Modification in the instruction regarding payment of MCA fees in electronic mode

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The Ministry of Corporate Affairs hasinstructed that from Monday next, i.e. May 29th, 2011 the payment of less than Rs. 50,000/- through electronic mode will be permissible in the “Investor Education and Protection Fund” through “Pay Misc. Fee functionality”. This facility will also be admissible for user having category as “Official Liquidator (OL)” office, and the user having category as MCA employee.

For payments of above Rs. 50,000, stakeholders will have the option to eithermake the payment in electronic mode, or paper challan. However, from 1st October, 2011 such payments would be made in electronic mode only.

It may be noted that in the interest of stakeholders and to improve service delivery time the MCA decided to accept payments of value up to Rs. 50,000/- only for MCA 21 Services from 27th March, 2011 in electronic mode.

Amendment in Rule 114B relating to furnishing of PAN for certain transactions

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AMENDMENT IN RULE 114B OF THE INCOME-TAX RULES, 1962

Income-tax (Fifth) AmendmentRules, 2011 – Amendment in rule 114B

NOTIFICATION NO. 27/2011 [F. NO. 149/122/2010-SO(TPL)], DATED 26-5-2011

In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely :—

1. (1) These rules may be called the Income-tax (Fifth Amendment) Rules, 2011.

(2) They shall come into force on the 1st day of July, 2011.

2. In the Income-tax Rules, 1962, in rule 114B,—

(i) in the Explanation (a), in clause (k), for the words “tour operator” the words “tour operator, or to an authorized person as defined in clause (c) of section 2 of the Foreign Exchange ManagementAct, 1999 (42 of 1999)” shall be substituted.

(ii) in clause (l) for the words “for issue of a credit card” the words “for issue of a credit or debit card” shall be substituted.

(iii) after clause (p) and before the first proviso, the following clauses shall be inserted, namely :—

“(q) payment of an amount aggregating fifty thousand rupees or more in a year as life insurance premium to an insurer as defined in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938);

(r) payment to a dealer,—

(i) of an amount of five lakh rupees or more at any one time; or

(ii) against a bill for an amount of five lakh rupees or more,

for purchase of bullion or jewellery;”.AMENDMENT IN RULE 114B OF THE INCOME-TAX RULES, 1962

Income-tax (Fifth) AmendmentRules, 2011 – Amendment in rule 114B

NOTIFICATION NO. 27/2011 [F. NO. 149/122/2010-SO(TPL)], DATED 26-5-2011

In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely :—

1. (1) These rules may be called the Income-tax (Fifth Amendment) Rules, 2011.

(2) They shall come into force on the 1st day of July, 2011.

2. In the Income-tax Rules, 1962, in rule 114B,—

(i) in the Explanation (a), in clause (k), for the words “tour operator” the words “tour operator, or to an authorized person as defined in clause (c) of section 2 of the Foreign Exchange ManagementAct, 1999 (42 of 1999)” shall be substituted.

(ii) in clause (l) for the words “for issue of a credit card” the words “for issue of a credit or debit card” shall be substituted.

(iii) after clause (p) and before the first proviso, the following clauses shall be inserted, namely :—

“(q) payment of an amount aggregating fifty thousand rupees or more in a year as life insurance premium to an insurer as defined in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938);

(r) payment to a dealer,—

(i) of an amount of five lakh rupees or more at any one time; or

(ii) against a bill for an amount of five lakh rupees or more,

for purchase of bullion or jewellery;”.

Income Tax Survey officer to provide prior to survey contact details of Chief Commissioner, Commissioner, Addl. / JCIT to taxpayer

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From the desk of Chairman,

CBDT S.N. 49/May 27,2011

Transparency in Survey operations

For bringing transparency in survey operations and obviate the possibility of any grievance to the taxpayers, it is decided that henceforth:
I.Survey teams visiting taxpayer’s premises under the provisions of section 133 A of theIncome tax Act will, before the commencement of survey proceedings,provide to the taxpayer the names, designations & contact numbers of their Chief Commissioner, Commissioner &Additional/ Joint Commissioner of Income Tax.
II. Inform the taxpayer that in case of any grievance or otherwise, he is free to contact Chief Commissioner /Commissioner /Addl Commissioner/Joint Commissioner of Income Tax.

In order to give effect to the above instruction, survey parties will invariably carry in their survey kit names, designations & contact numbers of their CCIT / CIT / Addl / JCIT in the following proforma, on which, as a proof of implementation of above directions, signature of the taxpayer surveyed would be obtained. The said proforma, duly signed by the taxpayer,would be submitted back to the CIT,to be preserved as permanent record.

SN	Designation	Name	Contact Numbers(Landline)	Cell Number

How to download online TDS Certificates in Form No. 16A from NSDL website

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As you are aware that at present, the activity of issuance of Form No.16A is distinct and independent of filing of e- TDS statement on quarterly basis and therefore the chances of mismatch, in certain cases, between TDS Certificate in Form No.16A and Form No, 26AS cannot be completely ruled out. To overcome the challenge of mismatch, the CBDT has issued Circular No.3 dated May 13th 2011 laying down therein that a common link has now been created between the TDS certificate in Form No.16A and Form No. 26AS through a facility in the Tax Information Network website (TIN Website) which will enable a deductor to download TDS Certificate in Form No.16A from the TIN Website based on the figures reported in e-TDS statement filed by him/them. As both Form No.16A and Form No.26AS will be generated on the basis of figures reported by the deductor in the e-TDS statement filed, the likelihood of mismatch between Form No.16A and Form No.26AS will be completely eliminated.

The CBDT has further clarified the following in the said Circular:

On or after April 1st 2011 the deductor being a Company including a Banking company should issue TDS Certificate in Form No. 16A generated through TIN Central system and which is downloaded from the TIN Website with a unique TDS certificate number in respect of all sums deducted on or after the 1st day of April, 2011 under any of the provisions of Chapter-XVII-B other than section 192.

However, the deductor, being a person other than a Company or a Banking company, may, at his option, issue TDS Certificate in Form No.16A generated through TIN central system and which is downloaded from the TIN Website with a unique TDS certificate number in respect of all sums deducted on or after the 1st day of April, 2011 under any provisions of Chapter-XVII-B other than section 192.

For deduction of tax at source made during FY 2010-11, the deductor, may at his option, issue the TDS certificate in Form No.16A generated through TIN central system which is downloaded from the TIN Website with a unique TDS certificate number in respect of all sums deducted during the FY 2010-11 under any of the provisions of Chapter- XVII-B other than section 192.

The deductor, issuing the TDS certificate in Form No.16A by downloading from the TIN Website shall authenticate such TDS certificate by either using digital signature or manual signature.
The deductor being a person other than a Company including a Banking Company who do not issue the TDS Certificate in Form No.16A by downloading from the TIN Website shall continue to authenticate TDS certificate in Form No.16A by manual signature only.

The Director General of Income-tax (Systems) shall specify the procedure, formats and standards for the purpose of issuance of TDS certificate in Form No.16A which is downloaded from the TIN Website and shall be responsible for the day-to-day administration in relation to the procedure, formats and standards for issuance of TDS certificate in Form No.16A in electronic form.

The TDS certificate issued in Form No. 16A by the person responsible for deducting TDS being a Company including a Banking Company in accordance with this circular and procedure, format and standards specified by the Director General of Income-tax (Systems) shall only be treated as a valid TDS certificate in Form No. 16A for the purpose of section 203 of the Act read with Rule 31 of the IT Rules, 1962.

In order to enable you to generate the TDS Certificates through TIN Website, you will be required to follow the following steps:

1. The deductor has to register their TAN with NSDL website. Click on the “Online TAN Registration” available in the home page of www.tin-nsdl.com and follow the due procedures mentioned therein.

2. Upon registration the deductor would be allotted a Reference Number. Note down this number.

3. The deductor will also receive an email from NSDL informing the Reference Number, User Name, Password…etc

4. After confirmation of registration formalities, again visit the website www.tin-nsdl.com and Login to TAN Account.

5. Provide the User Name, Password and TAN Number

6. Provide the details as asked for by the website for every quarter. You will receive by email a text file from NSDL.

7. Now the said text file needs to be converted into a PDF file / TDS certificate (Form 16A). Requisite conversion software provided in the website itself.

8. Once converted, the TDS certificates will be saved in the computer automatically at the defined path.

9. Take print out of the certificates and check the same for 100% accuracy

10. If found in order, affix seal and signature and issue the certificate to the deductees by either using digital signature or manual signature.

Removal of anomaly for differential interest rates for EPF and income-tax exemption

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he Central Government (the Ministry ofLabour and Employment) had issued anotification No. R-11018 / 1/ 2010.SS- II dated 17.03.2011 in March 2011, providing its approval for crediting of interest at the rate of 9.5 per cent for the year 2010-11 to the account of each Employees’ Provident Fund (“EPF”) member subject to certain conditions. However, the then prevailing notification No. S.O. 2091(E), dated 26.08.2010 issued by the Ministry of Finance [providing for income-tax exemption rate for such interest for the members of Recognised Provident Funds ("RPFs")] had fixed the interest at the rate of 8.5 per cent with effect from 1 September, 2010, beyond which the excess interest credited to the members’ accounts would be liable to income taxand taxable under the head `Salaries’ In terms of Rule 6(b) of the Part A of Fourth Schedule to the Income-tax Act, 1961 read with Section 17(1)(vi) of the Income-tax Act, 1961. Consequentially, the differential interest of 1 per cent credited to the members’ accounts (for the period 1 September, 2010 to 31 March, 2011) was chargeable to income-tax in the hands of the RPFs’ member employees.

This resulted in a disparity between the interest earned on EPF balances and the income-taxexemption enjoyed by the RPFs members.

Notification

To remove this anomaly, the Central Government has now come up with a notification No S.0.1046(E), dated 13.05.2011 (superseding the earlier prevailing notification dated 26 August, 2010) whereby it fixesinterest rate at the rate of 9.5 per cent with retrospective effect from 1 September, 2010 on the EPF balances of the employees which are members of the RPFs. Thus, the interest exceeding at the rate of 9.5 per cent shall be treated as taxable income.

Conclusion

In view of the clarity provided by this notification issued by the Ministry of Finance, the interest credited to the EPF accounts of the employees (which are members of the RPFs) at the rate of 9.5 per cent for year 2010-11 shall not be taxable.

Central Governement specifies Limited Liability Partnership a body corporate

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Central Government specifies LLP as a body corporate for the limited purpose of section 226 (3) (a) which deals with appointment of auditors vide notification dated 23.05.2011.The notification given clarifies that LLP will not be treated as body corporate for the purpose of f section 226(3)(a) of the Companies Act 1956 which is related to appointment of statutory auditor and put restriction on appointment of body Corporate as statutory auditor. The circular paves the way for appointment of LLP as statutory auditor of the company. It is to be noted that MCA has already allowed videGeneral Circular No. 10/2011 dated – 04.04.2011 to the CA/CS/CWA to practice under LLP in partnership with other fellow members of same institute and in case of CS, also with members of such recognized profession as may be prescribed.

Ministry of Corporate Affairs

Notification

New Delhi the 23/05/2011

S.O. ………… (E). – In exercise of the powers conferred by clause (c) of sub-section (7) of section 2 of the Companies Act, 1956 (1 of 1956), the Central Government hereby specifies, for the purpose of the said clause, the Limited Liability Partnership, a body corporate, incorporated under clause (1) of section 3 of Limited Liability Partnership Act, 2008 (6 of 2009), for the limited purpose of clause (a) of sub-section (3) of section 226 of the Companies Act, 1956.

TDS to be deducted on tips passed to employees by Hotel employers who have collected them from customers

PrintPDF The HC, following the decision of the Supreme Court in the case of Karamchari Union (above), treated ‘advantage’ in terms of the payment of money received by the employee from the employer in relation to or in addition to any salary or wages as covered by the inclusive definition of the term ‘salary’. Furthermore, the HC considered the bona fide belief of the assessee for non withholding of tax at source from payments made from tips as a reasonable cause for failure to withhold tax, and waived the penalty. This decision is of relevance to the hotels which are following a similar mechanism of collecting and distributing tips to their employees and not withholding taxes under section 192 when making payment of tips. In future, they may need to withhold taxes under section 192 while paying money collected as tips

Exemption from filing IT return for salaried taxpayers with annual income below 5 lakh rupees

PrintPDF Salaried taxpayers who do not have other sources of income and whose income are below5 lakh rupees per annum, are being exempted from filing income tax return. The Finance Minister Mr. Pranab Mukherjee said on Tuesday that this will apply in 2011-12 assessment year for the income earned in 2010-11. He said that a notice to this effect is being brought out soon. The Finance Minister was addressing the 27th Annual Conference of Chief Commissioners and Directors General of Income Tax in New Delhi.
Asking the Central Board of Direct Taxes to be vigilant in suspected money laundering cases, Mr. Mukherjee cautioned that terror activities and other crimes are being funded by anti-national elements through illegal transfers. Mr. Mukherjee disclosed that to check these transfers, government has approved setting up of Directorate of Criminal Investigation in Income Tax Department itself. The Directorate will track the criminal activities before, during and after the crime is committed.
Expressing his keenness on fiscal consolidation, Mr. Mukherjee stressed that fiscal deficit has to be reduced drastically to achieve the goal.

Splitting of Minimum Wages for the purpose of PF contribution not permissible

PrintPDF EMPLOYEES’ PROVIDENT FUND ORGANISATION, (Ministry of Labour & Employment, Govt. of India), Head Office, Bhavrshya Yidhr Bhawan, 14, Bhikaiji Cama Place. New Delhi - 110 066.

No.: Coord/4(6)2003/Clarification/Vol-II/ Dated: 23-05-2011
Sub: Splitting of Minimum Wages for the purpose of PF contribution not permissible.Sir,
Attention of all concerned is invited towards this office circular no. Coord./4(6)2003/Clarification/13633 dated 06.06.2008 vide which it was advised to ensure that P.F. Contributions on at least Minimum Wages are remitted by the establishments. It was also directed to review all such cases disposed of u/s 7A of the Act where determination of dues has taken place on wages lesser than Minimum Wages.
2. However, it has been observed that still uniform approach in this regard is not followed by all the field offices which is viewed seriously. It is also observed that the field offices are not duly defending the issue in spite of the fact that the Division Bench of Hon’ble High Court, Karnataka in the matter of Group 4 Securities Guarding Ltd Vs. RPFC has categorically upheld the view that RPFCs u/s 7A of the Act can examine and look into the nature of contract entered between the employer and its employees as well as the pay structure to decide whether the pay is being split up under several heads as a subterfuge to avoid PF Contribution.
3. The order of the Division Bench was challenged by the establishment before the Apex Court. While tentatively upholding the order of the Division Bench, the Hon’ble Supreme Court in its order dated 23.07.2004 again granted liberty to the authorities to decide the matter in accordance with law on its merits. As such the authorities have to consider the order of the Division Bench of Hon’ble High Court, Karnataka unless there is substantial evidence to lead otherwise.
4. Accordingly, the matter has been examined in view of the Apex Court’s direction and the following guidelines are issued which should be adhered to and followed by all strictly.
5. The EPF & MP Act, 1952 is a beneficial social security legislation. In construing the provisions of the Act, it has already been settled earlier* that where ever two views are reasonably possible, the view which helps the achievement of the object should be preferred and accordingly the assessing authority while determining dues under Section 7A should curb any attempt to curtail the legitimate social security benefits of the employees. It is needless to reiterate the impact of contribution on lesser wages by splitting the wages into different heads, which results in lesser accumulations in PF account and miniscule pension to the member/family.
[*The RPFC, Punjab Vs Shibu Metal Works — 1965 (1) LU.473].
6. As you are aware, section 2(b) of EPF & MP Act, 1952 defines the basic wage which excludes all kind of allowances from being considered as basic wage. As the term suggests, ‘basic wage’ or ‘basic salary’ is the base salary which is provided to a person in lieu of his services. It is without any allowances which may or may not be added to basic wages in terms of employment.
7. However, it appears that some confusion is prevailing among field offices as to whether basic wages can be lower than the minimum wages or whether an establishment paying minimum wages to its employees can be allowed to split up the wages into various allowances reducing the PF contribution by making it a part of ” terms of employment or Contract” .
8. It would be worth to see that the terms ‘basic’, ‘basic wage’and ‘minimum wage’ are defined in Oxford Dictionary as below:
(i). “basic. Adj.1. forming an essential foundation; fundamental. 2. consisting of the minimum required or offered”
(ii). “basic wage . n. 1 a minimum wage earned before additional payments such as overtime. 2. Austral/NZ/ the minimum living wage, as determined by industrial tribunal”
(iii). “minimum wage, n. the lowest wage permitted by law or by agreement.”
9. Thus, whereas the minimum wage is the lowest permitted wage ought to be paid to a worker as per law as upheld and revisited on various occasions by the Hon`ble Supreme Court *, basic wage is only relevant for allowing additional allowances by treating it (basic wage) as a basic/floor level.
(*Crown Aluminum Works Vs Workers Union, [1958 Vola LU,
Page I], Unichoyi Vs State of Kerala [1961 Voll LL.3 P. 631], Kaman’ Metals & Alloys Ltd. Vs. Their Work Men [1967 Vil.11- 55; (1967) 2 SCR Page 463]).
10. Another aspect of basic wage/salary i5 that it is provided to all classes of employees irrespective of quantum of their salary and its quantum varies with every class/post of an employee where as minimum wage is prescribed only for the lowest paid employee to whom any lesser payment of wages is not permitted by law.
11. From above, it is abundantly clear that basic wage in no case can be lesser than the minimum wage as the same is not only contrary to law of land but is also beyond logic and rationale that an establishment which can not pay even minimum wages to its employees, would be willing to pay allowances to them and if such instances exist, there is certainly a malafide motive which may be considered as knowingly making or causing to make false statement/representation punishable u/s 14(1) of EPF & MP Act, 1952. It may also attract the provision of section 418 of IPC.
12. Further, it also needs to be kept in mind that any agreement which negates any law of land is ab-initio-void and would have effect of non-existence. Therefore, any such terms of agreement for employment where minimum wages is splitted to reduce the liability under EPF & MP Act, 1952 would be governed by the same logic as it is against the provisions of Minimum Wages Act and hence illegal.
13. Also Minimum Wage being a state matter, clarifications were sought from various state Governments. The replies received reveal that minimum wage is a lump sum composite amount arrived at by following the permissible procedure of fixation as revised from time to time and it can not be segregated and reclassified. Thus the State governments have also observed that splitting of minimum wages is not permissible in the eye of law,
14. Accordingly, all concerned are directed to ensure that P.F. Contributions are not remitted on wages less than Minimum Wages since every employer is legally bound to pay at least minimum wages to his/her employees and minimum wages are not amenable to split up. It is one pay package.*
(*Civil Appeal 4259 of 1999 Air Freight Ltd. Vs State of Karnataka and Ors., 1999 Supp. (1) SCR 22]
15. It is needless to mention that wherever the matter regarding splitting of wages is challenged or pending in a court of law, the stand of department along with all rules and guidelines of Hon’ble Supreme Court should be effectively utilized to defend the case. It is also mentioned that nothing said above shall come in way of implementation/execution of any order of a court of law.
16. The assessing officers shall examine full facts about the wage structure, minimum wages prescribed by the appropriate govt. for the relevant class and provide reasonable opportunity to the establishment before deciding the subterfuge, if any.

Participation by shareholders in general meetings under the Companies Act, 1956 through electronic mode – General Circular No. 27/2011

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General Circular No. 27/2011, Dated: 20.05.2011All the Regional Directors,

All the Registrar of Companies

Subject: Green Initiative in the Corporate Governance – Participation byshareholders In general meetings under the Companies Act, 1956 through electronic mode.

Sir,

The Ministry of Corporate Affairs has taken a “Green Initiative in the Corporate Governance” by allowing paperless compliance’s by the Companies after considering sections 2, 4, 5, 13 and 81 of the Information Technology Act, 2000 for legal validity of compliance’s under Companies Act, 1956 through electronic mode.

2. The Ministry has been receiving representations from various Industry bodies to recognize participation by shareholders in meetings under the Companies Act, 1956 through electronic mode.

3. Section 13 of the Information Technology Act, 2000, inter-alia provides time and place of dispatch of notices in electronic mode, which may be applicable for the purpose of notice period provided in the Companies Act, 1956 or in the Article of Association of the company.4. In the light of the above provisions and circumstances, it is hereby clarified that a shareholder of the company may participate in a general meeting under the provisions of Companies Act, 1956 through electronic mode.

For this purpose, the company shall also comply with the following requirements and procedures, in addition to the normal procedures required under the Companies Act, 1956 for holding general meeting: –

(a) Electronic mode means video conference facility i.e. audio-visual electronic communication facility employed which enables all persons participating in that meeting to communicate concurrently with each other without an intermediary, and to participate effectively in the meeting.

(b) The notice of the meeting must inform shareholders regarding availability of participation through video conference, and provide necessary information to enable shareholders to access the available facility of videoconferencing.

(c) The Chairman of the meeting and Secretary shall assume the following responsibilities:

(i) to safeguard the integrity of the meeting via videoconferencing.

(ii) to ensure proper videoconference equipment/facilities.

(iii) to prepare the minutes of the meeting.

(iv) to ensure that no one other than the concerned shareholder or proxy to the shareholder is attending the meeting through electronic mode.

(v) If a statement of a participant in the meeting via videoconferencing is interrupted or garbled, the Chairman of the meeting or Secretary shall request for a repeat or reiteration, and if need be, the Chairman or Secretary shall repeat what he heard the participant was saying for confirmation or correction,

5. (a) Section 166 of the Companies Act, 1956 inter-alia provides that a company is required to have its Annual General Meeting either at the registered office of the company or at place within the city, town or the village in which registered office of the company is situated.

(b) Section 174 of the Companies Act, 1956 inter-alia provides that at least five members in case of public company and two members in case of other company have to be personally present and shall be the quorum for the general meeting.

(c) In a general meeting, where shareholders are allowed to participate through electronic mode, the quorum as required under section 174 of the Companies Act, 1956 as well as chairman of the meeting shall have to be physically present at the place of the meeting.

6. To provide larger participation and for curbing the cost borne by the shareholders to attend general meetings, listed companies may provide video conferencing connectivity during such meetings at least five places in India. It is recommended that these places would be situated all over India in such a way that it covers top five States/UTs based on maximum number of members or at least 1000 members, whichever is more, residing as per the address registered with the depositories.

7. In order to have secured electronic platform for capturing accurate electronic voting processes, the necessary clarification has already been issued vide Circular no. 21/2011 dated 02.05.2011.