Post Graduation Diploma in Taxation Project For Gju Studnts

TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT
ANNEXURE-i
PRACTICAL TRAINING REPORT ON

TAXATION IN BUSINESS MANAGEMENT
SUPERVISOR:MR.ANIL KUMAR GUPTA C/O MR. RAM KUMAR GUPTA BHAMASHAH NAGAR HISAR
SUBMITTED BY:MR. ASHUTOSH GOYAL ENROLLMENT NO. 11281114001 SESSION 2011-2012 COURSE NAME PGDT
MR. ASHUTOSH GOYAL ENROLLMENT NO. 11281114001 PGDT 2011-12
TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT (ANNEXURE-ii)
CERTIFICATE
This is to certify that Mr. Ashutosh Goyal Enrolment No. 11281114001 has worked under my supervision to prepare his Practical Training Report in Taxation on TAXATION IN BUSINESS MANAGEMENT. The work embodied in this report is original and was conducted at from 1 st January 2012 to 31st January 2012. The work has been submitted in part or full to this or any other university for the award of any degree or diploma. His work and conduct during the training period under my direct guidance was satisfactory and is recommended for evaulatuion for the award of PG Diploma in Taxation
Date: ____________
Signature of Supervisor(with name and seal) Name: Designation: Organisation:
Countersigned by Director/Principal of Study Center (with name and seal)
TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT ANNEXURE iii RESUME OF SUPERVISOR 1.NAME 2.DESIGNATION 3.QUALIFICATION 4.AREA OF SPECIALISATION 5.EXPERIENCE 6.OFFICIAL ADDRESS 7.TELEPHONE NO.: 8.MOBILE NO.: 9.E-MAIL:
DATE:______________ I have supervised Mr. ASHUTOSH GOYAL ENROLMENT NO. 11281114001 ON THE TOPIC TAXATION IN BUSINESS MANAGEMENT
(SIGNATURE OF SUPERVISOR) WITH SEAL
TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT (Annexure iv)
DECLARATION
I, ASHUTOSH GOYAL hereby declare that the practical training report entitled TAXATION IN BUSINESS MANAGEMENT is my original work and neither identical report has been prepared by me nor the same has been produced elsewhere for publication purpose to get any award of Diploma/Degree from any other institution/university in India or Abroad. Place: HISAR Date: Name of student(with signature) MR. ASHUTOSH GOYAL Enrolment No.11281114001 Session 2011-2012
Table of Contents
.......................2 (ANNEXURE-ii).................................................................2 Table of Contents.................................................................5 SYNOPSIS..........................................................................6 OBJECTIVES......................................................................7 LIMITATIONS OF THE STUDY......................................8 METHODOLOGY............................................................81 SCHEDULE.......................................................................82 REFERENCES..................................................................83
SYNOPSIS
The project intends to undertake an intensive study of taxation in the Indian Commodities Market along with Global Commodities Market and the working of different commodities exchanges and finally the risk management techniques used by them. A commodity futures market (or exchange) is, in simple terms, defined as a public market where commodities are contracted for purchase or sale at an agreed price for delivery on a specified date. This purchase or sale of commodities must be made through a broker who is a member of an organized exchange and the purchase should be made under the terms and conditions of a standardized futures contract. Also, as the factors that drive commodity prices are observed to be different from the factors that drive equity prices, commodities are perceived to be effective diversifying agents. Commodity derivatives play a pivotal role in the price risk management process especially in any agricultural surplus country. As unique hedging instruments derivatives such as forwards, futures, swaps, options and exotic derivative products are extensively used in the global market. Commodity analysis will involve the study of the movement of different commodity exchanges of world how each one affect the other, which commodity exchanges set the trend, and how changes like government and international policies, economic trends as indicated by the growth rate of the GDP, inflation etc affect the market. The next step will be to study the commodity exchanges respect to its structure, function, regulatory framework of FMC, vulnerability to policies, budget, business cycle etc. This will be followed by the company analysis which will involve financial analysis and future prospects. The study has surveyed the various publicly available websites of recognized commodity exchanges and their organizational and the regulatory set up for futures trading.
OBJECTIVES
To find different parameters that decides the pricing of commodities at different exchanges. To compare the difference in the working of different exchanges locally and globally. Risk management techniques used by different commodities exchanges. Identify the reasons about how and why some exchanges control the prices of certain commodities. To find out the effect of change in global commodity derivative on Indian commodity derivatives Where the Indian commodity derivative market stand as comparison to global commodity market To find the scope of Indian commodity derivative market
LIMITATIONS OF THE STUDY
Time is less and I have to attend classes regularly Internet problems and electricity problems Time constraint due to which I had to limit my study to five commodity exchanges. Due to more use of secondary sources data inaccuracy may be there Owing to the dynamic nature of the global economy in particular, the findings of the report will not be applicable after a point of time. No practical access to global market exchanges. Busy schedule of companys employees so that give less time to me for providing information.
VARIOUS INCOME TAX AUTHORITIES

1.1. VARIOUS AUTHORITIES Section of the Income Tax Act, 1961 provides for the administrative and judicial authorities for administration of this Act. The Direct Tax Laws Act, 1987 has brought far-reaching changes in the organizational structure. The implementation of the Act lies in the hands of these authorities. The change in designation of certain authorities and creation of certain new posts in the structure are the main features of amendments made by The Direct Tax Laws Act, 1987. The new features of authorities has been properly depicted in a chart on the facing page. These authorities have been grouped into two main wings : (i) Administrative [ Sec. 116 ] (a) the Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), (b) Directors-General of Income-tax or Chief Commissioners of Income-tax, (c) Directors of Income-tax or Commissioners of Income-tax or Commissioners of Income-tax (Appeals), (c) Additional Directors of Income-tax or Additional Commissioners of Income-tax or Additional Commissioners of Income-tax (Appeals), (cca) Joint Directors of Income-tax or Joint Commissioners of Income-tax. (d) Deputy Directors of Income-tax or Deputy Commissioners of Income-tax or Deputy Commissioners of Income-tax (Appeals), (e) Assistant Directors of Income-tax or Assistant Commissioners of Income-tax, (f) Income-tax Officers, (g) Tax Recovery Officers, (h) Inspectors of Income-tax. (ii) Assessing Officer [ Sec. 2(7A)]
TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT "Assessing Officer" means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act, and the Joint Commissioner or Joint Director who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act; Importance of Assessing Officer : In the organizational setup of the income tax department Assessing Officer plays a very vital role. He is the primary authority who initiates he proceedings and is directly connected with the public. Form the time of filing of return till the assessement is completed he plays a pivotal role . He can start proceedings for non filing of return, imposition of penalties etc. Orders passed by him can be challenged only on approval. The department can revise his orders only if it is proved that there are prejudicial to the revenue and that too only by the Commissioner of Income Tax. (iii) Appointment of Income-Tax Authorities [ Sec. 117 ] (1) Power of Central Government : The Central Government may appoint such persons as it thinks fit to be income-tax authorities. It kept with itself the powers to appoint authorities upto and above rank of an Assistant Commissioner of Income-Tax [ Sec. 117 (1) ] (2) Power of the Board and Other Higher Authorities : Subject to the rules and orders of the Central Government regulating the conditions of service of persons in public services and posts, the Central Government may authorize the Board, or a DirectorGeneral, a Chief Commissioner or a Director or a Commissioner to appoint income-tax authorities below the rank of an Assistant Commissioner or Deputy Commissioner. [ Sec. 117 (2) ] (3) Power to appoint Executive and Ministerial Staff : Subject to the rules and orders of the Central Government regulating the conditions of service of persons in public MR. ASHUTOSH GOYAL ENROLLMENT NO. 11281114001 PGDT 2011-12 10
TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT services and posts, an income-tax authority authorized in this behalf by the Board may appoint such executive or ministerial staff as may be necessary to assist it in the execution of its functions. (iv) Control of Income-Tax Authorities [ Sec. 118 ] The Board may, by notification in the Official Gazette, direct that any income-tax authority or authorities specified in the notification shall be subordinate to such other income-tax authority or authorities as may be specified in such notification. Power Of Income Tax Authorities Relating To Search And Seizure [ Section 132 ] 1.2. POWER OF INCOME TAX AUTHORITIES RELATING TO SEARCH AND SEIZURE [ SECTION 132] Entering and Searching the Premises : Where the Director General or Director or the Chief Commissioner or Commissioner or any such Joint Director or Joint Commissioner as may be empowered in this behalf by the Board , in consequence of information in his possession, has reason to believe that (a) any person to whom a summons under sub-section (1) of section 131 of this Act, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or (b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act or ; (c) any person is in possession of any money, bullion, jewellery or other valuable article or
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property [which has not been, or would not be, disclosed] for the purposes of the Indian Income-tax Act. Then--(A) the Director General or Director or the Chief Commissioner or Commissioner, as the case may be, may authorise any Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, or 1. such Joint Director, or Joint Commissioner , as the case may be, may authorise any 1. Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income-tax Officer, the officer so authorised in all cases being hereinafter referred to as the authorised officer to (i) enter and search any [building, place, vessel, vehicle or aircraft] where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept; (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available; (iia) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing; (iib) require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT subsection (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to afford the authorised officer the necessary facility to inspect such books of account or other documents;] (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search: (iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom; (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing : Where any building, place, vessel, vehicle or aircraft referred to in clause (i) is within the area of jurisdiction of any [Chief Commissioner or Commissioner], but such [Chief Commissioner or Commissioner] has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c), then, notwithstanding anything contained in section [120], it shall be competent for him to exercise the powers under this subsection in all cases where he has reason to believe that any delay in getting the authorisation from the [Chief Commissioner or Commissioner] having jurisdiction over such person may be prejudicial to the interests of the revenue :] The Finance Act, 1988 has further that where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it, except with the previous permission of such authorised officer. Application Of Seized Or Requisitioned Assets [Section132(B)] 1.3. APPLICATION OF SEIZED OR REQUISITIONED ASSETS [SECTION132(B)] 1. Any Assets seized under this section shall be first applied to pay the existing liability under Income-Tax Act, or Wealth Tax Act or Gift Tax Act. 2. Next it shall be adjusted against the tax liability determined uder block MR. ASHUTOSH GOYAL ENROLLMENT NO. 11281114001 PGDT 2011-12 13
TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT assessment and any penalty levied or interest payable under such asseessment. 3. In case assessee has explained the source of any asset, the authority may recover the amount of tax liability as mentioned above and remaining portion if any may be released but with the prior approval of CCIT or CIT. Such asset may be released to the assessee within 120 days from last authorization made for search and seizure. 4. In case seize assets consists of money or partly of money and partly of other assets, the authority may apply such money to the tax liabilities mentioned above and assessee shall be discharged of such liability upto the extent of such money. 5. The other assets shall be under distraint (cannot be sold) and he Assessing Office shall sell the assets but after prior approval of CCIT or CIT and apply such money to the existing liabilities and liability under block assessment. 6. The authority can realize the tax by any other mode also. 7. The reaming assets shall be handed over to the assessee from whose custody they were seized. 8. The Govt. shall pay an interest @ 1 % for every month or part of a month if there is any surplus of assets over the liability so adjusted. This interest shall be calculated from the date on which 120 days expire from the day last authorization was made till the day block assessment is made. Power Of Survey [ Section 133 a ] 1.4. POWER OF SURVEY [ SECTION 133A ] An Assessing Officer or his duly authorized inspector, Deputy Commissioner or Assistant Director has the power to enter : 1. any place within the limits of the area assigned to him, or 2. any place occupied by any person in respect of whom he exercises jurisdiction 3. any place in respect of which he is authorised for the purposes of this section
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT by such income-tax authority, who is assigned the area within which such place is situated or who exercises jurisdiction in respect of any person occupying such place. It may require the proprietor or any other person attending to such business or profession to afford him necessary facilities : 1. to inspect such books of account or other documents as he may require and which may be available at such place 2. to check or verify the cash, stock or other valuable article or thing which may be found therein, and 3. to furnish such information as he may require as to any matter which may be useful for, or relevant to, any proceeding under this Act. 4. An income-tax authority acting under this section may 1. place marks of identification on the books of account or other documents inspected by him. 2. impound and retain in his custody for such period as he thinks fit any books of account or other documents inspected by him 3. retain in his custody any such books of account or other documents for a period exceeding 10 days (exclusive of holidays) without obtaining the approval of the Chief Commissioner or Director General therefore In case the Income Tax Authority is not provided with such facility, such authority can proceed u/s 131(1) and 131(2) against the proprietor or nay other person attending to such business. Provision Relating To Power To Collect Certain Information [Section 133B] 1.5. PROVISION RELATING TO POWER TO COLLECT CERTAIN INFORMATION [SECTION 133B] (1) An income-tax authority may, for the purpose of collecting any information which may be useful for, or relevant to, the purposes of this Act, enter (a) any building or place within the limits of the area assigned to such authority ; or
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT (b) any building or place occupied by any person in respect of whom he exercises jurisdiction, at which a business or profession is carried on, whether such place be the principal place or not of such business or profession, and require any proprietor, employee or any other person who may at that time and place be attending in any manner to, or helping in, the carrying on of such business or profession to furnish such information as may be prescribed. (2) An income-tax authority may enter any place of business or profession only during the hours at which such place is open for the conduct of business or profession. (3) An income-tax authority acting under this section can not remove from the building or place wherein he has entered, any books of account or other documents or any cash, stock or other valuable article or thing. Disclosure Of Information Regarding Assessees To Certain Authorities [ Section 138 ] 1.6. DISCLOSURE OF INFORMATION REGARDING ASSESSEES TO CERTAIN AUTHORITIES [ SECTION 138 ] (1) (a) The Board or any other income-tax authority may furnish or cause to be furnished to
(i) any officer, authority or body performing any functions under any law relating to the imposition of any tax, duty or cess,; or (ii) such officer, authority or body performing functions under any other law as the Central Government may specify, any such information which was received or obtained by any income-tax authority in the performance of his functions under this Act, be necessary for the purpose of
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT enabling the officer, authority or body to perform his or its functions under that law. (b) Where a person makes an application to the Chief Commissioner or Commissioner in the prescribed form for any information relating to any assessee received or obtained by any income-tax authority, the Chief Commissioner or Commissioner may, if he is satisfied that it is in the public interest so to do, furnish or cause to be furnished the information asked for and his decision in this behalf shall be final and shall not be called in question in any court of law.
Payment of Tax
2.1. PAYMENT OF TAX When is Tax Payable ? [ Sec. 220(1) ] Any amount, otherwise than by way of advance tax shall be paid within 30 [thirty] days of the service of the notice of demand. All the assesses who are served with such notices must deposit such amount which is written in the notice and at the place and to the person mentioned in the notice : But where the Assessing Officer has any reason to believe that it will be detrimental to revenue if the full period of 30 [thirty] days is allowed, he may, with the previous approval of the Joint Commissioner , reduce the number of days which shall be less than 30 days and may be specified by him in the notice of demand. Payment of Interest: [ Sec. 220(2) ] If the amount specified in any notice of demand is not paid within the specified limit, the assessee shall be liable to pay simple interest at 1% [one] per cent for every month or part of a month. If due to any reason the amount on which interest was payable under this section had been reduced, the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded Extension of Date : [ Sec. 220(3) ] The Assessing Officer is empowered to extend the date of payment of tax if he is
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT approached by the assessee with an application before the expiry of the due date, the Assessing Officer may extend the time for payment or allow payment by installments, subject to such conditions as he may think fit to impose in the circumstances of the case. However, interest shall be charged in such a case and it will be calculated from the date specified in the notice of demand. Assessee in Default : [ Sec. 220 (4) ] The assessee shall be considered to be an Assessee in Default if he fails to pay tax within the time allowed originally or extended and to the person and place mentioned in he notice. The assessee can not be treated as being in default unless a notice of demand has been duly served. Payment of Tax in Installments: [ Sec. 220 (5) ] If, in a case where payment by instalments is allowed, the assessee commits defaults in paying any one of the instalments within the time fixed, the assessee shall be deemed to be in default as to the whole of the amount then outstanding, and the other instalment or instalments shall be deemed to have been due on the same date as the instalment actually in default. Penalty Payable when Tax is in Default : [ Sec. 221 ] When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable, be liable, by way of penalty, to pay such amount as the Assessing Officer may direct , and in the case of a continuing default, such further amount or amounts as the Assessing Officer may, from time to time, direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears : This Section expressly provides that before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard : Where the Assessing Officer is satisfied that the default was for good and sufficient reasons, no penalty shall be liable under this section. The assessee shall not cease to be liable to any penalty by reason of the fact that before the levy of such penalty he has paid the tax. Where as a result of any final order the amount of tax, on which the penalty was levied
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT shall be cancelled and the amount of penalty paid shall be refunded. Modes of recovery of Tax 2.2. MODES OF RECOVERY OF TAX Section 222 provides that in case assessee fails to pay any sum imposed by way of interest, fine, penalty, or any other sum payable under the provisions of this Act, the same shall be recoverable in the manner specified in the Act for the recovery of arrears of tax. Tax Recovery Officer means : A Collector or an Additional collector Any such officer empowered to effect recovery of arrears of land revenue or other public demand under any law relating to land revenue or other public demand for the time being in force in the State as ma be authorized by the State Government , by general or special notification in the Official Gazettee, to exercise the powers of a Tax Recovery Officer. Any Gazetted Officer of the Central or s State Govt. who may be authorized by the Central Govt. by general or special notification in the Officer Gazette, to exercise the powers of a Tax Recovery Officer When an assessee is in default or is deemed to be in default in making a payment of tax, the Tax Recovery Officer may draw up under his signature a statement in the prescribed form specifying the amount of arrears due from the assessee and shall proceed to recover from such assessee the amount specified in the certificate by one or more of the modes mentioned below, in accordance with the rules laid down in the Second Schedule : (a) attachment and sale of the assessees movable property ; (b) attachment and sale of the assessees immovable property ; (c) arrest of the assessee and his detention in prison ; (d) appointing a receiver for the management of the assessees movable and immovable properties. Tax Recovery Officer by whom recovery is to be effected [ Sec. 223 ] (1) The Tax Recovery Officer competent to take action shall be
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT (a) the Tax Recovery Officer within whose jurisdiction the assessee carries on his business or profession or within whose jurisdiction the principal place of his business or profession is situate, or (b) the Tax Recovery Officer within whose jurisdiction the assessee resides or any movable or immovable property of the assessee is situate, Jurisdiction assigned to the Tax Recovery Officer under the orders or directions issued by the Board, or by the Chief Commissioner or Commissioner who is authorised in this behalf by the Board. (2) Where an assessee has property within the jurisdiction of more than one Tax Recovery Officer and the Tax Recovery Officer by whom the certificate is drawn up (a) is not able to recover the entire amount by sale of the property, movable or immovable, within his jurisdiction, or (b) is of the opinion that, for the purpose of expediting or securing the recovery of the whole or any part of the amount under this Chapter, it is necessary so to do, he may send the certificate or, where only a part of the amount is to be recovered, a copy of the certificate certified in the prescribed manner and specifying the amount to be recovered to a Tax Recovery Officer within whose jurisdiction the assessee resides or has property and, thereupon, that Tax Recovery Officer shall also proceed to recover the amount under this Chapter as if the certificate or copy thereof had been drawn up by him. Other Mode of Recovery [ Sec. 226 ] Where no certificate has been drawn up, the Assessing Officer may recover the tax by any one or more of the modes provided in this section. Where a certificate has been drawn up, the Tax Recovery Officer may recover the tax by any one or more of the modes provided in this section. (i) Deduction from Salary If any assessee is in receipt of any Salaries income, the Assessing Officer or Tax Recovery Officer may approach such person paying salary to deduct arrears of tax from the salary of the assessee, and such person shall comply with any
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT such requisition and shall pay the sum so deducted to the credit of the Central Government or as the Board directs. But any part of the salary exempt from attachment in execution of degree of a civil court, shall be exempt from any requisition made under this sub-section. (ii) Collection from persons who owe money to assesee : (i) The Assessing Officer or Tax Recovery Officer may, at any time or from time to time, by notice in writing require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee to pay to the Assessing Officer or Tax Recovery Officer (when the money becomes due or is held) the amount which may be sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to or less than that amount. (ii) A notice may be issued to any person who holds or may subsequently hold any money for or on account of the assessee jointly with any other person and the shares of the joint holders in such account shall be presumed, until the contrary is proved, to be equal. (iii) A copy of the notice shall be forwarded to the assessee at his last address known to the Assessing Officer or Tax Recovery Officer, and in the case of a joint account to all the joint holders at their last addresses known to the Assessing Officer or Tax Recovery Officer. (iv) Save as otherwise provided in this sub-section, every person to whom a notice is issued under this sub-section shall be bound to comply with such notice, and, in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary for any pass book, deposit receipt, policy or any other document to be produced for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary. (v) Any claim respecting any property in relation to which a notice under this subsection has been issued arising after the date of the notice shall be void as against any demand contained in the notice. (vi) Where a person to whom a notice under this sub-section is sent objects to it by a statement on oath that the sum demanded or any part thereof is not due to
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT the assessee or that he does not hold any money for or on account of the assessee, then nothing contained in this sub-section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, but if it is discovered that such statement was false in any material particular, such person shall be personally liable to the Assessing Officer or Tax Recovery Officer to the extent of his own liability to the assessee on the date of the notice, or to the extent of the assessees liability for any sum due under this Act, whichever is less. (vii) The Assessing Officer or Tax Recovery Officer may, at any time or from time to time, amend or revoke any notice issued under this sub-section or extend the time for making any payment insection226 pursuance of such notice. (viii) The Assessing Officer or Tax Recovery Officershall grant a receipt for any amount paid in compliance with a notice issued under this sub-section, and the person so paying shall be fully discharged from his liability to the assessee to the extent of the amount so paid. (ix) Any person discharging any liability to the assessee after receipt of a notice under this sub-section shall be personally liable to the Assessing Officer or Tax Recovery Officer to the extent of his own liability to the assessee so discharged or to the extent of the assessees liability for any sum due under this Act, whichever is less. (x) If the person to whom a notice under this sub-section is sent fails to make payment in pursuance thereof to the Assessing Officer or Tax Recovery Officer he shall be deemed to be an assessee in default in respect of the amount specified in the notice and further proceedings may be taken against him for the realisation of the amount as if it were an arrear of tax due from him, in the manner provided in sections 222 to 225 and the notice shall have the same effect as an attachment of a debt by the Tax Recovery Officer in exercise of his powers under section 222. (iii) Application to Court for payment of money in courts custody [ Sec. 226(4)] The Assessing Officer or Tax Recovery Officer may apply to the court in whose custody there is money belonging to the assessee for payment to him of the entire amount of such money, or, if it
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT is more than the tax due, an amount sufficient to discharge the tax. (iv) Distraint and Sale of Movable Property [ Sec. 226(5)] The Assessing Officer or Tax Recovery Officer may, if so authorised by the Chief Commissioner or Commissioner by general or special order, recover any arrears of tax due from an assessee by distraint and sale of his movable property in the manner laid down in the Third Schedule. (v) Recovery through State Government [ Sec. 227] If the recovery of tax in any area has been entrusted to a State Government, the State Government may direct, with respect to that area or any part thereof; that tax shall be recovered therein with, and as an addition to, any municipal tax or local rate, by the same person and in the same manner as the municipal tax or local rate is recovered. Refunds 2.3. REFUNDS If, any assessment year an assessee pays the tax which is more than the amount for which he is actually chargeable and if the assessee proves excess payment before the Assessing Officer, section 237 empowers the assessee to claim a refund of the excess. Once the Assessing Officer is satisfied about the excess payment made by the assessee, he can allow the claim or refund. Under the following cases a claim to refund may arise When tax is deducted at source from salary, interest on securities od debentures, dividend at a rate higher than the rate applicable to the total income of an assessee. When tax paid in advance exceeds the amount of tax actually payable as determined at the time of refular assessment. When tax calculated was higher due to some mistake and later on tax liability is reduced on account of rectification of a mistake. When tax was calculated at the higher rate on the payment given to nonresidents whereas they were actually chargeable at a lower rate of income tax. When due to double taxation , the assessee is entitled to a double taxation relief. Who is allow to Claim Refund ? [ Sec. 238(1) ]
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT Where the income of one person is included in the total income of any other person, the latter alone shall be entitled to a refund in case of excess payment of tax in this case. In the case of death, incapacity, insolvency, liquidation or other cause, a person is unable to claim or receive any refund due to him, his legal representative or the trustee or guardian or receiver, as the case may be, shall be entitled to claim or receive such refund for the benefit of such person or his estate. A Claim for Refund must be filed in the prescribed form and verified in the prescribed manner. Where any part of the total income of a person claiming refund consists of dividends or any other income from which tax is deducted at source, the claim for refund shall be accompanied by a certificate which is issued by the tax-deducting authority. The claim for refund may be presented by the claimant or through an agent or may be send by post. Time Limit for Claiming Refund [ Sec. 239(2) ] No such claim shall be allowed, unless it is made within the period specified hereunder, namely : (a) where the claim is in respect of income which is assessable for any assessment year commencing on or before the 1st day of April, 1967, 4 years from the last day of such assessment year; (b) where the claim is in respect of income which is assessable for the assessment year commencing on the first day of April, 1968, 3 years from the last day of the assessment year; (c) where the claim is in respect of income which is assessable for any other assessment year, [one] year from the last day of such assessment year; (d) where the claim is in respect of fringe benefits which are assessable for any
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT assessment year commencing on or after the first day of April, 2006, 1 (one) year from the last day of such assessment year. Refund on Appeal etc. [ Sec. 240 ] Where, as a result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to the assessee, the Assessing Officer shall refund the amount to the assessee without his having to make any claim in that behalf: It is further provided that (a) an assessment is set aside or cancelled and an order of fresh assessment is directed to be made, the refund, if any, shall become due only on the making of such fresh assessment; (b) the assessment is annulled, the refund shall become due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee.] Interest On Delayed Refunds [ Sec. 243 ] Central Government shall pay the assessee simple interest at 15% p.a. [fifteen per cent per annum ] on the amount directed to be refunded from the date immediately following the expiry of the period of 3 months aforesaid to the date of the order granting the refund. (2) Where any question arises as to the period to be excluded for the purposes of calculation of interest under the provisions of this section, such question shall be determined by the Chief Commissioner or Commissioner whose decision shall be final. [(3) The provisions of this section shall not apply in respect of any assessment for the assessment year commencing on the 1st day of April, 1989 or any subsequent assessment years. Interest On Refund Where No Claim Is Needed [ Sec. 244 ]
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT Where a refund is due to the assessee in pursuance of an order and the Assessing Officer does not grant the refund within a period of 3 month [three months] from the end of the month in which such order is passed, the Central Government shall pay to the assessee simple interest at 15% p.a. [fifteen per cent per annum ] on the amount of refund due from the date immediately following the expiry of the period of 3 months [three] months aforesaid to the date on which the refund is granted. Interest on refunds [ Sec. 244A ] Where refund of any amount becomes due to the assessee, he shall be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely : (a) where the refund is out of any tax paid or collected at source or paid by way of advance tax or treated as paid, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of 1 % [onehalf per cent] for every month or part of a month comprised in the period from the 1st day of April of the assessment year to the date on which the refund is granted: Provided that no interest shall be payable if the amount of refund is less than 10% [ten per cent] of the tax on regular assessment; (b) in any other case, such interest shall be calculated at the rate of 1% [onehalf per cent] for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted. Introduction- (TDS) The Tax on Total Income is collected in three ways--Deduction of Tax at Source (TDS) Advance Tax ; and Tax on assessment through demand notice i.e. Direct Payment of Tax.
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT 3.1. INTRODUCTION - DEDUCTION OF TAX AT SOURCE(TDS) When a person responsible for paying any income deducts Income Tax on income at the time of payment of income, it is called Deduction of Tax at source-TDS. TDS is a scheme of collecting tax in the year in which the income has been earned by the assessee. Under the scheme , the person, who is making the payments under the specified sources, is required to deduct tax at source at the prescribed rate. The person who deducts tax is known as tax deducter or a payer of income. if is the duty of the tax deducter to deposit the TDS into the Govt. treasury within the specified time along with a statement, in the prescribed form. if the Tax Deducter does not deduct tax at source or deducted but does not deposited with the Govt. treasury he is treated as assessee in default and is liable for payment of interest. Penalty proceedings may also be initiated. The Tad Deducted at Source is regarded as the income of the assessee and it is included in his gross total income The Tax deducted at source is adjusted against the final payment of tax if proof of TDS certificate is furnished along with the return of income. The specified cases where tax is deducted at source are : Salaries, Interest on Securities, Interest other than interest on securities, dividends, winning from lotteries and crossword puzzles, payment to contractor, insurance commission, winning from horse races and also on other sums chargeable under the Act, which are paid to non-resident. Deduction of Tax from the Salary [ Sec-192] 3.2. DEDUCTION OF TAX FROM THE SALARY [ SECTION-192] The summarized provisions of Sec. 192 are given below : Who is the taxpayer Who is the recipient Payment covered At what time tax has to be deducted at source Maximum amount which can be paid without Tax Deduction Employer Employee Taxable salary of the employee At the time of payment The amount of exemption limit ( i.e. Rs.1,80,000 / Rs.2,25,000/Rs.1,50,000 for the assessment year 2009-10.)
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT Rate of tax deducted at source Normal Rates applicable to an individual The employee can make an application in Form Is it possible to get the payment without tax deduction or with lower tax deduction No.-13 to the Assessing Officer to get a certificate of lower tax deduction or no tax
deduction. Note: - Rs. 1,80,000 is for Resident Women below 65 years - Rs. 2,25,000 is for Senior Citizen 65 years or more. How to deduct Tax When a Person is employed by more than one Employer : Where, during the financial year, an assessee is employed simultaneously under more than one employer, In such case, Tax will be deducted on the aggregate Salary by one of the employers ( being the employer as the employee may choose, having regard to the circumstances of his case, by submitting the information in Form No.12B. Relief U/s 89 : If the employee furnishes information in Form No- 10E to the employer, relief under section 89 should be given to the concerned employee while deducting Tax at Source u/s 192. However, this facility is available only if the employer is Government or Public Sector undertaking or company , co-operative society, local authority, University, Institutions or association or Body. Can the Employer Deduct Tax in Respect of Other Incomes of Employee : The Provisions are given below :The employer may or may not declare his other incomes to the employer. If the employee wants to declare his othe incomes to the employer, then such information should be given on a plain paper to the employer. The employee may declare details of his other incomes ( including loss under the head Income from House Property but not any other loss ) and tax deducted thereon by others. If such information is not submitted by the employee to the employer, then employer cannot take into consideration other incomes of the employee. Deduction Of Tax From Interest On Securities [ Section-193]
3.3 DEDUCTION OF TAX FROM INTEREST ON SECURITES [ SECTION-193] The Provisions of section 193 are given below--Who is the taxpayer Who is the recipient Payment covered At what time tax has to be deducted at source Payer of Interest on Securities A resident person holding securities Interest on Securities At the time of payment or at the time of credit, whichever is
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earlier. Maximum amount which can be paid without Tax Deduction - 10% in the case of listed debentures and - - 20% in he case of non-listed debentures, if the recipient is resident noncorporate assessee. - 20% if the recipient is a domestic company ( these rates are subject to surcharge, education cess and secondary and higher education cess) Interest on Central / State Government Securities and few more are there
Rate of tax deducted at source
When the provisions are not applicable
Note : Rate of Tax includes .. Tax plus surcharges, education cess and secondary higher education cess. Securities Interest which is not subject to Tax Deduction : No Tax is deductible at source from the amount of interest payable to the following :
FY-2008-2009 if the recipient is an Individual/ HUF/AOP/BOI and payment or credit subject to tax deduction 1. does not exceed Rs.10 lakh. 2. if the recipient is an Individual/ HUF/AOP/BOI and payment or credit subject to tax deduction exceed Rs.10 lakh. if the recipient is Firm or a Domestic Company and payment or credit subject to tax deduction does not exceed Rs.1 Crore. if the recipient is Firm or a Domestic Company and payment or credit subject to tax deduction exceed Rs.1 Crore. if the recipient is a Non-Domestic Company and payment or credit subject to tax deduction does not exceed Rs.1 Crore. if the recipient is a Non-Domestic Company and payment or credit subject to tax deduction exceed Rs.1 Crore. NIL 10% 10% NIL 10% NIL 2.5 % NIL 2% 1%
3. if the recipient is an Artifitial Judicial Person 4. 5. 6. 7.
8. if the recipient is a Co-operative Soceity or Local Authority. Education Cess ( as percentage of Income Tax and surcharge) Secondary and Higher Education Cess (as a percentage of income tax and surcharge)
Note : Rate of Tax includes .. Tax plus surcharges, education cess and secondary higher education cess. Deduction Of Tax From Deemed Dividend [ Section-194] 3.4. DEDUCTION OF TAX FROM DEEMED DIVIDEND [ SECTION-194] The Provisions of section 194 are given below--Who is the taxpayer Who is the recipient Payment covered At what time tax has to be deducted at source Rate of tax deducted at source When the provisions are not applicable Domestic Company Resident Shareholders Deemed Dividend u/s 2(22)(e) At the time of payment 20% Dividend covered by Section 115-O
Maximum amount which can be paid without Tax Deduction -
Note : Rate of Tax includes .. Tax plus surcharges, education cess and secondary higher education cess. Deduction Of Tax From Interest Other Than Interest On Securities [ Section 194A]
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3.5. DEEUCTION OF TAX FROM INTEREST OTHER THAN INTEREST ON SECURITIES [ SECTION 194A] The Provisions of section 194A are given below--Any person paying interest other than interest on securities ( not being an individual or a Hindu Undivided Family whose books of accounts are not required to be audited u/s 44AB ) A Resident Person Interest other than interest on securities At the time of payment or at the time of credit, whichever is earlier. From June 1, 2007 tax is not deductible if payment / credit does not exceed the specified amount. 10% if the recipient is resident non-corporate assessee and 20% if the recipient is resident corporate assessee.
Who is the taxpayer Who is the recipient Payment covered At what time tax has to be deducted at source Maximum amount which can be paid without Tax Deduction Rate of tax deducted at source
When Taxis not required to be Deducted at Source : Following interest payments are not subjected to TDS.
o o o o o
When the aggregate of inters during the financial year is Rs.5,000 or less. Where interest is paid to any building company or co-operative society, LIC, UTI or any company or co-operative society carrying on the business of insurance or any financial corporation or nay institution as the Central Government may notify in the official gazette. Any scheme maintained at the post office. Interest paid by a firm to its partner. Where a declaration in Form 15G is furnished by the assessee.
Winning From Lottery Or Crossword Puzzle Or Card game And Game Of Any Sort [Section 194B]
3.6. WINNING FROM LOTTERY OR CROSSWORD PUZZLE OR CARD GAME AND GAME OF ANY SORT [ SECTION 194B] The Provisions of section 194 B are given below--Any person paying winning from lotteries / cross-word puzzles / card games / other games. Any person Winning from lotteries / cross-word puzzles / card games / other games. At the time of payment If the amount of payment is Rs.5,000 or less than Rs.5,000 30% plus surcharges, education cess and secondary higher education cess
Winning From Horse Race [ Section 194BB]

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3.7. WINNING FROM HORSE RACE [ SECTION 194BB] The Provisions of section 194 B are given below--Who is the taxpayer Who is the recipient Payment covered At what time tax has to be deducted at source Maximum amount which can be paid without Tax Deduction Rate of tax deducted at source Any person paying winning from Horse Races Any person Winning from Horse Races At the time of payment If the amount of payment is Rs.2,500 or less than Rs.2,500 30% plus surcharges, education cess and secondary higher education cess
Payment To Contractor And Sub-Contractor [ Section 194C]

3.8. PAYMENT TO CONTRACTOR AND SUBCONTRACTOR [ SECTION 194C] Payment to Contractor 1. Who is require deduct Tax at source ( Tax Deducter) : Any person responsible for paying any sum to any resident contractor for carrying out any work (including supply of labor for carrying out any work) in pursuance of a contract between the contractor and following specified person. Meaning of Specified Person 1. 2. 3. The Central Government or any State Government or any local authority ; or Any PSU or any company or any co-operative society or any society and any trust ; or Any authority, constituted in India by or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning ,development or improvement of cities, towns and villages, or for both ; or Any University including a deemed university. Any Firm
4. 5.
Meaning of Work : The work shall also include --1. 2. 3. Advertising ; Broadcasting and telecasting including production of programmes for such broadcasting or telecasting ; Carriage of goods and passengers by any mode of transport other than by railways ;
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4. Catering. 2. When to deduct tax at source : At the time of payment or at the time of credit, whichever is earlier. 3. What is the Rate of TDS : Where a sum is payable to a resident contractor for 1. 2. Advertising contract @1% + surcharges & Education Cess as applicable Any other contract @2% + surcharges & Education Cess as applicable
4. When Tax is not required to be deducted at source : Where payment of such income is Rs. 20,000 or less in the previous year. Payment to Sub-Contractor 1. Who is require deduct Tax at source ( Tax Deducter) : Any person responsible for paying any sum to any resident contractor for carrying out any work (including supply of labor for carrying out any work) in pursuance of a contract between the contractor and following specified person. However individual and HUF who are covered u/s 44AB (where tax audit is compulsorily) are also required to deduct tax at source. 2. When to deduct tax at source : At the time of payment or at the time of credit, whichever is earlier. 3. What is the Rate of TDS : Where a sum is payable to a resident Sub-Contractor, the Contractor shall deduct an amount equal to 1% of sum payable + surcharges and education cess as applicable. 4. When Tax is not required to be deducted at source : a. Where payment of such income is Rs. 20,000 or less in the previous year b. Where an individual is a sub-contractor who is in the business of playing, hiring or leasing goods carriages and who has not owned more than two goods carriages at any time during the previous year.
Tax Deducted At Source From Insurance Commission [ Section 194D]
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3.9. TAX DEDUCTED AT SOURCE FROM INSURANCE COMMISSION [SECTION 194D] The Provisions of section 194 D are given below--Any person paying Insurance Commission A resident person Insurance Commission At the time of payment or at the time of credit, whichever is earlier.
Who is the taxpayer Who is the recipient Payment covered At what time tax has to be deducted at source
Maximum amount which can If the amount of payment is Rs.5,000 or be paid without Tax Deduction less than Rs.5,000 10% + surcharges + education cess & higher secondary education cess, if the recipient is resident non-corporate Rate of tax deducted at source assessee 20% + surcharges + education cess & higher secondary education cess, if the recipient is resident corporate assessee The recipient can make an application Is it possible to get the in Form No.13 to the Assessing Officer payment without tax deduction to get a certificate of lower tax or with lower tax deduction deduction or no tax deduction.
Payments To Non-Resident Sportsmen Or Sports Associations [ Section 194E]

3.10 PAYMENTS TO NON-RESIDENT SPORTSMEN OR SPORTS ASSOCIATIONS [ SECTION 194E] Where any income referred to in section 115BBA is payable to a non-resident sportsman (including an athlete) who is not a citizen of India or a non-resident sports association or institution, the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent.]
Commission, Etc., On The Sale Of Lottery Tickets [Section 194G]

3.11 COMMISSION, ETC., ON THE SALE OF LOTTERY TICKETS [SECTION 194G] Any person who is responsible for paying, on or after the 1st day of October, 1991 to any person, who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize on such tickets in an amount exceeding Rs. 1000 shall deduct income-tax thereon at the rate of 10% + surcharges + Education Cess & Higher Secondary Education cess.
Payments To Non-Resident
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Sportsmen Or Sports Associations [ Section 194E]

3.10 PAYMENTS TO NON-RESIDENT SPORTSMEN OR SPORTS ASSOCIATIONS [ SECTION 194E] Where any income referred to in section 115BBA is payable to a non-resident sportsman (including an athlete) who is not a citizen of India or a non-resident sports association or institution, the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent.]
Commission, Etc., On The Sale Of Lottery Tickets [Section 194G]

3.11 COMMISSION, ETC., ON THE SALE OF LOTTERY TICKETS [SECTION 194G] Any person who is responsible for paying, on or after the 1st day of October, 1991 to any person, who is or has been stocking, distributing, purchasing or selling lottery tickets, any income by way of commission, remuneration or prize on such tickets in an amount exceeding Rs. 1000 shall deduct income-tax thereon at the rate of 10% + surcharges + Education Cess & Higher Secondary Education cess.
Commission Or Brokerage [ Section 194H]

3.12. COMMISSION OR BROKERAGE [ SECTION 194H] The Provisions of section 194 H are given below--Any person paying Commission or Brokerage ( not being an individual or a Hindu Undivided Family whose books of accounts are not required to be audited u/s 44AB ) A resident person Commission or Brakeage ( not being Insurance Commission )
Who is the taxpayer Who is the recipient Payment covered
At what time tax has to be deducted at At the time of payment or at the time of credit, source whichever is earlier. Maximum amount which can be paid without Tax Deduction Rate of tax deducted at source If the amount of payment is Rs.1,000 or less than Rs.1,000 10% + surcharges + education cess & higher secondary education cess.
Is it possible to get the payment without The recipient can make an application in Form No.13 tax deduction or with lower tax to the Assessing Officer to get a certificate of lower deduction tax deduction or no tax deduction.
Payment Of Rent [ Section 194 I ]

3.13. PAYMENT OF RENT [ SECTION 194 I ]
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The Provisions of section 194 I are given below--Any person paying Rent ( not being an individual or a Hindu Undivided Family whose books of accounts are not required to be audited u/s 44AB ) A resident person Rent At the time of payment or at the time of credit, whichever is earlier. If the amount of payment is Rs.1,20,000 or less than Rs.1,20,000 10% - for Rent of Machinery or Plant or Equipment for Rent of any Land or Building or Fittings 15% for Individual or HUF & 20% for any other person.
The recipient can make an application in Form No.13 to Is it possible to get the payment without the Assessing Officer to get a certificate of lower tax tax deduction or with lower tax deduction deduction or no tax deduction. Note : Rate of Tax includes .. Tax plus surcharges, education cess and secondary higher education cess.
Fees For Professional Or Technical Services [ Section 194J]

3.14. FEES FOR PROFESSIONAL OR TECHNICAL SERVICES [ SECTION 194J] The Provisions of section 194 J are given below--Any person paying Fees for Professional /Technical Service / Royalty ( not being an individual or a Hindu Undivided Family whose books of accounts are not required to be audited u/s 44AB ) A resident person Fees for Professional /Technical Service / Royalty At the time of payment or at the time of credit, whichever is earlier. If the amount of payment is Rs.20,000 or less than Rs.20,000 10% + surcharges, education cess and secondary higher education cess. The recipient can make an application in Form No.13 to the Assessing Officer to get a certificate of lower tax deduction or no tax deduction.
Who is the taxpayer Who is the recipient Payment covered At what time tax has to be deducted at source Maximum amount which can be paid without Tax Deduction Rate of tax deducted at source Is it possible to get the payment without tax deduction or with lower tax deduction
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Introduction-Filing of Return
4.1. INTRODUCTION Return of Income is a statement of total income and tax liability filled in the prescribed from duly signed and filed with the Income Tax Authority on or before the due date of furnishing of Return. The Act stipulates an obligation on the assessee that he files Return regularly in every assessment year to the department disclosing the income earned by him. When Return is to be filed as Statutory Obligation [ Sec. 139(1), (4A), (4B), (4C) ] Minimum income to attract the provision of filling Return of Income Any Income or Loss Compulsory Return if taxable income ( plus deductions u/s 10A, 10B, 10BA and Sec. 80C to 80U ) exceeds the exemption limit. IF the income ( without giving exemption u/s 11 to 12) exceeds the amount not chargeable to tax.
Taxpayer Company or Firm [ Sec. 139(1) ]
A person other than a company or firm
A person in respect of income derived from property held under a Trust for Charitable or Religious purposes [ Sec. 139 (4A)]
If the income ( without Chief Executive Officer of giving exemption u/s 13A) every political party [Sec. exceeds the maximum 139(4B)] amount not chargeable to tax. Scientific Research Association, News Agency, Association / Institute for control or supervision of a If the income ( without profession, institution for giving exemption u/s 10) development of Khadi and exceeds the amount not Village Industries, chargeable to tax. Fund/Institution refereed to , Educational / Medical Institution, Trade Union etc. University / Educational Institution existing solely If the income ( without for educational purpose giving exemption u/s 10) and not for the purpose of exceeds the exemption Profit if the aggregate limit. annual receipt does not exceed Rs. 1 crore
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Hospital / other institution existing solely for Medical Purpose and not for the purpose of Profit if the aggregate annual receipt does not exceed Rs. 1 crore. If the income ( without giving exemption u/s 10) exceeds the exemption limit.
Any Income or Loss ( return has to be submitted whether there Any University / College / is income or loss. Such Other Institution Return has to be submitted even if it is not required by any other provision) This provision applies to all persons whether they are Resident or Non-Resident. Time Limit For Filling Return Of Income [Section 139(1)] 4.2. TIME LIMIT FOR FILLING RETURN OF INCOME [ SECTION 139(1)]
Description 1. Salaried Employees 2. Business Class - Noncompany Assessee a)Whose accounts need NOT be compulsorily audited b)Whose accounts required to be compulsorily audited 3. Co-operative Societies 4. Trust/Charitable Institutions claiming exemption u/s11 5. Companies Due Date July,31 July,31 September, 30
Note : Failure to file Returns within the due date attracts interest @ 1% p.m. on the balance tax payable from the due date to the actual date of filling. If a person required to file Return u/s 139(1) fails to file Return before the end of the relevant Assessment Year a penalty of Rs. 5,000 shall be levied. When Return Of Loss Should Be Filed [Section 139(3)] 4.3. WHEN RETURN OF LOSS SHOULD BE FILED [ SECTION 139(3)] If any person who has sustained a loss in any previous year under the head 1. "Profits and gains of business or profession" or
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2. under the head "Capital gains" and claims that the loss or any part thereof should be carried forward , he may furnish, within the time allowed , a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under subsection (1). Can Return Be Filied Beyond Time [Section 139(4)] 4.4. CAN RETURN BE FILIED BEYOND TIME [ SECTION 139(4)] Any person who has not furnished a return within the time allowed to him, or within the time allowed under a notice issued , may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier: Can Revised Return Be Filed [ Section 139(5)] 4.5. CAN REVISED RETURN BE FILED [ SECTION 139(5)] If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier: What Is A Defective Or Incomplete Return [Section 139(9)] 4.6. WHAT IS A DEFECTIVE OR INCOMPLETE RETURN [ SECTION 139(9)] Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of 15 days from the date of such intimation or within such further period which, on an application made in this behalf, the Assessing Officer may allow; and if the defect is not rectified within the said period of 15 days, the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return: Provided that where the assessee rectifies the
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defect after the expiry of the said period of 15 days or the further period allowed, but before the assessment is made, the Assessing Officer may condone the delay and treat the return as a valid return. When Return Of Loss Should Be Filed [Section 139(3)] 4.3. WHEN RETURN OF LOSS SHOULD BE FILED [ SECTION 139(3)] If any person who has sustained a loss in any previous year under the head 1. "Profits and gains of business or profession" or under the head "Capital gains" and
2.
claims that the loss or any part thereof should be carried forward , he may furnish, within the time allowed , a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under subsection (1). Can Return Be Filied Beyond Time [Section 139(4)] 4.4. CAN RETURN BE FILIED BEYOND TIME [ SECTION 139(4)] Any person who has not furnished a return within the time allowed to him, or within the time allowed under a notice issued , may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier: Can Revised Return Be Filed [ Section 139(5)] 4.5. CAN REVISED RETURN BE FILED [ SECTION 139(5)] If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier: What Is A Defective Or Incomplete Return [Section 139(9)]
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4.6. WHAT IS A DEFECTIVE OR INCOMPLETE RETURN [ SECTION 139(9)] Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of 15 days from the date of such intimation or within such further period which, on an application made in this behalf, the Assessing Officer may allow; and if the defect is not rectified within the said period of 15 days, the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return: Provided that where the assessee rectifies the defect after the expiry of the said period of 15 days or the further period allowed, but before the assessment is made, the Assessing Officer may condone the delay and treat the return as a valid return. When Return Of Loss Should Be Filed [Section 139(3)] 4.3. WHEN RETURN OF LOSS SHOULD BE FILED [ SECTION 139(3)] If any person who has sustained a loss in any previous year under the head 1. "Profits and gains of business or profession" or under the head "Capital gains" and
2.
claims that the loss or any part thereof should be carried forward , he may furnish, within the time allowed , a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under subsection (1). Can Return Be Filied Beyond Time [Section 139(4)] 4.4. CAN RETURN BE FILIED BEYOND TIME [ SECTION 139(4)] Any person who has not furnished a return within the time allowed to him, or within the time allowed under a notice issued , may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier:
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Can Revised Return Be Filed [ Section 139(5)] 4.5. CAN REVISED RETURN BE FILED [ SECTION 139(5)] If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier: What Is A Defective Or Incomplete Return [Section 139(9)] 4.6. WHAT IS A DEFECTIVE OR INCOMPLETE RETURN [ SECTION 139(9)] Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of 15 days from the date of such intimation or within such further period which, on an application made in this behalf, the Assessing Officer may allow; and if the defect is not rectified within the said period of 15 days, the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return: Provided that where the assessee rectifies the defect after the expiry of the said period of 15 days or the further period allowed, but before the assessment is made, the Assessing Officer may condone the delay and treat the return as a valid return. Who Should Sign The Return Of Income [Section 140] 4.7. WHO SHOULD SIGN THE RETURN OF INCOME [ SECTION 140] The return shall be signed and verified1. in the case of an individual,(i) by the individual himself; (ii) where he is absent from India, by the individual himself or by some person duly authorised by him in this behalf; (iii) where he is mentally incapacitated from attending to his affairs, by his guardian or any other person competent to act on his behalf; and
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(iv) where, for any other reason, it is not possible for the individual to sign the return, by any person duly authorised by him in this behalf: 2. in the case of a Hindu undivided family, (i) by the karta, and, where the karta is absent from India or is mentally incapacitated from attending to his affairs, by any other adult member of such family; 3. in the case of a company, (i) by the managing director thereof, or where for any unavoidable reason such managing director is not able to sign and verify the return, or where there is no managing director, by any director thereof: Provided: that where the company is not resident in India, the return may be signed and verified by a person who holds a valid power of attorney from such company to do so, which shall be attached to the return: a. where the company is being wound up, whether under the orders of a court or otherwise, or where any person has been appointed as the receiver of any assets of the company, the return shall signed and verified by the liequidator. b. where the management of the company has been taken over by the Central Government or any State Government under any law, the return of the company shall be signed and verified by the principal officer thereof; 4. in the case of a firm, (i) by the managing partner thereof, or where for any unavoidable reason such managing partner is not able to sign and verify the return, or where there is no managing partner as such, by any partner thereof, not being a minor; 5. in the case of a local authority, (i) by the principal officer thereof; 6. in the case of a political party, (i) by the chief executive officer of such party (whether such chief executive officer is known as secretary or by any other designation);] 7. in the case of any other association, (i) by any member of the association or the principal officer thereof; and
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8. in the case of any other person, (i) by that person or by some person competent to act on his behalf. Permanent Account Number (PAN) 4.8. PERMANENT ACCOUNT NUMBER (PAN) PAN is a 10 digit code allotted to each essessee by I.T. Dept. Following Assessee should own or obtain PAN : 1. Every person whose total Income exceeds the Taxable Limit. 2. Every Business or Profession whose total Sales, Turnover, or Gross receipts exceed Rs. 5 Lakhs. 3. Every person shall quote his PAN or GIR in all documents pertaining to : a) Who Sales / Purchases any immovable property worth Rs.5 Lakhs or more. b) Who Sells or Purchases Motor Vehicle or Vehicle which require registration. c) Who opens a Time Deposit Account with Banks / Post Offices exceeding Rs. 50,000 d) Who deposits amount exceeding Rs.50,000 in Post Office Savings Bank. e) Who Sales or Purchases Securities exceeding Rs. 1 Lakh. f) Who opens a Bank Account * . g) Who makes payment to Hotels & Restaurants against bills exceeding Rs.25,000 at a time. h) Who wants to purchase DD/Pay Order/ Bankers Cheque by payment of cash aggregate Rs. 50,000 or more during any one day from a Bank. i) Payment in cash exceeding Rs.25,000 in connection with Foreign Travel. j) Payment of an amount of Rs.50,000 or more to buy Mutual Fund, Shares, Debentures or Bonds. * Those not having PAN/GIR No. can submit a simple declaration in Form No. 60/61. Any person who has not been allotted PAN/GIR No. and who makes payment in cash otherwise than by way of A/c payee Cheque or Draft or issued by any Bank in respect of any of the above listed transaction, should file a simple
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declaration in Form No. 60 giving the particulars of the transaction.
Meaning of Tax Planning

INTRODUCTION The avid goal of every taxpayer is to minimize his Tax Liability. To achieve this objective taxpayer may resort to following Three Methods :
o o o
Tax Planning Tax Avoidance Tax Evasion
It is well said that Taxpayer is not expected to arrange his affairs in a such manner to pay maximum tax . So, the assessee shall arrange the affairs in a manner to reduce tax. But the question what method he opts for ? Tax Planning, Tax Avoidance, Tax Evasion ! Let us see its meaning and their difference.
5.1. MEANINNG OF TAX PLANNING

Tax Planning involves planning in order to avail all exemptions, deductions and rebates provided in Act. The Income Tax law itself provides for various methods for Tax Planning, Generally it is provided under exemptions u/s 10, deductions u/s 80C to 80U and rebates and reliefs. Some of the provisions are enumerated below :
Investment in securities provided u/s 10(15) . Interest on such securities is fully exempt from tax. Exemptions u/s 10A, 10B, and 10BA Residential Status of the person Choice of accounting system Choice of organization.
For availing benefits, one should resort to bonafide means by complying with the provisions of law in letter and in spirit. Where a person buys a machinery instead of hiring it, he is availing the benefit of depreciation. If is his exclusive right either to buy or lease it . In the same manner to choice the form of organization, capital structure, buy or make products are the assesses exclusive right. One may look for various tax incentives in the above said transactions provided in this Act, for reduction of tax liability. All this transaction involves tax planning.
5.1.1. Why Every Person Needs Tax Planning ?

Tax Planning is resorted to maximize the cash inflow and minimize the cash outflow. Since Tax is kind of cast, the reduction of cost shall increase the profitability. Every prudence person, to maximize the Return, shall increase the profits by resorting to a tool known as a Tax Planning.
5.1.2. How is Tool of Tax Planning Exercised ?
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Tax Planning should be done by keeping in mine following factors :
The Planning should be done before the accrual of income. Any planning done after the accrual income is known as Application of Income an it may lead to a conclusion of that there is a fraud. Tax Planning should be resorted at the source of income. The Choice of an organization, i.e. Taxable Entity. Business may be done through a Proprietorship concern or Firm or through a Company. The choice of location of business , undertaking, or division also play a very important role. Residential Status of a person. Therefore, a person should arranged his stay in India such a way that he is treated as NR in India. Choice to Buy or Lease the Assets. Where the assets are bought, depreciation is allowed and when asset is leased, lease rental is allowed as deduction. Capital Structure decision also plays a major role. Mixture of debt and equity fund should be balanced, to maximize the return on capital and minimize the tax liability. Interest on debt is allowed as deduction whereas dividend on equity fund is not allowed as deduction
5.1.3. Methods Of Tax Planning

Various methods of Tax Planning may be classified as follows : 1. Short Term Tax Planning : Short range Tax Planning means the planning thought of and executed at the end of the income year to reduce taxable income in a legal way. Example : Suppose , at the end of the income year, an assessee finds his taxes have been too high in comparison with last year and he intends to reduce it. Now, he may do that, to a great extent by making proper arrangements to get the maximum tax rebate u/s 88. Such plan does not involve any long term commitment, yet it results in substantial savings in tax. 2. Long Term Tax Planning : Long range tax planning means a plan chaled out at the beginning or the income year to be followed around the year. This type of planning does not help immediately as in the case of short range planning but is likely to help in the long run ; e.g. If an assessee transferred shares held by him to his minor son or spouse, though the income from such transferred shares will be clubbed with his income u/s 64, yet is the income is invested by the son or spouse, then the income from such investment will be treaded as income of the son or spouse. Moreover, if the company issue any bonus shards for the shares transferred , that will also be treated as income in the hands of the son or spouse. 3. Permissive Tax Planning : Permissive Tax Planning means making plans which are permissible under different provisions of the law, such as planning of earning income covered by Sec.10, specially by Sec. 10(1) , Planning of taking advantage of different incentives and deductions, planning for availing different tax concessions etc. 4. Purposive Tax Planning : It means making plans with specific purpose to ensure the availability of maximum benefits to the assessee through correct selection of investment, making suitable programme for replacement of assets, varying the residential status and diversifying business activities and income etc.
Tax Avoidance 5.2. TAX AVOIDANCE It is an act of dodging tax without breaking the Law. It means when a taxpayer arranges his financial activities in such a manner that although it is within the four corner of tax law but takes advantages of loopholes which exists in the Tax Law for reduction of tax a liability. In other words though he has complied the letter of law but not the sprit behind the law. Following transactions are held as Tax Avoidance which are : 1. Where tax law is complied with by using colorable devices which means that use o dubious method or a method which is unfair for reduction of tax liability. 2. Where the fact of the case is presented in a false manner.
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3. 4. Where the sprit behind the law is avoided. There is a malafide intention.
It means that method adopted for reducing tax liability should be within the framework of law. If it is not within the framework of law, it amounts to tax avoidance and not Tax planning. Tax Avoidance 5.3. TAX EVASION Any illegal method which leads to reduction of tax liability is known as Tax Evasion. The Tax Evasion is resorted to by applying following dishonest means : 1. Concealing the Income 2. Claiming excessive expenditure 3. Falsification of accounts. 4. Willful violence of Rules E.g. Claiming depreciation where no asset exist in the Business or claiming depreciation on the assets which is used for residential purposes. It Is basically a fraudulent method of reduction in tax liability. The Difference Between Tax Planning And Tax Management 5.4. THE DIFFERENCE BETWEEN TAX PLANNING AND TAX MANAGEMENT .
Tax Planning
Tax Management
(i) The Objective of Tax Planning is to minimize The objective of Tax Management is to comply with the the tax liability provisions of Income Tax Law and its allied rules. (ii) Tax Planning also includes Tax Management Tax Management deals with filing of Return in time, getting the accounts audited, deducting tax at source etc. Tax Management relates to Past ,. Present, Future. Past Assessment Proceedings, Appeals, Revisions etc. Present Filing of Return, payment of advance tax etc. Future To take corrective action Tax Management helps in avoiding payment of interest, penalty, prosecution etc. Tax Management is essential for every assessee.
(iii) Tax Planning relates to future. (iv) Tax Planning helps in minimizing Tax Liability in Short-Term and in Long Term. (v) Tax Planning is optional.
The Difference Between Tax Avoidance And Tax Evasion' 5.5. THE DIFFERENCE BETWEEN TAX AVOIDACNE AND TAX EVASION
TAX AVOIDANCE
TAX EVASION
(i) Where the payment of tax is avoided though by complying with the provisions of law but Where the payment of tax is avoided through illegal means defeating the intension of the law is known as taxor fraud is termed as tax evasion. Avoidance. (ii) Tax Avoidance is undertaken by taking advantage of loop holes in law Tax evasion is undertaken by employing unfair means
(iii) Tax Avoidance is done through not malafied Tax Evasion is an unlawful way of paying tax and defaulter intention but complying the provision of law. may punished. (iv) Tax Avoidance looks like a tax planning and Tax evasion is blatant fraud and is done after the tax is done before the tax liability arises. liability has arisen.
Procedure for imposing Penalty [ Sec. 274]

INTRODUCTION Income is Income and that has to taxed. But what about penalty ? Is it always livable for not complying with law or any other matter connected with law ?
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The purpose behind levying penalty is to compel the taxpayer to adhere to the law and also make the taxpayer to comply with statutory obligations imposed by the law. It is deterrent against recurrence of default on the part of the assessee. It also helps in stopping the practices which the Legislature considers to be against the public interest. 6.1. PROCEDURE FOR IMPOSING PENALTY [ SECTION 274] (1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard. (2) No order imposing a penalty under this Chapter shall be made(a) by the Income-tax Officer, where the penalty exceeds Rs. 10,000. (b) by the Assistant Commissioner, where the penalty exceeds Rs. 20,000, except with the prior approval of the Deputy Commissioner. (3) An income-tax authority on making an order under this Chapter imposing a penalty, unless he is himself the Assessing Officer, shall forthwith send a copy of such order to the Assessing Officer. Various Types Of Penalties In The Event Of Default 6.2. VARIOUS TYPES OF PENALTIES IN THE EVENT OF DEFAULT The Income Tax Act, 1961 prescribes various types of penalties in the event of defaults under the Act. These are : 1. For failure to pay tax [ Sec. 221(1)]: When an assessee is in default in making a payment of tax, he shall be liable to pay penalty as the Assessing Officer may direct, and in the case of a continuing default, such further amount as the Assessing Officer may direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears. 2. Penalty For Concealment Of Income [ Secntion 271(1)(B) Or (C) ] (A) PENALTY IS LEVIED IN FORLLOWING SITUATIONS 1. Where the income has been concealed. Concealed income is that income which has not been shown in the return of income. During the course of assessment assessee discovers concealed income. It can be calculated as Concealed In come = Assessed Income Income shown in the return of income Inaccurate pariculars of the income has been furnished . it is the duty of taxpayer not only to furnish the return of income but also to furnish the correct return. He is committing an offence for furnishing an inaccurate particulars. It is held by Courts that the person may have disclosed his correct income ( i.e not concealed any income) but he may still be liable if inaccurate particulars of income is furnished. Fails to furnish his return of Income
1.
1.
(B) AMOUNT OF PENALTY LEVIED Minimum Penalty = 100% of the amount of tax sought to be evaded. Maximum Penalty = 300% of the amount of tax sought to be evaded.
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Penalty is in addition to any tax payable by him. 3. Registered Firm [ Sec 271(2)] When the person liable to penalty is a registered firm or an unregistered firm which has been assessed u/s 183(b) , then the penalty imposable u/s 271(1) shall be the same amount as would be imposable on that firm if that firm were an unregistered firm. 4. For Wrong Distribution Of Profit By Registered Firm [ Sec. 271(4)] IF the profits of the registered firm are distributed in such a way that the share of partner is shown below the real amount and if such a partner returns his income below the real amount, he shall in addition to tax, if any payable by him, be liable to pay a penalty of 150% of the difference between tax on partners income assessed and tax on income as returned. In such a case no refund or other adjustment shall be claimable by any other partner by reason of such direction. 5. Penalty for failure to comply with the provisions of section 133B [ Sec. 272AA] If a person fails to comply with the provisions of section 133B regarding entry of Income Tax Authorities in any building etc. The penalty for non compliance may extend to Rs.1000. Such Penalty can be levied only after the person has been given an opportunity of being hear. 6. Penalty for failure to comply with the provisions of section 139A. [ Sec. 272B] (1) If a person fails to comply with the provisions of section 139A, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of Rs.10,000. (2) In case assessee quotes a false or incorrect permanent account number on nay document an which he knows that it is false or incorrect, the Assessing Officer may direct him to pay a penalty of Rs.10,000 . Such Penalty can be levied only after the person has been given an opportunity of being hear. 7. Penalty for failure to comply with the provisions of section 206 CA i.e. Tax Collection Account Number [ Sec. 272 BBB] If a person fails to comply with the provisions of section 206CA i.e. to collect Tax Collection Account Number, he shall, on an order passed by the Assessing Officer, pay, by way of penalty, a sum of Rs.10,00. Such Penalty can be levied only after the person has been given an opportunity of being hear. Prosecutions 6.3. PROSECUTIONS There are some lapses on the part of the assessee which are punishable hrough the courts. Whenever, Income Tax department feels that a particular person has committed a particular offence, a wrongful act or he is guilty of a crime, the department will initiate the proceedings before a Magistrate. Punishment given by the department can be both in the shape of Monetary nature or/and of imprisonments. But for that, the Income Tax Authority have to launch the proceedings in a court of law. The following are cases where the person commits offence under the Act, making the guilty persons liable to be punished by the court. 1. For removing any Assets, Books of Account, Documents etc. found during search in contravention of order served U/s 132(3) [ Sec. 275A] Whoever contravenes any order referred to in Sec. 132(3), shall be punishable with rigorous
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imprisonment which may extend to two years and shall also be liable to fine. 2. Removal, concealment, transfer or delivery of property to avoid tax recovery [ Sec. 276 ] When a person fraudulently removes, conceals, transfers or delivers to any person, any property or any interest therein with the objective of thwarting recovery of tax, he shall be liable to rigorous imprisonment upto 2 years and with fine. 3. Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B. [ Sec. 276B] If a person fails to pay to the credit of the Central Government, (a) the tax deducted at source by him as required by or under the provisions of Chapter XVII-B; or (b) the tax payable by him, as required by or under ( i) sub-section (2) of section 115-O; or (ii) the second proviso to section 194B, he shall be punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 7 years and with fine. 4. Failure to pay the tax collected at source. [ Sec. 276BB] If a person fails to pay to the credit of the Central Government, the tax collected by him as required under the provisions of section 206C, he shall be punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 7 years and with fine. 5. Willful attempt to evade tax, etc. [ Section 276 (C)(1)] If a person willfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under this Act, he shall be punishable, (i) in a case where the amount sought to be evaded exceeds Rs. 1,00,000, with rigorous imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine; (ii) in any other case, with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 3 years and with fine. 6. Failure to furnish returns of income [ Sec. 276CC] If a person willfully fails to furnish in due time the return of fringe benefits which he is required to furnish or the return of income which he is required to furnish, he shall be punishable, (i) in a case where the amount of tax exceeds Rs.1,00,000, with rigorous imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine; (ii) in any other case, with imprisonment for a term which shall not be less than 3 months but which may extend to 3 years and with fine: 7. Failure to produce accounts and documents. [ Sec. 276D] If a person willfully fails to produce on or before the date specified in any notice served on him such accounts and documents, he shall be punishable with rigorous imprisonment for a term which may extend to 1 year or with fine equal to a sum calculated at a rate which shall not be less than Rs,4 or more than Rs.10 every day during which the default continues, or with both. 8. Abetment of false return, etc. [ Sec. 278]
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If a person abets or induces in any manner another person to make and deliver an account or a statement or declaration relating to any income [or any fringe benefits] chargeable to tax which is false and which he either knows to be false or does not believe to be true or to commit an offence, he shall be punishable, (i) in a case where the amount of tax, penalty or interest which would have been evaded, exceeds Rs.1,00,000, with rigorous imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and with fine; (ii) in any other case, with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 3 years and with fine.] 9. Offences by companies. [ Sec. 278 B] Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: 10. Offences by Hindu undivided families. [ Sec. 278C] Where an offence under this Act has been committed by a Hindu undivided family, the karta thereof shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
Fringe Benefit Tax (FBT)

STRUCTURE
7.1. Introduction 7.2. Salient Features Of FBT 7.3. Important Points Relating To Fringe Benefit Tax 7.4. Characteristics Of FBT 7.5. Classification Of Employer For FBT 7.6. Classification Of Not Employer For FBT 7.7. Direct Fringe Benefit 7.8. Deemed Fringe Benefit 7.9. Payment Of FBT To The Government 7.10. Filing Of FBT Return
7.1. INTRODUCTION Fringe Benefit Tax was introduced as part of Finance Act, 2005 as an additional income-tax and came into force from April 1, 2005. The term Fringe Benefits means any consideration for employment provided by way of any privilege, service, facility or amenity provided by the employer to the employees. Fringe Benefit Tax is to be levied on the employer in respect of fringe benefits provided/deemed to be provided by the employer to his employees during any financial year commencing on or after 1.4.2005 Fringe Benefit Tax is payable at the rate of 30% of the value of fringe benefits computed in the manner prescribed under the Section 115WC.
7.2. SALIENT FEATURES OF FBT
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Some of the features of FBT are listed as follows:
Fringe Benefit Tax payable by an employer is in respect of perquisites or fringe benefits provided or deemed to have been provided by the employer to his employees in addition to the cash salary or wages paid during the year. Fringe Benefit Tax is levied in addition to the Income-Tax charged. Fringe Benefit Tax is payable at the specified rate on the value of fringe benefits provided to the employees. The value of fringe benefits is calculated in accordance with the provisions of Section 115WC of the Income-Tax Act, 1961. An employer has to pay Fringe Benefit Tax even if no Income-Tax is payable on the total income. Like any other direct tax, Fringe Benefit Tax is not an allowable expenditure for the purpose of computation of taxable income.
7.3. IMPORTANT POINTS RELATING TO FRINGE BENEFIT TAX Some of the important points to be observed in FBT:
Rate is calculated on Net Expenses. Expenses are not to be segregated between Paid to Employees and Paid to Outsiders. Depreciation is calculated on the basis of Income Tax. FBT is applicable on Service Tax paid on any of the expenditure chargeable to FBT. Payment of FBT in case employers have employees based both in and outside India. Medical reimbursement upto Rs. 15,000 per employee is charged to FBT. Applicability of FBT in case an employer is engaged in two or more business activities. Different rates of tax on the Fringe Benefits provided by different industries. FBT is not payable on Advance paid. Tax Rate is 30% + Surcharge @10% + Education Cess @ 2%. One Ledger may have expenditure relating to different groups under FBT.
7.4. CHARACTERISTICS OF FBT Some of the characteristics of FBT are:
It is a tax on expenditure, not income. It is a tax on employer, not employees. It is a surrogate tax on employers. It cannot be recovered from the employees. It is to tax benefits that are usually enjoyed collectively by the employees and cannot be attributed to individual employees. A combination of presumptive and non-presumptive approaches has been adopted.
7.5. CLASSIFICATION OF EMPLOYER FOR FBT Under FBT, an Employer is defined as any of the following:
Company Firm Association of Persons or a Body of Individuals (except Fund or Trust or institution eligible for exemption under section 10(23C) or registered under section 12AA) Local Authority Every Artificial judicial person, not falling within any of the above
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Note: Under FBT, they are considered as Employer even if the Taxable Income is NIL.
7.6. CLASSIFICATION OF NOT EMPLOYER FOR FBT The following are not included as Employer under FBT:
An Individual (i.e., Proprietorship concern) Hindu Undivided Family Association of Persons or a Body of Individuals exempt under section 10(23C) or registered under section 12AA Central Government State Government
7.7. DIRECT FRINGE BENEFIT Direct Fringe Benefit as classified under section 115(WB) (1) means:
Any privilege, service, facility or amenity, which is directly or indirectly provided by an employer to his employees (including former employee or employees). Any free or concessional tickets provided by the employer for private journeys to employees or their family members. Any contribution by the employer towards an approved superannuation fund for employees. Any reimbursement, which is directly or indirectly made by the employer to employees for any purpose.
7.8. DEEMED FRINGE BENEFIT The Fringe Benefits are deemed to have been provided if the employer incurs any expenditure or makes any payment in the course of business or profession. This includes any activity whether or not such activity is carried on with the object of deriving income, profits or gains. Any expenditure incurred or payment made for the following constitutes deemed fringe benefit.
Entertainment Hospitality Conference Sales promotion including publicity Employee welfare Conveyance, tours and travel Hotel, boarding, lodging Repair, running and maintenance of cars Repair, running and maintenance of aircraft Use of telephone Maintenance of any accommodation in the nature of guest house Festival celebrations Health Club Any other club Gifts Scholarship to employees children Consumption of fuel other than industrial fuel
7.9. PAYMENT OF FBT TO THE GOVERNMENT In accordance with the provisions, the FBT should be paid in advance during any financial year and the regular
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assessment of fringe benefits is to be made in a later assessment year.
Advance Fringe Benefit Tax

Every assessee who is liable to pay advance tax has to pay tax on the current fringe benefits calculated in the manner laid down. The amount of advance tax payable in the financial year is 30% of the value of the fringe benefits paid or payable in each quarter. This is payable on or before the 15th day of the month following each quarter except for the quarter ending 31st of March. For the quarter ending on the 31st of March of the financial year, the amount of advance tax (on an estimated value) is to be paid on or before the 15th of March for the financial year. If tax is not paid or the tax paid is less than the prescribed rate, the assessee is liable to pay simple interest at the rate of 1% on the amount by which the advance tax paid falls short.
7.10. FILING OF FBT RETURN An employer who has paid or made provision for payment of fringe benefits to his employees during the previous year is required to furnish a return of fringe benefits in the prescribed form and manner to the Assessing Officer before the due date. For a company as an employer the due date is the 31st of October of the assessment year. For a person who is an employer but not a company and whose accounts are required to be audited, the due date is the 31st of October of the assessment year. For any other employer, the due date for filing the return of fringe benefits is the 31st of July of the assessment year. After the due date, the Assessing Officer may issue a notice to the assessee requiring him to furnish a return in the prescribed form and manner within a period of thirty days. Failure to furnish a return of fringe benefits or delayed filing of such return will result in the levy of interest at the rate of 1% for each month of delay or till the assessment is made on the amount of tax on the value of fringe benefits.
Applicability Of Service Tax

8.2. APPLICABILITY OF SRVICE TAX 1. Territorial Application State of Jammu & Kashmir excluded The provisions related to Service Tax are applicable to the whole of India except to the State of Jammu & Kashmir. As a result, the services provided within the territorial limits of the State of Jammu & Kashmir are excluded from the ambit of the levy of service tax. In other words as clarified by the Department that any service provider who has his place of business in the State of Jammu & Kashmir but provides taxable services to the clients in other parts of the country are liable for payment of service tax. Further any service provider who has his place of business in any of the Indian States other than the State of Jammu & Kashmir who provides the services to the persons in the State of Jammu & Kashmir , is not liable to pay service tax. Accordingly when the recipient of the taxable service is in the State of Jammu & Kashmir , the service is outside the service tax net.
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2. Levy of Service Tax The Service Tax is livable on notified service tax providers in respect of the value of the taxable service. In other words, service tax is levied only in respect of notified service providers and not on all service providers. Further a taxable service cannot be subjected to service tax twice under different classifications and is liable to tax only once. 3. Levy of Service Tax- Threshold Exemption With effect from 1-4-2008, i.e. from the Financial Year 2008-2009, the threshold exemption is raised upto Rs. 10 lakhs vide Notification NO.8/2008-ST,dt. 1-3-2008. The expression aggregate value of taxable services means the aggregate value of services for which service tax is payable and exclusive of services which are exempt from service tax by way of any general / specific exemption. The eligibility to avail threshold limit exemptions of Rs. 8 lakhs, Rs. 10 lakhs as the case may be is burdened with various conditions. They are , 1. 2. 3. 4. 5. 6. No CENVAT Credit is availed on the service tax paid on input services used to render the subject taxable service. Similarly no CENVAT Credit is availed in respect of capital goods and inputs till the date of exhausting threshold exemption. Only capital goods and inputs received after the completion of availing exemption limit can alone qualify for input credit. Input Credit in respect of goods lying in stock or unutilized input credit lying in the books to the credit of the service provider should not be utilized and shall also be reversed to the extent to service tax payable. The aggregate value taxable services rendered by the service provider shall not exceed Rs. 9 lakhs in the preceding Financial Year. With effect from 1-4-2008, i.e. from the Financial Year 2008-2009, the threshold exemption is raised upto Rs.10 lakhs vide Notification No. 8/2008-ST,dt. 1-3-2008.
C-4. Levy of Service Tax- Not applicable The levy of service tax on taxable services will not extend to the following receipt as there is no element of service in such receipts and / or consideration is involved.
Value of goods and materials sold by the service provider subject to the condition that they should be quantified and shown separately in the invoice. Reimbursement of out-of-pocket expenses on actual basis subject to the condition that such expenses are specified separately in the bills raised by the service providers under certain circumstances.
Taxable service provided free of charge without any consideration thought the service is otherwise taxable Service Tax Rate 8..3. SERVICE TAX RATE (Increase in Effective Service Tax Rate w.e.f. 11th May 2007.) Service Tax Rate has been hiked to 12.36 per cent as Secondary and Higher Education Cess of 1 per cent on service tax has come into force. Consequently, w.e.f. 11th May 2007 the rate of service tax shall be revised as follows: Service Tax on taxable value 12.00% Education Cess @ 2% of Service Tax 0.24% Secondary and Higher Secondary Cess (SHE) 1% of taxable value 0.12%
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Hence effective service tax works out to 12.36% Kindly note that all three heads of taxes shall have to be separately displayed on the Invoice. Registration Formalities
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Payment & Refund Of Service Tax
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Filling Or Returns of Service Tax
Assessments of Service Tax
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Central Value Added Tax (Cenvat) Credit of Service Tax
60
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Penalties & Prosecutions of Service Tax

8.9. PENALTIES & PROSECUTIONS >> Failure to apply for Registration : Maximum Penalty may extend upto Rs. 1000/>> Failure to pay Service Tax :
Penalty shall not be less than Rs. 100 per day for every day during which such failure continues but failure continues but not more than Rs.200 per day for every day during which such failure continues and in any case it shall not exceed service tax payable by the assessee. With effect from 18-4-2006, the penalty shall not be less than Rs.200 per day during which the failure continues or amount calculated at the rate of 2% per month on the Tax due which ever is higher. >> Failure to Furnish Tax :
Maximum penalty may extend upto Rs. 1000. W.e.f. 11-5-2007. the enhanced to Rs.2000 maximum penalty is
>> Willful suppression of the value of taxable service : 1. Penalty shall not be less than the service tax sought to be evaded but shall not exceed twice the amount of service tax sought to be evaded. If the assesses pays the service tax and interest as determined within 30 days of the ommunication of the order, penalty is restricted to 25% the service tax so determined.
2.
>> Failure to comply with the notice issued by assessing authority. Since the Section 78 was omitted by the Finance ( No. 2) Act, 2004, the failure attracts residuary provision. Under that provision, maximum penalty may extend upto Rs.1,000 >> Contravention of the provisions of Act/Rules there under, where no specific penalty is provided: Punishable with penalty which may extend to an amount not exceeding Rs. 1,000/-.
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Introductions -VAT (Value Added Tax)

9.1. INTRODUCTION Value Added Tax (VAT) is an indirect tax on goods, introduced in lieu of sales tax, to ensure transparency and greater compliance. The basic premise of VAT is to tax the true value added to the goods, at each stage of the transaction chain. This ultimately reduces: 1. Tax paid to the government. 2. Cost/tax passed onto the consumer. VAT is a multi-point tax as against sales tax, which is a single-point tax. VAT removes the cascading effect of tax on tax, by allowing a set off for input tax, i.e. tax paid at earlier stage on purchases. It is an efficient, globally acceptable and easy to administer taxation system. VAT Composition In order to relieve some small businesses of the need to keep detailed records, the law has made provision for a simpler method of accounting for VAT. The method of calculating, VAT payable is also made easier. Such a method is called a VAT Composition Returns. The VAT Composition Returns states that Small dealers with an annual gross turnover not exceeding 5 to 50 lakhs and subject to respective state act and rules, who are otherwise liable to pay VAT, shall however have the option for a composition scheme with payment of tax at a small percentage of gross turnover. The dealers opting for this composition scheme will not be entitled to input tax credit. This scheme is a special method of determining the tax liability for specified
63
TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT dealers whose turnover in the year before April 1, 2005 or in the current year exceeds Rs. 5 lakhs but does not exceed Rs.5 Concept of -VAT (Value Added Tax) 9.2. Concept of VAT The essence of VAT is in providing set-off for input tax and this is applied through the concept of input credit/rebate. This input credit in relation to any period means setting off the amount of input tax by a registered dealer against the amount of his output tax. Value Added Tax (VAT) is based on the value addition to the goods, and the related VAT liability of the dealer is calculated by deducting the input credit from the tax collected on sales during the payment period. VAT works in two different ways: 1. If VAT-registered business receives more output tax than the taxes paid as input, they will need to pay the difference to the Commissioner of Taxes (State) 2. If the input tax paid is more than the output tax collected, 1. You can carry forward the Input credit and adjust it against the output tax in the subsequent months. 2. You can have the Input Credit refunded to you by the Government at the end of the current or following year. You can receive refunds for Input Credit on exports within a period of three months. Types of Dealers-VAT (Value Added Tax) 9.3. Types of Dealers There are two types of Dealers.

Registered Dealers Unregistered Dealers
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT Registered Dealers A dealer whose gross annual turnover is above the VAT threshold limit is required to register under VAT. This is mandatory. A new dealer will be allowed 30 days time from the date of liability to get registered. A VAT registered dealer will be eligible for input tax credit. All Registered Dealers must follow the VAT law, irrespective of the size of the business. A Registered Dealer may sell to both Consumers and Non- Consumers. A registered dealer can opt for compositions scheme. Unregistered Dealers A dealer whose annual turnover is less than Rs.5 lakhs is an Unregistered Dealer and has been granted the status of a Consumer. So, the VAT paid by an Unregistered Dealer is treated as his cost and is charged no further VAT on his sale. It is assumed that such small dealers will not be supplying other industries or dealers. Therefore they are not included into the VAT chain. But if the small dealer is in the business of actually supplying to others besides consumers, then he can optionally choose to register and gain the benefits of a Registered Dealer. The registered dealer pays VAT on goods purchased from unregistered dealer. General terminology used in VAT (Value Added Tax) 9.4. General terminologies used in VAT Term Input tax Output tax Description This is a tax paid on purchases
65
TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT Input Credit Composite Dealers Dealers with annual gross turnover not exceeding a certain threshold (threshold - decided by the respective State Governments) can opt for a composition scheme whereby they will pay tax as a small percentage of their gross turnover. However, retailers opting for this composition scheme will not be entitled to Input Credit. The State Governments fix the periods and the procedures for the payment of the lump sum. Advantages of VAT over Sales Tax 9.5. Advantages of VAT over Sales Tax
This is a tax charged on sales The amount of Input tax that is permitted to be set off against Output tax.
As VAT is a multi-point tax with set-off for tax paid on purchases, it prevents repeated taxation of the same product. Simple and Transparent: In the Sales tax system the amount of tax levied on the goods at all stages is not known. However, in VAT, the amount of tax would be known at each and every stage of goods sale or purchase.
VAT has the flexibility to generate large and buoyant revenues, as it levies tax on value additions. Zero rating of tax on exports is possible in case of VAT. Fair and Equitable: VAT introduces uniform tax rates across the state so that unfair advantage cannot be taken while levying the tax. Procedure of simplification: Procedures related to filing of returns, payment of tax, furnishing declaration and assessment are simplified under the VAT system so as to minimize any interface between the tax payer and the tax collector.
Ability to provide same revenue to the Government with lower rates
66
TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT of tax. Tax does not become a cost of doing business. VAT Rates
9.6. VAT Rates According to the White Paper, there are 550 categories of goods under the VAT system. They are classified into the following four groups, depending on the VAT rate: VAT @ 4% The largest number of goods (270) comprising of basic necessity items such as drugs and medicines, agricultural and industrial inputs, capital goods and declared goods are under 4% VAT rate. Exempted from VAT There are about 46 commodities under the exempted category. This includes a maximum of 10 commodities that each state would be allowed to select, from a broader approved list for VAT exemption. The exempted commodities include natural and unprocessed products in unorganized sector as well as items, which are legally barred from taxation. VAT @ 1% This is for a specific category of goods like gold, silver, etc. VAT@12.5% The remaining commodities are under the general VAT rate of 12.5%. Computation of VAT and Profit
67
The above diagram depicts computation of (10 %) VAT at each stage of business. Hence, it is not the manufacturers and retailers but only the consumer who has paid 10% VAT to the government. The profits for manufacturers and retailers thus remain unaffected
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT Items Covered in Indian VAT 9.8. Items Covered in Indian VAT 550 items covered 270 items of basic needs, Rest 12.5% VAT. Gold & like medicine, drugs, agro & industrial inputs, capital Tea-producing states options either percentage & declared goods 4% VAT Petrol, diesel, liquor, Sugar, textile & tobacco lottery not included * excluded for one year silver jewellery - 1%
VAT Note : * Some states like Delhi have imposed VAT on diesel at 20%, which is higher than the 12% sales tax charged earlier. Similarly, Delhi imposed VAT on LPG at 12.5%, which is also higher than the previous sales tax rate of 8 percent. All business transactions carried on within a State by individuals, partnerships, companies etc. will be covered by VAT. "More than 550 items would be covered under the new Indian VAT regime of which 46 natural and unprocessed local products would be exempt from VAT", a PTI report quoted West Bengal Finance Minister and VAT panel chairman Asim Dasgupta as saying. About 270 items including drugs and medicines, all agricultural and industrial inputs, capital goods and declared goods would attract four per cent VAT in India. The remaining items would attract 12.5 per cent VAT. Precious metals like gold and bullion would be taxed at one per cent. Considering the difficulties faced by the tea industry, it was decided that teaproducing states would be given an option to levy 12.5 per cent or four per cent subject to review in 2006. Petrol and diesel would be kept out of VAT regime in India, which covers only marketable items.
69
TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT Dasgupta was quoted as saying that the panel was yet to take a view on CNG. Following opposition from some of the states, it was decided that states would have option to either levy four per cent or totally exempt food grains but it would be reviewed after one year. Three items - sugar, textile and tobacco - covered under Additional Excise Duties, will not be under VAT regime for one year but the existing arrangement would continue. The Indian VAT panel relaxed the threshold limit for traders coming under VAT regime from Rs 5-50 lakh of turnover from the previous stance of Rs 5-40 lakh. Traders within this limit can pay a composite VAT rate of one per cent but would not be entitled to input tax credit Central Sales Tax (CST) STRUCTURE
o o o o o o o
Introductions Inter-State Sale What are the objectives of CST Act ? What are the conditions for CST Act to become applicable. Rate of CST Sale Price CST Transactions Forms
10.1. INTRODUCTION Central Sales Tax (CST) is a tax on sales of goods levied by the Central Government of India. CST is applicable only in the case of inter-state sales and not on sales made within the state or import/export of sales.
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Inter-state sale is when a sale or purchase constitutes movement of goods from one state to another. Accordingly, consignments to agents or transfers of goods to branch or other offices is not a sale as per the CST Act CST is payable in the state where the goods are sold and movement commences. The tax collected is retained by the state in which the tax is collected. CST is administered by Sales Tax authorities of each state. Thus, the State Government Sales Tax officer who assesses and collects local (state) sales tax also assesses and collects CST. Sales Tax is a tax, levied on the sale or purchase of goods. There are two kinds of Sales Tax i.e. Central Sales Tax, imposed by the Centre and Sales Tax, imposed by each state.
10.2. INTER-STATE SALE An inter-state sale takes place when a sale or purchase:

Leads to movement of goods from one State to another State. Is achieved by the transfer of documents of title while the goods are being moved from one State to another State.
Example 1: A in Orissa sells and delivers goods to B in Gujarat. Example 2: X in Orissa delivers goods to Y in Calcutta. Y sells it to C in Delhi by transferring the document of title during the goods movement from Orissa to Delhi. Note: Goods that are sold within a state, but while transporting travel through another state is not considered inter-state sales.
71
TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT 10.3. WHAT ARE THE OBJECTIVES OF CST ACT ? 1. Formulate principles for determining when a sale or purchase of goods takes place :- in the course of interstate trade or commerce ; or - outside a State ; or - in the course of import into or export from India. 2. Provide for the :- levy of - collection and - distribution Of taxes on sales of goods in the course of interstate trade or commerce. 3. Declare certain goods to be of special importance of inter state trade or commerce. 4. Specify the restriction and conditions to which state laws imposing taxes on the sale or purchase of such goods of special importance shall be subject. 5. Provides for collection of tax in the event of liquidation of a company. 6. Authority to settle disputes in course of interstate trade or commerce. 10.4. WHAT ARE THE CONDITIONS FOR CST ACT TO BECOME APPLICABLE. 1. The sale should not take place in the course of import into or export from India. 2. There should be a Dealer and such dealer must be registered under the CST Act. 3. He should made a sale to any buyer ( registered dealer or unregistered dealer) 4. He should carry on any business. 5. He should made a sale of any goods ( declared or undeclared) 6. The sale should be made in the course of interstate trade or commerce ( i.e. MR. ASHUTOSH GOYAL ENROLLMENT NO. 11281114001 PGDT 2011-12 72
TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT the sale should not be a sale inside a state. WHAT HAPPENS IF THE ABOVE CONDITION ARE SATISFIED 1. The CST Act becomes applicable and CST is levied at the Rate specified. 2. it is levied on Turnover, which in turn is computed on the basis of the sale price. 3. it is payable by the dealer who makes the sale in the course of interstate trade or commerce. 4. It is payable in respect of sale of goods effected by him during the year. 5. It is so payable to appropriate state in which the dealer has a place of business. 10.5. RATE OF CST
In an inter-state sale to a registered dealer against form C the rate of CST is 4% or local sales tax rate whichever is lower. If under the local sales tax law, sale or purchase is exempt from CST the CST is Nil. In an inter-state sale to government against form D the rate of CST is 4% or local sales tax rate whichever is lower. Rate of CST in case of inter-state sale of declared goods without form C or D is twice the rate of tax applicable to the local sale or purchase of such goods in that state.
Rate of CST in case of other goods ( i.e. non-declared goods) is 10% or the applicable local sales tax of that state, which ever is higher.
10.6. SALE PRICE Sale Price means the amount payable to a dealer as consideration fro the sale of any goods. It does not include,
Cash Discount ( including Trade Discount, Quantity Discount, Additional 73
TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT Discount ). This sum is deducted from sale consideration.
Cost of installation, freight and delivery is excluded ( if such cost is separately charged). Goods returned by buyer within 6 months. Goods rejected by buyer.
It includes,

Consideration for sale any goods Excise Duty ( whether included in sale price or separately charged) Sales Tax payable by the dealer ( whether included in sale price or separately charged) Sum charged for anything done by the dealer in respect of the goods at the time of or before the deliver thereof. Cost of packing material and packing charges. Insurance charges if the seller has insured the goods. Bonus Disocunt / Incentive Bonus for attracting Sale Targets.
10.7. CST Transaction Forms Dealers have to issue certain declarations in prescribed forms to buyers/sellers. The type of forms are C, D, E1, E2, F, H and I. Forms C, E1, E2, F and H are printed and supplied by Sales Tax authorities. Dealers have to issue declarations in these forms printed and supplied by the Sales Tax authorities. Form D is to be issued by government organization departments making purchases. These forms are to be prepared in triplicate. Form C The sales tax on inter-state sale is 4% or the applicable sales tax rate for sale within the State whichever is lower if the sale is to a dealer registered under CST and the goods are covered in the registration certificate of the purchasing dealer. The purchasing dealer is eligible to get these goods at concessional rate if a declaration in C form is submitted to the selling dealer.
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT Form D Sale to government is taxable @ 4% or applicable sales tax rate for sale within the State whichever is lower. This concession on CST is applicable if Form D is issued by the government department which purchases the goods. Form E1 This form is issued by the dealer who makes the first inter-state sale during movement of goods from one State to another. This enables the purchaser to claim exemption from CST on the second inter-state sale during the movement of goods by transfer of documents of title. Form E2 This form is issued by the second or the subsequent seller when the goods move from one state to another in a series of inter-state sales by transfer of documents of title. This form enables the purchaser to claim exemption form CST on subsequent sale of goods. Form F This form is issued when goods are despatched to another state as a consignment or to the branch of a dealer in another State. The CST is not payable if there is only inter-state stock transfer and there is no sale. To claim inter-state movement of goods as not a sale, the dealer has to produce a declaration in Form F received from Consignment Agent or Branch Office in another State. One Form F covering receipts during one calendar month has to be issued. Form H This form is issued by an exporter for purchase of goods. The purchase of goods is for an export order or in pursuance of an export order. These goods are then sold in export and the form enables seller of the goods to the exporter to claim deduction on the goods sold for export.
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT Form I This form is issued by a dealer located in a Special Economic Zone (SEZ). No CST is levied when sales is made to a dealer located in SEZ.
Tax Collected at Source (TCS)

STRUCTURE
o o o o o o o o o
Introductions Classification of Seller for TCS Classification of Buyer for TCS Goods and Transactions classified under TCS. Certificate of TCS TCS Exemptions Payment of TCS to the Government Electronic TCS (e-TCS) Filing of TCS Returns
11.1. INTRODUCTION TCS is the Tax Collected at Source by the seller (collector) from the buyer/ lessee (collectee/ payee). The goods are as specified under section 206C of the Income Tax Act, 1961. If the purchase value of goods is X, the amount payable by the buyer is X+Y, where Y is the value of tax at source. The seller deposits Y (tax collected at source) at any designated branch of banks authorised to receive the payment. The seller, lessor or licensor, is responsible for the collection of tax from the buyer, lessee or licensee. The tax is collected for sale of goods, on transactions, receipt of amount from the buyer in cash or issue of cheque, draft or any other mode, whichever is earlier.
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT 11.2. Classification of Seller for TCS Under TCS, a seller is defined as any of the following:
o o o o o o o o
Central Government State Government Any Local Authority Any Statutory Corporation or Authority Any Company Any Partnership Firm Any Co-operative Society Any individual/HUF whose total sales or gross receipts exceed the prescribed monetary limits as specified under section 44AB during the previous year
11.3. Classification of Buyer for TCS A buyer is classified as a person who obtains goods or the right to receive goods in any sale, auction, tender or any other mode. The following are not included:
o o o o
Public Sector Companies Central Government State Government Embassy of High Commission, Consulate and other Trade Representation of a Foreign State Any Club, such as social clubs, sports clubs and the like
11.4. Goods and Transactions classified under TCS Goods and transactions classified under TCS are listed below:
o
Alcoholic liquor for human consumption including Indian Made Foreign Liquor (IMFL) Tendu leaves 77
TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT o Timber obtained under a forest lease
o o o
Timber obtained by any mode other than under a forest lease Any other forest produce not being Timber or Tendu Scrap (Scrap means waste and scrap from the manufacture or mechanical working of materials which is usable as such because of breakage, cutting up, wear and tear and other reasons) Licensing or leasing of Parking Lot, Toll Plaza Mining and quarrying
o o
11.5. Certificate of TCS The certificate of collection of tax at source has to be submitted in Form No-27D by persons collecting tax at source within a week from the last day of the month in which the tax was collected. If there is more than one certificate to be issued to a buyer for tax collected at source with respect to the period ending September 30 and March 31 in the financial year, then the person collecting the tax on request from the buyer can issue a consolidated certificate within one month from the end of such period. If an issued TCS certificate is lost, the person collecting tax at source may issue a duplicate certificate on plain paper, with necessary details as contained in Form-27D. The Assessing Officer (AO), before giving credit for the tax collected at source on the basis of the duplicate certificate, has to get the payment certified and obtain an Indemnity Bond from the assessee. 11.6. TCS Exemptions TCS can be totally exempted or fixed at a lower rate under some circumstances. Total Exemption: No TCS Collection
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT A declaration by the buyer in Form Number 27C (in duplicate) has to be made for total exemption. The declaration is if the goods listed are to be used for the purpose of manufacturing or processing and not trading. A copy of the declaration has to be given to the person collecting tax. The person collecting this declaration form has to submit the copy to the authorities concerned on or before the seventh day of the following month. Lower Rate of TCS The buyer (Collectee) can apply to the Assessing Officer (AO) for a lower rate, using Form No.13, subject to the condition that the AO is convinced that the total income of the buyer (Collectee) justifies the lower rate. The AO may issue a certificate, specifying the rate of collection.
11.7. Payment of TCS to the Government The tax collected is to be paid to the Central Government within one week of the last day of the month in which the tax was collected. This payment is made in any branch of Reserve Bank of India (RBI), State Bank of India (SBI), or any other authorised bank. The payment is made accompanied by income tax challan 281. If the tax is collected on behalf of the Government, then the amount can be paid without the income tax challan.
11.8. Electronic TCS (e-TCS) e-TCS is the filing of TCS returns using electronic media. It is mandatory for corporate and government collectors to furnish TCS returns in electronic form, from financial year 2004-2005. Collectors (other than government and corporates) may file TCS returns in electronic or physical form.
79
TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT NSDL collects the e-TCS returns from the Collectors on behalf of the Income Tax Department. TCS returns on computer media for e-TCS TCS returns filed using computers should be in TCS specific form formats and must contain all the information, details and particulars specified in such forms. Computer media specifications are as follows (any of these):

CD ROM of capacity 650 MB or more 4mm 2GB/4GB (90M/120M) DAT Cartridge 3.5 Inches, 1.44 MB floppy diskette.
The returns must be accompanied by Form No.27B and verified.
11.9. Filing of TCS Returns TCS returns are to be filed quarterly, in addition to annual returns.
The quarterly returns are to be filed in Form Number 27EQ on or before July 15, October 15 and January 15, respectively for the first three quarters of the financial year. For the last quarter, the returns are to be filed on or before April 30.
Annual returns are to be filed in Form Number 27E on or before June 30 of the following financial year
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METHODOLOGY
Analysis involves o Analysis of the Global and Indian commodities market. o Analyze the working of Religare commodities in Indian Commodity Market. Global and Indian Commodities Market involves o Collection of news for the commodities market keeping in mind both domestic and global scenario. o Analyzing the impact of major events like budget, reforms etc. o Regulatory framework and its impact on the global and Indian economy o Growth prospects & future outlook of the global and Indian commodities market. Working of Religare Commodities. o Analyzing the risk managing strategies of the company. o Arbitrage and Hedging analysis.
81
SCHEDULE
I to III week Theoretical concept clarity of fundamental analysis, about
derivatives and commodities market.

III to V week To collect data regarding the key factors that affect the commodity
markets allover, to study the different commodity exchanges, factors that decide the commodity prices and analyze them .
V to XII week To study the various instruments (hedging, arbitraging etc.) for
managing risk from investor and company point of view and deriving the useful conclusion regarding the performance of the Indian exchanges in a globalize economy and the impact of different factors on their performance.
XIII to XIV week Revision, report preparation and Presentation to the faculty
guide.
82
REFERENCES
Energy and metal research cell, Agri research cell, risk management cell Market indices.(MCX AND NCDEX) Websites o www.Nymex.com o www.Mcxindia.com o www.Yahoofinance.com o www.Riskglossary.com o www.Lme.com o www.Nseindia.com
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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT

PRACTICAL TRAINING REPORT ON

MR. ASHUTOSH GOYAL ENROLLMENT NO. 11281114001 PGDT 2011-12

TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT (ANNEXURE-ii)

Signature of Supervisor(with name and seal) Name: Designation: Organisation:

Countersigned by Director/Principal of Study Center (with name and seal)

MR. ASHUTOSH GOYAL ENROLLMENT NO. 11281114001 PGDT 2011-12

(SIGNATURE OF SUPERVISOR) WITH SEAL

MR. ASHUTOSH GOYAL ENROLLMENT NO. 11281114001 PGDT 2011-12

TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT (Annexure iv)

MR. ASHUTOSH GOYAL ENROLLMENT NO. 11281114001 PGDT 2011-12

TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT

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MR. ASHUTOSH GOYAL ENROLLMENT NO. 11281114001 PGDT 2011-12

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LIMITATIONS OF THE STUDY

MR. ASHUTOSH GOYAL ENROLLMENT NO. 11281114001 PGDT 2011-12

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VARIOUS INCOME TAX AUTHORITIES

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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT

Rate of tax deducted at source

When the provisions are not applicable

3. if the recipient is an Artifitial Judicial Person 4. 5. 6. 7.

Maximum amount which can be paid without Tax Deduction -

MR. ASHUTOSH GOYAL ENROLLMENT NO. 11281114001 PGDT 2011-12

TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT

Winning From Horse Race [ Section 194BB]

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Payment To Contractor And Sub-Contractor [ Section 194C]

MR. ASHUTOSH GOYAL ENROLLMENT NO. 11281114001 PGDT 2011-12

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Tax Deducted At Source From Insurance Commission [ Section 194D]

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Payments To Non-Resident Sportsmen Or Sports Associations [ Section 194E]

Commission, Etc., On The Sale Of Lottery Tickets [Section 194G]

TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT

Sportsmen Or Sports Associations [ Section 194E]

Commission, Etc., On The Sale Of Lottery Tickets [Section 194G]

Commission Or Brokerage [ Section 194H]

Who is the taxpayer Who is the recipient Payment covered

Payment Of Rent [ Section 194 I ]