Ten features of importance in Foreign Income and Asset transactions:
- Tax on all foreign income will have to be paid at the flat rate of 30 per cent without any exemption, deduction and set off or carry forward losses that the Income Tax Act permits.
- There will be enhanced punishment of jail for 3-10 years for willful evasion of tax on foreign income along with a penalty equal to three times the amount of tax evaded or 90 per cent of the undisclosed income or the value of the asset.
- Offenders under this law would have to pay tax at the rate of 30%, however concessional penalty would be equal to the tax amount payable.
- Failure to file returns of foreign income or assets will attract a penalty up to Rs. 10 lakhs.
- Second and subsequent offence will be punishable with rigorous imprisonment of 3-10 years with a fine of up to Rs. 1 crore.
- Undisclosed holdings of less than Rs. 5 lakhs at any time during a year not reported out of oversight or ignorance will not involve penalty or prosecution.
- The Bill empowers the Centre to enter into agreements with other countries for the exchange of information, recovery of tax and avoidance of double taxation.
- The Government is proposing to include “tax evasion” as a scheduled offence under the Prevention of Money Laundering Act, 2002.
- The right to appeal will be to the Income Tax Appellate Tribunal and to jurisdictional High Courts and the Supreme Court on substantial questions of law.
- The tax authorities will have powers of discovery and inspection, issue of summonses, enforcement of attendance, production of evidence and impounding of account books and documents.
Business entities to file Foreign Liabilities and Assets Returns:
- TheAnnual return of foreign liabilities and assets (FLA) is required to be submitted by all the Indian Companies which have received FDI and /or made FDI abroad in the previous year (S) including the current year i.e. who holds foreign assets or liabilities in their Balance sheets.
- FLA return is mandatory under FEMA 1999 and companies are required to submit the same based on audited/ unaudited account by July 15 every year.
- If, the Indian company’s accounts are not audited, before the due date of submission i.e. July 15,then the FLA return should be submitted based on unaudited account. Once the accounts get audited and there are revisions from the provisional information submitted by the company, they are supposed to submit the revised FLA return based on audited accounts by end of September.
- If the Indian company does not have any outstanding investment in respect of Inward or outward FDI as on end March of reporting year, the company need not submit the FLA return.
- If the Indian company has received only share application money and does not have any foreign direct investment or overseas direct investment outstanding as of end-March of the reporting year, then that company is not required to fill up FLA return.
- If the company has not ‘received any fresh FDI and/or ODI (overseas direct investment) in the latest year but the company has outstanding FDI and/or ODI, then that company is required to submit the FLA Return every year by July 15.
- All Partnership firms, Trusts, Societies and its Branches or Trustees have any outward FDI outstanding as of end-March of the reporting year, then they are required to send a request mail to get a dummy CIN number which will enable them to file theExcel based FLA Return. If any entity has already got the dummy CIN number from the previous survey, they should use the same CIN number in the current survey also. It is also informed that these dummy CIN numbers are provided by RBI for filling the excel based FLA return only and not for any other purpose.
- FLA Return and Annual Performance Report (APR) for ODI are two different returns and monitored by two different departments of RBI. So we are required to submit both the returns if these are applicable to the company.
- If ALL non-resident shareholders of a company have transferred their shares to the residents during the reporting period and the company does not have any outstanding investment in respect of inward and outward FDI as on end-March of reporting year, then the company need not submit the FLA Return.
- Shares issued by the reporting company to non-resident on Non-Repatriable basis should not be considered as foreign investment; therefore, companies which have issued the shares to non-resident only on Non-Repatriable basis, is not required to submit the FLA Return.
Duties on tax Deduction at Source:
The types of income which invite TDS include salary paid to employees, interest on bank deposits and bonds, winnings from lotteries and horse races, contract payments, professional charges, rent, commission, advertisement charges etc.
TDS is deductible at various rates specified by the government. There may be a threshold listed for different types of incomes, and TDS may be levied only above this limit.
The deductor issues a TDS certificate to the deductee, giving details of the tax cut. It is treated as tax paid by the deductee on income earned, and adjusted against income tax payable for the year while filing the return.
The responsibility of deducting tax at source and depositing it with the government lies with the deductor. The TDS should be deposited within a week of the end of the month in which the deduction is made.
The returns for the TDS must be filed by all deductors every quarter on the prescribed forms. The respective due dates for filing of returns are 15 July, 15 October, 15 January and 15 May.
Nature of Payment
|Cut Off amount||TDS Rate %|
|Induvidual / HUF||Others|
|194 A||Interest other than interest on securities to resident
On Bank Interest
|Rs. 5,000 p.a
|194 C||Payment to resident Contractor / Sub contractor||Rs.30,000 per contract or Rs.75,000 p.a||1||2
|194 H||Commission or brokerage to a resident||Rs.5,000 p.a||10||10|
|194 I||Rent to a resident (Excepting residential)|
|Rent for Plant , Machinery & Equipments||Rs. 180,000 p.a||2||2|
|Rent for land, building or furniture||Rs. 180,000 p.a||10||10
|194 J||Professional Charges||Rs. 30,000 p.a||10||10|
Service Tax Matters:
What payments will suffer reverse charge by the service receiver, applicable to business persons?
|Sl. No.||Description of a service||Percentage of service tax payable by the person providing service||Percentage of service tax payable by any person liable for paying service tax other than the service provider|
|1||in respect of services provided or agreed to be provided by an insurance agent to any person carrying on insurance business||Nil||100%|
|1A||in respect of services provided or agreed to be provided by a recovery agent to a banking company or a financial institution or a non-banking financial company (Effective from 01.04.2015)||Nil||100%|
|1B.||in respect of services provided or agreed to be provided by a mutual fund agent or distributor, to a mutual fund or asset management company (Effective from 01.04.2015)||Nil||100%|
|1C.||in respect of service provided or agreed to be provided by a selling or marketing agent of lottery tickets to a lottery distributor or selling agent||Nil||100%|
|2||in respect of services provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road to Company, Partnership Firm, Registered Factory, Registered Society, co-operative society, AOP, LLP, Person Registered Under Central Excise Act, 1944 including Excise Dealers||Nil||100%|
|3||in respect of services provided or agreed to be provided by way of sponsorship to anybody corporate or partnership firm||Nil||100%|
|4||in respect of services provided or agreed to be provided by an arbitral tribunal to any Business entity||Nil||100%|
|5||in respect of services provided or agreed to be provided by individual advocate or a firm of advocates by way of legal services to any Business entity||Nil||100%|
|5A||in respect of services provided or agreed to be provided by a director of a company or a body corporate to the said company or the body corporate||Nil||100%|
|6||in respect of services provided or agreed to be provided by Government or local authority excluding,- (1) renting of immovable property, and (2) services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act,1994 to any Business Entity||Nil||100%|
|7||(a) in respect of services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on abated value to any person who is not engaged in the similar line of business by individual, HUF, firm or AOP to Body Corporate||Nil||100%|
|(b) in respect of services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on non abated value to any person who is not engaged in the similar line of business by individual, HUF, firm or AOP to Body Corporate (Revised wef 01.10.2014)||50%||50%|
|8.||in respect of services provided or agreed to be provided by way of supply of manpower for any purpose or security services by individual, HUF, firm or AOP to Body Corporate||Nil||100%|
|9.||in respect of services provided or agreed to be provided in service portion in execution of works contract by individual, HUF, firm or AOP to Body Corporate||50%||50%|
|10||in respect of any taxable services provided or agreed to be provided by any person who is located in a non-taxable territory and received by any person located in the taxable territory||Nil||100%|
|11.||in respect of any service provided or agreed to be provided by a person involving an aggregator in any manner to any Business Entity(Effective from 01.03.2015)||Nil||100%|
Explanation-I. – The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification.
Explanation-II. – In works contract services, where both service provider and service recipient is the persons liable to pay tax, the service recipient has the option of choosing the valuation method as per choice, independent of valuation method adopted by the provider of service.
Explanation-III. Hitherto, support services provided by a Government/Local authority to any business entity was subject to 100% reverse charge. The scope of reverse charge has now been extended in case of all services provided by the Government/ Local authority to such business entities. The exclusion from reverse charge on renting of immovable property and some specified services of Sec. 66D of the Act shall continue.
Changes made in Service Tax Abatement Provisions with effect from 01/04/2015
- Transport of goods/ passengers by rail– Hitherto, service tax was payable on 30% of the value of services of rail transport of goods and passengers (with or without accompanied belongings) without any condition. Now, the abatement shall be available subject to the condition that Cenvat credit on inputs, capital goods and input services, used for providing the taxable services has not been taken under CCR, 2004.
- Goods Transport Agency-Abatement on “Transportation of goods by Goods Transport Agency” was 75% which has now been reduced to 70%.
- Services provided in relation to chit-Abatement on “Services provided in relation to chit” has been withdrawn.
- Transport of goods in a vessel– Abatement on “Transportation of goods in a vessel” was 60% which has now been increased to 70%.
- Transport of passengers by Air– Hitherto, an abatement of 60% was provided on taxable services of transport of passengers by air (with or without accompanied belongings). The said abatement continues for economy class travel and in case of other than economy class the abatement has been reduced to 40%.
Service Tax Rate Abatement Chart as Applicable from 01.04.2015 updated with Changes Made Vide Budget 2015 and Notification No. 8/2015-ST, Dated: March 01, 2015.
|Sl.No.||Description of taxable service||Percentage|
|1||Services in relation to financial leasing including hire purchase||10||90|
|2||Transport of goods by rail||30||70|
|3||Transport of passengers, with or without accompanied belongings by rail||30||70|
|4||Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises ( including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises||70||30|
|5||Transport of passengers by air, with or without accompanied belongings in|
|(i) economy class||40||60|
|(ii) other than economy class||60||40|
|6||Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes.||60||40|
|7||Services of goods transport agency in relation to transportation of goods.||30||70|
|8||Renting of motor cab||40||60|
|9||Transport of passengers, with or without accompanied belongings, by-a. a contract carriage other than motor cab .b. a radio taxi.||40||60|
|10||Transport of goods in a vessel||30||70|
|11||Services by a tour operator in relation to,-(i) a package tour||25||75|
|(ii) a tour, if the tour operator is providing services solely of arranging or booking accommodation for any person in relation to a tour||10||90|
|(iii) any services other than specified at (i) and (ii) above.||40||60|
|12.||Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly, except where entire consideration is received after issuance of completion certificate by the competent authority,-|
|(a) for a residential unit satisfying both the following conditions, namely:–(i) the carpet area of the unit is less than 2000 square feet; and (ii) the amount charged for the unit is less than rupees one crore;||25||75|
|(b) for other than the (a) above.||30||70|