network (TIN) or ITD website) along with Form 24G Statement Statistics Report (generated through File Validation Utility), duly signed by the AO.
Where the DDO and AO are same, the statistics report shall be counter signed by his superior officer.
Once Form 24G is accepted by the TIN-FC, it will issue a provisional receipt with a unique number (provisional receipt number) to the AO as a proof of submission of the statement
In respect of Form-24G who is called DDO and what is Account office name?
The Pay and Accounts Office (PAO)/ District Treasury Office (DTO)/ Cheque Drawing and Disbursing Office (CDDO) are required to file Form 24G as per Income-tax Department Notification no. 41/2010 dated May 31, 2010. In case of an office of the Government, where tax has been paid to the credit of Central Government without the production of a challan associated with deposit of the tax in a bank, the PAO / CDDO / DTO or an equivalent office (herein after called as AO in this document) government is required to file Form 24G.
Form 24G is to be furnished only in electronic form.
A unique seven digit Accounts Office Identification Number (AIN) shall be allotted by the Directorate of Income Tax (Systems), Delhi, to every AO. Each AO will be identified in the system by this number.
Each DDO will be identified in the system by a Tax Deduction and Collection Account Number (TAN). This number is allotted by Income Tax Department.
Every AO shall furnish one complete, correct and consolidated Form 24G every month having details of all type of deduction / collection viz. TDS-Salary / TDS-Non Salary / TDS-Non Salary Non Residents / TCS.
Every Form 24G shall be prepared in accordance with the data structure prescribed by the Income Tax Department (ITD).
The contents of Form 24G should be as follows:
Details of the AO filing Form 24G (AIN, name, demographic information, contact details)
Category of AO (Central / State Government) along with details of ministry / state.
Statement details (month and year for which Form 24G is being filed)
Payment summary; nature of deduction wise (TDS – Salary /TDS Non-salary / TDS – Non-salary Non-resident / TCS)
DDO wise payment details (TAN of DDO, name, demographic details, total tax deducted and remitted to the Government account (A.G. / Pr.CCA)
DDOs which are associated with the AO. If the DDO wants to add/delete or update details of DDO, same should be mentioned in the statement.
AO can prepare the statement either using his own software or using the Form 24G Preparation Utility developed by National Securities Depository Limited (NSDL) and freely available at Tax Information Network (TIN) website (www.tin-nsdl.com) or ITD website (www.incometaxindia.gov.in). You can click here to download the Form 24G Preparation Utility.
Once the statement is prepared, the AO shall validate the same by using File Validation Utility (FVU) developed by National Securities Depository Limited (NSDL) and freely available at Tax Information Network (TIN) or ITD website. You can click here to download the Form 24G FVU.
The statement can be furnished in Compact Disk (CD) at any of the TIN-Facilitation Centers (TIN-FC) managed by National Securities Depository Limited (NSDL) along with Form 24G Statement Statistics Report (generated through File Validation Utility), duly signed by the AO.
Where the DDO and AO are same, the statistics report shall be counter signed by his superior officer.
Once Form 24G is accepted by the TIN-FC, it will issue a provisional receipt with a unique number (provisional receipt number) to the AO as a proof of submission of the statement.
Form 24 G applicable, Govt autorities those who are doing TDS by book adjustment transfer.
What is Form 24G?
In the Government Accounting System, each DDO (Drawing & Disbursement Officer) is associated with a specific Accounts Officer (AO), who processes the bills prepared by the DDO. Form 24G is a single monthly statement where the AO will consolidate the payment details from each of the DDO, for each type of deduction/collection (TDS-Salary/ TDS-Non Salary/ TDS- Non Salary Non Residents/ TCS) in a single form known as Form 24G.
What is the periodicity of filing Form 24G?
Every AO is required to file Form 24G every month for every type of deduction/ collection i.e. TDS-Salary / TDS Non-Salary / TDS-Non Salary Non-Residents / TCS in a single form.
Who is required to file Form 24G?
Every Accounts Officer (AO) who processes the bills prepared by the DDO has to furnish the monthly Form 24G. In case of State Government the District Treasury Officer (DTO) will be responsible for filing Form 24G.
What is AIN?
Accounts Office Identification Number (AIN) is a seven digit unique identification number issued by the Directorate of Income Tax (Systems), Delhi, to each Accounts Office. It is mandatory for an AO to have an AIN for submitting the Form 24G.
How to obtain AIN?
Application for AIN has to be made in the form ‘Application for allotment of Accounts Office Identification Number’ (AIN application form). Click here for detailed guidelines for procedure to obtain AIN.
How intimation of AIN allotment will be given to the Accounts Officer?
An AIN allotment letter will be sent to the AO giving details of AIN allotted to him.
Is it mandatory to file Form 24G in electronic format?
Yes, it is mandatory for every Accounts Officer to file Form 24G in electronic format only.
In case of change in the details of DDOs associated to the AO, to whom and how will the same be communicated?
Any change in the details of DDOs associated to the AO are to be stated in Form 24G, which is to be prepared as per the prescribed data structure.
What does a Form 24G contain?
Form 24G contains the following details:
1. Details of the AO / DTO filing Form 24G (AIN, name, demographic information, contact details)
2. Category of AO (Central / State Government) along with details of ministry / state.
3. Statement details (month and year for which Form 24G is being filed)
4. Payment summary; nature of deduction wise (TDS – Salary /TDS Non-salary / TDS – Non-salary Non-resident / TCS)
5. DDO wise payment details (TAN of DDO, name, demographic details, total tax deducted and remitted to the Government account (A.G. / Pr.CCA)
Is it mandatory to mention Accounts Office Identification Number (AIN) in the Form 24G?
Yes, it is mandatory to mention the seven digit Accounts Office Identification Number (AIN) in the Form 24G.
Is it mandatory to mention TAN of DDOs in the Form 24G?
Yes, it is mandatory to mention the ten digit TAN (allotted by ITD) of every DDO record in Form 24G.
At the time of filing Form 24G if the valid TAN of the DDO is not available the following values can be mentioned in the TAN field:
TANAPPLIED: if the DDO has applied for a TAN
TANNOTAVBL: if TAN of DDO is not available
TANINVALID: if TAN of DDO is not valid.
Is it necessary to submit Statement Statistic Report with Form 24G?
Every Form 24G should be accompanied with the Statement Statistic Report signed by the Accounts Officer.
By whom should the Statement Statistic Report be signed?
The Accounts Officer (AO) will sign the statement statistic report. In case the AO (PAO) is also a DDO, whose details are being given in the statement, statistic report is to be counter signed by the person who is his immediate superior.
Procedure for application for Accounts Office Identification Number (AIN) for Government offices required to file Form 24G
Procedure for application for Accounts Office Identification Number (AIN) for Government offices required to file Form 24G
Introduction
The Pay and Accounts Office (PAO)/ District Treasury Office (DTO)/ Cheque Drawing and Disbursing Office (CDDO) are required to file Form 24G as per Income-tax Department Notification no. 41/2010 dated May 31, 2010. In case of an office of the Government, where tax has been paid to the credit of Central Government without the production of a challan associated with deposit of the tax in a bank, the PAO / CDDO / DTO is required to file Form 24G. For filing Form 24G each PAO / CDDO / DTO is required to have an AIN. AIN is the identification of the PAO / CDDO / DTO for the purpose of filing Form 24G. It is mandatory for each PAO / CDDO / DTO to have an AIN.
How to Apply
• Application for AIN has to be made in the form ‘Application for allotment of Accounts Office Identification Number’ (AIN application form).
• The application has to be made in physical form as per guidelines provided with the AIN application form.
Allotment of AIN
• Complete and correct AIN application forms submitted by the PAO / CDDO / DTO will be forwarded to National Securities Depository Limited (NSDL) by the CIT (TDS) recommending allotment of AIN to the PAO / CDDO / DTO.
• AIN allotment letter will be sent to the PAO / CDDO / DTO at the address mentioned in the AIN allotment form.
•
Download of AIN application
Deductors who do not have a AIN can apply for one by submitting a duly filled and signed AIN application form to jurisdictional CIT (TDS).
eTDS Returns for Government Deductors
For the Financial year 2004-05, apart from corporates, all government
deductors are also liable to file eTDS and eTCS Returns. This is for
the first time that this requirement has been made mandatory for
government deductors.
Rule 36 of Income Tax Rules, prescribe the persons responsible for
filing return in the case of Offices of the government. The same is
given below…
1. Civil Audit Officers/Pay and Accounts officers for
Gazetted Officers and others who draw their from Audit
Officers/Pay and Accounts offices on separate bills; and
also for all pensioners who draw their pensions from Audit
Offices;
2. Treasury Officers for all Gazetted Officers and others who
draw their from treasuries on separate bills without countersignature
and also for all pensioners who draw their
pensions from treasuries;
3. Heads of civil or Military Offices for all Gazetted Officers
and others, except those referred to in clause (2), and all
non-Gazetted Officers, whose pay is drawn on
establishment bills or on bills countersigned by the head
office;
4. Forest Disbursing Officers and public Works
Department Disbursing Officers in cases where direct
payment from treasuries is not made, for themselves and
their establishments;
5. Head Postmasters for (i) themselves, their gazetted
subordinates and the establishments of which the
establishment pay bills are prepared by them, and (ii)
gazetted supervising and controlling officers of whose
headquarters post office they are in charge, and (iii)
pensioners drawing their pensions through post offices;
head record clerks for themselves and all the staff whose
pay is drawn in their establishment pay bills; Divisional
Engineering in respect of Telegraph and Telephone
Engineering Divisions; Accounts Officers, stores and
workshops organization and Disbursing officers in the case
of the Administrative and Audit offices;
6. (i) Controllers of Defence Accounts for Defence
Services Officers and others including civilian gazetted
officers under their payment control;
(ii) Officer Commanding Air Force Central Accounts
Office, New Delhi for Air Force Officers, and others for
whom IRLAs are maintained by them.
(iii) Supply Officer-in-charge, Naval Pay Office
Bombay for Navy Officers and ratings for whom
IRLAs are maintained by them;
(iv) Chief Accounting Officer, London for Defence
services personnel serving in or attached to High
Commission in UK;
7. The financial Advisor and Chief Accounts
Officer/Deputy Financial Advisor and Chief Accounts
Officer of Railways Concerned for all Railway
employees of the Railway audit Department under their
payment control;
8. Heads of Offices in the Missions and posts abroad
for themselves and for all gazetted and other officers
under their administrative control;
9. Trade Commissions abroad, where their
establishments are independent of Missions, for
themselves and for gazetted and other officers under
Administrative control;
10. The Chief Accounts Officer, India Supply Mission,
Washington and India Stores Department, London for
themselves and for the gazetted and other officers under
their Administrative control;
11. The Directors/Managers of the Tourist offices
abroad, for themselves and for the gazetted and other
officers under their Administrative control;
TAN
All Corporate Deductors must have a valid TAN No and
PAN No otherwise they will not be able to file the eTDS return.
Government Deductors also should have TAN No to file TDS
returns. For this they must first apply for a TAN by submitting
form 49B and attach a copy of the same with eTDS Return.
Form 24G is to be furnished only in electronic form.
A unique seven digit Accounts Office Identification Number (AIN) shall be allotted by the Directorate of Income Tax (Systems), Delhi, to every AO. Each AO will be identified in the system by this number.
Each DDO will be identified in the system by a Tax Deduction and Collection Account Number (TAN). This number is allotted by Income Tax Department.
Every AO shall furnish one complete, correct and consolidated Form 24G every month having details of all type of deduction / collection viz. TDS-Salary / TDS-Non Salary / TDS-Non Salary Non Residents / TCS.
Every Form 24G shall be prepared in accordance with the data structure prescribed by the Income Tax Department (ITD).
The contents of Form 24G should be as follows:
1. Details of the AO filing Form 24G (AIN, name, demographic information, contact details)
2. Category of AO (Central / State Government) along with details of ministry / state.
3. Statement details (month and year for which Form 24G is being filed)
4. Payment summary; nature of deduction wise (TDS – Salary /TDS Non-salary / TDS – Non-salary Non-resident / TCS)
5. DDO wise payment details (TAN of DDO, name, demographic details, total tax deducted and remitted to the Government account (A.G. / Pr.CCA)
6. DDOs which are associated with the AO. If the DDO wants to add/delete or update details of DDO, same should be mentioned in the statement.
AO can prepare the statement either using his own software or using the Form 24G Preparation Utility developed by National Securities Depository Limited (NSDL) and freely available at Tax Information Network (TIN) website (www.tin-nsdl.com) or ITD website (www.incometaxindia.gov.in). You can click here to download the Form 24G Preparation Utility.
Once the statement is prepared, the AO shall validate the same by using File Validation Utility (FVU) developed by National Securities Depository Limited (NSDL) and freely available at Tax Information Network (TIN) or ITD website. You can click here to download the Form 24G FVU.
The statement can be furnished in Compact Disk (CD) at any of the TIN-Facilitation Centers (TIN-FC) managed by National Securities Depository Limited (NSDL) (list available at Tax Information Network (TIN) or ITD website) along with Form 24G Statement Statistics Report (generated through File Validation Utility), duly signed by the AO.
Where the DDO and AO are same, the statistics report shall be counter signed by his superior officer.
Once Form 24G is accepted by the TIN-FC, it will issue a provisional receipt with a unique number (provisional receipt number) to the AO as a proof of submission of the statement
In respect of Form-24G who is called DDO and what is Account office name?
The Pay and Accounts Office (PAO)/ District Treasury Office (DTO)/ Cheque Drawing and Disbursing Office (CDDO) are required to file Form 24G as per Income-tax Department Notification no. 41/2010 dated May 31, 2010. In case of an office of the Government, where tax has been paid to the credit of Central Government without the production of a challan associated with deposit of the tax in a bank, the PAO / CDDO / DTO or an equivalent office (herein after called as AO in this document) government is required to file Form 24G.
Form 24G is to be furnished only in electronic form.
A unique seven digit Accounts Office Identification Number (AIN) shall be allotted by the Directorate of Income Tax (Systems), Delhi, to every AO. Each AO will be identified in the system by this number.
Each DDO will be identified in the system by a Tax Deduction and Collection Account Number (TAN). This number is allotted by Income Tax Department.
Every AO shall furnish one complete, correct and consolidated Form 24G every month having details of all type of deduction / collection viz. TDS-Salary / TDS-Non Salary / TDS-Non Salary Non Residents / TCS.
Every Form 24G shall be prepared in accordance with the data structure prescribed by the Income Tax Department (ITD).
The contents of Form 24G should be as follows:
Details of the AO filing Form 24G (AIN, name, demographic information, contact details)
Category of AO (Central / State Government) along with details of ministry / state.
Statement details (month and year for which Form 24G is being filed)
Payment summary; nature of deduction wise (TDS – Salary /TDS Non-salary / TDS – Non-salary Non-resident / TCS)
DDO wise payment details (TAN of DDO, name, demographic details, total tax deducted and remitted to the Government account (A.G. / Pr.CCA)
DDOs which are associated with the AO. If the DDO wants to add/delete or update details of DDO, same should be mentioned in the statement.
AO can prepare the statement either using his own software or using the Form 24G Preparation Utility developed by National Securities Depository Limited (NSDL) and freely available at Tax Information Network (TIN) website (www.tin-nsdl.com) or ITD website (www.incometaxindia.gov.in). You can click here to download the Form 24G Preparation Utility.
Once the statement is prepared, the AO shall validate the same by using File Validation Utility (FVU) developed by National Securities Depository Limited (NSDL) and freely available at Tax Information Network (TIN) or ITD website. You can click here to download the Form 24G FVU.
The statement can be furnished in Compact Disk (CD) at any of the TIN-Facilitation Centers (TIN-FC) managed by National Securities Depository Limited (NSDL) along with Form 24G Statement Statistics Report (generated through File Validation Utility), duly signed by the AO.
Where the DDO and AO are same, the statistics report shall be counter signed by his superior officer.
Once Form 24G is accepted by the TIN-FC, it will issue a provisional receipt with a unique number (provisional receipt number) to the AO as a proof of submission of the statement.
Form 24 G applicable, Govt autorities those who are doing TDS by book adjustment transfer.
What is Form 24G?
In the Government Accounting System, each DDO (Drawing & Disbursement Officer) is associated with a specific Accounts Officer (AO), who processes the bills prepared by the DDO. Form 24G is a single monthly statement where the AO will consolidate the payment details from each of the DDO, for each type of deduction/collection (TDS-Salary/ TDS-Non Salary/ TDS- Non Salary Non Residents/ TCS) in a single form known as Form 24G.
What is the periodicity of filing Form 24G?
Every AO is required to file Form 24G every month for every type of deduction/ collection i.e. TDS-Salary / TDS Non-Salary / TDS-Non Salary Non-Residents / TCS in a single form.
Who is required to file Form 24G?
Every Accounts Officer (AO) who processes the bills prepared by the DDO has to furnish the monthly Form 24G. In case of State Government the District Treasury Officer (DTO) will be responsible for filing Form 24G.
What is AIN?
Accounts Office Identification Number (AIN) is a seven digit unique identification number issued by the Directorate of Income Tax (Systems), Delhi, to each Accounts Office. It is mandatory for an AO to have an AIN for submitting the Form 24G.
How to obtain AIN?
Application for AIN has to be made in the form ‘Application for allotment of Accounts Office Identification Number’ (AIN application form). Click here for detailed guidelines for procedure to obtain AIN.
How intimation of AIN allotment will be given to the Accounts Officer?
An AIN allotment letter will be sent to the AO giving details of AIN allotted to him.
Is it mandatory to file Form 24G in electronic format?
Yes, it is mandatory for every Accounts Officer to file Form 24G in electronic format only.
In case of change in the details of DDOs associated to the AO, to whom and how will the same be communicated?
Any change in the details of DDOs associated to the AO are to be stated in Form 24G, which is to be prepared as per the prescribed data structure.
What does a Form 24G contain?
Form 24G contains the following details:
1. Details of the AO / DTO filing Form 24G (AIN, name, demographic information, contact details)
2. Category of AO (Central / State Government) along with details of ministry / state.
3. Statement details (month and year for which Form 24G is being filed)
4. Payment summary; nature of deduction wise (TDS – Salary /TDS Non-salary / TDS – Non-salary Non-resident / TCS)
5. DDO wise payment details (TAN of DDO, name, demographic details, total tax deducted and remitted to the Government account (A.G. / Pr.CCA)
Is it mandatory to mention Accounts Office Identification Number (AIN) in the Form 24G?
Yes, it is mandatory to mention the seven digit Accounts Office Identification Number (AIN) in the Form 24G.
Is it mandatory to mention TAN of DDOs in the Form 24G?
Yes, it is mandatory to mention the ten digit TAN (allotted by ITD) of every DDO record in Form 24G.
At the time of filing Form 24G if the valid TAN of the DDO is not available the following values can be mentioned in the TAN field:
TANAPPLIED: if the DDO has applied for a TAN
TANNOTAVBL: if TAN of DDO is not available
TANINVALID: if TAN of DDO is not valid.
Is it necessary to submit Statement Statistic Report with Form 24G?
Every Form 24G should be accompanied with the Statement Statistic Report signed by the Accounts Officer.
By whom should the Statement Statistic Report be signed?
The Accounts Officer (AO) will sign the statement statistic report. In case the AO (PAO) is also a DDO, whose details are being given in the statement, statistic report is to be counter signed by the person who is his immediate superior.
Procedure for application for Accounts Office Identification Number (AIN) for Government offices required to file Form 24G
Procedure for application for Accounts Office Identification Number (AIN) for Government offices required to file Form 24G
Introduction
The Pay and Accounts Office (PAO)/ District Treasury Office (DTO)/ Cheque Drawing and Disbursing Office (CDDO) are required to file Form 24G as per Income-tax Department Notification no. 41/2010 dated May 31, 2010. In case of an office of the Government, where tax has been paid to the credit of Central Government without the production of a challan associated with deposit of the tax in a bank, the PAO / CDDO / DTO is required to file Form 24G. For filing Form 24G each PAO / CDDO / DTO is required to have an AIN. AIN is the identification of the PAO / CDDO / DTO for the purpose of filing Form 24G. It is mandatory for each PAO / CDDO / DTO to have an AIN.
How to Apply
• Application for AIN has to be made in the form ‘Application for allotment of Accounts Office Identification Number’ (AIN application form).
• The application has to be made in physical form as per guidelines provided with the AIN application form.
Allotment of AIN
• Complete and correct AIN application forms submitted by the PAO / CDDO / DTO will be forwarded to National Securities Depository Limited (NSDL) by the CIT (TDS) recommending allotment of AIN to the PAO / CDDO / DTO.
• AIN allotment letter will be sent to the PAO / CDDO / DTO at the address mentioned in the AIN allotment form.
•
Download of AIN application
Deductors who do not have a AIN can apply for one by submitting a duly filled and signed AIN application form to jurisdictional CIT (TDS).
eTDS Returns for Government Deductors
For the Financial year 2004-05, apart from corporates, all government
deductors are also liable to file eTDS and eTCS Returns. This is for
the first time that this requirement has been made mandatory for
government deductors.
Rule 36 of Income Tax Rules, prescribe the persons responsible for
filing return in the case of Offices of the government. The same is
given below…
1. Civil Audit Officers/Pay and Accounts officers for
Gazetted Officers and others who draw their from Audit
Officers/Pay and Accounts offices on separate bills; and
also for all pensioners who draw their pensions from Audit
Offices;
2. Treasury Officers for all Gazetted Officers and others who
draw their from treasuries on separate bills without countersignature
and also for all pensioners who draw their
pensions from treasuries;
3. Heads of civil or Military Offices for all Gazetted Officers
and others, except those referred to in clause (2), and all
non-Gazetted Officers, whose pay is drawn on
establishment bills or on bills countersigned by the head
office;
4. Forest Disbursing Officers and public Works
Department Disbursing Officers in cases where direct
payment from treasuries is not made, for themselves and
their establishments;
5. Head Postmasters for (i) themselves, their gazetted
subordinates and the establishments of which the
establishment pay bills are prepared by them, and (ii)
gazetted supervising and controlling officers of whose
headquarters post office they are in charge, and (iii)
pensioners drawing their pensions through post offices;
head record clerks for themselves and all the staff whose
pay is drawn in their establishment pay bills; Divisional
Engineering in respect of Telegraph and Telephone
Engineering Divisions; Accounts Officers, stores and
workshops organization and Disbursing officers in the case
of the Administrative and Audit offices;
6. (i) Controllers of Defence Accounts for Defence
Services Officers and others including civilian gazetted
officers under their payment control;
(ii) Officer Commanding Air Force Central Accounts
Office, New Delhi for Air Force Officers, and others for
whom IRLAs are maintained by them.
(iii) Supply Officer-in-charge, Naval Pay Office
Bombay for Navy Officers and ratings for whom
IRLAs are maintained by them;
(iv) Chief Accounting Officer, London for Defence
services personnel serving in or attached to High
Commission in UK;
7. The financial Advisor and Chief Accounts
Officer/Deputy Financial Advisor and Chief Accounts
Officer of Railways Concerned for all Railway
employees of the Railway audit Department under their
payment control;
8. Heads of Offices in the Missions and posts abroad
for themselves and for all gazetted and other officers
under their administrative control;
9. Trade Commissions abroad, where their
establishments are independent of Missions, for
themselves and for gazetted and other officers under
Administrative control;
10. The Chief Accounts Officer, India Supply Mission,
Washington and India Stores Department, London for
themselves and for the gazetted and other officers under
their Administrative control;
11. The Directors/Managers of the Tourist offices
abroad, for themselves and for the gazetted and other
officers under their Administrative control;
TAN
All Corporate Deductors must have a valid TAN No and
PAN No otherwise they will not be able to file the eTDS return.
Government Deductors also should have TAN No to file TDS
returns. For this they must first apply for a TAN by submitting
form 49B and attach a copy of the same with eTDS Return.
Wednesday, November 17, 2010
Criteria / Guidelines for selection of cases for Income tax Scrutiny for Assessment year 2010-11 or Financial Year 2009-2010
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)
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)
A breif note on IT scrutiny
A breif note on IT scrutiny
--------------------------------------------------------------------------------
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.
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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.
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
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