Equalisation levy of 6% on services pertaining to cross border digital transactions will come into effect from 1st June, 2016. CBDT had notified the rules for equalisation levy and the said tax will come into force from 01-06-2016.

The specified services covered by the levy include online advertising, provision for digital advertising space and any other service to be notified by government.

As per the Finance Act, 2016 a person making payment to a non-resident (who does not have a permanent establishment) exceeding in aggregate Rs.1 Lakh in a year will with hold tax @ 6%  of gross amount paid as equalisation levy. This levy will only applicable  to business to business(B2B) transactions. Non-resident companies will not get credit in their home countries on transactions subject to the levy.

The cost of advertisement for startups will increase due to the introduction of this levy as the payments to Google, Facebook, Twitter and other social media sites as well as website/blog designing, hosting, promotional emails by non-residents who doesn’t have permanent establishment in India will be subject to this levy.

The Government had notified raising the threshold limit for TDS on EPF withdrawals from the existing Rs.30,000/- to Rs.50,000/-.

The Finance Act, 2016 had amended section 192A of Income Tax Act to raise the threshold limit of PF withdrawal from Rs.30,000/- to Rs.50,000/- for Tax Deducted at Source.The provision will came effect from 01-01-2016.

TDS rate is 10%, provided the PAN is submitted. However, in case 15G (for senior citizens above 60 years) or 15H (claimants below the age of 60) is submitted by the member, no TDS is deducted. If PAN is not furnished or 15G/15H is not submitted TDS is deducted at maximum marginal rate of 34.608%.

TDS shall not be deducted in case of transfer of PF from one account to another and in case of withdrawal after 5 years.

CBDT had introduced a new form (Form 12 BB as setup under Rule 26C) for claiming tax deduction towards LTA, LTC, HRA, Interest on Housing Loan and deduction under Sections 80C,  80D etc of Chapter VIA of Income Tax Act.

This rule will take effect from 01st June, 2016.

Copy of the form 12BB in PDF & Excel is given below:

Please click the link below for Form 12 BB In PDF 

https://drive.google.com/file/d/0BwfaVqFwg9yDSkxHSmRvZkx4TlE/view?usp=sharing

Please click the link below for Form 12 BB In Excel 

https://drive.google.com/file/d/0BwfaVqFwg9yDSkxHSmRvZkx4TlE/view?usp=sharing

The Finace Act, 2016, has increased the Service Tax by including a nee cess by the name Krishi Kalyan Cess, which is applicable w.e.f. 01-06-2016. The effective rate of Service Tax  for all new services provided on or after 01-06-2016 is given below:

Service Tax                         : 14.00%

Swatch Bharath Cess       :  0.50%

Krishi Kalyan Cess            : 0.50%

Effective Rate                    : 15.00%

The bifurcation of three elements as shown above should be clearly shown in the invoice. CENVAT Credit will be available on Krishi Kalyan Cess. But for Swatch Bharath Cess, Cenvat Credit will not be available.

The treatment of invoices outstanding as on 31-05-2016 is given below:

In order to avoid the effect of increase in service tax, it’s advisable to make the payment for services received on or before 31-05-2016.

MCA vide general Circular No.6/2016 dated 16th May, 2016 decided to extend the period for which the one time waiver of additional fees is applicable to all e-forms which are due for filing by companies between the 25th March 2016 up to 31st May 2016 as well as extend the last date for filing such documents and availing the benefit of waiver to 10.06 .2016.

CBDT had issued Circular No. 13/2016 dated 09th May, 2016, giving tax payers who have e-uploaded their income tax returns from Asssesment Year 2009-10 to 2014-15, within the time allowed but have remained incomplete due to non-submission of ITR-V for verification  duly signed to CPC – Bengaluru. Those tax payers have a final opportunity to complete the process by  Electronic Verification Code (EVC) on or before 31st August, 2016. As an alternative to EVC, the tax payer is allowed to send a duly signed copy of ITR-V to the CPC, Bengaluru by 31st August, 2016 by speed post.

CBDT also relaxes the time limit for intimation under section 143(1) and directs that such returns shall be processed by 30-11-2016 and intimation of processing of such returns shall be send to the tax payer concerned as per the laid down procedure. In refund cases, while determining the interest the provisions of section 244A(2) of the Act would apply.

Section 244A(2) provides that where the reasons for delay in processing of refund is attributable to the taxpayer, such period of delay caused by the assessee shall be excluded while computing the period for which interest in refund is payable.

It is also clarified in the circular that “in case the taxpayer concerned does not get his return regularized by furnishing a valid verification (either EVC or ITR-V) till 31.08.2016, necessary consequences as provided in law for non-filing the return may follow”.

Consequences of non-filing ITR-V within the time allowed are significant as such a return can be declared ‘Non-Est’ (does not exist) according to the law and the assessee shall face repercussions. For example, under section 271F a penalty Rs.5,000 may be levied.

TAX PAYERS WHO HAD UPLOADED INCOME TAX RETURN AND NOT SUBMITTED ITR-V SHOULD AVAIL THIS OPTION SO AS TO AVOID PENAL PROCEEDINGS.

To view the Circular, please click the link below:

https://drive.google.com/file/d/0BwfaVqFwg9yDYzRvOGQtaHB5SmM/view?usp=sharing

1. Unlisted Share Transfer: Inserted a new clause to provide that unlisted shares of company would be treated as short-term capital asset if it is held for a period of 24 months or less immediately preceding the date of its transfer.
2. Eligible Start-up: As per Finance Bill, Section 80-IAC to provide 100 percent deduction for 3 assessment years to an ‘eligible Start-up’. The ‘eligible start-up’ is defined to mean a ‘company’ engaged in an eligible business. The Finance Bill, 2016 as passed by the Lok Sabha extends the definition of ‘eligible start-up’ to include ‘LLP’.
3. Additional 10% tax of Dividends for tax payers receiving Dividend more than Rs.10 Lakhs: The aggregate amount of dividend (i.e., dividend paid or declared or distributed by one or more domestic companies) shall be considered for the limit of Rs.10 lakhs.
4. TCS on motor vehicles purchase for value exceeding Rs.10 Lakhs: The tax shall be collected under Section 206C only at the time of receipt of consideration.
5. Employers Contribution to EPF: Any contribution by employer in excess of 12% of salary to the recognized provident fund account of the employees shall be deemed as income of employee. The ceiling limit of Rs.1,50,000/- was there in the Finance Bill, 2016.
6. Processing of return before scrutiny assessment: The Finance Bill, 2016 proposed mandatory processing of returns under Section 143(1) even when the scrutiny assessment notice is issued to the assessee. However, the finance bill as passed by the Lok Sabha provides that the processing of return is not necessary before the expiry of one year from the end of the financial year in which return is furnished, where a notice is issued for scrutiny assessment under Section 143(2).
7. Benefit of 25% reduced tax rate extended to the companies engaged in research in relation to or distribution of article or thing manufactured or produced by it.
8. Income Declaration Scheme: Income chargeable to tax is declared in the form of investment in any asset, the fair market value of such asset as on the date of commencement of this scheme shall be deemed to be the undisclosed income. The Finance Bill, 2016 as passed by the Lok Sabha provides that the cost of acquisition of such asset shall be deemed to be the fair market value taken into account for purposes of Income Declaration Scheme, 2016.
9. Withdrawal of amendments related to retirement funds: The proposed amendment to tax withdrawal from EPF and Superannuation fund in the Finance Bill 2016, is withdrawn.