ERODE BRANCH - SIRC NEWSLETTER - erodeicai.org

Chairman

CA. R. Nagarajan

ICA President Visit on 17.05.2014

98431 50658

Secretary

CA. P. Sivasubramanian CA. S. BalamuruganCA. M. Vijayakumar98429 64821

Lead Person for Newsletter

From Chairman’s Desk 2

Activity Report 3

Public Charitable Trust from Tax Angles 4-5

Power Sector from Tax Angles 6-7

Service Tax and VAT 8-9

Important Legal Obligations for the

Month of May 2014 10

Birthday and Wedding day wishes 11

Photo Gallery 12

VOLUME : 14VOLUME : 14VOLUME : 14 ISSUE : 3ISSUE : 3ISSUE : 3MAY 2014MAY 2014MAY 2014

ERODE BRANCH - S IRCERODE BRANCH - S IRCNEWSLET TERNEWSLET TER

ERODE BRANCH - S IRCNEWSLET TER

The Institute of Chartered Accountants of India

CA. R. NagarajanCA. R. NagarajanChairmanChairman

CA. R. NagarajanChairman

My Dear Professional Colleagues,

Due to cyclical nature of the profession,

we have to update our knowledge with current

change in the statutory and legal compliance.

In the fast moving economic scenario, the

changes in the regulatory and compliance

should be absorbed in our profession. In our

profession, the updation in information

technology is played very crucial role.

For the changes made in companies

Act, 2013, we have organised a one day th

seminar on 10 May,2014 in grand manner. It

was very helpful updating the knowledge on

Companies Act.

th On 12 May, 2014, we have organised

“Insurance Awareness programme” with

Junior Chamber International. This

programme is very successful with general

public.

Once again we are very thankful to

CA.Gopalakrishna Raju, our Ex-Officio

member, for arranging eminent speakers and

co-ordinate with them.

th On 17 May, 2014. It is one of the

memorable day for the Erode Branch. Our

National President CA. K. Raghu visited our

Branch. He had immense pleasure on that

evening on interacting with our members of

Erode Branch. He very much appreciated the

up keep and maintenance of our Erode Branch

premises. He has readily accepted in principle

our proposal for the purchase of additional

land for our Branch.

th On 24 May, 2014, we have arranged

the CPE Seminar on “Charitable Trust” by CA.

Phalguna Kumar, SIRC member from Tirupathy.

It was well attended by the Branch Members.

My Best wishes for the students who

are going to write the IPCC and CA Final Exam.

Yours in Service

ERODE BRANCH OF SIRC OF ICAI

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ACTIVITY REPORT FOR THE MONTH OF APRIL 2014

FORTHCOMING PROGRAMME FOR THE MONTH OF MAY 2014

Date & Time

Date & Time

Programme

Programme

Resource Person

Resource Person

CPE Credit

CPE Credit

2 Hrs

2 Hrs

6 Hrs

3 Hrs

3 Hrs

2 Hrs

2 Hrs

-

-

04.04.2014

11 am to 1 pm

03.05.2014

5 Pm to 7 pm

11.04.2014

11 am to 1 pm

10.05.2014

9.30 am to

5 pm

12.05.2014

CA. (Dr.) Girish Ahuja

CA G N Jayaram, Erode

CPE Teleconference on Issues on

Capital Gains with special

reference to Share & Real Estate.

CPE Study Circle Meeting on How to Face Peer Review

National CPE Teleconference on H o w t o f a c e i n c o m e t a x a s s e s s m e n t a n d s u r v e y proceedings? A threadbare analysis.

CA. Sunil Talati

CA. Gopal Krishna Raju Member SIRC of ICAI,

CA. Sekkizhar B, Member SIRC of ICAI

& CS S.Dhanapal, Chennai

Public Meeting Insurance Awarness Programme

CA J Anand, Erode

17.05.2014

4.30 pm to

8.45 pm

President Visit & CPE Seminar on Practical Issues in E-filing

of TDS Returns.

CA. K. Raghu, ICAI President

CA. Babu Abraham Kalvivayalil,

Central Council Member, ICAI

CA. P.V. Rajarajeswaran,

Chairman, SIRC of ICAI

CA. Cotha S. Srinivasan, Member SIRC.

CA. P. Aravind Thangam, Coimbatore

22.05.2014

11 am to 1 pm

CPE Teleconference on Art of investing in Shares and

Securities in the current scenario.

CA. A.K. Narayan, B.A, ACA

24.5.2014

11 am to 1 pmCPE Seminar on Charitable Trusts.

CA.E. Phalguna Kumar,SIRC Member, Tirupathi

28.05.2014

11 am to 1 pm

CPE Teleconference on Importantprovisions of Chapter 9 & 10 relating to Accounts & Audit

under New Companies Act, 2013.

CA. Sunil Talati

The Companies Act,2013.

CA. R. Muralidharan, Erode




I. Service Tax Point of View

Definition

* Notification No.25/2012/ST/20.06.2012 defines Charitable Activity

* Charitable Activities means activities relating to

i. Public Health by way of

a. Care or Counselling of

i. terminally ill persons or persons with severe physical or mental disability

ii. Persons afflicted with HIV or AIDS or

iii. Persons addicted to a dependence - forming substance such as narcotics drugs or alcohol or

b. Public awareness of preventive health family planning or prevention of HIV infection

ii. advancement of religion or spirituality

iii. advancement of educational programmes or skill development relating to

a. abandoned or orphaned or homeless children

b. physically or mentally abused and traumatized persons

c. prisoners or

d. persons over the age of 65 years residing in a rural area

iv. Preservation of environment including watershed forests and wild life

Conditions for a Charitable Organisation:

a. Entity should be registered under Sec.12AA of the Income Tax Act.

b. It should provide services by way of Charitable activities

Negative List:

None of the services specified in Sec.66D (negative list) relate to services provided by Charitable organisation. Hence, all the services provided by Charitable Organisation are taxable.

Exemption:

Notification No.25/2012/ST/20.06.2012 grants exemption from payment of service tax to the activities carried out by Charitable organisation.

They are

a. Health Care Services by clinical establishment, an authorised medical practitioner or para medics

b. Services provided by a veterinary clinic in relation to health care of animals or birds

c. Services by a person by way of renting of precincts of a religious place meant for general public or conduct of any religious ceremony.

d. Services provided by way of construction, erection, commissioning, installation, completion, fitting out repair, maintenance, renovation or alteration of a building owned by an entity registered under Sec.12AA of the Income Tax Act, 1961 and meant predominantly for religious use by general public.

Public Charitable Trust from Tax Angles




e. Services received from a provider of service located in a non taxable territory by an entity registered under Sec.12AA of the Income Tax Act, 1961 for the purposes of providing charitable activities.

II. Income Tax Point of View

Taxation Issues:

Definition:

Sec.2(15) says “Charitable purpose includes relief of the poor education medial relief, preservation of environment including watersheds forests and wildlife and preservation of monuments or places or objects of artistic or historic interest and the advancement of any other object of general public utility”.

Major points in Income Tax:

a. A public Charitable Trust should get itself registered with Income Tax Department.

b. The Accounts of the Trust are to be compulsorily audited, if the income exceeds RS.2,00,000/-

c. It should apply 85% of its income for charitable purpose.

d. A Charitable Trust can invest its funds in approved securities only.

e. A Trust can do business but gross receipts cannot exceed Rs.25,00,000/- per annum.

Points of difference:

a. The very definition of charity differs in Income Tax and in Service Tax.

b. A Charitable Trust exempted under Income Tax need not necessarily be exempted under Service Tax.

c. Income Tax attaches lot more conditions for exemption, than Service Tax.

Conclusion:

A Tax consultant ought to know the subtle differences in various tax laws even though “Charity” is the main purpose of the organisation.

Condition Taxation

Not liable for tax

Taxable as an AOP

Taxable at Maximum Marginal Rate

Taxable at the rate of Individual

Taxable at Regular rate of Individuals

Maximum Marginal Rate

Where income is exempt under Sec.11/Sec.12.

Where income is not exempt under Sec.11

Where exemption is withdrawn under Sec.13(1)(c)(d)

Where 85% is not applied for charitable purpose, nor is it accumulated with permission

Business Income

Anonymous Donation




Power Sector from Tax Angles

Income Tax - Exemptions

I. Sec.80IA(4)(iv)(a):

a. It should be power sector engaged in generation or generation and distribution of power.

b. It should have been set up in any part of India.

c. It begins to generate power at any time during the period beginning on 1.4.1993 and ending 31.3.2013.

d. 100% deduction from profits is available for 10 consecutive assessment years out of 15 years for

companies and others also.

e. It should be an undertaking.

II. Sec.80IA(4)(iv)(b):

a. It should be an undertaking

b. It starts transmission or distribution by laying a network of new transmission or distribution lines at any

time during the period beginning on 1.4.1993 and ending on 31.3.2013.

c. 100% deduction from profits is available for 10 consecutive Assessment Years out of 15 years for

companies as well as other Assessees.

d. The deduction is available only in relation to the profits derived from laying of such network of new lines

for transmission or distribution.

III. Sec.80IA(4)(iv)(c):

a. It should be an undertaking.

b. It undertakes substantial renovation and modernisation of the existing network of transmission or

distribution lines at any time during the period beginning on 1.4.2004 and ending on 31.3.2013.

c. Substantial renovation and modernisation means an increase in the plant and machinery in the network

of transmission or distribution lines by at least 50% of the book value of such plant and machinery as on

1.4.2004.

d. 100% deduction is available from profits for 10 consecutive Assessment Years out of 15 years for

companies as well as for others.

IV. Windmills - Depreciation:

Windmills can claim 15% depreciation only from 1.4.2012. However, new windmills installed can claim

additional depreciation of 20% in the first year like eligible plant and machinery items.

V. Depreciation on Generators:

Generators are classifiable as Renewable Energy Devices and hence eligible for higher rate of

Depreciation. Agarwal Transformers (P) Limited 258 ITR 251 (Raj.)





VI. Special Provisions for Power Sector Units:

a. Power Sector units engaged in the business of generation or generation and distribution of power can

depreciate their assets under straight line method at the rates prescribed in Appendix I of the Income Tax

Rules.

b. This power sector unit can claim depreciation on SLM Method only on tangible assets and not on

intangible assets for which only WDV method shall apply.

c. In case of newly acquired assets put into use for less than 180 days. 50% of the normal rate only shall

apply.

d. They can also opt for claiming depreciation under WDV.

e. They have to exercise such option before the due date of furnishing the return under Sec.139(1) relevant

to the previous year in which they begin to generate power.

f. The option once exercised shall be final.

g. Where the asset is sold or discarded in the previous year in which it is first put to use any loss arising

therefrom shall be treated as Capital Loss.

II. Service Tax - Exemption

a. Transmission and distribution of electricity:

* Transmission or distribution of electricity by an electricity transmission or distribution utility is not taxable

service - Clause (i) of Negative List of services as per section 66D of Finance Act, 1994 introduced w.e.f.

1.7.2012.

* “Electricity transmission or distribution utility” means the Central Electricity Authority; a State Electricity

Board; the Central Transmission Utility or a State Transmission Utility notified under the Electricity Act,

2003 (36 of 2003); or a distribution or transmission license under the said Act, or any other entity

entrusted with such function by the Central Government or, as the case may be, the State Government -

section 65B(23) of Finance Act, 1994.

* “Central Electricity Authority” means the authority constituted under section 3 of the Electricity (Supply)

Act, 1948 - Section 65B(18) of Finance Act, 1994.

* “Central Transmission Utility” shall have the meaning assigned to it in clause (10) of section 2 of the

Electricity Act, 2003 - section 65B(19) of Finance Act, 1994.

* “State Electricity Board: means the Board constituted under section 5 of the Electricity (Supply) Act,

1948 - section 65B(47) of Finance Act, 1994.

* “State Transmission Utility” shall have the meaning assigned to it in clause (67) of section 2 of the

Electricity Act, 2003 - section 65B(48) of Finance Act, 1994.

b. Private Providers not exempt but still service tax cannot be imposed:

* Electricity generation and distribution service provided by housing society, developer or private

contractors are taxable. They are not exempt from service tax - Para 4.11.2 of CBE & C’s “Taxation of

Services: An Education Guide” published on 20.06.2012.

* However, Taxes on the consumption or sale of electricity is covered under Entry 53 of List II (State List).

Further, electricity is “goods”. Hence, service tax indeed cannot be imposed on sale of electricity.

Conclusion:

These are some of the concessions given to the Power Sector in the Income Tax Act and in Service Tax.




Service Tax and VAT


It is quite common that a Businessman pays Service Tax and VAT for the same business when both

become applicable to him.

I. Service Tax takes precedence :

Service Tax is not payable on the value of VAT / CST in an Invoice, since service tax takes precedence

over VAT.

For Example:-

“A” Limited provides works contract services.

The value is Rs.1,00,000/-. He opts for composition Scheme.

Value of Services and goods = 1,00,000

Service Tax 60% @ 12.36% = 7.42% = 7,420

1,07,420

VAT @ 5% = 5,000

Value of the Bill = 1,12,420

Note: CENVAT Credit on inputs goods not allowed for A Ltd.

II. Centrtal Excise, Service Tax and VAT :

Value of goods Sold = 1,00,000

Excise Duty 12.36% = 12,360

-----------------

1,12,360

VAT @ 5% = 5,618

----------------

1,17,978

Labour Charges = 20,000

Service Tax @ 12.36% = 2,472

---------------

Total Value of Bill = 1,40,450

---------------

III. Some Judgement :

a. BSNL Vs. UOI 282 ITR 273 (SC) it has been held that value of service cannot be included in the price of

goods.




b. Imagic Creative (P) Ltd. Vs.CCT 12 VST 371 (SC) it has been held that Service Tax and VAT are mutually

exclusive. In case of composition Contract, VAT Cannot be imposed on portion relating to value of

service.

c. In Gannon Dunkerley & Co Vs.State of Rajasthan (1993) 1 SCC 364 (SC) it was held that charges for

labour and services have to be deducted from total value of works contract.

IV. Definition of Works Contract differs:

* As per Sec.2(ja) of the CST Act, works contract means a contract for carrying out any work which includes

assembling construction, building, altering, manufacturing, processing, fabricating, erection, installation,

fitting out, improvement, repair or commissioning of any movable or immovable property.

* The definition of works contract under CST Act is different from that under Service Tax.

Para 6.8.6 of Education Guide:

* This clarifies that for the purpose of levy of service tax the definition of works contract under Sec.65B(54)

shall apply.

* Hence VAT definition of works contract cannot be taken for service tax purposes.

To illustrate :-

Works Contract value (Material + Labour + Profit) for VAT purposes = 1,00,000

VAT on 70% @ 5% = 3,500

VAT Payable = 3,500

For Service Tax Works Contract value as above = 1,00,000

Service Tax on 60% @ 12.36% = 7,416

Service Tax = 7,416

From the above, it can be noted that service tax applies abatement on original works contract value of

Rs.1,00,000/- without considering VAT Calculations.

V. Composition Scheme under Service Tax :

When an Assessee wants to come under Composition Scheme in Service Tax, he should be liable for tax

under State VAT Act.

VI. Non Payment of VAT :

If the State Government exempts a person from payment of VAT, that does not mean, he is not liable for

VAT. This means that tax is levied but exempt from payment of VAT.

If an Assessee is exempt from State VAT Act, that does not mean that he is not eligible for works contract

under Service Tax.

Conclusion:

A Tax consultant ought to know the link between VAT and Service Tax for proper implementation of

taxation laws.




Direct Taxes :

Income Tax:

May- 07 : Deposit of TDS/TCS collected during APRIL 2014

May -15 : Quaterly returns for TDS made during Jan. to March 2014.

May-30 : Issue of TDS certificates for TDS made during the month of APRIL 2014 except on Salaries FOR THE

QUARTER JAN TO MARCH 2014.

May-31 : Issue of TDS certificates for TDS made during the month of APRIL 2014 Salaries

May-31 : Return of TDS from Contribution paid by the Trustees of An Approved Superannuation Fund.

Indirect taxes

Central sales tax/VAT:

May-20 : Monthly return and payment of CST &VAT collected during APRIL 2014.

Excise Duty :

May-05 : Payment of Excise Duty for APRIL 2014.

May-06 : E-Payment of Excise duty for APRIL 2014(MANDATORY IF >=10 LACS IN FY 2011-2014).

May-10 : Monthly Return for Production & Removal of Goods &Cenvat for APRIL 2014.

May-10 : Monthly Return of Excisable Goods Manufactured& Receipt Of Inputs &Capital goods by units in

EOU, STP, HTP for APRIL 2014.

May-10 : Monthly Return By Assesses Making PLA Payment of Rs. 1 Crore Or More during the Previous Year

for APRIL 2014.

Service Tax

May-05 : Payment of service tax for APRIL 2014 by corporates.

May-06 : E-Payment of service tax for APRIL 2014(MANDATORY IF >=10 LACS IN FY 2011-2014).

EPF

May-15 : Payment Of EPF Contribution For APRIL- 2014.

May-15 : Return Of Employees Qualifying To EPF During APRIL-2014.

May-15 : Consolidated Statement of Dues and Remittance Under EPF and EDLI for APRIL 2014.

May-15 : Monthly Returns of Employees Joined / Employees Left The Organisation during APRIL-2014.

ESISTMay-12 : HALFYEARLY RETURN OF ESI CONTRIBUTION FOR THE HALF YEAR ENDING 31 MARCH 2014.

May-21 : Deposit of ESI Contributions and Collection for APRIL-2014 to the Credit of ESI Corporation.

IMPORTANT LEGAL OBLIGATIONS FOR THE MONTH OF MAY 2014

BIRTHDAY & WEDDING DAY WISHES

Name of the Member

S.No.

Name of the MemberWedding Date Wedding Date

Name of the Member DateName of the Children

CA Rameash R

CA Radha S

CA Jayanthilal B

CA Saminathan T

CA Sivasubramani P

10th May

12th May

21st May

21st May

22nd May

CA Sundaram S

CA Venkataramanan T V

CA Saravanan L

CA Elangovan R

22nd May

23rd May

24th May

29th May

CA Ramasamy T K

CA Muruganandham E S

CA Sundarkumar

CA Thangamuthu K

CA Ragavan D

CA Venkatachalapathy K S

CA Balu A

CA Rajendra kumar rathi

CA Selvadurai

CA Venkataraman M

CA Subbunarayanan T V

CA Balasubramaniam P

CA Balasubramaniam P

CA Subbunarayanan T V

CA Asokan M

CA Jaganathan A

CA Gowrisankar R

CA Sengottuvel D

CA Saravanan L

CA Sengottuvelavan G V

CA Ravikumar G V

CA Nithya P

CA Shanmugasundaram K

CA Raghunathan S

CA Saravanan S

R.Thirunavukkarasu

E.M.Sakthikumar

S.Vignesh

T.DineshSanbhaviragvan

K.V.Swagath

B.Rajprethiv

Vineetrathi

S.Poornachandrika

Raji venkataraman

S.Venkatesan

B.Ashwin

B.Akash

S.Swarnalakshmi

A.Gnanavel

J.Hemapriyadharshiny

G.Ullasniragulan

A.S.Parameswaran

Sri Aishvarryaa Saravanan

S.Dhivyajothi

G.R.Vaishnavi

G Ritvikram

N.S.Saranya

R.Thirukkarthickrajaa

S.Arjun

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11.

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14.

15.

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18.

19.

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21.

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24.

25.

1st May

2nd May

3rd May

5th May

7th May

7th May

8th May

8th May

13th May

13th May

18th May

18th May

18th May

18th May

18th May

21st May

21st May

22nd May

22nd May

23rd May

24th May

28th May

29th May

30th May

31st May

Secretary on behalf of Erode Branch of SIRC of The Institute of Chartered Accountants of India,

Erode. and Printed at : Sakura Printers, 7, Muthuvelappa Street, Brough Road, Erode - 638001. Ph : 0424-2251464

email : [email protected] and published by Erode Branch of SIRC of ICAI, “ICAI BHAWAN”, 122-A, Pushpa Nagar, Thindal, Erode - 638 012.

Ph : 0424 - 2430776 Cell : 98429 30776 Email : [email protected] Website : www.icaierode.org

Contents of this journal do not necessarily represent the views of Erode Branch of SIRC of ICAI unless otherwise Stated

CA. P. Boopalan, SalemCA. P. Boopalan, SalemCA. P. Boopalan, Salem

CA. B. Sekkizhar, SIRC Member.CA. B. Sekkizhar, SIRC Member.CA. B. Sekkizhar, SIRC Member.

CA Gopal Krishna Raju, SIRC Member.CA Gopal Krishna Raju, SIRC Member.CA Gopal Krishna Raju, SIRC Member.

CA. J. Anand, Erode.CA. J. Anand, Erode.CA. J. Anand, Erode.

CA . Babu Abraham Kallivayalil, CC Member.CA . Babu Abraham Kallivayalil, CC Member.CA . Babu Abraham Kallivayalil, CC Member.

CA . E. Phalguna Kumar, SIRC Member.CA . E. Phalguna Kumar, SIRC Member.CA . E. Phalguna Kumar, SIRC Member.

CA . P.V. Rajarajeswaran, Chairman, SIRC.CA . P.V. Rajarajeswaran, Chairman, SIRC.CA . P.V. Rajarajeswaran, Chairman, SIRC.

Participants of One Day SeminarParticipants of One Day SeminarParticipants of One Day Seminar

CA . K. Raghu, President of ICAICA . K. Raghu, President of ICAICA . K. Raghu, President of ICAI

CA . Cotha S. Srinivas, Secretary, SIRC.CA . Cotha S. Srinivas, Secretary, SIRC.CA . Cotha S. Srinivas, Secretary, SIRC.

CS. S. Dhanapal, Chennai.CS. S. Dhanapal, Chennai.CS. S. Dhanapal, Chennai.

Participants of Insurance Awarness ProgrammeParticipants of Insurance Awarness ProgrammeParticipants of Insurance Awarness Programme

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ERODE BRANCH - SIRC NEWSLETTER - erodeicai.org