Bad news for all Export Commissions / indenting agents in India ?

There are many who provide services of this nature wherein the ultimate recipient of the services resides outside India. This typically happens in the case of the foreign suppliers who were trading their good in the Indian territory and paying the commission to the Indian agents for the promoting their material to the Indian buyers. This notification has now changed the pointer to the provider for services instead of the recipient of the services for this purpose. This makes all indenting agents of this nature (which were previously outside the preview) liable to pay service tax w.e.f. 1st Oct 2014.

Changes in Place of Provision of Services Rules, 2012 (“The POP Rules”) Vide NotificationNo. 14/2014-ST Dated 11-7-2014 (Effective From 1-10-2014):-

Definition of ‘Intermediary’ has been amended to include intermediary of goods in its scope. Accordingly, an intermediary of goods, such as a commission agent or consignment agent shall be covered under Rule 9(c) of the POP Rules instead of Rule 3 of the POP Rules.

Let us analyse above.

Rule 9(c ) of Place of Provision of Service

Rule 9 : Place of provision in respect o following services shall be the location of the service provider:

(C ) Intermediary Services;

INTERMEDIARY SERVICES

Let us analyse Intermediary Service Pre and Post 01.10.2014.

“Intermediary” means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of service between two or more persons, but does not include a person who provides the main service on his account.”

WEF 01.10.2014 Intermediary Means as under.

“Intermediary” means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of service or a supply of goods between two or more persons, but does not include a person who provides the main service or supplies the goods on his account.”

Please mark words written in bold. It is evident that the service of intermediary facilitating supply of goods also be considered intermediary service wef 01.10.2014. Hence Location of service provider will be the place of provision of service.

Acche Din - Are you a salaried employee??- Save Rs.10,000 of your income taxes

Budget this year popped late. However the slab rate changes apply to who of year's salary for you.

Read on to save. Share with your HR department and teams to take the benefits. I am sure many have missed out on this even at this juncture and you can save for many along with you. 

An official circular is issued now dt. 10th Dec. Better late than never.

Amendment was in the tax slab.

Although there is no change in the existing tax rate yet new Government had increased the minimum limit from Rs. 2,00,000 to Rs. 2,50,000. There were no changes in the tax slab from last 2 years.

So definitely, this is one of the very important announcements in new finance bill. Following are the tax slabs of Assessment Year 2014-15 & 2015-16.

Table 1: Tax Slabs

Tax Slabs 2014-15		Tax Slabs 2015-16
Income	Tax Rate	Income	Tax Rate
Upto Rs. 2 Lacs	0	Upto Rs. 2.5 Lacs	0
Rs. 2 Lacs to Rs. 5 Lacs	10%	Rs. 2.5 Lacs to Rs. 5 Lacs	10%
Rs. 5 Lacs to Rs. 10 lacs	20%	Rs. 5 Lacs to Rs. 10 lacs	20%
Above Rs. 10 Lacs	30%	Above Rs. 10 Lacs	30%

For senior citizen with Age group of 60 years or above but less than 80 years than their minimum tax limit is Rs. 300,000 instead of Rs. 250,000.

 On the other hand, senior citizen with age of 80 years or more than they do not need to pay tax of initial income of Rs. 500,000.

 Amendment is under section 80C and 80CCC.

Earlier, the maximum qualifying investments for deduction from total income was Rs. 1, 00,000 (even more amount was investment in specified schemes) which was raised to Rs. 1, 50,000. 

 So if no loan is taken by the employee to construct or renovate the house & having total salary income Rs. 5 lacs  than his total taxable income will decline by Rs. 50,000 (after availing this deduction) which is 12.5 % of earlier base income.

 The above conclusion can be examined with below table:-

(A) Person Having Income Rs. 5 lacs with no house loan

Table 2 Before Budget 2014 ( NO House loan is there)		Table 3 After Budget 2014 ( NO House loan is there)
Gross Salary	Rs. 500000	Gross Salary	Rs. 500000
less deduction U/S 80C +80CCC	Rs. -100000	less deduction U/S 80 + 80CCC	Rs.-150000
Taxable salary	Rs. 400000	Taxable salary	Rs. 350000
Loss from HP (due to interest on loan   taken for construction or renovation of house)	0	Loss from HP (due to interest on loan   taken for construction or renovation of house)	0
Net Taxable income	Rs. 400000	Net Taxable income	Rs. 350000

Now tax liability can be calculated as below:-

Table 4 Tax Liability before Budget 2014 ( NO House loan is there)			Table 5 Tax Liability before Budget 2014 ( NO House loan is there)
	Tax Rate	Tax		Tax Rate	Tax
Upto 2 lacs	0	0	Upto 2.5 lacs	0	0
Next 2 Lacs	10%	Rs. 20000	Next 1 Lac	10%	Rs. 10000
Total Tax before surcharge		Rs. 20000	Total Tax before surcharge		Rs.10000
Surcharge	3%	Rs. 600	Surcharge	3%	Rs. 300
Total Tax		Rs. 20600	Total Tax		Rs.10300
			Less: Rebate **		Rs. 2000
			Net Tax		Rs. 8300

  Table 6 Net change in Total tax Structure having gross income Rs. 5 lacs.

Total Tax liability before budget	Rs. 20600
Total Tax liability after budget	Rs.-10300
Net Benefit	Rs. 10300

Rebate u/s 87A of Rs 2000 will also be admissible if the person income does not exceed Rs. 500000.

Key vat changes - by mymuneemji

The Maharashtra BUDGET for 2014-2015 is announced today 5th June, 2014 and the main tax proposals in respect of Maharashtra VAT and

1.Profession Tax are -
Registration limit increased to 10 lakhs

2.VAT Audit limit raised to 1 crore from FY 2013-2014

3.Late Fee reduced to Rs.2,000/- for late upto 1 month in filing Return

4.Pending Returns can be filed with Tax, interest and Late Fee of Rs.1,000/-.

5.Retailer composition @1% of total turnover or @1.5% of taxable turnover

6.No 30(4) penal interest if additional demand as audit or investigation is less than 10% of tax paid with returns.

7.Rate of Tax on Cotton reduced to 2%

8.Profession Tax limit for salaried persons increased to Rs.7,500/-

Tax is not on revenue but on Profit!!

In India, a typical entrepreneur always wants to hide things from the tax department under a feeling of being questioned and asked for paying taxes. In this race for non-disclosure, sometimes the things of our benefit also remain underground.

This process of hiding starts without even knowing "What if this is disclosed?". Many a times this has positive impact as well!! Seems funny?? In our experience, many are seen doing the same.

Tax is not on revenue (sales) but on Profit!!  Funny part is people start worrying about taxes with respect to the revenue.

1. There are expenses which are deductible from this revenue to arrive at the profit. Please understand all the expenses which are incurred to earn the revenue directly and indirectly are allowed to arrive at the taxable profit.
2. Not only cash expenses but the expenses which are to be paid on later date are also available. These are termed as accrued expenses in accounting language. This include your year end bills of supplies, rentals, electricity which don't get paid in that period but are pertaining to that period. 
3. Also, there is are certain virtual deduction like for depreciation of Capital Goods like plant, building, machinery, equipment, motor car purchased in past for the purpose of the business. This is basically value for wear and tear of the assets in that period to generate the sales. Additional deduction on account of depreciation is allowed in the year of such investments for plant and machinery.
4. Other virtual deduction that needs to be taken into account while doing the computation of profits is with regard to the Bad Debts. Many times of our customers don't pay after committing even after followup and legal action. Those customer balances could be written off in the books and claimed as deduction. Even the discounts while settlement of dues are available as deduction if part of the deal.
5. Whenever there is an actual help coming in from the Partners, Directors, family members or relatives, we can pay them salaries and commissions. Even the directors and partners can have legitimate remunerations which are available as deductions subject to certain conditions. 
6. You may claim market rentals for the family properties from the company. This is something that many of us may be missing.
7. Other areas to check are credit card expenses and cash spending for business directly and indirectly. This many a times doesn't gets reflected in the books and may be missed out. It may be for business development, marketing, conveyance and so on for business purpose.

Above is a very broad list of items which are available as business deductions and we can deduce the sales / revenue to this extent before working out the taxes.

Our article on 5 basic disciplines of accounting for businesses would help you with tips of tracking the same diligently.

So, first track and than calculate correct PROFITS. It's quiet possible that you end up at a legitimate and acceptable tax liability without playing any gimmicks :-)

How to Form a Company in India with New Companies Act

The first thing to take care of under the new Companies Act, 2013 is to follow a changed procedure for giving birth to a Company. This article speaks of only Public and Private Limited Companies and does not cover One Person Companies. The brief procedure to be adopted for incorporating a Company would be :

Action Points : Formation of a Public / Private Limited Company – under Companies Act, 2013
[Covered by provisions of Chapter II]

Sr No	Action Point	Requirement
01	Obtain Digital Signature Certificate (DSC)	Obtain a Digital Signature Certificate from authorized DSC issuing authority.
02	Obtain DirectorIdentification No. (DIN) [S.153]	Make Application in Form DIR-3  [Rule 9 of Chapter XI Rules]
03	Register DSC in the name of Director on MCA portal
04	Apply for Reservation of Name [S.4(4)]	Apply in Form No. INC.1 [Rule 9]. The same shall be reserved for a period of 60 days
05	Adoption of Memorandumof Association [S.4(6)]	MoA shall be in respective form as prescribed in Table A, B, C, D and E of Schedule I as may be applicable
06	Adoption of Articles of Association [S.5(6)]	MoA shall be in respective form as prescribed in Table F, G, H, I and J of Schedule I as may be applicable
07	Incorporation	File with ROC Form No. INC.7 [Rule 12 to 18] alongwith(a)   The Memorandum and Articles of the company duly signed by all subscribers; (b)   A declaration in Form No.INC.8 by an advocate or Practicing professional (CA, CS, CA) who is engaged in incorporation, and a person named in director as Director, Manager or Secretary, that all requirements related to incorporation has been complied with; (c)   an affidavit in Form No. INC.9 from each subscriber and from each person named as first director in the articles that; he is not convicted if any offence in connection with promotion, formation or management of any company, he is not been found guilty of any fraud or misfeasance or of any breach of duty to any company during preceding five years, and all the documents filed with the Registrar contain correct, complete and true  information to the best of his knowledge and belief; (d)  the address for correspondence till its registered office is established; (e)  the particulars of every subscribers along with proof of identity; (f)   the Particulars of first directors along with proof of identity; and (g)  the particulars of interests of first directors in other firms or bodies corporate along with their consent to act as directors.
08	Commencement of business [S.11]	Director should file Declaration with ROC in Form No. INC.21 [Rule 24]
09	Registered Office [S.12]	A company shall have a registered office within 15 days of Incorporation and it shall file Form No.INC.22 [Rule 25] to verify the same

5 basic accounting disciplines for startups.. Credit to Yourstory

MyMuneemji did a guest blog for one of the renowned blogs for entrepreneurship called YourStory.in.
Below are the excerpts of the blog. http://
bit.ly/1gRSmws

Caution - Six things to start doing immediately if you own a Corporate entity in India

With effect from 01.04.2014 as per Notified section 12 of the New Companies Act 2013, every company shall comply with the following requirements:

1. Paint or affix its name and address of registered office, outside every offices of the company;
2. Get its name, address of its registered office and the Corporate Identity Number (CIN) along with telephone 
3. Number, fax number, if any, e-mail and website addresses, if any,
4. Printed in all its business letters, billheads, letter papers and in all its notices and other official publications;
5. Get its name printed on hundies, promissory notes, bills of exchange and such other documents as may be notified by Central Government from time to time.
6. Also, in case where the company has changed its name during last 2 years, it shall also print former name along with its current name under Sr. no. 1 & 2 mentioned above.

Penalty for non-compliance : Rs.1,000/- for every day during which the default continues but not exceeding Rs.1,00,000/-.