Buy home abroad, save tax in India

Sec. 54 of the Income Tax Act offers a way out of paying such tax. If the capital gain amount is invested in a residential house within one year before to two years after the sale, then the capital gains earned are fully exempted from tax. In case the investor intends to construct a house, the time limit is extended to within three years of the date of sale. Of course, if only a part of the capital gain is used, the exemption would be proportional and the excess will be chargeable to tax. So far, so good. Now comes the interesting part, especially for NRIs. Nowhere does Sec. 54 specify that the new house purchased should be within India. This means, to save capital gains earned in India, the NRI can even purchase a house in his or her own host country abroad and yet claim exemption. Why just NRIs, now even resident Indians can benefit from this rule. RBI allows an Indian resident up to $1,00,000 per annum to be invested abroad. Such investment could be even in property. So far, this was just a theoretical possibility based on a plain reading of the law. However, in a recent judgment, the Income Tax Tribunal in the case of Prema P Shah (Citation 282 ITR 211) has ruled that the exemption offered by Sec. 54 can indeed be extended to a property purchased in a foreign country. ..This judgment will have far reaching impact, especially on NRI investments and taxation. No one is born an NRI. Indian residents become NRIs when they go abroad for employment or business. More often than not, such persons own property in India, either the one they left behind when they went abroad and became NRIs, or one that is inherited. A number of such persons, who have set up a new life abroad definitely don't need a new property just to save on tax. Now, such persons can actually consider buying property abroad and claiming tax benefits in India.

Lost your Pan Card : How to get Duplicate Pan card

Its almost time for you to file income tax returns, and this is the last thing which you wanted to happen. You have lost your PAN card. Now you need to reapply for getting a duplicate PAN card. There is no need to panic as the procedure is not very difficult, however you shoul get yourself a duplicate PAN card as soon as possible.First you need to get a FIR filed at the police station about you loosing your PAN card.Now you need to know your PAN number. If you already know it then no problem, butif you don't then you cen get it by following ways .

1. Throug your Income Tax returns which you have already filed.

2. Credit Card department

3. From your Bank account

4. The cover letter which come along with the PAN card.

5. Through the PAN application counter foil numbers which you obtained at the time of PAN application. If the slip contains 15 digit acknoledgement No., then it is a NSDL application. If it contains 9 digits application number and 9 digit coupon number, then it is a UTITSL application. Fill these number on Income tax website and get your PAN number.Once you know your PAN number you can apply for a Duplicate PAN card.You can apply for a duplicate PAN card (its actually similar getting a fresh PAN card) in any UTI or NDSL branch. Pay Rs 67 fees, address proof, and colored photo. You can apply offline as well as online.

TAX SAVING TIP:LOSS FROM SHARES

To understand this tip first of all I would like to discuss the taxabilty provisions on Long term capital Gain/Loss From shares and securities
From 1.10.2004 onwards sale of a long term security (means where holding period is more than 12 month) ,on which STT paid (Securities Transaction Tax) is not liable for tax and fully exempted from Income Tax.
As the long term capital gain from the sale of securities is exempted from tax ,loss from such deals can not be adjusted from the other capital gain and can not be carry forward either.
Securities Transaction tax (stt) is payable for transaction made through stock exchanges.
what is the trick/tip
if you are planning to sell the shares on which you will have long term capital loss ,then sell them out of the exchange without paying STT and save tax .lets study with a example.
Example:Rajiv has sold a shares for 300000 which he has purchased for 500000 ,13 months back.similarly he has also sold a land for 500000 which he has purchased for 100000 four year ago.Rajiv has also salary income for Financial year 2008-09.
calculate tax in two situations
shares has been sold through stock exchange means stt paid.
shares has been sold to friend out of exchange.
Ans:Case -1:Calculation of tax Case one(through stock exchange)
income from salary =300000
Income from capital gain on capital gain =400000
(500000-100000)
tax liability=on 150000-300000 @ 10%=15000
20% on 400000 LTCG =80000
Net tax liability=15000+80000=95000
long term loss from shares sold through exchange being exempted income can not be adjusted from LTCG on land,and not not be carry forward either.
Case-2:(shares sold to friend out of stock exchange ) no stt paid
Income from salary =300000
Income from Long term capital gain
LTCG from land =400000
Less:LTCL from Shares=200000
net LTCG =200000
tax liability
salary=10% on 300000-150000=15000
Ltcg=20% on 200000 =40000
net tax liabilty =55000
so in First case Tax Liability is 95000 where as in second case the tax liability is 55000 means saving of 40000 tax by not selling shares through exchange !!!
Further if we have sold share out of exchange this year and made a loss and have no other long term capital gain then we can carry forward the loss for next eight years and adjust the loss from other long term gain,means the benefit is definite if we adjust it in this year or next eight year.
Note:
To avoid complication in calculation Indexation on cost of capital assets has not been done.
Shares and securities word has been used interchangeable though differently defined under the act.so read accordingly.
Sucharge and Cess on tax has also not shown to avoid complications.
You can also save tax from short term capital loss from same trick.
Short term capital gain saving another tip is here.

ZERO income tax upto Rs.13 lakhs income

Believe it or not, it's true.One would be forgiven for being sceptical because for the ongoing year (FY 2008-09), the total income exempt from income tax in the hands of a male individual is only Rs 150,000 and that for a woman taxpayer only Rs 180,000 (for senior resident Indian citizens above the age of 65 years, the tax exemption is higher at Rs 225,000 but for our purpose, we shall consider a family where all the members are below the 65 years of age.). So how, then, can an income of Rs 13.10 lakh be completely exempt from tax?You can achieve this by following one of the five golden rules of tax planning, namely, by spreading your income among your family members.This golden rule makes creative use of the classic power concept of divide and rule. The simple strategy is that each family member must have his or her independent source of income so as to legally become an independent taxpayer under the provisions of the Income Tax Law. When the entire income of a family belongs to just one member, the tax liability is very much higher than when the same income is divided among different members of the family.Thus, the first golden rule of tax planning requires that one develops income tax files for oneself, one's spouse, one's major children, the Hindu Undivided family, and for all other major relatives in the family, including one's parents.Now, under the income tax law it is not possible to arbitrarily divide or apportion one's income amongst different members of one's family - and then pay lower tax in the names of different family members. However, you can achieve this goal by intelligent use of the perfectly legitimate facility of gifts and settlements.Here is how:Generally, any gift you receive from various members of your family and specified relatives is not considered your income but a capital receipt. Thus, no income tax is payable on gifts received from relatives, and gifts received from parties other than relatives up to a sum of Rs 50,000 - and up to any amount at the time of marriage.Let us consider the example of a small family consisting of Mr. Zerotaxwala, his wife who is a homemaker and not a career person, his major son studying in college, and one major daughter studying in school. They also constitute a Hindu Undivided Family.Let us consider that the total combined income of all five members of the Zerotaxwala family, including the HUF, is Rs 13.10 lakh. Every member contributes Rs 70,000 in the PPF Account and has invested Rs 30,000 in an infrastructure or company or equity linked savings scheme, etc. such that each of the five assesses achieves full benefits of maximum deduction under Section 80C, namely Rs 100,000 each.Through an intelligent use of gifts and settlements by Mr. Zerotaxwala to all members of his family, each family member has investments in business, industry, house property, etc., in their own individual names in such a manner that each of the male members and the HUF would have a gross annual income of Rs 250,000 each, and both the female members have an income of Rs 280,000 each, in total adding up to Rs 13.10 lakh.And here is the beauty: this income of Rs 13.10 lakh can be totally tax-free. Here is how:Section 80C of the Income-tax Act, 1961 provides each individual taxpayer, including an HUF, a deduction of Rs 100,000 from his / her gross income when investments up to Rs 100,000 is made in stipulated investment avenues, such as PPF, infrastructure bonds, equity linked savings schemes, life insurance, etc. Thus, all the four family members, and also the HUF, can avail of this deduction under Section 80C to the extent of Rs 100,000 each.After availing of the deduction of Rs 100,000 each under Section 80C, the taxable incomes of the five taxpayers of the Zerotaxwala Family would be as follows:Mr. Zerotaxwala Rs 150,000Mr. Zerotaxwala's son Rs 150,000Zerotaxwala HUF Rs 150,000Mrs. Zerotaxwala Rs 180,000Mr. Zerotaxwala's daughter Rs 180,000There, we have it!The total tax liability of the Zerotaxwala Family is now ZERO, since the income of each taxpaying constituent individual / HUF is below the taxable limit which, as noted earlier is currently Rs 150,000 for male and HUF taxpayers, and Rs 180,000 for women tax payers.It may also be mentioned here that we have not considered the additional tax savings which are possible through a deity Trust, or a trust for an unborn person in the family, which would further increase the zero income tax level income to more than Rs 16 lakh.In addition, several items of fully exempted income, such as agricultural income, dividend income, income from mutual fund, etc., could be planned for each of the four family members, and also for the HUF, to secure a still higher level of zero income tax for the Zerotaxwala Family.By following the simple principles outlined above, you, too, can become a zerotaxwala family.

-----------Excerpt from Tax-Free Incomes & Investments: A-to-Z Tax Guide (A.Y. 2009-10) by R. N. Lakhotia, published by Vision Books. Mr. Lakhotia is one of India's top taxation experts.

Send ITR-V through POST for 2009-10

"Since the Form ITR-V is bar-coded, assessee is advised not to fold the same and post it in A4 size envelope. The ssessee shall furnish the Form ITR-V to the Income-tax Department bymailing it to “Income Tax Department – CPC, Post Box No - 1, Electronic City Post Office,Bangalore - 560100, Karnataka” within thirty days after the date of transmitting the dataelectronically. The Post Box shall deliver all the Form ITR-V to the Centralized ProcessingCentre (CPC) of the Income-tax Department in Bangalore. Upon receipt of the Form ITR-V, theCPC shall send an e-mail acknowledging the receipt of Form ITR-V. The e-mail shall be sent indue course to the e-mail address furnished by the tax-payers in his return. No Form ITR-V shallbe received in any other office of the Income-tax Department or in any other manner."
As per the above statement from the circular 3/2009, any assessee filing ITR electronically without digital signature, has to send ITR-V (acknowledgement received from e-filing website) through post to the above mentioned address. There will be no acceptance of ITR-V at any Income Tax Offices.
This measure gives the scope for increased electronic returns as Assessee may feel easy to upload and send it across through POST / Courier. It is also heard that, success of this measure will ease the decision of making ITR e-filing mandatory for all Assessees, from coming year.
Towards other points in ITR for 2009-10, UTN has been introduced. However, during e-filing, UTN field can be kept blank.

Post office savings may gain if bank rates decline

When the choppy stock markets turned consumers to safer fixed-income products last year, India’s multiple post office saving schemes did not gain popularity as was anticipated. But financial planners say post office schemes may turn attractive if banks’ interest rates continue to fall.
Post office saving schemes include fixed deposits, recurring deposits, public provident fund (PPF), Kisan Vikas Patra and National Savings Certificate (NSC).

Saving grace: Financial planners say post office savings schemes could turn attractive if the interest rates offered by banks continue to fall. Harikrishna Katragadda / MintCash-starved banks raised their one-year deposit rates to 10.5% in September last year, as against 8% return offered by post office saving schemes. However, bank deposit rates have since come down to 6.5-8.25% for one-year deposits.
A senior official in the department of posts said the total outstanding balance in post office savings schemes actually registered a fall, coming down to Rs5.5 trillion in the year ended March from Rs5.64 trillion the previous year.
“There has been a decline because people are shifting from postal savings to other instruments, which have better returns. Also, because of an increase in investment options under section 80C of the Income-tax Act, people have got more choices,” the official said, requesting anonymity as he is not authorized to speak with media.
Section 80C of the Income-tax Act, 1961, offers deductions in respect of certain payments in computing the total income of an assessee.
Bank deposits in 2008-09 stood at Rs39.52 trillion, compared with Rs32.97 trillion a year ago.
But bankers say the rate of interest offered by post office schemes should be brought down. “Administered rates distort the market. It forces money to flow from banks... Then banks can’t get deposits at lower rates and, therefore, can’t lend at lower rates,” said Hemant Kaul, executive director, Axis Bank Ltd. “Post office should decide (interest) rates depending on the cost to other players in the market. But that situation is far off. The issue needs to be addressed immediately.”
NSC, among the most popular post office schemes, offers an interest rate of 8% per annum, which is compounded half-yearly. The effective interest, which is a taxable income, comes to 8.16% per annum. PPF, too, gives an interest of 8% per annum, but it is compounded annually and is tax-free. In both the schemes, interest accumulates and is not paid out every year.
“Post office savings have gone down because the bank interest rates were pretty good in the last two years compared with post office schemes,” said Surya Bhatia, a New-Delhi based financial planner. “Investment in post office schemes may, however, go up if rate cuts happen further. Currently, both are offering around 8%.”
Some economists expect the soft rate regime to continue till the second half of fiscal 2011. In a research noted dated 1 June, Bank of America Securities-Merrill Lynch economist Indranil Sen Gupta pointed out that the gap between the 10-year bond yield and the prime lending rate of banks, at about 550 basis points, is too high to sustain and should come down. “This should protect our soft lending rate regime until second half of FY11,” Sen Gupta said in his report.
“Higher interest rates offered by banks and better returns from income funds over last two years caused a decline in post office schemes. Going forward, if interest rates fall further, we might see an increase in postal savings. We have to see how things pan out in the next six months,” said Gaurav Mashruwala, a Mumbai-based financial planner. “Given that post office schemes have sovereign guarantee and do not fluctuate with the market conditions, they are good avenues to invest in.”
Himanshu Kohli, a founder partner of Client Associates, a Gurgaon-based wealth management company, said that in 2008 people preferred to hold cash instead of making long-term investments. Since post office investments are binding, people didn’t go to post offices, he said.
But he said this year may be different.
“We may expect half to 1% fall in interest rates over 12 months. With 2-3% real rate of interest and (section) 80C benefits, post office savings offer a long-term hedge to beat inflation and provides safety, too.”

A salary structure that can save you taxes

To save taxes, it is important to factor in other components of compensation which might help in saving taxes. So next time you negotiate your compensation with your employer, keep the following points in mind:
HRA: It is possible to maximise the benefit received through HRA by balancing the figure in such a way that the figure calculated under all three methods is approximately the same.
PF: The contribution made by an employee to his/her PF is deductible under the overall limit of Section 80C. The most hassle-free way of saving taxes is by increasing the amount of this contribution. This will result in an automatic saving and one will not have to worry about making the necessary investments.
Other tax-free allowances: You can factor in fully exempt allowance in your compensation such as daily allowance, subsistence allowance, helper allowance, etc.
Perquisites: Non-taxable perquisites such as free lunch, club membership, company car, etc., can be added to the compensation package.
In addition to structuring your salary intelligently, you can also save tax by availing of various deductions available under the Income Tax Act.
Section 80C: As stated above, investments up to an amount of Rs 1 lakh annually are deductible from your taxable income under this section. This translated into a tax saving of Rs 30,000 in case you are in the highest tax bracket. This provides the individual with the double benefit of tax savings as well as investments.
Housing loan interest: In case you take a home loan to buy your dream house you can claim benefit on the interest you pay on it, up to an amount of Rs 1.5 lakh annually. This can result in a tax saving of up to Rs 45,000.
Educational loan: The interest that you pay for the repayment of any educational loan taken by you is deductible from your total income. There is no limit set for this amount.
Medical expenses: An individual can claim a deduction of up to Rs 40,000 per annum in respect of expenditure incurred in the treatment of one of the following diseases:
Neurological diseases
Cancer
AIDS
Chronic renal failure
Haemophilia
Thalassaemia
LTA: Travelling expenses incurred by the individual and his/her family on outstation trips can be claimed as LTA deductions twice in 4 years

New tax-saving scheme likely in Budget to fund infra

The Centre is believed to be considering a new tax-saving scheme to garner `idle money' lying with households and elsewhere in the system, primarily to fund building infrastructure.The scheme could offer tax benefits for investments up to Rs 5 lakh and be instrumental in partly meeting the country's infrastructure funding needs, which have been pegged at as high as $750 billion, sources said. The scheme could serve multiple purposes including giving additional tax benefits to the public and channelising the huge amount of money lying idle in saving accounts or with households for productive means, that too without adding to the fiscal deficit, the sources noted. The government has already announced a borrowing programme of over Rs 3,00,000 crore for the current fiscal and any further increase could result in liquidity available for the private sector drying up and also add to the ballooning fiscal deficit, they added. There have been demands from various sectors for additional tax benefits for citizens and also tapping alternative resources for meeting the government's spending needs. Currently, collective tax benefits are given for an investment of Rs 1 lakh in insurance, pension schemes, bonds, mutual funds, children's education and housing loans, etc. An additional benefit of up to Rs 1.5 lakh is allowed only for housing loan interest payments. According to Planning Commission estimates, the country would need around $500 billion to build infrastructure during the remaining period of the 11th Plan (2007-12). The country's top private sector bank ICICI Bank's chairman K V Kamath has pegged the capital need for the infrastructure sector even higher, at $750 billion, over the next three years. Policymakers have favoured spending most of the money allotted for infrastructure as quickly as possible in the remaining years of the current five-year plan. Financial services major Reliance Money's CEO Sudip Bandyopadhyay said any such move would be welcome from the government if it brings out some sort of infrastructure bonds that could offer tax benefits of up to Rs 5 lakh in the Union Budget. The move could help the government raise funds, without increasing the fiscal deficit and the people would welcome it as the targeted money was anyway not giving any returns, he added. The government is also said to be considering the possibility of raising the tax exemption limit from Rs 1 lakh currently available under Section 80C of the Income Tax Act, as also the benefits for housing loan interest payment from Rs 1.5 lakh.

Source: PTI

CUSTOM DUTY

Customs Duty is a type of indirect tax levied on goods imported into India as well as on goods exported from India. Taxable event is import into or export from India. Import of goods means bringing into India of goods from a place outside India. India includes the territorial waters of India which extend upto 12 nautical miles into the sea to the coast of India. Export of goods means taking goods out of India to a place outside India.
Custom duty in India is governed by the Customs Act 1962 and the Customs Tariff Act 1975. Imported goods in India attract basic customs duty, additional customs duty and education cess. The rates of basic customs duty are specified under the Tariff Act. The peak rate of basic customs duty has been reduced to 15% for industrial goods. Additional customs duty is equivalent to the excise duty payable on similar goods manufactured in India. Education cess at 2% is leviable on the aggregate of customs duty on imported goods. Customs duty is calculated on the transaction value of the goods.
Rates of customs duty for goods imported from countries with whom India has entered into free trade agreements such as Thailand, Sri Lanka, BIMSTEC, south Asian countries.Customs duties in India are administrated by Central Board of Excise and Customs under Ministry of Finance
Customs Duties…
Customs duties are levied at specific percentage ad valorem, specific amount per unit of quantity or both, depending on the classification of the imported goods in the Customs Tariff Act.
The classification of goods and the applicable rates for the levy of import duties are furnished in the Customs Tariff Act. Duty rates may change according to the country of origin and the type of product. For example, complete exemption or rate concessions are allowed on the import of specified items from some neighboring and developing countries such as Bangladesh, Bhutan, Egypt, Myanamar, Nepal, and Sri Lanka
Types of Customs Duties
Basic duty : This is the basic duty levied under the Customs Act. The rate varies for different items from 5% to 40%.
Export Duty : Such duty is levied on export of goods. At present very few articles such as skins and leather are subject to export duty. The main purpose of this duty is to restrict exports of certain goods. The Central Government has been granted emergency powers to increase import or export duties if the need so arises. Such increase in duty must be by way of notification which is to be placed in the Parliament within the session and if it is not in session, it should be placed within seven days when the next session starts. Notification should be approved within 15 days.
Additional Duty: This additional duty is levied under section 3 (1) of the Custom Tariff Act and is equal to excise duty levied on a like product manufactured or produced in India. If a like product is not manufactured or produced in India, the excise duty that would be leviable on that product had it been manufactured or produced in India is the duty payable. If the product is leviable at different rates, the highest rate among those rates is the rate applicable. Such duty is leviable on the value of goods plus basic custom duty payable. eg. If the customs value of goods is Rs. 5000 and rate of basic customs duty is 10% and excise duty on similar goods produced in India is 20 %, CVD will be Rs.1100/-.
Protective Duty : If the Tariff Commission set up by law recommends that in order to protect the interests of Indian industry, the Central Government may levy protective anti-dumping duties at the rate recommended on specified goods. The notification for levy of such duties must be introduced in the Parliament in the next session by way of a bill or in the same session if Parliament is in session. If the bill is not passed within six months of introduction in Parliament, the notification ceases to have force but the action already undertaken under the notification remains valid. Such duty will be payable upto the date specified in the notification. Protective duty may be cancelled or varied by notification. Such notification must also be placed before Parliament for approval as above.
Import Restrictions
Goods may be imported freely without any restriction unless regulated on grounds of public policy or listed in the negative list of imports. The negative lists comprise prohibited, restrictive list of imports. The negative lists comprise prohibited, restricted and canalized items :
A. The importing of prohibited items is banned.
B.The importing of restricted items is permitted under specific license, or in accordance with a public notice conveying a general schedule.
C.Canalized items can be imported only through designated public sector agencies, such as the Indian Oil Corporation and the State Trading Corporation. However, the central government may grant licenses to others to import any canalized goods.
The negative list of import is under constant review; it is important to check the current list at the time of import.
The import of consumer goods and durables continues to be restricted (with exceptions for a Specific items).
The import of capital goods machinery has been liberalized and is generally allowed without license. Secondhand capital goods are also allowed, subject to certain conditions.
Special licensing schemes permit the import of capital goods required for export production either duty-free import of inputs required for export production.
The import of gold and specified items of consumer goods is also permissible under special import licenses issued to certain categories of exporters on the basis of either the net foreign exchange earning or the FOB value of physical exports.

CENTRAL EXCISE DUTY

Central Excise duty is an indirect tax which is levied and collected on the goods/commodities manufactured in India. Generally, manufacturer of commodities is responsible to pay duty to the Government. This indirect taxation is administered through an enactment of the Central Government viz., The Central Excise Act, 1944 and other connected rules- which provide for levy, collection and connected procedures. It is compulsory to pay Central Excise duty payable on the manufactured goods. It is not payable on the exported goods out of India.
In 2001, new Central Excise (No.2) Rules, 2001 have replaced the Central Excise Rules, 1944 with effect from 1st July, 2001. Other rules have also been notified namely, CENVAT Credit Rules, 2001, Central Excise Appeal Rules, 2001etc. With the introduction of the new rules several changes have been effected in the procedures. The new procedures are simplified. There are less numbers of rules, only 32 as compared to 234 earlier.
Types of Central Excise
Duties under Central Excise Act - Basic duty and special duty of excise are levied under Central Excise Act. Basic excise duty is levied at the rates specified in First Schedule to Central Excise Tariff Act, read with exemption notification, if any. The general rate is 16% w.e.f. 1-3.2001.
National Calamity Contingent Duty - A ‘National Calamity Continent Duty’ has been imposed on cigarettes, biris, pan masala and miscellaneous tobacco products w.e.f. 1-3-2001.
Additional Duty on Goods of Special Importance - Some goods of special importance are levied Additional Excise under Additional Duties of Excise (Goods of Special Importance) Act, 1957.
Additional Duty on Textile Articles - Additional excise duty of 15% on certain textile and textile articles like articles of silk / wool / cotton, man-made filaments, metalised yarn etc. is imposed under Additional Duties of Excise (Textile and Textile Articles Act, 1978.)
Duty on Medical and Toilet Preparations - A duty of excise is imposed on medical preparations under Medical and Toilet Preparations (Excise Duties) Act, 1955.
Additional duty on Mineral Products - Additional duty on mineral products (like motor spirit, kerosene, diesel and furnace oil) is payable under Mineral Products (Additional Duties of Excise and Customs) Act, 1958.
Central Excise Registration
In accordance with Rule 9 of the said Rules and Notifications issued under rules 18 and 19 of the said Rules, as the case may be, the following category of persons are required to register with jurisdictional Central Excise Officer in the Range office having jurisdiction over his place of business/factory.
Every manufacturer of excisable goods (including Central/State Government undertakings or undertakings owned or controlled by autonomous corporations) on which excise duty is livable.
Persons holding private warehouses.
Persons who obtain excisable goods for availing end-use based exemption notification.
Exporters manufacturing or processing export goods by using duty paid inputs and intending to claim rebate of such duty or by using inputs received without payment of duty and exporting the finished export goods.
Separate registration is required in respect of separate premises except in cases where two or more premises are actually part of the same factory (where processes are interlinked), but are segregated by public road, canal or railway-line. The fact that the two premises are part of the same factory will be decided by the Commissioner of Central Excise based on factors, such as:
Interlinked process – product manufactured/produced in one premise are substantially used in other premises for manufacture of final products.
Large number of raw materials are common and received/proposed to be received commonly for both/all the premises
Separate Registration is required for each depot, godown etc. in respect of persons issuing Cenvat invoices. However, in the case liquid and gaseous products, availability of godown should not be insisted upon.
Registration Certificate may be granted to minors provided they have legal guardians i.e. natural guardians or guardians appointed by the Court, as the case may be, to conduct business on their behalf.
Conditions for Excise Liabilities
The duty is on goods.
The goods must be excisable.
The goods must be manufactured or produced.
Such manufacture or production must be in India. Unless all of these conditions are satisfied, Central Excise Duty cannot be levied.

SERVICE TAX

Service Tax duty is an indirect tax which is levied by service providers in India except Jammu & Kashmir. The tax is levied on service providers who have annual revenue of more than 8 lakhs, which encourages smaller service providers.
The responsibility of collecting the tax lies with the Central Board of Excise and Customs (CBEC). Central Board of Excise and Customs (CBEC) is a part of the Department of Revenue under the Ministry of Finance, Government of India. It deals with the tasks of formulation of policy concerning levy and collection of Customs and Central Excise duties, prevention of smuggling and administration of matters relating to Customs, Central Excise and Narcotics to the extent under CBEC’s purview. The Board is the administrative authority for its subordinate organizations, including Custom Houses, Central Excise Commissioner ates and the Central Revenues Control Laboratory
New Services in Service Tax
ATM operations, maintenance and management.
Registrar, share transfer agents and bankers to an issue.
International air travel excluding economy class passengers.
Business support services, auctioneering.
Recovery agents Ship management agents
Travel on cruise ships
Public relation management services
Container services on rail, excluding the railway freight charges
Sponsorships of events, other than sports events by companies.
Registration Procedure
Fill the Form ST-1. Enclose photocopy of PAN card and proof of address to be registered.
Copy of PAN card is necessary
Persons who obtain excisable goods for availing end-use based exemption notification.
These forms are required to be submitted to the jurisdictional Central Excise office0.
A single registration is sufficient even when an assessee is providing more than one taxable services.
An assessee should get the registration certificate (registration number) within 7 days from the date of submission of form S.T.1, under normal circumstances.
A fresh registration is required to be obtained in case of transfer of business to another person.
In case a registered assessee starts providing any new service from the same premises, he need not apply for a fresh registration. He can simply fill in the Form S.T.1 for necessary amendments he desires to make in his existing information. The new form may be submitted to the jurisdictional Superintendent for necessary endorsement of the new service category in his Registration certificate.

Tax Laws : Sales Tax and Value Added Tax (VAT)

SALES TAX

Sales Tax is an indirect tax which is charged at the point of purchase for certain goods and services. The tax is usually set as a percentage by the Government. There are usually alist of exemptions. The tax can be included inthe price or added at the point of sale.
It is charged exactly once on any one item, and is simple to calculate and simple to collect. A conventional or retail sales tax attempts to achieve this by charging the tax only on the final end user, unlike a gross receipts tax levied on the intermediate business who purchases materials for production or ordinary operating expenses prior to delivering a service or product to the marketplace. This prevents so- called tax “cascading” or “pyramiding,” in which an item is taxed more than once as it makes its way from production to final retail sale.
Most of the Indian States have replaced Sales tax with a new Value Added Tax (VAT) from April 01, 2005. VAT is imposed on goods only and not services and it has replaced sales tax. Only Sales Tax is replaced by VAT. VAT is implemented at the State level by State Governments. VAT is applied on each stage of sale with a mechanism of credit for the input VAT paidSales Tax Types
Central Sales Tax which is levied by Central Government.
State Sales Tax which is levied by State Government.
Local Sales Tax which is levied by Local Government.
Slabs of VAT
Registrar, share transfer agents and bankers to an issue.
0% for essential commodities
1% on bullion and precious stones
4% on industrial inputs and capital goods and items of mass consumption
All other items 12.5%
Petroleum products, tobacco, liquor etc., attract higher VAT rates that vary from State to State

PAN CARD

WHAT IS P.A.N.
P.A.N. or Permanent Account Number is a number allotted to a person by the Assessing Officer for the purpose of identification. P.A.N. of the new series has 10 alphanumeric characters and is issued in the form of laminated card.
WHO SHALL APPLY FOR P.A.N.
Section 139A of the Income Tax Act provides that every person whose total income exceeds the maximum amount not chargeable to tax or every person who carries on any business or profession whose total turnover or gross receipts exceed Rs.5 lakhs in any previous year or any person required to a file a return of income u/s 139(4A) shall apply for PAN. Besides, any person not fulfilling the above conditions may also apply for allotment of PAN. With effect from 01.06.2000, the Central Government may be notification specify any class/classes of person including importers and exporters, whether or not any tax is payable by them, and such persons shall also then apply to the Assessing Officer for allotment of PAN.
W.e.f. 01.04.2006 a person liable to furnish a return of fringe benefits under the newly introduced section 115WD of the I.T. Act is also required to apply for allotment of PAN. Ofcourse, if such a person already has been allotted a PAN he shall not be required to obtain another PAN.
TRANSACTIONS IN WHICH QUOTING OF PAN IS MANDATORY
Purchase and sale of immovable property.Purchase and sale of motor vehicles.Transaction in shares exceeding Rs.50,000.Opening of new bank accounts.Fixed deposits of more than Rs.50,000.Application for allotment of telephone connections.Payment to hotels exceeding Rs.25,000.Provided that till such time PAN is allotted to a person, he may quote his General Index register Number or GIR No.

HOW TO APPLY FOR PAN
Application for allotment of PAN is to be made in Form 49A. Following points must be noted while filling the above form:-
1. Application from must be typewritten or handwritten in black ink in BLOCK LETTERS.

2. Two black & white photographs are to be annexed.

3. While selecting the “Address for Communication”, due care should be exercised as all communications thereafter would be sent ate indicated address.

4. In the space given for “Father’s Name”. Only the father’s name should be given. Married ladies may note that husband’s name is not required and should not be given.

5. Due care should be exercised to fill the correct date of birth.

6. The form should be signed in English or any of the Indian Languages in the 2 specified places. In case of thumb impressions attestation by a Gazetted Officer is necessary.

TAX SAVING TIPS

The TAX saving season is here. Most tax-payers start looking at various investment options for saving income-tax from December onwards and complete the process by March every year. Most popular among individual investors is the section 80C of the Income-Tax Act. Under this investments in certain specified instruments and expenses under certain items qualify for deduction from income up to a limit of Rs 1 lakh per assessee.

Let’s look at the expenses first.

Education expenses incurred on children’s tuition fees, etc. for school/college/university in India are deductible from income under the overall limit. Donations, capitation fees, contribution to building funds, international education, etc. do not qualify for this deduction.

Repayment of the principal amount of housing loans is also deductible under section (u/s) 80C, besides the deduction of interest paid on housing loans as “loss on house property” up to Rs 1,50,000 per annum (p.a.). This combination saves Rs 75,000 every year for an assessee paying tax at the rate of 30 percent. This is a very good tax-saving-cum real estate investment option available to salaried individuals.

Employees’ contribution to provident funds, a compulsory investment route, also qualifies for this deduction. Life Insurance premium is another item allowed under the section.

But investors should learn to think beyond section 80C for proper investment planning. The secondary and equally important objective should be to get the best out of investment options. The choice could vary depending upon the age, risk profile, total income and investment objective of an individual. Most investors have been purchasing National Savings Certificates (NSC) and/or investing in Public Provident Fund (PPF) accounts. Both these schemes offer 8 per cent interest per annum – PPF is better, because the interest earned is tax-free. But there are better options. Equity Linked Saving Schemes of MFs (ELSS) Salient features:

1. Lock in period – only three years

2. Compared to NSC/PPF the lower lock-period ensures that you get twice the tax benefit in ELSS on a fixed sum invested today

3. Dividend tax-free at the hands of the investor

4. Returns – not assured, but over the last three years ELSS’ have delivered average returns in excess of 40 percent per annum

5. Dividend payout option – especially in respect of existing open-ended ELSS – ensures that the amount locked in is actually less than the amount invested. Example (smaller lock-in period)

Lets take the example of two hypothetical investors Rahul and Abhishek. Rahul, a conventional investor, purchases NSC’s worth Rs 60,000. Rahul purchases NSC’s worth Rs 60,000. He will save tax of Rs 18,000 this year, but his money will be locked in for six years and he will start paying tax on accrued interest on the NSC from the next year on wards; while the return is just 8 per cent.

Compare him with Abhishek who invests Rs 60,000 in ELSS of an existing mutual fund. He is expected to earn more than 8 per cent returns, which will be tax free. After three years his capital will be released which can invested in an ELSS scheme yet again (assuming that tax laws remain the same). Thus on Rs 60,000 invested in ELSS, Abhishek can save Rs 36,000 income tax in six years besides earning higher tax-free income compared to Gore.

Tax saved in six years is double in ELSS compared to PPF/NSC, while the returns also tend to be superior. Old fund vs new fund It may be wiser to consider investing in an existing open-ended ELSS rather than a new fund, if tax savings is your only objective. Some existing ELSS funds with high NAV declare very handsome dividends in these months – watch out for such funds.

Let’s assume that Abhishek invests Rs 60,000 in an existing ELSS fund with a good track record, at the current NAV of Rs 20. Suppose the fund declares dividend at the rate of Rs 10 per unit, Abhishek will get tax-free dividend of Rs 30,000. He will save tax of Rs 18,000 on net investment of Rs 30,000 with a lock in period of only three years. This combination ensures that he is four times better off compared to Gore. (Not considering the superior returns possible in mutual funds).

Pension plans of mutual funds Another important but often ignored option u/s 80C is “Approved pension/retirement benefit plans of mutual funds”. Only two mutual funds have schemes that have been approved by CBDT for tax benefit – the two being Templeton India Pension Plan and UTI Retirement Benefit Plan. These two funds are balanced funds and have managed to deliver returns of around 15 percent per annum since their inception about 7-8 years ago. Obviously, the returns are superior compared to 8 percent tax-free returns of PPF and these schemes should be considered as an alternative to PPF investments. The tax payers in the age group of 40-plus should start investing on a systematic basis in these pension plans for tax savings, tax-free returns and most importantly for “Retirement Planning”. Say in 15 years the lump sum accumulated would be much higher than that in a PPF account.