E-PAYMENT FROM ANOTHER PERSON ACCOUNT

The Central Board of Direct Taxes has issued Circular No. 5/2008 dated 14th July 2008 clarifying the following things -
With a view to facilitating electronic payment of taxes by different categories of taxpayers, it is hereby clarified that, an assessee can make electronic payment of taxes also from the account of any other person. However, the challan for making such payment must clearly indicate the Permanent Account Number (PAN) of the assessee on whose behalf the payment is made. It is not necessary for the assessee to make payment of taxes from his own account in an authorized bank.
Further, it is also clarified that payment of any amount by a deductor by way of tax deducted at source (TDS) or tax collected at source (TCS) shall fall within the meaning of `tax' for the purpose of the rule 125 of the Income-tax Rules, 1962.

JAGO GRAHAK JAGO (CONSUMER BEAWARE)

CONSUMER RIGHTS VINDICATED
Railways held responsible for Passenger Safety
While consumers generally tolerate the lack of service in Railways, it causes immense trauma and distress when one's safety is at stake due to inefficiency and abdication of responsibility of Railway and State Police. Mr. S L Bhargava reserved tickets for himself and his companions on Musssourie Express from Delhi to Hardwar in 1997. Barely had the train crossed Ghaziabad that a mob participating in a rally entered the coaches shouting slogans ,making catcalls and making travelling extremely difficult for the passengers with reservations. The passengers had to suffer sheer mental agony and physical pain due to the unruly presence of the mob in the coaches. The passengers had to remain holed up in the coaches without being able to avail the basic amenities till the train reached its last
destination. No Railway police or TTE staff was available on the scene. Mr. Bhargava filed a complaint with a consumer court for deficiency in service by Railways. But in response the
Northern Railways said that the complaint was not maintainable because the complainant was not a consumer, that the District Forum had no territorial jurisdiction and that the compensation claimed was excessive. The Northern Railway denied liability for the situation by claiming that the situation was beyond their control. The Delhi State Commission did not view such reasons sympathetically and said that such an incident demonstrated grossest kind of deficiency in service on the part of a huge organisation like the Railways. Not only the Railway have its
own police, it also has the services of the State Police at its disposal. The Commission further noted that Railways cannot absolve itself and runaway from their responsibility of providing perfect, faultless service, apart from protecting the life and property of the consumer which is very essential. The State Commission awarded a compensation of Rs.25000 for the mental agony, trauma and harassment suffered by the consumer and Rs.5000 as cost of litigation.
S L Bhargava vs Northern Railway, I (2007) CPJ 92 Delhi SCDRC

CUSTOMER IS KING

CONSUMER RIGHTS VINDICATED
Banks held accountable for ATM services
"Offering ATM facility to consumers is a 'service' and
banks are accountable for it", this is the categorical
message that has been given to banks by the Consumer
Court. Mr. Devender Pratap Singh had a saving bank
account with the State Bank of India, under which the
bank extended to him ATM facility. Once when he tried to
withdraw Rs.800 from his SBI account ATM in his native
place Bulandshahar, he was unable to complete the
transaction. The ATM showed that his account balance
was Rs.249.47, even though actually he had Rs. 25565 in
his account. When Mr. Singh came back to Delhi, he
contacted the SBI Branch Manager who confirmed that he
indeed had sufficient balance. When Mr. Pratap filed a
case against SBI in consumer court for deficiency in
service, the bank contended that ATM services do not fall
in the ambit of being called a 'service' under the
Consumer Protection Act, as banks do not charge any
consideration from the consumer for this facility.
Therefore no question arises for any liability on this
account.
The State Commission did not agree with the contention
of the bank and explained the meaning of 'service' under
the Act to the bank. The Commission also observed that it
was neither a case of ATM failure nor malfunction and it
was indeed "the grossest kind of deficiency in service on
the part of those who are maintaining and feeding the
ATMs".
The State Commission upheld compensation of Rs.4000
and Rs.1000 as cost of litigation awarded by the District
Forum to the consumer.
SBI vs Devender Pratap Singh, IV (2006) CPJ 167

Mobile recharge voucher's validity change
penalised
Mr. Pradyumna Kumar Mishra of Cuttak purhased a
mobile recharge card for Rs.200 which had a validity
period of 30 days. However on the 20th day Mishra found
he could no longer make outgoing calls.
When Mishra enquired from Reliance Telecom about the
same, he was told that the validity period of the smart
card had been reduced from 30 days to 20 days and the
same had been published in newspapers. Mishra's
contention was that the mobile recharge card explicitly
said that it was valid for 30 days therefore the service
provider cannot unilaterally reduce the validity period to
twenty days.
When Mishra took the case to Cuttak District Forum,
Reliance's contention was that the relationship between
the consumer and the company was a contractual one
and was governed by the service terms and conditions set
out in the subscriber enrolment form.
While the Cuttak District Forum rejected Mishra's plea,
the Orissa State Commission held that the arbitrary and
unilateral action of the service provider in reducing the
validity period indeed amounted to deficiency in service.
During the period that the his phone calls were barred,
the consumer must have chosen some other mode of
communication by spending additional money.
The Commission assessed the compensation at Rs. 5000
and allowed Rs.1000 as costs of litigation.
Pradyumna Kumar Mishra vs Reliance Telecom Ltd,
I (2007) CPJ 421

REAL ESTAE OR GOLD ?

INVESTMENT IN REAL ESTATE OR GOLD
Q. Is there a correlation between stock market and
property market? If the stock market crashes, will
sentiments turn negative in property market?
A. The answer, however, is not as straightforward as you
might think. Yes, there is, but not much. There are
different demand drivers for different real estate
sectors. The stock market performance and its impact
on general sentiments is only one of the factors.
There are many other factors that also reduce the
correlation. There can be two scenarios - in the first,
if the market goes up, resulting in excessive profits
being invested in the real estate sector. In the second,
the market goes down and investors shift their focus
from the stock market to real estate for safety
reasons.
Q. Ideally when should one invest in real estate? What
are the factors that would suggest that the time is
right to invest in real estate? :
A. The best time to invest in real estate is while the
demand for property in particular location is likely to
increase and prices are still low, and the possibility of
appreciation is high. If prices are already high, they
will eventually plateau out. Another factor to consider
is when you want to diversify your portfolio.
Q. Considering the high rates of interest on home loans,
are there going to be any long-term repercussions on
the real estate market?
A. Interest rates on home loans have risen, and may rise
by another 50-100 basis points within 2 to 3 months.
But this does not change the fact that people need
homes, as well as opportunities to invest. It only
results in people buying smaller homes in lesspreferred
locations, which is what is happening now.
Q. What kind of gold should I buy?
A. The answer, however, is not as straightforward as you
might think. What you buy depends upon your goals.
If your goal is simply to capitalize on price movement
with tax treatment of Mutual funds, then buy Units of
Exchange Traded Funds (Currently UTI Gold Share
and Gold Bees of Bench Mark are traded at NSE).
These offer profit potential just like tracking gold
price.
If you want leverage effect also then buy Gold Futures
at NCDEX or MCX.
If you want to convert gold into ornaments , then buy
physical gold.
Q. When should I buy Gold or Property?
A. The short answer is 'When you need it.' You cannot
approach gold or property the way you approach
equity investments. Timing is not really an issue. The
real question is whether or not you feel the need to
diversify your present portfolio with gold or property.
If you feel the need, the best time to start is now. It is
better to be a day early than an hour late.
Q. Is investment in gold is an insurance against odds?
A. Gold's baseline, essential quality is its role as the only
primary asset that is not someone else's liability. No
matter what happens in this country, with the Rupee,
with the stock and bond markets, the gold owner will
find a friend in the yellow metal something to rely
upon when the chips are down. In gold, investors will
find a vehicle to protect their wealth.
This is precisely what people have discovered during
countless crisis situations over the centuries and in
financial meltdowns in recent history like the Pacific
Rim in 1997, in Argentina and Brazil in 1998, in
Turkey in 2002, and in the Middle East during Iraq
war. When crunch time came, those who owned gold
understood that gold is gold.
Q. What percentage of my assets should I invest in gold?
A. Once again the answer is not cut and dried, but a
general rule of thumb is 10% to 20%; and how high
you go within that range depends upon your analysis
of the current economic, financial and political
situation.
Obviously, the individual with a low level of concern
about the current economic situation will tend toward
the 10% level. Those with lagging confidence in the
way things are going will gravitate to the higher end of
the range.
Q. Can you briefly describe what you believe to be the
biggest mistake investors make when starting out as
gold owners?
A. The biggest trap investors fall into is buying a gold
investment that bears little or no relationship to his or
her objectives. Most often the safe-haven investor
simply wants to add gold coins to his or her portfolio
mix, but too often this same investor ends up instead
with a leveraged gold position.
Q. What about gold futures contracts?
A. Futures contracts are generally considered one of the
most speculative arenas in the investment
marketplace. The investor's exposure to the market is
leveraged and the moves both up and down are
greatly exaggerated. Something like 9 out of 10
investors who enter the futures market come away
losers. For someone looking to hedge their portfolios
against economic and financial risk, this is a poor
substitute for owning the metal itself.
Q. What is the best approach for the safe-haven investor?
A. If you want to protect yourself against inflation,
deflation, stock market weakness and potential
currency problems -- in other words, if you want to
hedge financial uncertainties, there are only two
portfolio items that will serve you in all seasons and
under most circumstances gold or property.

DIGITALLY SIGNED TDS CERTIFICATES

CBDT has issued Circular 2/2007 dated 21-05-2007,
allowing employers to issue digitally signed Form 16 to
employees.
Form 16 till now
Every employer has to issue TDS certificate in Form 16 to
employees before 30th April. The certificate has to be
singed by the authorised person.
The certificate, till assessment year 2006-07 was a
critical document in the hands of employee, as it needed
to be attached with the return of income. Without Form
16, the return of income was not accepted.
Annexure less filing for AY 2007-08
This has changed with the introduction of annexure less
returns for the assessment year 2007-2008. There is no
need to attach Form 16 with the return of income. In fact,
it has been made very clear that even if any attachment is
presented , the receiving person will detach the same and
return it to the assessee.
The TDS certificates are now issued only for the purpose
of personal record of the employees subject to the
condition that they may be required to produce the same
on demand before the Assessing Officer.
The TDS details made in the return of income can also
be matched with the e-TDS returns Form 24Q furnished
by the deductors.
Physically signing Form 16
Many companies have a very large number of employees.
This posed problem for the person authorised to issue
TDS certificate as he/she would have to physically sign
each and every certificate, which is very time consuming.
There were representation to the income tax department
to allow the employers to use their digital signatures to
authenticate TDS certificates instead of signing the
certificates manually.
Digital Signature
• Digital signatures are being used to authenticate
most of the e-commerce transactions on the internet.
Digital signature are used for e-filing of return of
income. All ROC returns are also electronically filed
with digital signatures.
Digitally Signed Form 16
• Deductors are now allowed to use their digital
signatures to authenticate the certificates of
deduction of tax at source in Form No.16.
• This is optional and they can continue to manually
sign the certificate.
• The deductors will have to ensure that TDS
certificates in Form No.16 bearing digital signatures
have a control No. and a log of such control number
must be maintained.
• The deductor must ensure that its TAN and the PAN of
the employee are correctly mentioned in such Form.
• The deductors will also ensure that once the
certificates are digitally signed, the contents of the
certificates are not amenable to change by anyone.
When and how to issue
For the financial year 2006-07 , the last date of issuing
Form 16 was April 30, 2007 . This would mean that all the
employers would have already issued Form 16 with
manual signature.
For the financial year 2007-2008, however digitally
signed certificates can be issued.
For issuing the same
• You will require a software tool to create Form 16 in
format which cannot be changed.
• You can also create Form 16 in Microsoft Word file
and digitally sign it. To do this :
1. On the Tools menu, click Options, and click
the Security tab.
2. Click Digital signatures.
3. Click Add.
4. Select the certificate you want to add, and
then click OK.

Give Power To Your Portfolio

The demand for power is expected to increase substantially in future with more urbanization and industrialization in
store ahead. The per capita consumption of power in India is 600 KWH, which is very low as compared to 2,634 KWH
world average. The demand is higher than supply and with shortage in the supply side due to low installed capacity
overall, any kind of capacity addition will be welcomed in our country
Even in China due to power shortage recently , the Government has taken steps to reduce power consumption . For
example , it has issued an order asking all its citizens not to keep air conditioners below 25 degree celsius.
• All power generating, distribution, trading and power equipment manufacturing companies are set to benefit
from the bright prospects for the sector.
• You can invest in companies in power sector listed at Stock Exchanges. Some of prominent companies are Jindal
Steel & Power ,Reliance Energy, ABB, Tata Power, JP Hydro., Power Trading Co., Siemens, Crompton Greaves,
Areva T&D India Ltd, Voltamp Trans, Cummins India, NTPC, BHEL, GMR etc..
• You can also invest through Mutual Funds like Reliance Power Sector Fund

NAV Returns
1-Week 1-Month 3-Months 6-Months 1-Year 3-Years Incep.
NAV Growth 3.48% 3.88% 26.45% 19.76% 87.08% 64.98% 59.08%

Shares held as stock-in-trade or Investment ?

Shares held as stock-in-trade or Investment
The laws in our country are quite confusing at times.
Circulars issued from time to time clarify these issues.
But what can be done, when the circular creates more
confusion that clarifying the issue?
Gains from investment
We have at hand a crucial situation with regard to the
gains from investment. Whether the same be treated as
Capital Gain or Business Income.
• The point became important with the introduction of
Securities Transaction Tax (STT) and corresponding
lowering of tax rate in case of STT paid Capital gains.
• In majority of cases effective tax rate is lower when
the profit is considered as Capital Gain, than as
business income.
• In the case of FII's it is the other way round, since
they are benefited if the same is considered as
business income due to Double Taxation Avoidance
Agreements.
• Either way without any clear-cut instructions, the
issue is always open for litigation.
Past circular
• The issue was raked up one year back when the old
circular issued by The Central Board of Direct Taxes
(CBDT) through Instruction No.1827 dated August
31, 1989 was issued in the Income tax Department
to be followed to determine the taxability.
• Now again this issue is in the news with the
publication of CIRCULAR NO. 4/2007, DATED
15-6-2007
Present Circular No 4/2007
• The present circular hardly says anything new.
• It firstly refers to The Central Board of Direct Taxes
(CBDT) Instruction No.1827 dated August 31, 1989
• Then it goes on to discuss the findings of Supreme
Court Decisions in the case of
o Commissioner of Income Tax (Central), Calcutta
Vs Associated Industrial Development Company
(P) Ltd (82 ITR 586)
o Commissioner of Income Tax, Bombay Vs H.
Holck Larsen (160 ITR 67), and
o The Authority for Advance Rulings (AAR) (288
ITR 641) and also reference is to the AAR in the
case of Fidelity group
What the present circular has to say
The principles referred to by the Circular are summarized
below :
1. The assessee, who being in a position should produce
evidence from its records as to whether it has
maintained any distinction between those shares
which are its stock-in-trade and those which are held
by way of investment.
2. The emphasis is on facts and not on law.
3. The power to purchase or sell shares in the
Memorandum is not decisive of the nature whether
trading or investment.
4. The substantial nature of transactions, the manner of
maintaining books of accounts, the magnitude of
purchases and sales and the ratio between
purchases and sales and the holding would furnish a
good guide to determine the nature of transactions.
5. The purchase and sale of shares with the motive of
earning a profit, would result in the transaction being
in the nature of trade/adventure in the nature of
trade.
6. Where the object of the investment in shares of a
company is to derive income by way of dividend etc.
then the profits accruing by change in such
investment (by sale of shares) will yield capital gain
and not revenue receipt.
7. it is possible for a tax payer to have two portfolios,
i.e., an investment portfolio comprising of securities
which are to be treated as capital assets and a
trading portfolio comprising of stock-in-trade which
are to be treated as trading assets.
8. Where an assessee has two portfolios, the assessee
may have income under both heads i.e., capital gains
as well as business income.
9. No single principle would be decisive and the total
effect of all the principles should be considered to
determine in a given case
The last para of circular practically undoes the whole
exercise by stating that “ These instructions shall
supplement the earlier Instruction no. 1827 dated August
31, 1989.”
If we analyse the circular there are two new things that
emerge from this circular.
1. An assessee can have two portfolios.
2. The total effect of the guiding principles has to be
applied in a given case.
This reduces the threat faced by the retail investor. Now
some instances of non delivery investments or F&O
transactions will not give blanket permission to the
Assessing officer to consider the total investment as
Business.
Does this circular really gives any relief to the Investor?
Does this circular give any clarity on the matter? The
answer to the latter is definitely negative, but for the
former to an extent yes.
We wish the law makers understand the situation and
clear the dilemma. We would like to take the example of
option given to the assessee to chose Indexation benefit
as an alternate to long term tax at a lower percentage.
A similar option will be a real relief. The FII's have AAR to
take shelter, where does retail investor go?
4 July

How to get TDS/TCS Credit ?

Ensuring TDS/TCS Credit

1. Introduction
Tax Information Network (TIN), a repository of
nationwide tax related information, has been established
by National Securities Depository Limited (NSDL) on
behalf of the Income Tax Department (ITD). TIN is an
initiative by ITD for the modernisation of the current
system for collection, processing, monitoring and
accounting of direct taxes using information technology.
All quarterly TDS/TCS returns, giving details of TDS/TCS
submitted by the deductor are uploaded to the central
system hosted by NSDL. The central system also
receives, on a daily basis, details of TDS/TCS deposited
by deductors at the tax collecting banks through the
Online Tax Accounting System (OLTAS). The TIN central
system matches the details of the tax deposited given in
the TDS/TCS statements with the details of the tax
deposits uploaded by the banks and once they are
matched, each of the underlying deductees [whose
details are given in the TDS/TCS statements] are given
tax credit against his Permanent Account Number (PAN).
As per the Finance Act, 2006, credit of TDS/TCS would be
on the basis of the entries in the PAN-wise ledger
described above which is called Form 26AS or Annual Tax
Statement for tax deducted or tax collected on or after
1/4/2008. The PAN ledger will replace Forms 16/16A as
the basis for claiming tax credit in Income Tax Returns
from Assessment Year 2009-2010 onwards.
As can be seen from above, the authentication of tax
deposits claimed by deductors in their TDS/TCS returns
with the data of tax deposits from banks ensures that tax
credit is given only against funds that are actually
received in government account.
2. Ensure Tax Credit
1. The deductor should use the same TAN to deposit
tax in the bank and to prepare the TDS/TCS
statement.
2. In case the deductor has multiple TANs, only one
TAN should be used consistently, the other TANs
should be surrendered to ITD.
3. The deductor details, i.e. TAN, name, address of
deductor should be correctly stated in the
statement filed.
4. Challan details (BSR code- seven digits, challan
serial number upto five digits, date of tender)
mentioned in the statement should be same as
those stamped by the bank on the challan
counterfoil. (Verify the challan details from TIN
website (www.tin-nsdl.com) before filing the
statement to prevent errors)
5. The challan amount mentioned in the statement
should be same as the total amount deposited in
the bank.
6. Valid 10-digit PAN of deductee should be
provided.
3. Views for deductor on the NSDL TIN website
1. 'Challan Status Enquiry' displays the details of
challan deposited in the bank. There are two types
of views; CIN based view and TAN based view.
CIN based view: details of any particular challan can
be viewed.
TAN based view: details of all challans deposited in
the banks for a given TAN during a specified period
can be viewed.
2. 'Quarterly Statement Status' displays status of
the quarterly statement submitted by the deductor.
The deductor can also check the status of the
challans as well as the count of valid PANs in the
statement.
4.Inconsistency in the TDS/TCS statement
submitted by the deductor
TIN matches the challan details (BSR code, Cheque
Tender Date, Challan Serial No., TAN and Amount) in
the TDS statement with challan details uploaded by
the bank. Feedback is given to the deductor where
challans in the statement are not matched.
The status provided in the inconsistency letter is as
follows.:
Matched: Challan details, match with details
provided by bank.
Match failed (Amount does not match,
different TAN in challan and statement,
amount and TAN mismatch): indicates CIN in the
statement matches with CIN in details provided by
banks but TAN and/or amount do not match.
Match pending (CIN in statement not found in
bank data): indicates that CIN mentioned in
statement not received from the bank or the CIN
uploaded by the bank is different than the CIN issued
to the deductor.
In addition to the above the deductor is advised to submit
a correction statement providing valid PAN of all
deductees mentioned in the statement.
For detail guidelines on preparation of correction
statements please refer the Deductors' Manual and also
refer the Do's and Don'ts. These are available on the
NSDL-TIN website (www.tin-nsdl.com).
Action to be taken by the deductor ( Please refer to
the table on page No 3)
TAX INFORMATION NETWORK (TIN)
of Income Tax Department
Ensuring TDS/TCS Credit
For any clarification related to inconsistency, send
email at tin_returns@nsdl.co.in

TAX PAID BY THE EMPLOYER

DELHI ITAT RULING- TAX PAID BY THE EMPLOYER

There is good news for salaried taxpayers, especially
foreign nationals working in India. In case employer picks
up employees tax liability, this perquisite of tax-free salary
will not be taxed again.
A special bench of the Income Tax Appellate Tribunal (ITAT) ,
held that when tax on salary is paid by employer , this
perquisite is exempt from tax under Section 10 (10C) of
the Income-Tax Act, which means that it cannot be taxed
again. Therefore, if an employer picks up the income tax
tab of the employee, this benefit of tax-free employment
will not be taxed again.
This ruling was given in the case of RBF Rig Corp LLC, USA.
Issues when tax is paid by employer
• When tax is paid by the employer, whether it is to be
considered as a perquisite or salary is not expressly
stated under the Act. Tax is statutory obligation of the
employee and when met by the employer it can be
treated as a perquisite. The other view is that the tax
paid by the employer is merely allocation of salary
towards taxes.
• If the tax paid by the employer is considered to be a
perquisite, the next issue to be addressed is whether it
is a “monetary payment” or a “non-monetary
perquisite”. Again ,“monetary payment” and “non-
monetary perquisites” has not been defined under the
Act and different views are expressed as to their
classification. This distinction is important as it has a
direct impact on the taxability of the employee, in
terms of single or multiple grossing up and hence, the
overall cost for the employer.
Delhi Tribunal's judgement
The Tribunal has held that the tax paid by the employer
on behalf of the employee would constitute a
“perquisite”. such tax payment to the government would
not constitute monetary payment to the employee and
therefore not subject to multiple grossing up.
• If the employer agrees to pay Rs 100 net of tax salary
to the employee in India and the tax rate is 34%.
• When such tax payment by the employer is considered
to be a “non-monetary perquisite” then only Rs 34
shall be added to the taxable income of the employee.
• If such tax payment is considered a “monetary
payment” then Rs 34 will be subject to multiple
grossing up and Rs 52 will be added in the taxable
income of the employee, so that after paying a tax of
34% on Rs 152, the employee receives Rs 100 net of
tax salary.

E-FILING OF INCOME TAX RETURNS

RETURN MADE SIMPLER THROUGH E-FILING

NEW DELHI: As July 31 — the last date for filing income-tax returns for individuals, Hindu Undivided Families and other non-corporate assessees — draws closer, taxpayers have started preparing themselves for the yearly ritual of poring over their documents and making hurried calls to their chartered accountants. Though e-filing of returns is not compulsory for individual taxpayers, it has picked up in a big way because of the convenience it offers. All you need to do is to log on to the official website http://www.incometaxindiaefiling.gov.in or www.incometaxindiaefiling.gov.in, and register with your PAN, which will act as your user ID. Next, you need to identify the return form (in excel format) applicable to you and download the same. A salaried assessee with no other income (except interest from bank deposits) has to fill the form ITR 1. If he/she has also earned income by way of rent, selling a house property or stocks and so on, ITR 2 will be applicable. The Form-16 issued by your employer will serve as a helpful guide to filling the return forms. You need to go to Tools > Macro > Security and set the security level to medium and enable the macros. Once you are done with filling the form, you need to validate all the information by clicking on the Validate key and proceed to generate an XML file, which will have to be uploaded on to the site by hitting the Submit Return key. If you have obtained a digital signature (DS) certificate, you need to upload it along with the XML file. Once the website displays the acknowledgement details, your task can be considered complete. You can preserve a print-out of the acknowledgement slip for your records. However, in case you have submitted the return without a DS, the ITR-V form will be generated, which will have to be filled and submitted to your local income-tax office within 15 days of e-filing your return. In case you are unable to so, your return is rendered invalid. ITR-V has to be signed and submitted in duplicate. The I-T department will retain a copy and hand over the other duly stamped copy to you. This copy will serve as a proof that you have submitted ITR-V within stipulated time. While you are not required to attach any documents like the Form-16 or TDS certificates along with ITR-V, it is advisable to attach photocopies of the same to enable the taxman assess your return easily.
A digital signature (DS) is required to validate the electronic documents. A DS can be obtained for a fee from any of the seven Certification Agencies (CAs), including TCS, National Informatics Centre and MTNL, which are authorised by the government to issue digital signatures. An individual assessee is required to obtain Class II/Class III digital signature certificates, which are issued after the submission of relevant identity and address proofs. Usually, these are certificates issued with a validity period of 1-2 years, and need to be renewed thereafter. The process of obtaining a DS can take up to 1-2 weeks. The fees charged for issuing a DS depend on the vendor and the validity period. The cost of obtaining a Class II DS could range from Rs 300 to Rs 2,000. While e-filing has certainly made the taxpayer’s life simpler, certain hiccups such as slow downloading and uploading do crop up at times. One of the drawbacks of this system is that it does not guide you with helpful tips and information, points out Pune-based chartered account Vaibhav Sankhla. Besides, the portal’s functioning gets disrupted even if minor typographic errors such as extra spacing between the words or usage of an incorrect date format occur, says PricewaterhouseCoopers executive director Sandip Mukherjee. People who do not have the time or patience to file their returns directly through the official website can opt for the services offered by e-filing specific portals like Taxsmile and Taxspanner, who promise to simplify the procedure further for a fee (starting from Rs 250 a year). They arrange for a DS as well. Taking this route could make your task easier. “These portals provide useful inputs and tools that can guide the users properly,” says Mr Sankhla. You can also courier your ITR-V to their offices, which will in turn, submit the form at the local I-T offices, marking the culmination of the return-filing process. However, if you happen to miss the bus this time, you have an option of filing a belated return till March 31, 2010. But if the return is filed after March 31, 2009, you may have to shell out penal charges of up to Rs 5,000 if your papers are picked up for assessment by the taxman. Moreover, if any tax remains unpaid, the tax payer will also be liable to pay a penal interest of 1 per cent per month on the amount of unpaid tax from the date immediately following the due date, i.e. July 31, 2008, till the day the tax amount is finally paid.

Fair Value Derivatives Statement

GASB Issues Fair Value Derivatives Statement
USA July 7, 2008
The Governmental Accounting Standards Board has issued GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments.
Statement 53 is intended to improve how state and local governments report information about derivative instruments -- financial arrangements used by governments to manage specific risks or make investments -- in their financial statements. It specifically requires governments to measure most derivative instruments at fair value in their financial statements that are prepared using the economic resources measurement focus and the accrual basis of accounting.
The guidance in this Statement also addresses hedge accounting requirements and is effective for financial statements for reporting periods beginning after June 15, 2009, with earlier application encouraged.
"By requiring the fair values of derivative instruments to be reported on the face of financial statements prepared using the accrual basis of accounting, Statement 53 brings additional transparency to those transactions," said Robert Attmore, chairman of the GASB. "The application of the financial reporting standards required by this Statement gives the users of financial statements a clearer look into the risks their governments are sometimes exposed to when they enter into these transactions and how those risks are managed."
Governments often enter into derivative instruments as hedges of identified financial risks associated with specific assets or liabilities, or expected transactions (that is, hedgeable items). Many of these hedges are intended to effectively offset changes in interest rates or commodity prices. While derivative instruments can be an effective risk management or investment tool, they also can expose governments to significant risks and liabilities.
The new standard provides specific criteria that governments will use to determine whether a derivative instrument results in an effective hedge. Changes in fair value for effective hedges that are achieved with derivative instruments will be recognized in the reporting period to which they relate. The changes in fair value of these hedging derivative instruments do not affect current investment revenue, but are instead reported as deferrals in the statement of net assets or the balance sheet. Derivative instruments that either do not meet the criteria for an effective hedge or are associated with investments that are already reported at fair value are classified as investment derivative instruments for financial reporting purposes. Changes in fair value of those derivative instruments are reported as part of investment revenue in the current reporting period. Statement 53 also improves disclosures, providing a summary of the government's derivative instrument activity, its objectives for entering into derivative instruments, and their significant terms and risks.
More information about GASB Statement 53—including a question and answer document, fact sheet, and plain language article—is available at www.gasb.org.
[Source: SmartPros]
ABHASH KUMAR

MEMEBR JAB WE MET CA

REDEFINING PROFESSIONALIM.....

How to Incorporate a Company ?

Steps to be taken to get a new company incorporated:
Select, in order of preference, at least one suitable name upto a maximum of six names, indicative of the main objects of the company.
Ensure that the name does not resemble the name of any other already registered company and also does not violate the provisions of emblems and names (Prevention of Improper Use Act, 1950) by availing the services of checking name availability on the portal.
Apply to the concerned RoC to ascertain the availability of name in eForm1 A by logging in to the portal. A fee of Rs. 500/- has to be paid alongside and the digital signature of the applicant proposing the company has to be attached in the form. If proposed name is not available, the user has apply for a fresh name on the same application.
After the name approval the applicant can apply for registration of the new company by filing the required forms (that is Form 1, 18 and 32) within six months of name approval
Arrange for the drafting of the memorandum and articles of association by the solicitors, vetting of the same by RoC and printing of the same.
Arrange for stamping of the memorandum and aticles with the appropriate stamp duty.
Get the Memorandum and the Articles signed by at least two subscribers in his/her own hand, his/her father's name, occupation, address and the number of shares subscribed for and witnessed by at least one person.
Ensure that the Memorandum and Article is dated on a date after the date of stamping.
Login to the portal and fill the following forms and attach the mandatory documents listed in the eForm Declaration of compliance - Form-1Notice of situation of registered office of the company - Form-18. Particulars of the Director's, Manager or Secretary - Form-32.Submit the following eForms after attaching the digital signature, pay the requisite filing and registration fees and send the physical copy of Memorandum and Article of Association to the RoC
After processing of the Form is complete and Corporate Identity is generated obtain Certificate of Incorporation from RoC.
Additional steps to be taken for formation of a Public Limited Company:
To obtain Commencement of Business Certificate after incorporation of the company the public company has to make following compliance
File a declaration in eForm 20 and attach the statement in lieu of the prospectus(schedule III) OR
File a declaration in eForm 19 and attach the prospectus (Schedule II) to it.
Obtain the Certificate of Commencement of Business.
Additional steps to be taken for registration of a Part IX Company:
The Part IX Company is required to file eForm 37 and eForm 39 apart from filing eForm 1, 18 and 32.
The company is required to file eForm 1 first and then the company can file all the other eForms (18, 32, 37 and 39) simultaneously or separately

VIKAS KAPAHI

TREASURER

JAB WE MET CA

REDEFINING PROFESSIONALISM....

Auditing Standard on Related Parties

IAASB Issues Auditing Standard on Related Parties; Makes Further Progress on Clarity Standards
New York July 14, 2008
Following the consideration and approval of due process by the Public Interest Oversight Board (PIOB), the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting board under the auspices of the International Federation of Accountants (IFAC), today released International Standard on Auditing (ISAs) 550 (Revised and Redrafted), Related Parties and three clarity redrafted ISAs.
Related PartiesThe involvement of related parties in major corporate scandals encouraged the IAASB to revise its current auditing standard on the subject. The revised Related Parties standard clarifies the meaning of "related party" for purposes of an audit. It also makes clear the auditor's responsibility to obtain sufficient evidence about the required accounting and disclosure of related party relationships and transactions and to understand how such relationships and transactions affect the view given by the financial statements.
"The standard will strengthen current auditing practice in this area by emphasizing the need for the auditor to understand related party relationships and transactions in order to identify the risks of material misstatement to which these may give rise, and directing the auditor to focus work effort on the assessed risks of material misstatement, including those due to fraud," explains John Kellas, IAASB Chairman.
"The revised standard clarifies the auditor's responsibilities in those cases where the financial reporting framework establishes minimal or no related party requirements. In addition, it provides enhanced guidance to assist the auditor in understanding and responding to the risks of material misstatement that may arise in relation to related parties with dominant influence," emphasizes Kellas.
Clarity Redrafted ISAsIn addition to ISA 550 (Revised and Redrafted), the IAASB has also released the following clarity redrafted ISAs:
ISA 250 (Redrafted), Consideration of Laws and Regulations in an Audit of Financial Statements;
ISA 510 (Redrafted), Initial Audit Engagements-Opening Balances; and
ISA 570 (Redrafted), Going Concern.
They form part of the IAASB's ambitious 18-month program to redraft existing standards following the clarity drafting conventions.* To date, the IAASB has released 15 final clarity redrafted ISAs. The IAASB is on track to finalize its complete set of clarified ISAs by the end of this year.
The complete set of clarified ISAs, including newly revised standards such as ISA 550 (Revised and Redrafted), will be effective for audits of financial statements for periods beginning on or after December 15, 2009.
The ISAs can be downloaded free-of-charge from the IFAC online bookstore at http://www.ifac.org/store.
About the IAASB and IFACThe objective of the IAASB is to serve the public interest by setting high quality auditing and assurance standards and by facilitating the convergence of international and national standards, thereby enhancing the quality and uniformity of practice throughout the world and strengthening public confidence in the global auditing and assurance profession. The Public Interest Oversight Board oversees the activities of the IAASB and, as one element of that oversight, establishes its due process and working procedures.
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry and commerce. In addition to setting international auditing and assurance standards through the IAASB, IFAC, through its independent standard-setting boards, sets international ethics, education, and public sector accounting standards. It also issues guidance to encourage high quality performance by professional accountants in business.
* Key elements of the clarity drafting conventions include: establishing an objective for the auditor with respect to the subject matter of each standard; clearly distinguishing requirements from guidance on their application; avoiding ambiguity through eliminating the present tense to describe actions by the auditor and using more imperative language where a requirement was intended; and other structural and drafting improvements to enhance the overall readability and understandability of the standards.
[Source: IFAC]
ABHASH KUMAR
MEMEBR JAB WE MET CA

REDEFINING PROFESSIONALISM........

Fair value rules will not change, says IASB

UK July 11, 2008
The principal body responsible for global accounting rules said it would not dilute the "fair value" standards that critics blame for increasing the scale of credit crisis-related write downs at banks.
The International Accounting Standards Board is pushing ahead with a process to review how the value of assets such as mortgage-backed securities can be established in an illiquid market.
But the rules on "fair value", which dictate that assets should be valued at the price they would fetch in the marketplace, will not change.
A panel established by the board to assess whether it can give companies more guidance on valuing illiquid assets met for the first time last month.
John Smith, a director of the board, said the panel was likely to meet again in the coming months, possibly several times.
There is no fixed timetable for meetings, however, or fixed objectives.
"If there's something to be done, we'd like to do it as quickly as possible. I couldn't tell you when but I would say this year clearly versus sometime further out," Mr Smith said.
Accounting rules drawn up by the board are used in more than 100 countries and are mandatory for companies listed in the EU.
The Institute for International Finance, a lobby group for financial institutions, has said there is a need to clarify some accounting rules.
[Source: The Telegraph]
-- Thanks & Regards
ABHASH KUMAR
JAB WE MET CA
REDEFINING PROFESSONALISM............

IAS-2 ( TECHNICAL SUMMARY)

Technical Summary

This extract has been prepared by IASC Foundation staff and has not been approved by the IASB. For the requirements reference must be made to International Financial Reporting Standards. IAS 2 Inventories
The objective of this Standard is to prescribe the accounting treatment for inventories. A primary issue in accounting for inventories is the amount of cost to be recognised as an asset and carried forward until the related revenues are recognised. This Standard provides guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realisable value. It also provides guidance on the cost formulas that are used to assign costs to inventories.
Inventories shall be measured at the lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
The cost of inventories shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
The cost of inventories shall be assigned by using the first-in, first-out (FIFO) or weighted average cost formula. An entity shall use the same cost formula for all inventories having a similar nature and use to the entity. For inventories with a different nature or use, different cost formulas may be justified. However, the cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects shall be assigned by using specific identification of their individual costs.
When inventories are sold, the carrying amount of those inventories shall be recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories shall be recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, shall be recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

Golden Quotes

To make somebody wrong never makes anything right.....

IFAC’s International Auditing and Assurance Standards Board Issues Strategy and Work Program for 2009-2011

*IFAC's International Auditing and Assurance Standards Board Issues Strategy
and Work Program for 2009-2011*

New York
July 14, 2008

The International Auditing and Assurance Standards Board (IAASB), an
independent standard-setting board under the auspices of the International
Federation of Accountants (IFAC), today released its Strategy and Work
Program, 2009-2011. The three-year strategy includes an emphasis on the
development of standards that contribute to the effective operation of the
world's capital markets and that address the needs of small- and
medium-sized entities and small and medium practices.

The Strategy and Work Program, issued following consideration and approval
of its completeness from a public interest perspective by the Public
Interest Oversight Board (PIOB)*, is consistent with the IAASB's overall
objectives. ** It builds on the strong base of standards developed by the
IAASB to date and focuses on three areas:

- The development of standards;
- The facilitation and monitoring of adoption of those standards; and
- Responding to concerns about the implementation of the standards by
activities designed to improve the consistency with which they are applied
in practice.

"The IAASB's vision is that the high quality standards on assurance, related
services and, in particular, International Standards on Auditing that we
develop in the public interest are adopted and applied internationally. The
strategy and work program are consistent with this longer term vision,"
explains John Kellas, IAASB Chairman.

The Strategy and Work Program responds to significant developments in the
environment in which audit and other assurance services are performed, and
in which standards for such services are set. It also highlights the IAASB
role in working toward global acceptance of and convergence with its
standards and in establishing and maintaining relevant partnerships. It is
underpinned by the IAASB's communications initiatives to keep stakeholders
informed of its activities and to promote adoption and implementation of its
standards.

The Strategy and Work Program reflects the outcome of an extensive
consultation program to obtain the widest possible input into determining
the IAASB's priorities over the next three years. A summary of the IAASB's
conclusions with regard to significant matters raised during these
consultations is presented in the Basis for Conclusions: IAASB Strategy and
Work Program, 2009-2011.

"I am grateful to the many people and organizations that contributed to our
strategy review consultations. I hope that the direction of our work will be
seen as responding to the representations made to us, and to the public
interest, which must be our overriding concern. Of course, events and
circumstances may require us to amend our program, and for this reason it
will be kept under constant review," notes Kellas.

The Strategy and Work Program, 2009-2011 can be downloaded free-of-charge
from the IFAC online bookstore (http://www.ifac.org/store). To access the
related Basis for Conclusions and other information on the IAASB's work,
visit its home page at http://www.iaasb.org/.

*About IFAC*
IFAC is the global organization for the accountancy profession dedicated to
serving the public interest by strengthening the profession and contributing
to the development of strong international economies. IFAC is comprised of
157 members and associates in 123 countries and jurisdictions, representing
more than 2.5 million accountants in public practice, education, government
service, industry and commerce. In addition to setting international
auditing and assurance standards through the IAASB, IFAC, through its
independent standard-setting boards, sets ethics, education, and public
sector accounting standards. It also issues guidance to encourage high
quality performance by professional accountants in business.

*Notes to Editors*

* The PIOB was formally established in February 2005 to oversee IFAC's
auditing and assurance, ethics, and education standard-setting activities as
well as the IFAC Member Body Compliance Program. The objective of the PIOB
is to increase confidence of investors and others that such activities,
including the setting of standards by the IAASB, are properly responsive to
the public interest. PIOB members are nominated by international
institutions and regulatory bodies.

** The objective of the IAASB is: "To serve the public interest by setting,
independently and under its own authority, high quality standards dealing
with auditing, review, other assurance, quality control, and related
services, and by facilitating the convergence of national and international
standards." This objective contributes to enhanced quality and uniformity of
practice in these areas throughout the world and to strengthened public
confidence in financial reporting. The IAASB aims to achieve its objective
through the following strategic initiatives:

(a) Development of Standards - Establish high quality auditing, review,
other assurance, quality control, and related services standards.

(b) Global Acceptance, Convergence and Partnership - Promote the acceptance
and adoption of IAASB pronouncements throughout the world and support a
strong and cohesive international accountancy profession by coordinating
with IFAC member bodies, regional organizations, and national standard
setters to achieve the objective of the IAASB.

(c) Communication - Improve the quality and uniformity of auditing practices
and related services throughout the world by encouraging debate and
presenting papers on a variety of audit and assurance issues and increasing
the public image and awareness of the activities of the IAASB.

[Source: IFAC]

--
Thanks & Regards
ABHASH KUMAR

Bank liable to deduct TDS on MICR charges

*Bank liable to deduct TDS on MICR charges*

New Delhi
July 15, 2008

The Ahmedabad Income-Tax Tribunal has held that where charges are incurred
towards MICR facilities regarding identifying, reading and clearing cheques
through special kind of machines, the same would be in the nature of fees
for technical services (FTS) and would accordingly be liable to deduct tax
at source (TDS) under section 194J. In the relevant case, the assessee was
engaged in the business of banking activities/services. During verification
of the TDS return, the AO observed that the assessee had made payment
towards MICR charges to MICR centre managed by State Bank of India without
deducting TDS. The tribunal held that the definition of the term FTS is very
wide. The services of MICR facilities involve human skills as well as
computerised machines and that it is not automatic. In that sense, it is not
hiring/leasing or making available the technical equipment working on its
own. But it is fully supported by services of personnel and requires human
application of mind along with technical equipment. Since other banks pay
charges for the MICR facilities through its special machines, the same is in
the nature of FTS and therefore, would be exigible to TDS under section
194J.

[Source: The Economic Times]

--
Thanks & Regards
ABHASH KUMAR