lunawat bulletin - february 2017

Serving Since 1968Serving Since 1968Serving Since 1968Serving Since 1968 February 2017February 2017February 2017February 2017

Lunawat Bulletin

Market Watch Sensex Sensex Sensex Sensex

31.01.2017 : 31.01.2017 : 31.01.2017 : 31.01.2017 : 27655.9627655.9627655.9627655.96

31.12.2016 : 31.12.2016 : 31.12.2016 : 31.12.2016 : 26626.4626626.4626626.4626626.46

NiftyNiftyNiftyNifty

31.01.2017 : 31.01.2017 : 31.01.2017 : 31.01.2017 : 8561.308561.308561.308561.30

31.12.2016 : 31.12.2016 : 31.12.2016 : 31.12.2016 : 8185.808185.808185.808185.80

For Private Circulation Only

Lunawat & Co. Chartered Accountants www.lunawat.com

Inside …..

Compliance Due Dates

2

Income Tax and RBI

3-4

Corporate mat-ters, DVAT and Service Tax

5

SEBI and Benami Property

6

Lunawat Update 7

• Industry captains feel that the 6.75-7.5 % GDP growth estimate for 2017-18 too can be achieved. The lower range of this estimate is below 7.1% growth estimated for FY 2016-17.

• Industrial sector growth will come down to 5.2% in 2016-17 from 7.4% in 2015-16 while the services sector will grow at 8.8% in FY 2016-17. Agriculture sector growth will accelerate to 4.1% in the coming year, from 1.2% in 2015-16, which was a drought year.

• Major achievements according to Economic Survey this year include:

• GST

• Bankruptcy Bill

• Monetary Policy Committee

• Aadhar Bill

• FDI Liberalisation

• UPI: Inter-Operability and Making the “M” in Jam a reality.

• Promoting Labour-intensive sectors (apparels and made-ups)

• It pitches for bringing land, real estate under GST.

• India should reduce dependency on fossil fuels.

• Subsidy Bill up by 5% in April-November 2016.

• India should play proactive role in promoting open global markets.

• Prescribes cut in individual I-T rates, real estate stamp duties.

• Time table for cutting corporate tax should be accelerated.

• Demonetization to affect growth rate by 0.25-0.5 %, but to have long-term benefits.

• Demonetization may affect supplies of certain agricultural products like sugar, milk, potatoes and onions.

• Fiscal windfall likely from Pradhan Mantri Garib Kalyan Yojana, low oil price.

• Universal Basic Income Scheme is an alternative to plethora of state subsidies for poverty alle-viation.

• Efforts to collect taxes on disclosed and undisclosed wealth should not lead to tax harassment..

Economic Survey 2017-Highlights

Lunawat Bulletin

Compliance Due Dates

Due Date Related to Particulars

06.02.2017 (Monday)

Service Tax E-payment of Service Tax for month ending January 2017 for Companies.

07.02.2017 (Tuesday)

TDS/TCS (Income Tax)

• Deposit TDS for payments of Salary, Interest, Commission, Rent, Professional, etc. during month of January 2017.

• Deposit TCS for collections made under section 206C during the month of January 2017

13.02.2017 (Monday)

DVAT File DVAT & CST quarterly return in electronic form for the quarter ended December 2016 and furnish hard copy of return verification Form 56 of the same.

14.02.2017 (Tuesday)


Issue of TDS Certificate for tax deducted under section 194-IA in the month of December 2016

15.02.2017 (Wednesday)


Issue Quarterly TDS Certificate (in respect of tax deducted for payments other than salary) for the quarter ending December 31, 2016


EPF Deposit PF under Employees Provident Fund & Misc. Provision Act, 1952 deducted for the month of January 2017.


DVAT/CST Deposit tax deducted at source under DVAT Act for the month of January 2017.

21.02.2017 (Tuesday)

ESI Deposit ESI under Employees State Insurance Act, 1948 deducted for the month of Janu-ary 2017.

21.02.2017 (Tuesday)

DVAT Deposit DVAT and CST for the month ended January 2017.


DVAT Issue TDS certificate under DVAT Act for tax deducted and deposited for the month of January 2017 in Form DVAT-43.

February 2017

Income Tax

• Bank shall obtain and link PAN or Form No. 60 (where PAN is not available) in all existing bank accounts (other than BSBDA) by 28.02.2017.

• RBI vide circular dated 15.12.2016 has mandated that no withdrawal shall be allowed from the accounts having sub-stantial credit balance/deposits if PAN or Form No.60 is not provided in respect of such accounts.

• Therefore, persons who are having bank account but have not submitted PAN or Form No.60 are advised to submit the PAN or Form No. 60 to the bank by 28.2.2017.

• The banks and post offices have also been mandated to submit information in respect of cash deposits from 1.4.2016 to 8.11.2016 in accounts where the cash deposits during the period 9.11.2016 to 30.12.2016 exceeds the specified limits.

• Person who is required to obtain PAN or Form No.60 shall record the PAN/Form.No.60 in all the documents and quote the same in all the reports submitted to the Income-tax Department

a. As per proviso to rule 114B, a person who has an account (other than a time deposit and a Basic Saving Bank De-posit Account) maintained with a banking company or a cooperative bank to which the Banking Regulation Act, 1949, applies and has not quoted his permanent account number or furnished Form No. 60, as the case may be, at the time of opening of such account or subsequently, he shall furnish his permanent account number or Form No. 60.

b. Any person eligible to receive permanent account number and declaration in Form 60 shall ensure that valid PAN and facts furnishing in Form 60 is duly mentioned in the records and also linked to information furnished to In-come Tax Authority or other specified authority and agency.

c. Every person shall quote his PAN if: Cash Deposit with

• banking company or a co-operative bank

• Post Office Cash deposits exceeding

• Rs. 50,000/- during any one day

• Aggregating to more than Rs. 2,50,000/- during the period 09thNovember, 2016 to 30th December, 2016.

d.

CBDT amends IT Rules – Form 60 to be obtained by all bankers for accounts main-

tained

Income tax Rules amended : Bank shall obtain and link PAN or Form No. 60 in all existing bank accounts by 28.02.2017

CBDT issued Circular No. 41/2016 dated 21.12.2016 which dealt with clarification on Indirect Transfer provisions which is kept in abeyance for the time being.

CBDT withdraws clarificatory circular on Indirect Transfers Provision

Nature & Value of Trans-action

Reporting Person

Cash deposits during the period 1st April, 2016 to 9th November, 2016 in re-spect of accounts that are reportable when cash de-posits during the period 09th November, 2016 to 30th December, 2016 ag-gregating to

• 12,50,000/- or more in one or more current ac-count of a person; or

• 2,50,000/- or more in one or more accounts other than current ac-count

• A banking compa-ny or a co-operative bank to which the Banking Regulation Act, 1949

• Post Master Gen-eral

Lunawat Bulletin

• CBDT issues few clarifications on Taxation & Investment Regime for PMGKY 2016

• CBDT issues the annual circular on TDS to be made on Salaries during Financial Year 2016-17 • The concept of Place of Effective Management (POEM) for

deciding the Residential Status of a company. Amended provisions would now be effective from 1 st April 2017 and will apply to Assessment Year 2017-18 and onwards.

• A company is said to be a resident in India in any previous year, if—

1. it is an Indian company; or

2. its place of effective management, in that year, is in In-dia.

• "Place of effective management" is defined as a place where key management and commercial decisions that are neces-sary for the conduct of the business of an entity as a whole are, in substance, made.

• 'Place of effective management' (POEM) is an international-ly recognised test for determination of residence of a com-pany for avoidance of double taxation.

• POEM will also be required to be determined on year to year basis. The process of determination of POEM would be primarily based on the fact as to whether or not the com-pany is engaged in active business outside India.

• The POEM in case of a company engaged in active business outside India shall be presumed to be outside India if the majority meetings of the board of directors of the company are held outside India.

• The intent is to target shell companies and companies which are created for retaining income outside India although real control and management of affairs is located in India.

• It is mandating that the Assessing officer (AO), before initi-ating inquiry for POEM in a case of a taxpayer, will seek approval from Principal Commissioner of Income Tax/ Commissioner of Income-tax. The AO shall also obtain approval from Collegium of Principal Commissioners of Income-tax before holding that POEM of a non-resident company is in India.

• POEM guidelines shall not apply to companies having turn-over or gross receipts of Rs. Fifty Crore or less in a FY.

CBDT issues Guiding Principles for

determination of Place of Effective

Management (POEM) of a Company

Other Notifications

RBI

CBDT clarifies that cooperative banks are not authorized to accept deposits under PMGKDS

2016

• Any person who declared undisclosed income under Pra-dhan Mantri Garib Kalyan Yojana, 2016 will deposit sum, which shall not be less than twenty-five per cent of the declared undisclosed income at the authorized banks to which the Banking Regulation Act, 1949 applies.

• Co-operative Banks are not authorised banks to accept deposits under PMGKDS, 2016

RBI withdraws limit on cash withdrawal from current account & ATM’s

The limits on cash withdrawals from Current Account, cash credit accounts/ overdraft accounts has been withdrawn, howev-er, limits on withdrawal from Saving Bank Account are still applicable i.e. a withdrawal of maximum Rs.24,000 can be done on weekly basis. Foreign Citizens are not allowed anymore to exchange their old Indian currency earlier they were allowed to exchange Rs.5000/- on weekly basis from authorised persons till 31st January, 2017. Similarly, limits on withdrawal from ATMs stands withdrawn from 01.02.2017

Restriction on investment in specified overseas entity by Indian Party

RBI prohibits Indian Party from making direct investment in an overseas entity (set up or acquired abroad directly as JV/WOS or indirectly as Step Down Subsidiary) identified by the Finan-cial Action Task Force (FATF) as “Non Cooperative countries and territories” in order to align with the objectives of FATF,.

Other Notifications

• Banks maintaining currency chests are advised to step up issuance of fresh notes to rural branches of RRBs, DCCBs and commercial banks so that at least 40% bank notes could be supplied in rural areas.

• RBI issues a clarification that Co-operative Banks are not authorised banks to accept deposits under PMGKDS, 2016. (scheme for depositing declared undisclosed income)

February 2017

MCA revises Form SPICe (INC-32) to include functionality of application for PAN & TAN in

form itself

• Mandatory to apply for PAN & TAN for all fresh incorpora-tion on or after 23rd January, 2017.

• After submission of SPICe, MCA21 system will auto generate pre-filled application forms 49A (PAN) and 49B (TAN), which is to be downloaded, affix DSC & then upload both forms as linked forms on the portal.

• SPICe will be processed only after Forms 49A & 49B are duly signed, uploaded and payment is confirmed by MCA.

• PAN will be printed on Certificate of Incorporation & TAN will be communicated separately through email.

• If any resubmission for application made before 23rd January, 2017, then download older version of SPICe for the same.

• Filing of SPICe was not be permitted from 1.00 PM on 20th January, 2017 until 8.00 AM on 23rdJanuary, 2017.

Companies Act

MCA exempts / modifies several sections for Public and Private Companies which is licensed to operate

from International Financial Services Centre (IFSC)

• The Central Government, in the interest of public, hereby di-rects that certain provisions of the Companies Act, 2013 (18 of 2013) shall not apply or shall apply with specified excep-tions, modifications and adaptations, to a private company which is licensed to operate by the RBI or the SEBI or the Insurance Regulatory and Development Authority of India from the IFSC located in an approved multi services Special Economic Zone set-up under the Special Economic Zones Act, 2005 (28 of 2005) read with the Special Economic Zones Rules, 2006 (hereinafter referred to as “Specified IFSC pri-vate company”)

• The Central Government, in the interest of public, hereby di-rects that certain provisions of the Companies Act, 2013 (18 of 2013), shall not apply or shall apply with such exceptions, modifications and adaptations as specified, to an unlisted pub-lic company which is licensed to operate by the RBI or SEBI or the Insurance Regulatory and Development Authority of India from the International Financial Services Centre located in an approved multi services Special Economic Zone set-up under the Special Economic Zones Act, 2005 (28 of 2005) read with the Special Economic Zones Rules, 2006 (herein after referred to as “Specified IFSC public company”

DVAT

Service Tax

Services provided by a tour Operator shall be taxable @ a flat rate of 60% and for this purpose, bill issued shall indicate the gross amount charged for such a tour including the charges of accommodation & transportation required thereof. Cenvat Credit shall not be allowable for inputs & capital goods used for providing the said taxable service, however input services have now been made eligible for cenvat credit. This notifica-tion shall be applicable w.e.f.22.01.2017

Taxability of Services by a Tour Operator

Service Receiver shall pay service tax under reverse charges in respect of Services received relating to transportation of goods by a vessel from a place outside India (by a person located in non taxable territory) upto the customs station of clearance in India (to a person located in non taxable territo-ry). This notification shall be applicable w.e.f.22.01.2017

Service tax under reverse charge mechanism

Extension for filing DVAT returns

The concerned authorities has extended the last day of filling

of online /hard copy of third quarter return for the year 2016-

17 , in form DVAT-16 , DVAT -17 and DVAT-48 along with

required annexures/ enclosures to 13.02.2017

February 2017

SEBI

Services provided by a business facilitator or a business corre-spondent to an Insurance company in rural area has been made taxable, however, services provided to a Banking Company w.r.t. accounts in its rural area branch are still exempt. This notification shall be applicable w.e.f. 12.01.2017.

Services by Business Facilitator to Insurance company in Rural Area

Change in definition of Aggregator

Amendment has been made in the definition of aggregator to exclude such person who enables a potential customer to con-nect with the persons providing such services by way of rent-ing of hotels, inns, guest house, clubs, campsites, or other com-mercial places meant for residential and lodging purposes & whole consideration is received directly by such service pro-vider and he has taken registration under service tax & aggre-gator has nor received any sum from either the recipient of service or his representative. This notification shall be applica-ble w.e.f. 22.01.2017.

SEBI notified (Listing Obligations and Disclosure Requirements) (Third Amendment) Regula-

tions, 2016

• It states that no employee including KMP or director or promoter of a listed entity enter into any agreement for compensation or profit sharing in connection with dealings in the securities of such listed entity, directly or indirectly, with any shareholder or any other third party, unless prior approval for the same has been obtained from the Board of Directors & public shareholders by way of an ordinary resolution.

• Further, all such agreement entered during the preceding 3 yrs from this date of publication, shall be disclosed to Stock Exchange and subsisting agreement to be placed before forthcoming Board Meeting & General Meeting for approval. Also, all interested persons involved in transac-tion covered in said agreement shall be abstain from vot-ing in General Meeting.

Benami Property

• Benami Property can be any property whether movable or immovable, the source and ownership of which is not known. When the owner of the property is not able to de-fine the source of funding of the property, the property could become benami.

• Benami transaction takes place between two parties. On the one hand is the beneficial owner of the property who pays the consideration for the benami transaction. On the other hand is the owner of the property in whose name the prop-erty has been purchased, such person is called the be-namidar

• A transaction shall be regarded as a Benami Transaction if it fulfils the following two conditions:

1. Property is held by or transferred to any person for which the consideration is paid by another person and

2. The property is held for the benefit or future bene-fit, either directly or indirectly, for the person who has provided such consideration.

• Following are also considered as Benami Transactions: 1. Any transaction or arrangement made in respect of

a property carried out or made in a fictitious name. 2. Any transaction or arrangement made in respect of

a property, where the owner of the property is not aware of such ownership.

3. Any transaction or arrangement made in respect of a property, where the person providing the consid-eration is not traceable or fictitious.

• Following are the consequences of entering into Benami transactions:

1. As per the provisions of Prohibition of Benami Property Transactions Act, entering into benami transactions is prohibited

2. This Act further provides that whosoever enters into any benami transactions shall be punishable with rigorous imprisonment for a term which shall not be less than one year and shall not exceed seven years.

3. In addition to this, fine of 25% of the fair market market value of the property shall be payable.

4. The Act further prohibits recovery of the benami property from the benamidar by the real owner and where the benamidar re-transfers the property to the beneficial owner, then the transaction for such re-transfer shall be deemed to be null & void.

5. Properties that are held as benami are liable to be confiscated by the Government without payment of any compensation.

© 2017 Lunawat & Co. All Rights Reserved Information in this document is intended to provide only a general outline of the subjects covered. We recommend that you seek professional advice prior to initiating action on specific issues. Lunawat & Co. does not take any responsibility for any loss arising from any action taken or not taken by anyone

Disclaimer

Lunawat Update

February 2017

Our Services

• Audit and Assurance

• International Taxation

• Income Tax Laws

• Goods & Services Tax (GST)

• VAT/Sales Tax

• Service Tax

• Corporate Laws

• Limited Liability Partnership

(LLP)

• Insolvency & Bankruptcy

• Benami Properties

• NGOs/Societies and Trusts

• Compliance Audits

• Investigations

• Outsourcing Services

• Setting up Business in India

• Consulting Services

• Trainings

• Valuations

• XBRL

• Trade Marks

Daryaganj, New Delhi 54, Daryaganj, New Delhi – 110 002 Tel: +91 11 23270624 + 91 11 23279414 Email: [email protected]

Paschim Vihar, New Delhi A-2/132, Prateek Apartments, Paschim Vihar, New Delhi – 110 063 Tel: + 91 11 25278405 + 91 11 25278406 + 91 11 45581263 + 91 11 45581264 Email:[email protected]

Karampura, New Delhi 109, Magnum House-1, Karampura Complex, New Delhi-110 015 Tel: + 91 11 41427356 Email: [email protected]

Mumbai Office No. 9, First Floor. Star Trade Centre, Chamunda Circle, Near Station, Borivali (W), Mumbai - 400 092 Tel: + 91 22 28954451 Tel: + 91 9869285628 Email: [email protected] Keshopur, New Delhi WZ-339, 2nd Floor, Street No. 19, Santgarh, Keshopur, Outer Ring Road, New Delhi - 110 018 Tel: +91 11 28333914 Fax:+ 91 11 28331602 Email: [email protected]

Presentations

During January 2017, our partner CA. Pramod Jain gave following

presentations:

• “Benami Properties vis-a-vis FS; Penny Stocks & Taxation (2nd

Amendment) Act ” at Karol Bagh Westend CPE Study Circle of

NIRC of ICAI

• “Financial Literacy for Directors” at Institute of Directors,

Nehru Place

• “Driving Financial Performance” at Institute of Directors,

Nehru Place

• “Corporate Financial Statements from Banker's Perspective” at

Indian Institute of Banking & Finance , Delhi

• “ Role of CAs in Prohibition of Benami Transactions Act & Tax-

ation Laws (2nd Amendment) Act 2016 ” at West Delhi Study

Circle of NIRC of ICAI.

Editorial Team: CA. Vikas Yadav, CA. Rahul Modi, Arushi, Shubham, Leena, Abhinav, Sristhi and Dishanka

We may be contacted at:

We also have ASSOCIATES at :

Chennai, Kolkatta, Ludhiana, Pune,

Chandigarh, Udaipur, Vadodara,

Bangalore, Cochin, Indore, Jodhpur,

Jaipur, Bharatpur, Hyderabad,

Jharsuguda, Panipat, Ranchi & Gha-

ziabad.

• “Overview of Emerging Laws - PBPT, PMLA, IBC Taxation Laws

(2nd Amendment) Act” at Kota Branch of CIRC of ICAI.

During January 2017, our partner CA. Rajesh Saluja gave following

presentations:

• “Commercial Thinking for Bharti Infratel Limited” , at Patna

• “Commercial Thinking for Bharti Infratel Limited” at Bhubaneshwar

• “Finance for Non Finance for Bharti Infratel Limited” at Bhu-

baneshwar

• “Commercial Thinking for Bharti Infratel Limited” at Guhawati

• “Finance for Non Finance for Bharti Infratel Limited” at Guhawati

• “Financial Acumen for Greeves cotton Ltd., Gurgaon

• “Training on GST and The Road Ahead for Delta India Electronics

Pvt. Ltd.” at Bangalore

• “ Input Tax Credit under GST” at Jawahar Park Study Circle, Delhi.