Penalty Provision in respect of delay in payment of P.F. dues

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Penalty Provision in respect of delay in payment of P.F. dues

1. Delay in deposit of P.F. dues attracts penal damages. Damages are levied at the following FLAT RATES:

o For 0 — 2 months delay – @ 5 % p.a.

o For 2 — 4 months delay – @10 % p.a.

o For 4 — 6 months delay – @ 15 % p.a.

o For delay above 6 months – @ 25 % p.a. (subject to a maximum of 100%)

2. Levy of damages at lesser rates is not permissible under the EPF & MP Act.

3. Reduction/Waiver of damages – considered only for Sick Industrial Companies having rehabilitation scheme sanctioned by BIFR.

4. Deposit dues in time – avoid penal damages.

Section 54EC Relief available Even If Cheque Cleared after 6 Month Limit

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Mumbai ITAT has held in an important case namely Kumarpal Amrutlal Doshi vs. DCIT (ITAT Mumbai) that relief u/s 54EC shall be available even if the bonds are issued after the requisite period of 6 months for investment, if the cheque is issued within the period of 6 months but cheque is encashed after the requisite period and bonds are also issued after the requisite period of 6 months.

Brief Facts: On 9.8.2005 (AY 2006-07) the assessee earned LTCG on sale of land. U/s 54EC, NABARD bonds were a “specified asset” till 31.3.2006 and the assessee had time till 9.2.06 (6 months) to make the investment. The assessee issued a cheque on 7.2.06 and sent it by courier to NABARD. The cheque was encashed on 13.2.2006 and the bonds were allotted on 15.2.06. The AO & CIT(A) rejected the claim on the ground that (i) NABARD bonds were not a “specified asset” as of 1.4.06 & (ii) the investment was not within 6 months of the transfer.

Verdict: On appeal to the Tribunal, the appeal was allowed and the following decision was made:

(i) The department’s argument that for AY 2006-07 only the “specified assets” as of 1.4.06 should be considered is not acceptable. Instead, the law as it stood on the date of transfer of the capital asset has to be applied;

(ii) When a payment is made by cheque, then the ‘date of payment‘ is the ‘date of the cheque‘ even though the cheque may be encashed subsequently. As the cheque was issued within 6 months of the transfer, s. 54EC relief was available even though the cheque was encashed, and bonds were allotted, later.

Payment of commission to Non-Whole Time Directors of the company under section 309(4) (b) of the Companies Act, 1956

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General Circular No. 4/2011 , Dated:- 4th March, 2011

Companies are making applications to the Central Government for payment of remuneration in the form of commission to their Non-Whole Time Director(s) even when the total commission to be paid to all the Non-Whole Time Director(s) taken together falls within the limit of 1% of net profit of the company under Section 198 of the Act [when the company has a Whole Time Director(s) or a Managing Director(s)] or within the limit of 3% net profit of the company under Section 198 of the Act [when the company does not have a Managing Director or a Non-Whole Time Director(s)] in addition to the sitting fee. This is based on a decision of this Ministry taken in File No. 6(a) CL-I/66 issued several decades back.

It has now been decided that a company shall not require approval of the Central Government for making payment of remuneration by way of commission to its Non- Whole Time Director(s) in addition to the sitting fee if the total commission to be paid to all those Non-Whole Time Directors does not exceed 1% of the net profit of the company if it has a Whole Time Director(s) or 3% of the net profit of the company if does not have a Managing Director or Whole Time Director(s).

Circular Simplifying of DIN rules and making Possible Allotment of DIN on the same dayCircular Simplifying of DIN rules and making Possible Allotment

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The Ministry has constituted a Group to examine the business process re-engineering under MCA-21. In order to speed up and simplify the process to obtain a DIN, the below mentioned procedure have been recommended.

1. Application for DIN will be made on eForm; No physical submission of documents shall be accepted and for this purpose Scanned documents along with verification by the applicant will be attached with the eForm. Only online fee payment will be allowed i.e. No challan payment

2. The application can also be submitted online by the applicant himself using his DSC.

3. DIN 1 eForm can be digitally signed by the professional who shall also confirm that he has verified the particulars of the Applicant given in the application.

4. Where the DIN 1 is verified by the professional, the DIN will be approved by the system immediately online.

5. In other cases the DIN cell will examine the application and same shall be disposed of within one or two days.

6. Companies (Directors Identification Number) Rules, 2006 are being amended on the above lines.

7. Penal action against the applicant and professional certifying the DIN application in case of false information / certification as per provisions of section 628 of the Act will be taken in addition to action for professional misconduct and revocation of DIN, allotted on false information

8. The above procedures is expected to enable allotment of DIN on the same day.

9. The above procedures applies to filing of DIN 4 intimating changes in particulars of Directors.

A notification to notify the aforesaid procedure is being issued. After issue of necessary notification, the applicant/professionals/DIN Cell are advised to follow the notified procedures for allotment of DIN.

Transfer pricing Audit due date for corporate assesses extended to 30th November

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Due date of return of Income for corporate assesses who are required file a transfer pricing report in Form 3CEB, extended to 30th November

Section 139 of the Income-tax Act stipulates 30th September of the assessment year as the due date for filing of return of income in case of corporate assessees. In addition to filing a return of income, assessees who have undertaken international transactions are also required (under the provisions of section 92E) to prepare and file a transfer pricing report in Form 3CEB before the due date for filing of return of income.

Corporate assessees face practical difficulties in accessing contemporary comparable data before 30th September in order to furnish a report in respect of their international transactions. It is, therefore, proposed to amend section 139 to extend the due date for filing of return of income by such corporate assessees to 30th November of the assessment year.

This amendment is proposed to take effect from 1st April 2011.

GST may not be implemented from April 2012

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The government today said it may not be possible to roll out the Goods and Services Tax (GST) from April next year, as the proposal needs consent from all the states. ”…the (GST) legislation cannot be voted upon until the ratification is completed…there may be problem on the time factor (April 1, 2012),” Revenue Secretary Sunil Mitra said at a CII post-Budget conference .

Ideally, the government would have liked to bring both Direct Taxes Code (DTC) and GST together, he said. DTC is expected to be rolled out from April, 2012.

The Centre and the states are engaged in talks over the proposed Goods and Services Tax (GST) for about four years.

The government is scheduled to table the GST Constitution Amendment Bill during the current session of Parliament for consideration.

“Even if the constitutional amendment goes in now, practically it would be referred to Standing Committee for examination,” Mitra added.

He further said if the Standing Committee give its suggestion towards the end of the Winter Session, the government can present it for voting in Parliament earliest in the next Budget Session.

“…once it is voted in Parliament, it has to go for ratification of 50 per cent states, that will take some time,” he added.

Since 2007, the government has been trying to introduce the new tax regime, under which GST will subsume most of the indirect taxes of the Centre and the states.

The GST rollout has already missed the implementation timeline of April 1, 2010, and would not be introduced from the coming April 1, the start of the financial year 2011-12.

Analysis of Budget 2011

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Budget Analysis 2011