Monday 29 December 2014

COMPLETE PROCEDURE OF REVISE E TDS RETURN

If an assessee has filed his income tax return and subsequently found any omission or wrong statement therein, he can re-file/revise the return with necessary modification. This re-filing of the income tax return is referred to as Revised Return. The process for revising the return is very simple. Please remember that the process outlined below is applicable if you had filed the original return online.

RULES RELATED TO REVISED RETURN
•    Revised return can be filed for any previous year at any time before the expiry of 1 year from the end of the relevant assessment year or before completion of the assessment whichever is earlier. For this financial year 2013-14), you can file the revised return till March 31st, 2014
•    However, if the income tax department completes the assessment of your return earlier, then a revised return cannot be filed.
•    Revised return can be filed only if the original return was filed before due date. Thus if a return is filed after a due date then it cannot be revised
•    A loss return filed within time can also be revised and in such case loss as per the revised is carried forward
•    One should have acknowledgement number and date of filing the original return in order to file a revised return
•    Return filed in response to the notice u/s 148 can also be revised. It should be noted that notice u/s 148 is issued in respect of the escaped income in the respective assessment year
•    In case of concealment of income and furnishing of inaccurate information in income tax return an individual will be penalized
HOW TO FILE A REVISED RETURN
•    Check for the discrepancy in ITR-V form received from the original return e-filing.
•    Log on to h t t p s: // i n c o m e t a x i n d i a e f i l i n g . g o v .i n /
•    In the home page, Login through link of Registered Users.
•    Prepare & Submit online Return under e-file & complete below detail as required.
•    Enter the E-filing acknowledgement receipt number from the ITR-V (Which you got after the original return)
•    Select the appropriate “return filed under section”. You will find options for 17-Revised 139(5).
•    Press Save as Draft and continue and go ahead make changes and enter correct details
•    Press Submit button on completion of data . You will get a new ITR-V marked as revised return.
•    Once you receive the ITR-V form, you are supposed to send across both original and revised return ITR-V forms to IT department Bangalore within 120 days.

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Monday 22 December 2014

Analysis of Some Relevant Sections UNDER INCOME TAX With Regard to Transfer of Immovable Property


Existing Section 50C: Section 50C affects all the transactions of land and buildings in the country except Jammu and Kashmir. This section comes into picture at the time of computing capital gains under section 48 of the Income Tax Act, 1961. Section 50C provides that if the value stated in the instrument of transfer is less than the valuation adopted, assessed or assessable by the stamp duty authorities, the valuation as adopted, assessed or assessable by the stamp duty authorities will be considered for the purpose of computation of capital gains arising on transfer of land or building or both. Income tax consultants

For example: If in the agreement for sale, the value of the flat is stated at Rs. 24 lacs but according to the stamp duty authorities the valuation of the flat is Rs. 34 lacs, then it will be considered that the flat has been sold for Rs. 34 lacs and capital gains will be computed on the basis of Rs. 34 lacs.

Section 50C is applicable only to transfer of land or building or both provided it is a  capital asset. Thus, in cases when such assets are held as stock-in-trade, the section does not apply. By implication, it does not affect sale of land or building by a builder or a developer because land, building, shops, flats, etc sold by the builders and developers are generally stock-in-trade in their hands and not the capital assets.

Last few statements in bold letters acts as a platform for the insertion of new section 43CA

New Section 43CA(With effect from 1st April, 2013): A new section 43CA has been
inserted by the Finance Act, 2013 which provides stamp duty value to be considered for the purpose of computation of income under the head "Profits and Gains of Business or Profession" in respect of all transactions relating to land or building or both. This amendment has an adverse impact on almost all transactions of real estate entered into by all real estate developers and traders in India because their income would be computed on the basis of  notional income and not the real income as appearing in the books of account of a tax payer.

Exception to Section 43CA:
•    Sale consideration is received in a mode other than cash.
•    Sale consideration is received on or before the date of agreement of transfer.
•    The date of an agreement fixing the value of consideration for the transfer of the
•    asset and the date of registration of the transfer of the asset are not the same.

When the above three conditions are satisfied, the stamp duty value may be taken as on the date of the agreement for transfer and not as on the date of registration for such transfer.

Section 56(2)(vii):

Existing Law: Where any immovable property is received by an individual or HUF without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property would be charged to tax in the hands of the individual or HUF as income from other sources. It is further stated that the existing provision does not cover a situation where the immovable property has been received by an individual or HUF for inadequate consideration.

As amended by the Finance Act, 2013: The provisions of clause (vii) of sub-section (2) of section 56 is amended so as to provide that where any immovable property is received for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration, shall be chargeable to tax in the hands of the individual or HUF as income from other sources.

Exception to Section 56(2)(vii):

•    Sale consideration is received in a mode other than cash.
•    Sale consideration is received on or before the date of agreement of transfer.
•    The date of an agreement fixing the value of consideration for the transfer of the
•    asset and the date of registration of the transfer of the asset are not the same.

When the above three conditions are satisfied, the stamp duty value may be taken as on the date of the agreement for transfer and not as on the date of registration for such transfer.

Section 194IA: A new section 194IA has been inserted by Finance Act, 2013 so as to
provide that every transferee, at the time of making payment or crediting of any sum as consideration for transfer of immovable property (other than agricultural land) to a resident transferor, shall deduct tax, at the rate of 1% of such sum only if the purchase value of immovable property is in excess of Rs.50 Lakhs. Consequent to this insertion, the tax payers would be required to obtain TAN (Tax Deduction Account Number) Number and also perhaps would be required to file the yearly TDS return(With effect from 1/6/2013).

Section 80EE (Inserted by Finance Act, 2013): Helpful for individuals having total income
beyond Rs. 6 lacs:
•    Lender is a bank or public financial institution.
•    Loan sanctioned between 1/4/2013 to 1/4/2014.
•    Loan is for acquisition or construction of a new house.
•    On the date of sanction of loan he should not own any residential property. Loan amount is less than or equal to Rs. 25 lacs.
•    Value of residential property is less than or equal to Rs. 40 lacs. Only interest paid is allowed up to Rs. 1 lac. in the year I. If less than Rs 1 lac. is claimed in the I year, then the balance amount can be claimed in the year II. Maximum Rs 1 lac deduction can be claimed in the 2 year spread.
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Monday 15 December 2014

METHODS OF ELIMINATING DOUBLE TAXATION


The objective of double taxation can be achieved Tax treaties employ various methods or a combination of
(I) EXEMPTION METHOD –
One method of avoiding double taxation is for the residence country to altogether exclude foreign income from its tax base. The country of source is then given exclusive right to tax such incomes. This is known as complete exemption method and is sometimes followed in respect of profits attributable to foreign permanent establishments or income from immovable property. Indian tax treaties with Denmark, Norway and Sweden embody with respect to certain incomes.
(II) CREDIT METHOD
This method reflects the underline concept that the resident remains liable in the country of residence on its global income, however as far the quantum of tax liabilities is concerned credit for tax paid in the source country is given by the residence country against its domestic tax as if the foreign tax were paid to the country of residence itself.
(III) TAX SPARING
One of the aims of the Indian Double Taxation Avoidance Agreements is to stimulate foreign investment flows in India from foreign developed countries. One way to achieve this aim is to let the investor to preserve to himself/itself benefits of tax incentives available in India for such investments. This is done through “Tax Sparing”. Here the tax credit is allowed by the country of its residence, not only in respect of taxes actually paid by it in India but also in respect of those taxes India forgoes due to its fiscal incentive provisions under the Indian Income Tax Act.
Thus, tax sparing credit is an extension of the normal and regular tax credit to taxes that are spared by the source country i.e. forgiven or reduced due to rebates with the intention of providing incentives for investments.
The regular tax credit is a measure for prevention of double taxation, but the tax sparing credit extends the relief granted by the source country to the investor in the residence country by the way of an incentive to stimulate foreign investment flows and does not seek reciprocal arrangements by the developing countries.
APPLICABILITY OF TREATY BENEFITS
In order to get the benefit of a tax treaty, it is necessary to have an access to it. For that purpose, a person must qualify in terms of the treaty as a: 
- person 
- resident of any of the Contracting states; and 
- beneficial owner of the income by the way of dividends, interest or royalties for a lower rate of withholding tax.
RESIDENCE OF A PERSON/ RESIDENT
The determination of the residential status is of great significance as the taxability of income under the domestic laws depends upon it, and as also only the resident of a contracting state can seek relief from double taxation.
The expression ‘resident of contracting state’ is defined to mean any person who, under the laws of that state, is 
1. liable to tax therein by reason of 
2. domicile, residence, place of management or 
3. any other criterion of a similar nature.
The treaty provisions set forth rules for determination whether a person is a resident of a contracting state for purposes of the treaty. The determination looks for first to a person’s liability to tax as a resident under the respective taxation laws of the contracting state. If a person is resident in both the contracting states, there are provisions to assign a single state of residence to him for purposes of the treaty through tie-breaking rules.
BUSINESS INCOME
The business income of a non-resident is taxable in India under section 9(1)(i) of the ITA only if it accrues or arises, directly or indirectly, through or from any business connection in India, property in India, asset or source of income in India, or through the transfer of an Indian capital asset. Explanation 2 of section 9(1) (i) contain an inclusive definition of business connection; as per which a business connection is said to exist if any person carrying on a business activity acts on behalf of a non-resident and:
# has and habitually exercises an authority to conclude contracts on behalf of the non-resident 
# has no such authority, but habitually maintains in India a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the non-resident 
# habitually secures orders in India, mainly or wholly for the non-resident or its affiliates.

PERMANENT ESTABLISHMENT
Double taxation agreement restricts the jurisdiction of the contracting states to taxing business income of a foreign enterprise only if such enterprise carries on business in India through a permanent establishment.
The term “permanent establishment” as defined in Article 5 means a fixed place of business through which business of an enterprise is carried on. The definition requires performance of business activity through a fixed place of business in another country. The expression has been defined as:
a. fixed place of business through which the business of an 
b. enterprise is 
c. Wholly or partly carried on.
The first part of Article 5(1) postulates that the existence of a fixed place of business whereas the second part postulates that the business is carried on through a fixed place. If the second part is not attracted, there is no permanent establishment.[10] Thereby meaning that there should necessarily be a fixed place of business through which the enterprise must conduct business activity and that activity must be income generating.
TREATING SHOPPING
Treating shopping is an expression which refers to the act of a resident of a third country taking advantage of a fiscal treaty between states. A person acts through a legal entity created in a state essentially to obtain treaty benefits that would not be available directly to such person.

The basic feature of treaty shopping is the establishment of base companies in other states solely for the purpose of enjoying the benefit of a particular treaty rules existing between the state involved and the third state. An example of treaty shopping can be the India-Mauritius double Taxation agreement where various companies have been incorporated in Mauritius to take advantage of the Indo-Mauritius DTAA in which capital gains are to be assessed as per the law of the state of residence of the entity .However, under the Mauritian law, tax is not levied on capital gains which means that the capital gains made by the Mauritian entity on transfer of shares in an Indian company go unassessed.

However, the last few tears have seen a change in the approach of the States in the wake of wide reports of extensive money laundering and the tax evasion. As a consequences, a lot of countries are adopting a “Limitation of Benefits” clause in the tax treaties so as o restrict third parties from taking advantage of tax treaties between two other states.
INDIAN TAX REGIME
The Income Tax Act, 1961 (ITA) governs taxation of income in India. According to section 5 of the ITA, Indian residents[11] are taxable on their worldwide income, and nonresidents are taxed only on income that has its source in India.10 Section 6 of the ITA defines who may be a tax resident and contains different residency criteria for companies, firms, and individuals. The scope of section 5 is expanded by the ‘‘legal fiction contained in section 9,’’ which deems certain kinds of income to be of Indian source.
The ITA favors source-based taxation as compared to the OECD model conventions or treaties entered into by many developed countries that favor residence based taxation. Indian courts have supported source based taxation in several cases in the past.

INDIAN POLICY WITH RESPECT TO DOUBLE TAXATION AVOIDANCE AGREEMENTS
The policy adopted by the Indian government in regard to double taxation treaties may be worded as follows:

  •  Trading with India should be relieved of Indian taxes considerably so as to promote its economic and industrial development.
  •  There should be co-ordination of Indian taxation with foreign tax legislation for Indian as well as foreign companies trading with India 
  •  The agreements are intended to permit the Indian authorities to co-operate with the foreign tax administration. 
  •  Tax treaties are a good compromise between taxation at source and taxation in the country of residence 
  •  India primarily follows the UN model convention and one therefore finds the tax-sparing and credit methods for elimination of double taxation in most Indian treaties as well as more source-based taxation in respect of the articles on ‘royalties’ and ‘other income’ than in the OECD model convention.

CONCLUSION
The regime of international taxation exists through bilateral tax treaties based upon model treaties, developed by the OECD and the UN, between the Contracting States. India has entered into a wide network of tax treaties with various countries all over the world to facilitate free flow of capital into and from India. However, the international tax regime has to be restructured continuously so as to respond to the current challenges and drawbacks. Know more about information: Business tax consultants and Tax consulting company

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Monday 8 December 2014

LEADERSHIP SKILLS

Very few people are great leaders overnight. It takes time and practice. As long as you’re open about learning along the way and working with your team on leadership versus dictating to them, most people will be happy to go on the journey with you.
Leadership skills come after a person has tested his waters. What I mean to say is he or she has understood and accepted himself or herself completely. Once you know what you can do and do well, you can build up on that while leading others.
  1. Lead By Example. You can’t be an aloof leader, someone that’s never around and incapable of getting your hands dirty. One of the best ways to lead is by example – pitching in where needed, lending a helping hand, and making sure that the work you do is clearly understood by your team.
  2. Passion. A leader without passion isn’t a leader. He’s a paper pusher. Or a taskmaster. Or a government employee… Passion drives a lot, and you can inspire so much in others through your own passion and enthusiasm. That doesn’t mean you have to be constantly cheery, it means you’ve got to believe in what you’re doing and what your company is doing.
  3. Be Organized. A disorganized leader isn’t leading, he’s chasing his own tail. Disorganization breeds nothing but more disorganization. If you’re frazzled and messy, your team will be too. When you’re organized you’ll be much more productive and so will everyone else.
  4. Delegate. You can’t do everything. A great leader needs to be able to delegate effectively. The key to delegating successfully is giving employees ownership of the work you assign them. They can’t just feel like they own the work, they really have to.
  5. Take Ownership and Responsibility. Although you’ve just delegated work and truly given your team ownership, you also have to take ownership and responsibility at all times. Your team has to know you’ll be there for them through the good and the bad times. That doesn’t mean you absolve people from making mistakes or ignore crappy work/effort, but it does mean you take responsibility for the big picture.
  6. Communicate Effectively. Duh. Everyone knows great leaders have to be great communicators. But there are certain points of communication that many people forget. For example, it’s critical that you communicate to employees how their work matters in the bigger picture. Are they a cog, or does their work truly make a difference?
Communicating success is also something leaders forget to do. People need affirmation. They want to know they did a good job. You just have to tell them.Business set up in India
And be precise. Insecure leaders will often ramble; uninterested leaders cut things off to quickly. Whether you’re giving praise, providing constructive criticism, or defining goals and to-dos, you have to figure out how much to say and in what order. Be precise, specific and concise. Get to the point.
  1. Be Brave and Honest. Cowardly leaders will shy away from any number of situations that crop up regularly when running a team. The project your team has worked on for 6 months just got shelved. Now what? Or you have to talk to someone about their lack of effort recently. Do you ignore the problem? Or maybe it’s time to take your product into a new market. Do you hobble forward, scared and nervous, or do you grab the market by the throat?
Leaders are brave. And honest. Tell it like it is. Don’t sugarcoat, don’t obfuscate. Don’t be a jerk either. You have to learn how to present things to your team in an honest but balanced manner.
  1. Great Listener. A huge part of being a great communicator is being a great listener. If all you want to do is talk, you’re not a leader. Keeping people motivated means listening to them, asking them questions, understanding their issues. When you listen more, you can respond more effectively and get to the heart of things much faster.
  2. Know Your People. You have to know your people. You don’t have to be best friends or even socialize outside work, but you do have to know what makes them tick. You need to know something about their personal lives because their lives outside work matter. Their lives outside work drive a great deal of their success (or lack of) at work. Keep track of simple things: birthdays, marriages, children, etc. The more you know your people the more common ground you’re likely to find, the more you’ll be able to connect.
  3. Be a Follower. Benjamin Disraeli said, “I must follow the people. Am I not their leader?” That sums up many of the other points so beautifully. Great leaders are followers too. If you’re a leader without following, you’re a dictator. And as fun as that sounds… Being a leader-follower means finding value in your team, getting inspired by your team, encouraging your team to communicate, brainstorm and be open.
Effective Leadership Skills
For effective leadership & management, the leader needs to have quite a few qualities and skills. So what is it that makes a person an effective leader?
  1. Vision: A leader is a visionary and this quality, more than any other, sets a leader apart from the followers. Followers blindly align themselves to the vision and goals of the leader and help the leader accomplish them. But without an envisioned leader, the team will be a directionless group.
  2. Ability to Change: The external business environment is becoming more and more dynamic and a leader should be able to change with the times. He should be able to align his vision with what the market wants.
  3. Set a Benchmark: A leader should be able to set a performance benchmark and be what he expects the employees to be. He himself should display the set of qualities which he expects from his team.
  4. People-Skills: Whatever the monetary and non-monetary rewards, employees will only be really motivated to work if they know what it is that is motivating the leader. So a leader should be able to communicate the effective leadership strategies and his vision to the rest of the team in a way that the employees too feel that 'yes! This is what we want too!'
  5. Listening and Not Just Talking: A lot of employees complain that their boss doesn't listen to what they have to contribute and is not open to suggestions. If the leader chooses to listen to what his team has to say, they may be able make valuable suggestions to make a process more effective. Hence, listening too is one of the most important practices for effective leadership.
  6. Solving: The path to a goal is often strewn with traps and obstacles. Hence, a leader should have good problem solving and analytical skills which will help him and the team overcome any problem in the path to their goal.
  7. Ability to Motivate Others: A leader should know how to get the work done from his team. He should be able to motivate his workers with monetary and non-monetary rewards. He should be able to make his team a part of his vision. A leader should be able to coach his team so that they can give their best performance.
  8. Discipline: A leader should be well disciplined himself and should be able to imbibe qualities like professionalism and hard work in his team as well
Confidently Confident
An individual has to be confident, in any case. Yes, a person should have the confidence in his capacities and strengths. At the same time, good leadership skills warrant that a person will have to be mentally prepared if something goes wrong. In case of a managerial set up, an individual will have to delegate work accurately and quickly and hope for things to work out right.

Walk, Talk, Express
A very important skill amongst skills needed to lead people is interpersonal communication. If you do not speak or communicate with others, do not share your thoughts and views, how will you persuade and motivate them? Or at a very basic level tell them what to do? Likewise, a good leader also listens to others and considers their opinions and views just as they do regarding his opinions and thoughts. So the core of all the other things is effective and positive communication. This is a pillar amongst leadership skills for managers. Remember this as a crucial one regarding effective leadership skills.
All Fired Up
Oh no! I am not talking about gunshots. I am talking about the fact that for a person to become a leader, he needs to have a fire and passion for a thing. If a person aspiring to lead others is without a driving force , a strong desire himself, the leading is going to be a huge no-show. The reason? That individual himself is not motivated enough. In that case, that individual will not be able to lead others. So a passion and a strong urge to grow and help others grow, especially in the professional and corporate field is very important for leading others.
In an Instance
People or the followers or subordinates look up to the leader. Leadership qualities and skills, therefore, demand that an individual sets an example for others to follow. In fact by consistently doing that, a person can become a leader. A leader has to pitch in and set high standards and should lead by example. That includes behavioral traits like adaptability, humility, sense of humor and integrity.
Fortune Favors the Brave
A very very tough one amongst leadership skills is to be bold, brave and courageous. A leader has to be brave enough to face any kind of situation and cannot shy away from it. Such leaders know how to divide the work and they grab the problem by the scruff of the neck. Along with this, a person has to be frank and honest to take the responsibility and ownership of a project or anything. There are no shortcuts to this leadership trait!
Look and Decide
In leadership skills, vision and decision making are other to aspects which are inevitable. It is even more important as far as business leadership skills are concerned. Unless a leader has a vision, he or she cannot motivate the others and cannot take decisions regarding that.
Ultimately leadership skills are incomplete if a person does not know the people he is leading well. Hence a leader has to reach to the people and know them. A leader has to know what gets them up and coming and click at their work.
There are a few more things in the leadership skills list, but I guess without these the other minor ones would not count and would be inconsequential! Moreover, it is really difficult to define leadership skills definitely and pin point them. These are just generic skills one needs to have. All this reminds me of what Harry Truman had said, "To be able to lead others, a man must be willing to go forward alone."
CHARACTERISTICS OF A GOOD LEADER
Leaders who have tasted success have done so because of the following reasons:
  • Confidence: This is one of the most important and probably the most visible characteristic of a true leader. I have always noticed that no matter what the degree of difficulty they find themselves in, strong leaders always have a sense of confidence and sureness about them. On a personal level, I have tried imbibing this aspect in my daily life and have found that it really works wonders! A super-confident leader can really make a world of difference.
  • Communication: Another key characteristic of a good leader; clear and effective communication, is vital for a leader to be successful. Effective communication will ensure that his team thoroughly understands what is expected of them. This translates into appropriate actions which in turn lead to desired results.
  • Man Management: A leader must be able to marshal the troops and manage his resources well. Leadership involves having a good sense of understanding between the leader and his team. Each person's views and opinions should be respected and each one's contribution should be acknowledged and appreciated. Being authoritative should not be confused with being dictatorial. A dictator may be a leader, but a leader is not a dictator.
  • Decision Maker: Leadership often involves split second decision making. A good leader must think on his feet and should be capable of making quick and smart decisions whenever the need occurs.
  • Lead by Example: A leader should always lead by example. Stepping up, shouldering responsibility and getting the job done when the chips are down, is the mark of a true leader.
  • Risk Taker: Last but not the least, leadership does require one to take a few risks every now and then. Let me make it clear though, that by taking risks I do not mean being foolhardy and reckless. Risks, when taken, should be taken in a calculated manner and after careful evaluation of the circumstances. It requires good vision along with clarity of thought and action.
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