Accounting code for service tax wef 1 July,2012

Circular No.161/12/2012 -ST

F.No.341/21/2012-TRU

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

Tax Research Unit

153, North Block,

New Delhi, 6^th July, 2012

To

Chief Commissioners of Customs and Central Excise (All),

Chief Commissioners of Central Excise & Service Tax (All),

Director General (Service Tax), Director General(Systems), Director General (Central Excise Intelligence),  Director General (Audit),

Commissioners of Service Tax (All),

Commissioners of Central Excise (All) &

Commissioners of Central Excise and Customs (All).

Madam/Sir,

Subject:  Accounting Code for payment of service tax under the Negative List approach to taxation of services, with effect from the first day of July 2012 - regarding.

          Negative List based comprehensive approach to taxation of services came into effect from the first day of July, 2012. For payment of service tax under the new approach, a new Minor Head - ‘All taxable Services’ has been allotted under the Major Head “0044-Service Tax”.

2.  Accounting codes for the purpose of payment of service tax under the Negative List approach, with effect from 1^st July, 2012 is as follows:

Name of Services	Accounting codes
	Tax collection	Other Receipts	Penalties	Deduct refunds
All Taxable Services	00441089	00441090	00441093	00441094

NOTE: (i) service specific accounting codes will  also continue to operate, side by side, for accounting of service tax  pertaining to the past period (meaning, for the period prior to 1^st July, 2012); 

(ii) Primary Education Cess on all taxable services will be booked under 00440298 and Secondary and Higher Education Cess on all taxable services will be booked under 00440426; 

(iii) a new sub-head has been created for payment of “penalty”; the sub-head “other receipts” is meant only for payment of interest etc. leviable on delayed payment of service tax;

(iv) the sub-head “deduct refunds” is not to be used by the assessees, as it is meant for use by the Revenue/Commissionerates while allowing refund of tax.

3. Trade Notice/Public Notice may be issued to the field formations and tax payers. Please acknowledge the receipt of this Circular. Hindi version follows.

(S. Jayaprahasam)

Technical Officer

Tel: 011-23092037

BASIC TAX COMPLIANCE AND TAX PLANNING TIPS FOR SALARIED EMPLOYEES

                      Is it Your First Job? If Yes, then below are some points useful for you.

•   What is Form 16?

Form 16 is a Certificate of TDS (Tax deducted at Source) i.e. tax deducted on your Salary by your Employer and deposited with the Government on your behalf.

It reflects the details of your Gross Salary, the exempt allowances, your Other Income if any, details of Investments made and deductions availed. Thereafter, your tax liability, TDS made, and tax payable/refundable (If any).

Form 16 needs to be compulsorily issued if tax is deducted on your Salary. It is the responsibility of the Employer to issue Form 16.

As per law, Form 16 for FY 2011-12 needs to be issued to employees by 30th May 2012 (Being within 15 days of filing of Quarter IV Etds Return).

•      How do I confirm the TDS shown in my Form 16 is actually correct?

It is the prime responsibility of the Employer to furnish accurate details in Form 16, failure of which attracts penalty to the employer.

Nevertheless, tax authorities recently have empowered the deductees (Employee on whose Salary TDS is made) to cross-verify the TDS details against the records available with the Government.

Tax Information Network (TIN; a division of the Income-tax department) has introduced in recent years, the Form 26AS wherein any tax deducted at source on any of your income is reflected. Thus, you can cross-verify whether the tax that has been deducted is actually paid to the government or not.

•      It is compulsory to file my Return of Income?

Yes, As per the Income-tax Act, every person whose Gross Total Salary exceeds the basic exemption limit (Rs. 1,80,000/2,10,000/2,50,000) has to file a Return of Income (ROI). Failure to file the Return of Income can expose to a penalty of Rupees Five Thousand.

Also, the laws do not permit payments of your Refunds (If any) when the Income Tax Return is not filed.

It is a good policy and a wilful conduct to keep your financial and tax records updated so that you do not have to face hurdles while applying for Business loans, Home loans, Insurance policies, etc. Filing of Income tax Return should be seen as a good habit and not as compliance burden.

• Till which date I have to file my Return of Income?

For salaried individuals the due date of filing of Tax Return is 31st July, 2012 for the FY 2011-12.

• I have not filed my earlier years Income-tax Return. Can I file them now?

Yes, you can file Income-tax Returns of earlier years as well. That means if you had not claimed your Refund of last year due to non-filing of Income-tax Return, you can still do it now.

• I had not submitted few Investment proofs to my Employer. What do I do now?

The Employer is under obligation to consider all Investment proofs provided by you. However, if you miss on providing any details/proofs you can always claim the investments in your Income-tax Return and claim your Refund, since your Employer has already deducted the extra tax on the investment-portion for which you had not provided the proofs.

• How do I reduce my tax liability?

There are many Investment options which reduce your tax liability.

Section 80C provides you relief till Rs. 1 lac. Various Investments/expenses enumerated under Sec. 80C. They are listed below:

·           Life Insurance premiums ( of self and family)

·           Provident Fund contributions (of self and family)

·         Mutual Fund contributions

·         Public Provident Fund (PPF)

·         Tuition Fees (of self and family)

·         Principal portion of EMI of the Housing loan

·         Fixed Deposit with Banks for 5 years

·         NABARD and other Bonds / Certificates as specified from time to time.

Following are additional deductions which are over and above the Rs.1 lac limit as mentioned above:

·         Health Insurance premium up to Rs.15,000/- (under section 80D)

·         Full Interest on Education loan u/s 80E

·         Donations u/s 80G

·         Interest portion of EMI of Housing loan up to Rs.1.5 lacs (section 24).   (Consequently, benefit can be availed on the principal and the interest expenses.)

• How do I get maximum benefit of HRA?

House Rent Allowance is exempt the least of the following:

·         HRA actually received

·         Rent paid in excess of 10% of Salary

·         50% of Salary (Rent paid in Metro City) or 40% of Salary (Non-metro city)

• How does my House Property Loan help me in tax savings?

Repayment of house loan can be bifurcated in 2 parts:

·         Principal amount allowed till Rs. 1 lac u/s 80C

·         Interest amount allowed till Rs. 1.5 lacs u/s 24

If you have House loan on more than one property, the interest repaid on second home is exempt without any limit.

• I had switched my employment during the year. What about my TDS made by earlier Employer?

It is the responsibility of the employee to furnish to the new employer the details of Salary and TDS made thereon by the previous employer. Only if such details are furnished, the new employer shall take into account the salary and TDS details and calculate TDS to be made in future accordingly.

• How do I file my Return of Income?

      People having only Salary and/or House Property and/or Other Income need to file their Income-tax Return in Form ITR-1. 

      This may be submitted either physically or online. The benefit of submitting the Return online is that the Return is processed quickly, thereby reducing your wait for Refund amount.

• Is Penalty paid to Previous Employer for not serving Notice Period deductible in computing income?
• 
  
        No, this is not allowed to be deducted while calculating the total taxable income. If you have received any Notice Pay from your current employer it will be included in your taxable income.
  
  

About this Newsletter

This publication contains general information only and is not intended to be comprehensive nor to provide specific accounting, business, financial, investment, legal, tax or other professional advice or services. This publication is not a substitute for such professional advice or services, and it should not be acted on or relied upon or used as a basis for any decision or action that may affect you or your business. Before making any decision or taking any action that may affect you or your business, you should consult a qualified professional advisor.

While every effort has been made to ensure the accuracy of the information contained in this publication, this cannot be guaranteed, and neither Author nor any related entity shall have any liability to any person or entity that relies on the information contained in this publication. Any such reliance is solely at the user’s risk.

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EXEMPTION TO SPECIFIED PERSONS FROM REQUIREMENT OF FURNISHING A RETURN OF INCOME UNDER SECTION 139(1) FOR ASSESSMENT YEAR 2012-13

NOTIFICATION NO. 9/2012 [F. NO.225/283/2011-ITA(II)], DATED 17-2-2012

S.O........... (E). - In exercise of the powers conferred by sub-section (IC) of section 139 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby exempts the following class of persons, subject to the conditions specified hereinafter, from the requirement of furnishing a return of income under sub-section (1) of section 139 for the assessment year 2012-13, namely:-

1. Class of persons. -An individual whose total income for the relevant assessment year does not exceed five lakh rupees and consists of only income chargeable to income-tax under the following head,-

(A) "Salaries";

(B) "Income from other sources", by way of interest from a saving account in a bank, not exceeding ten thousand rupees.

2. Conditions,- The individual referred to in para 1,-

(i) has reported to his employer his Permanent Account Number (PAN);

(ii) has reported to his employer, the incomes mentioned in sub-para (B) of para 1 and the employer has deducted the tax thereon;

(iii) has received a certificate of tax deduction in Form 16 from his employer which mentions the PAN, details of income and the tax deducted at source and deposited to the credit of the Central Government;

(iv) has discharged his total tax liability for the assessment year through tax deduction at source and its deposit by the employer to the Central Government;

(v) has no claim of refund of taxes due to him for the income of the assessment year, and

(vi) has received salary from only one employer for the assessment year.

3. The exemption from the requirement of furnishing a return of income tax shall not be available where a notice under section 142(1) or section 148 or section 153A or section 153C of the Income-tax Act has been issued for filing a return of income for the relevant assessment year.

4. This notification shall come into force from the date of its publication in the Official Gazette.

INSTRUCTION NO. 01/2012 [F.NO.225/34/2011-ITA.II], DATED 2-2-2012

SECTION 143 OF THE INCOME-TAX ACT, 1961 - ASSESSMENT - GENERAL - PROCESSING OF RETURNS OF ASSESSMENT YEAR 2011-12 - STEPS TO CLEAR BACKLOG
INSTRUCTION NO. 01/2012 [F.NO.225/34/2011-ITA.II], DATED 2-2-2012

The issue of processing of returns for the Asst. Year 2011-12 and giving credit for TDS has been considered by the Board. In order to clear backlog of returns, the following decisions have been taken:
(i)  In all returns (ITR-1 to ITR-6), where the difference between the TDS claim and matching TDS amount reported in AS-26 data does not exceed Rs. One lac, the TDS claim may be accepted without verification.
(ii)  Where there is zero TDS matching, TDS credit shall be allowed only after due verification. However, in case of returns of ITR-1 and ITR-2, credit may be allowed in full, even if there is zero matching, if the total TDS claimed is Rs. Five thousand or lower.
(iii)  Where there are TDS claims with invalid TAN, TDS credit for such claims are not to be allowed.
(iv)  In all other cases, TDS credit shall be allowed after due verification.

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Satyam Vs PWC

A day after Tech Mahindra-acquired Satyam filed a suit against its former Board of Directors, certain employees and Price Waterhouse seeking damages for perpetrating a fraud three years ago, PW officials revealed that they have already filed a similar suit in a Andhra Pradesh court against the software firm on January 7, 2012.
"We have filed for minimum compensation and damages of Rs 100 crore, arising from the carefully and deliberately concealed fraud specifically designed to mislead the auditors by providing deliberately false information and documents," a source said.
The civil suit is against Satyam and its former senior management -- Ramalinga Raju, Rama Raju, G Rama Krishna, Vadlamani Srinivas, Srisailam Chetkuru, D Venkatapathi Raju, the person added.
Yesterday in a BSE filing, Mahindra Satyam had said the company filed a suit in city civil court, Hyderabad, seeking damages from PW and former Satyam Board for "inter-alia perpetrating fraud, breach of fiduciary responsibility, obligations and negligence in performance of duties".
Last year, Mahindra Satyam had agreed to pay USD 125 million (over Rs 587 crore) in an out-of-court settlement to end a bunch of class action suits filed in the US.
It has also agreed to pay USD 70 million in a legal settlement with British firm Upaid Systems. Indian tax authorities have also made an I-T claim of about Rs 2,500 crore.
Besides, US Securities Exchange Commission has in April, 2011 imposed a penalty of USD 17.5 million jointly on Satyam Computers, PriceWaterhouse India and affliates auditors for the accounts bungling that went undetected for several years.
Satyam agreed to pay a fine of USD 10 million towards settlement of charges of fraudulently "overstating the company's revenue, income and cash balances by more than USD 1 billion over five years".
SEC asked PriceWaterhouse India to pay USD 6 million in penalty for conducting "deficient audits of the company's financial statements and enabling a massive accounting fraud to go undetected for several years".
Other affiliates, Lovelock & Lewes and Price Waterhouse Bangalore agreed to pay the Public Company Accounting Oversight Board (PCAOB) a USD 1.5 million penalty for their violations of PCAOB rules and standards in relation to the Satyam audit engagement.
Satyam was taken over by the Mahindra group in 2009 and rechristened it as Mahindra Satyam, after its founder Ramalinga Raju admitted to an about Rs 14,000-crore accounting scam in 2009.