PGDT Project

TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT
MR. ASHUTOSH GOYAL ENROLLMENT NO. 11281114001 PGDT 2011-12 1

ANNEXURE-i

PRACTICAL TRAINING REPORT
ON

TAXATION IN BUSINESS MANAGEMENT

SUPERVISOR:- SUBMITTED BY:-
MR.ANIL KUMAR GUPTA MR. ASHUTOSH GOYAL
C/O MR. RAM KUMAR GUPTA ENROLLMENT NO. 11281114001
BHAMASHAH NAGAR HISAR SESSION 2011-2012
COURSE NAME PGDT


(ANNEXURE-ii)
CERTIFICATE

This is to certify that Mr. Ashutosh Goyal Enrolment No. 11281114001 has
worked under my supervision to prepare his Practical Training Report in Taxation
on TAXATION IN BUSINESS MANAGEMENT. The work embodied in this
report is original and was conducted at from 1
st
January 2012 to 31
st
January
2012. The work has been submitted in part or full to this or any other university
for the award of any degree or diploma. His work and conduct during the training
period under my direct guidance was satisfactory and is recommended for
evaulatuion for the award of PG Diploma in Taxation

Date: ____________ Signature of Supervisor(with name and seal)
Name:
Designation:
Organisation:

Countersigned by Director/Principal of Study Center (with name and seal)

ANNEXURE iii
RESUME OF SUPERVISOR

1.NAME
2.DESIGNATION
3.QUALIFICATION
4.AREA OF SPECIALISATION
5.EXPERIENCE
6.OFFICIAL ADDRESS
7.TELEPHONE NO.:
8.MOBILE NO.:
9.E-MAIL:

DATE:______________

I have supervised Mr. ASHUTOSH GOYAL
ENROLMENT NO. 11281114001 ON THE TOPIC TAXATION IN
BUSINESS MANAGEMENT

(SIGNATURE OF SUPERVISOR)
WITH SEAL

(Annexure iv)
DECLARATION

I, ASHUTOSH GOYAL hereby declare that the practical training report entitled
TAXATION IN BUSINESS MANAGEMENT is my original work and neither
identical report has been prepared by me nor the same has been produced
elsewhere for publication purpose to get any award of Diploma/Degree from any
other institution/university in India or Abroad.
Place: HISAR
Date: Name of student(with signature)
MR. ASHUTOSH GOYAL
Enrolment No.11281114001
Session 2011-2012
Table of Contents

INTRODUCTION ......... Error! Bookmark not defined.

OBJECTIVES .......................................................... 8

LIMITATIONS OF THE STUDY ............................... 9

METHODOLOGY .................................................. 81

SCHEDULE ........................................................... 82

REFERENCES ...................................................... 83


SYNOPSIS

The project intends to undertake an intensive study of taxation in the Indian
Commodities Market along with Global Commodities Market and the working of
different commodities exchanges and finally the risk management techniques
used by them.
A commodity futures market (or exchange) is, in simple terms, defined as a
public market where commodities are contracted for purchase or sale at an
agreed price for delivery on a specified date. This purchase or sale of
commodities must be made through a broker who is a member of an organized
exchange and the purchase should be made under the terms and conditions of a
standardized futures contract. Also, as the factors that drive commodity prices
are observed to be different from the factors that drive equity prices,
commodities are perceived to be effective diversifying agents.
Commodity derivatives play a pivotal role in the price risk management process
especially in any agricultural surplus country. As unique hedging instruments
derivatives such as forwards, futures, swaps, options and exotic derivative
products are extensively used in the global market.
Commodity analysis will involve the study of the movement of different
commodity exchanges of world how each one affect the other, which commodity
exchanges set the trend, and how changes like government and international
policies, economic trends as indicated by the growth rate of the GDP, inflation etc
affect the market. The next step will be to study the commodity exchanges
respect to its structure, function, regulatory framework of FMC, vulnerability to
policies, budget, business cycle etc. This will be followed by the company
analysis which will involve financial analysis and future prospects.
The study has surveyed the various publicly available websites of recognized
commodity exchanges and their organizational and the regulatory set up for
futures trading.


OBJECTIVES

To find different parameters that decides the pricing of commodities at
different exchanges.
To compare the difference in the working of different exchanges locally
and globally.
Risk management techniques used by different commodities exchanges.
Identify the reasons about how and why some exchanges control the
prices of certain commodities.
To find out the effect of change in global commodity derivative on Indian
commodity derivatives
Where the Indian commodity derivative market stand as comparison to
global commodity market
To find the scope of Indian commodity derivative market


LIMITATIONS OF THE STUDY

Time is less and I have to attend classes regularly
Internet problems and electricity problems
Time constraint due to which I had to limit my study to five commodity
exchanges.
Due to more use of secondary sources data inaccuracy may be there
Owing to the dynamic nature of the global economy in particular, the
findings of the report will not be applicable after a point of time.
No practical access to global market exchanges.
Busy schedule of companys employees so that give less time to me for
providing information.

VARIOUS INCOME TAX AUTHORITIES
1.1. VARIOUS AUTHORITIES
Section of the Income Tax Act, 1961 provides for the administrative and judicial
authorities for administration of this Act. The Direct Tax Laws Act, 1987 has brought
far-reaching changes in the organizational structure. The implementation of the Act
lies in the hands of these authorities. The change in designation of certain authorities
and creation of certain new posts in the structure are the main features of
amendments made by The Direct Tax Laws Act, 1987. The new features of authorities
has been properly depicted in a chart on the facing page. These authorities have been
grouped into two main wings :
(i) Administrative [ Sec. 116 ]
(a) the Central Board of Direct Taxes constituted under the Central Boards
of Revenue Act, 1963 (54 of 1963),
(b) Directors-General of Income-tax or Chief Commissioners of Income-tax,
(c) Directors of Income-tax or Commissioners of Income-tax or
Commissioners of Income-tax (Appeals),
(c) Additional Directors of Income-tax or Additional Commissioners of
Income-tax or Additional Commissioners of Income-tax (Appeals),
(cca) Joint Directors of Income-tax or Joint Commissioners of Income-tax.
(d) Deputy Directors of Income-tax or Deputy Commissioners of Income-tax
or Deputy Commissioners of Income-tax (Appeals),
(e) Assistant Directors of Income-tax or Assistant Commissioners of
Income-tax,
(f) Income-tax Officers,
(g) Tax Recovery Officers,
(h) Inspectors of Income-tax.

(ii) Assessing Officer [ Sec. 2(7A)]
"Assessing Officer" means the Assistant Commissioner or Deputy
Commissioner or Assistant Director or Deputy Director or the Income-tax
Officer who is vested with the relevant jurisdiction by virtue of directions or
orders issued under sub-section (1) or sub-section (2) of section 120 or any
other provision of this Act, and the Joint Commissioner or Joint Director who
is directed under clause (b) of sub-section (4) of that section to exercise or
perform all or any of the powers and functions conferred on, or assigned to,
an Assessing Officer under this Act;
Importance of Assessing Officer :
In the organizational setup of the income tax department Assessing Officer plays a
very vital role. He is the primary authority who initiates he proceedings and is directly
connected with the public. Form the time of filing of return till the assessement is
completed he plays a pivotal role . He can start proceedings for non filing of return,
imposition of penalties etc. Orders passed by him can be challenged only on approval.
The department can revise his orders only if it is proved that there are prejudicial to
the revenue and that too only by the Commissioner of Income Tax.
(iii) Appointment of Income-Tax Authorities [ Sec. 117 ]
(1) Power of Central Government : The Central Government may appoint such
persons as it thinks fit to be income-tax authorities. It kept with itself the powers to
appoint authorities upto and above rank of an Assistant Commissioner of Income-Tax
[ Sec. 117 (1) ]

(2) Power of the Board and Other Higher Authorities : Subject to the rules and orders
of the Central Government regulating the conditions of service of persons in public
services and posts, the Central Government may authorize the Board, or a Director-
General, a Chief Commissioner or a Director or a Commissioner to appoint income-
tax authorities below the rank of an Assistant Commissioner or Deputy Commissioner.
[ Sec. 117 (2) ]

(3) Power to appoint Executive and Ministerial Staff : Subject to the rules and orders
of the Central Government regulating the conditions of service of persons in public
services and posts, an income-tax authority authorized in this behalf by the Board
may appoint such executive or ministerial staff as may be necessary to assist it in the
execution of its functions.

(iv) Control of Income-Tax Authorities [ Sec. 118 ]
The Board may, by notification in the Official Gazette, direct that any income-tax
authority or authorities specified in the notification shall be subordinate to such other
income-tax authority or authorities as may be specified in such notification.
Power Of Income Tax Authorities Relating To Search And Seizure [ Section 132 ]
1.2. POWER OF INCOME TAX AUTHORITIES RELATING TO SEARCH AND
SEIZURE [ SECTION 132]
Entering and Searching the Premises :
Where the Director General or Director or the Chief Commissioner or Commissioner
or any such Joint Director or Joint Commissioner as may be empowered in this behalf
by the Board , in consequence of information in his possession, has reason to believe
that
(a) any person to whom a summons under sub-section (1) of section 131 of this Act,
or under sub-section (1) of section 142 of this Act was issued to produce, or cause to
be produced, any books of account or other documents has omitted or failed to
produce, or cause to be produced, such books of account or other documents as
required by such summons or notice, or
(b) any person to whom a summons or notice as aforesaid has been or might be
issued will not, or would not, produce or cause to be produced, any books of account
or other documents which will be useful for, or relevant to, any proceeding under the
Indian Income-tax Act or ;
(c) any person is in possession of any money, bullion, jewellery or other valuable
article or
thing and such money, bullion, jewellery or other valuable article or thing represents
either wholly or partly income or property [which has not been, or would not be,
disclosed] for the purposes of the Indian Income-tax Act.
Then---
(A) the Director General or Director or the Chief Commissioner or Commissioner, as
the case may be, may authorise any Joint Director, Joint Commissioner, Assistant
Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or
Income-tax Officer, or
1. such Joint Director, or Joint Commissioner , as the case may be, may
authorise any
1. Assistant Director or Deputy Director, Assistant Commissioner or Deputy
Commissioner or Income-tax Officer, the officer so authorised in all
cases being hereinafter referred to as the authorised officer to
(i) enter and search any [building, place, vessel, vehicle or aircraft] where he has
reason to suspect that such books of account, other documents, money, bullion,
jewellery or other valuable article or thing are kept;
(ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for
exercising the powers conferred by clause (i) where the keys thereof are not available;
(iia) search any person who has got out of, or is about to get into, or is in, the building,
place,
vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such
person has secreted about his person any such books of account, other documents,
money, bullion, jewellery or other valuable article or thing;
(iib) require any person who is found to be in possession or control of any books of
account or
other documents maintained in the form of electronic record as defined in clause (t) of
subsection (1) of section 2 of the Information Technology Act, 2000 (21 of 2000), to
afford the authorised officer the necessary facility to inspect such books of account or
other documents;]
(iii) seize any such books of account, other documents, money, bullion, jewellery or
other valuable article or thing found as a result of such search:
(iv) place marks of identification on any books of account or other documents or make
or cause to be made extracts or copies therefrom;
(v) make a note or an inventory of any such money, bullion, jewellery or other valuable
article or thing :
Where any building, place, vessel, vehicle or aircraft referred to in clause (i) is within
the area of jurisdiction of any [Chief Commissioner or Commissioner], but such [Chief
Commissioner or Commissioner] has no jurisdiction over the person referred to in
clause (a) or clause (b) or clause (c), then, notwithstanding anything contained in
section [120], it shall be competent for him to exercise the powers under this sub-
section in all cases where he has reason to believe that any delay in getting the
authorisation from the [Chief Commissioner or Commissioner] having jurisdiction over
such person may be prejudicial to the interests of the revenue :]
The Finance Act, 1988 has further that where it is not possible or practicable to take
physical possession of any valuable article or thing and remove it to a safe place due
to its volume, weight or other physical characteristics or due to its being of a
dangerous nature, the authorised officer may serve an order on the owner or the
person who is in immediate possession or control thereof that he shall not remove,
part with or otherwise deal with it, except with the previous permission of such
authorised officer.
Application Of Seized Or Requisitioned Assets [Section132(B)]
1.3. APPLICATION OF SEIZED OR REQUISITIONED ASSETS [SECTION132(B)]
1. Any Assets seized under this section shall be first applied to pay the
existing liability under Income-Tax Act, or Wealth Tax Act or Gift Tax
Act.
2. Next it shall be adjusted against the tax liability determined uder block
assessment and any penalty levied or interest payable under such
asseessment.
3. In case assessee has explained the source of any asset, the authority
may recover the amount of tax liability as mentioned above and
remaining portion if any may be released but with the prior approval of
CCIT or CIT. Such asset may be released to the assessee within 120
days from last authorization made for search and seizure.
4. In case seize assets consists of money or partly of money and partly of
other assets, the authority may apply such money to the tax liabilities
mentioned above and assessee shall be discharged of such liability upto
the extent of such money.
5. The other assets shall be under distraint (cannot be sold) and he
Assessing Office shall sell the assets but after prior approval of CCIT or
CIT and apply such money to the existing liabilities and liability under
block assessment.
6. The authority can realize the tax by any other mode also.
7. The reaming assets shall be handed over to the assessee from whose
custody they were seized.
8. The Govt. shall pay an interest @ 1 % for every month or part of a
month if there is any surplus of assets over the liability so adjusted. This
interest shall be calculated from the date on which 120 days expire from
the day last authorization was made till the day block assessment is
made.
Power Of Survey [ Section 133 a ]
1.4. POWER OF SURVEY [ SECTION 133A ]
An Assessing Officer or his duly authorized inspector, Deputy Commissioner or
Assistant Director has the power to enter :
1. any place within the limits of the area assigned to him, or
2. any place occupied by any person in respect of whom he exercises jurisdiction
3. any place in respect of which he is authorised for the purposes of this section
by such income-tax authority, who is assigned the area within which such place
is situated or who exercises jurisdiction in respect of any person occupying
such place.
It may require the proprietor or any other person attending to such business or
profession to afford him necessary facilities :
1. to inspect such books of account or other documents as he may require and
which may be available at such place
2. to check or verify the cash, stock or other valuable article or thing which may
be found therein, and
3. to furnish such information as he may require as to any matter which may be
useful for, or relevant to, any proceeding under this Act.
4. An income-tax authority acting under this section may
1. place marks of identification on the books of account or other documents
inspected by him.
2. impound and retain in his custody for such period as he thinks fit any
books of account or other documents inspected by him
3. retain in his custody any such books of account or other documents for a
period exceeding 10 days (exclusive of holidays) without obtaining the
approval of the Chief Commissioner or Director General therefore
In case the Income Tax Authority is not provided with such facility, such authority can
proceed u/s 131(1) and 131(2) against the proprietor or nay other person attending to
such business.
Provision Relating To Power To Collect Certain Information [Section 133B]
1.5. PROVISION RELATING TO POWER TO COLLECT CERTAIN INFORMATION
[SECTION 133B]
(1) An income-tax authority may, for the purpose of collecting any information which
may be useful for, or relevant to, the purposes of this Act, enter
(a) any building or place within the limits of the area assigned to such authority ; or

(b) any building or place occupied by any person in respect of whom he exercises
jurisdiction,
at which a business or profession is carried on, whether such place be the principal
place or not of such business or profession, and require any proprietor, employee or
any other person who may at that time and place be attending in any manner to, or
helping in, the carrying on of such business or profession to furnish such information
as may be prescribed.
(2) An income-tax authority may enter any place of business or profession only during
the hours at which such place is open for the conduct of business or profession.

(3) An income-tax authority acting under this section can not remove from the building
or place wherein he has entered, any books of account or other documents or any
cash, stock or other valuable article or thing.
Disclosure Of Information Regarding Assessees To Certain Authorities
[ Section 138 ]
1.6. DISCLOSURE OF INFORMATION REGARDING ASSESSEES TO CERTAIN
AUTHORITIES
[ SECTION 138 ]
(1) (a) The Board or any other income-tax authority may furnish or cause to be
furnished to

(i) any officer, authority or body performing any functions under any law relating to the
imposition of any tax, duty or cess,; or

(ii) such officer, authority or body performing functions under any other law as the
Central Government may specify,

any such information which was received or obtained by any income-tax authority in
the performance of his functions under this Act, be necessary for the purpose of
enabling the officer, authority or body to perform his or its functions under that law.
(b) Where a person makes an application to the Chief Commissioner or
Commissioner in the prescribed form for any information relating to any assessee
received or obtained by any income-tax authority, the Chief Commissioner or
Commissioner may, if he is satisfied that it is in the public interest so to do, furnish or
cause to be furnished the information asked for and his decision in this behalf shall be
final and shall not be called in question in any court of law.

Payment of Tax
2.1. PAYMENT OF TAX
When is Tax Payable ? [ Sec. 220(1) ]
Any amount, otherwise than by way of advance tax shall be paid within 30 [thirty] days
of the service of the notice of demand. All the assesses who are served with such notices
must deposit such amount which is written in the notice and at the place and to the person
mentioned in the notice :

But where the Assessing Officer has any reason to believe that it will be detrimental to
revenue if the full period of 30 [thirty] days is allowed, he may, with the previous
approval of the Joint Commissioner , reduce the number of days which shall be less than
30 days and may be specified by him in the notice of demand.
Payment of Interest: [ Sec. 220(2) ]
If the amount specified in any notice of demand is not paid within the specified limit, the
assessee shall be liable to pay simple interest at 1% [one] per cent for every month or part
of a month.

If due to any reason the amount on which interest was payable under this section had
been reduced, the interest shall be reduced accordingly and the excess interest paid, if
any, shall be refunded
Extension of Date : [ Sec. 220(3) ]
The Assessing Officer is empowered to extend the date of payment of tax if he is
approached by the assessee with an application before the expiry of the due date, the
Assessing Officer may extend the time for payment or allow payment by installments,
subject to such conditions as he may think fit to impose in the circumstances of the case.
However, interest shall be charged in such a case and it will be calculated from the date
specified in the notice of demand.
Assessee in Default : [ Sec. 220 (4) ]
The assessee shall be considered to be an Assessee in Default if he fails to pay tax within
the time allowed originally or extended and to the person and place mentioned in he
notice. The assessee can not be treated as being in default unless a notice of demand has
been duly served.
Payment of Tax in Installments: [ Sec. 220 (5) ]
If, in a case where payment by instalments is allowed, the assessee commits defaults in
paying any one of the instalments within the time fixed, the assessee shall be deemed to
be in default as to the whole of the amount then outstanding, and the other instalment or
instalments shall be deemed to have been due on the same date as the instalment actually
in default.
Penalty Payable when Tax is in Default : [ Sec. 221 ]
When an assessee is in default or is deemed to be in default in making a payment of tax,
he shall, in addition to the amount of the arrears and the amount of interest payable, be
liable, by way of penalty, to pay such amount as the Assessing Officer may direct , and in
the case of a continuing default, such further amount or amounts as the Assessing Officer
may, from time to time, direct, so, however, that the total amount of penalty does not
exceed the amount of tax in arrears :
This Section expressly provides that before levying any such penalty, the assessee shall
be given a reasonable opportunity of being heard :
Where the Assessing Officer is satisfied that the default was for good and sufficient
reasons, no penalty shall be liable under this section.

The assessee shall not cease to be liable to any penalty by reason of the fact that before
the levy of such penalty he has paid the tax.

Where as a result of any final order the amount of tax, on which the penalty was levied
shall be cancelled and the amount of penalty paid shall be refunded.
Modes of recovery of Tax
2.2. MODES OF RECOVERY OF TAX
Section 222 provides that in case assessee fails to pay any sum imposed by
way of interest, fine, penalty, or any other sum payable under the provisions of
this Act, the same shall be recoverable in the manner specified in the Act for the
recovery of arrears of tax.
Tax Recovery Officer means :
A Collector or an Additional collector
Any such officer empowered to effect recovery of arrears of land revenue or
other public demand under any law relating to land revenue or other public
demand for the time being in force in the State as ma be authorized by the State
Government , by general or special notification in the Official Gazettee, to
exercise the powers of a Tax Recovery Officer.
Any Gazetted Officer of the Central or s State Govt. who may be authorized by
the Central Govt. by general or special notification in the Officer Gazette, to
exercise the powers of a Tax Recovery Officer
When an assessee is in default or is deemed to be in default in making a
payment of tax, the Tax Recovery Officer may draw up under his signature a
statement in the prescribed form specifying the amount of arrears due from the
assessee and shall proceed to recover from such assessee the amount
specified in the certificate by one or more of the modes mentioned below, in
accordance with the rules laid down in the Second Schedule :

(a) attachment and sale of the assessees movable property ;
(b) attachment and sale of the assessees immovable property ;
(c) arrest of the assessee and his detention in prison ;
(d) appointing a receiver for the management of the assessees movable and
immovable properties.
Tax Recovery Officer by whom recovery is to be effected [ Sec. 223 ]
(1) The Tax Recovery Officer competent to take action shall be

(a) the Tax Recovery Officer within whose jurisdiction the assessee carries on
his business or profession or within whose jurisdiction the principal place of his
business or profession is situate, or

(b) the Tax Recovery Officer within whose jurisdiction the assessee resides or
any movable or immovable property of the assessee is situate,
Jurisdiction assigned to the Tax Recovery Officer under the orders or directions
issued by the Board, or by the Chief Commissioner or Commissioner who is
authorised in this behalf by the Board.
(2) Where an assessee has property within the jurisdiction of more than one Tax
Recovery Officer and the Tax Recovery Officer by whom the certificate is drawn
up
(a) is not able to recover the entire amount by sale of the property, movable or
immovable, within his jurisdiction, or

(b) is of the opinion that, for the purpose of expediting or securing the recovery
of the whole or any part of the amount under this Chapter, it is necessary so to
do,
he may send the certificate or, where only a part of the amount is to be
recovered, a copy of the certificate certified in the prescribed manner and
specifying the amount to be recovered to a Tax Recovery Officer within whose
jurisdiction the assessee resides or has property and, thereupon, that Tax
Recovery Officer shall also proceed to recover the amount under this Chapter as
if the certificate or copy thereof had been drawn up by him.
Other Mode of Recovery [ Sec. 226 ]
Where no certificate has been drawn up, the Assessing Officer may recover the
tax by any one or more of the modes provided in this section.
Where a certificate has been drawn up, the Tax Recovery Officer may recover
the tax by any one or more of the modes provided in this section.
(i) Deduction from Salary
If any assessee is in receipt of any Salaries income, the Assessing Officer or
Tax Recovery Officer may approach such person paying salary to deduct arrears
of tax from the salary of the assessee, and such person shall comply with any
such requisition and shall pay the sum so deducted to the credit of the Central
Government or as the Board directs.
But any part of the salary exempt from attachment in execution of degree of a
civil court, shall be exempt from any requisition made under this sub-section.
(ii) Collection from persons who owe money to assesee :
(i) The Assessing Officer or Tax Recovery Officer may, at any time or from time
to time, by notice in writing require any person from whom money is due or may
become due to the assessee or any person who holds or may subsequently hold
money for or on account of the assessee to pay to the Assessing Officer or Tax
Recovery Officer (when the money becomes due or is held) the amount which
may be sufficient to pay the amount due by the assessee in respect of arrears or
the whole of the money when it is equal to or less than that amount.
(ii) A notice may be issued to any person who holds or may subsequently hold
any money for or on account of the assessee jointly with any other person and
the shares of the joint holders in such account shall be presumed, until the
contrary is proved, to be equal.
(iii) A copy of the notice shall be forwarded to the assessee at his last address
known to the Assessing Officer or Tax Recovery Officer, and in the case of a
joint account to all the joint holders at their last addresses known to the
Assessing Officer or Tax Recovery Officer.
(iv) Save as otherwise provided in this sub-section, every person to whom a
notice is issued under this sub-section shall be bound to comply with such
notice, and, in particular, where any such notice is issued to a post office,
banking company or an insurer, it shall not be necessary for any pass book,
deposit receipt, policy or any other document to be produced for the purpose of
any entry, endorsement or the like being made before payment is made,
notwithstanding any rule, practice or requirement to the contrary.
(v) Any claim respecting any property in relation to which a notice under this sub-
section has been issued arising after the date of the notice shall be void as
against any demand contained in the notice.
(vi) Where a person to whom a notice under this sub-section is sent objects to it
by a statement on oath that the sum demanded or any part thereof is not due to
the assessee or that he does not hold any money for or on account of the
assessee, then nothing contained in this sub-section shall be deemed to require
such person to pay any such sum or part thereof, as the case may be, but if it is
discovered that such statement was false in any material particular, such person
shall be personally liable to the Assessing Officer or Tax Recovery Officer to the
extent of his own liability to the assessee on the date of the notice, or to the
extent of the assessees liability for any sum due under this Act, whichever is
less.
(vii) The Assessing Officer or Tax Recovery Officer may, at any time or from time
to time, amend or revoke any notice issued under this sub-section or extend the
time for making any payment insection226 pursuance of such notice.
(viii) The Assessing Officer or Tax Recovery Officershall grant a receipt for any
amount paid in compliance with a notice issued under this sub-section, and the
person so paying shall be fully discharged from his liability to the assessee to the
extent of the amount so paid.
(ix) Any person discharging any liability to the assessee after receipt of a notice
under this sub-section shall be personally liable to the Assessing Officer or Tax
Recovery Officer to the extent of his own liability to the assessee so discharged
or to the extent of the assessees liability for any sum due under this Act,
whichever is less.
(x) If the person to whom a notice under this sub-section is sent fails to make
payment in pursuance thereof to the Assessing Officer or Tax Recovery Officer
he shall be deemed to be an assessee in default in respect of the amount
specified in the notice and further proceedings may be taken against him for the
realisation of the amount as if it were an arrear of tax due from him, in the
manner provided in sections 222 to 225 and the notice shall have the same
effect as an attachment of a debt by the Tax Recovery Officer in exercise of his
powers under section 222.
(iii) Application to Court for payment of money in courts custody [ Sec. 226(4)]
The Assessing Officer or Tax Recovery Officer may apply to the court in whose
custody there is money belonging to the assessee for payment to him of the
entire amount of such money, or, if it
is more than the tax due, an amount sufficient to discharge the tax.
(iv) Distraint and Sale of Movable Property [ Sec. 226(5)]
The Assessing Officer or Tax Recovery Officer may, if so authorised by the Chief
Commissioner or Commissioner by general or special order, recover any arrears
of tax due from an assessee by distraint and sale of his movable property in the
manner laid down in the Third Schedule.
(v) Recovery through State Government [ Sec. 227]
If the recovery of tax in any area has been entrusted to a State Government, the
State Government may direct, with respect to that area or any part thereof; that
tax shall be recovered therein with, and as an addition to, any municipal tax or
local rate, by the same person and in the same manner as the municipal tax or
local rate is recovered.

Refunds
2.3. REFUNDS
If, any assessment year an assessee pays the tax which is more than the
amount for which he is actually chargeable and if the assessee proves excess
payment before the Assessing Officer, section 237 empowers the assessee to
claim a refund of the excess. Once the Assessing Officer is satisfied about the
excess payment made by the assessee, he can allow the claim or refund.
Under the following cases a claim to refund may arise
When tax is deducted at source from salary, interest on securities od debentures,
dividend at a rate higher than the rate applicable to the total income of an
assessee.
When tax paid in advance exceeds the amount of tax actually payable as
determined at the time of refular assessment.
When tax calculated was higher due to some mistake and later on tax liability is
reduced on account of rectification of a mistake.
When tax was calculated at the higher rate on the payment given to non-
residents whereas they were actually chargeable at a lower rate of income tax.
When due to double taxation , the assessee is entitled to a double taxation relief.
Who is allow to Claim Refund ? [ Sec. 238(1) ]
Where the income of one person is included in the total income of any other
person, the latter alone shall be entitled to a refund in case of excess payment of
tax in this case.

In the case of death, incapacity, insolvency, liquidation or other cause, a person
is unable to claim or receive any refund due to him, his legal representative or
the trustee or guardian or receiver, as the case may be, shall be entitled to claim
or receive such refund for the benefit of such person or his estate.

A Claim for Refund must be filed in the prescribed form and verified in the
prescribed manner. Where any part of the total income of a person claiming
refund consists of dividends or any other income from which tax is deducted at
source, the claim for refund shall be accompanied by a certificate which is issued
by the tax-deducting authority. The claim for refund may be presented by the
claimant or through an agent or may be send by post.

Time Limit for Claiming Refund [ Sec. 239(2) ]
No such claim shall be allowed, unless it is made within the period specified
hereunder, namely :

(a) where the claim is in respect of income which is assessable for any
assessment year commencing on or before the 1st day of April, 1967, 4 years
from the last day of such assessment year;

(b) where the claim is in respect of income which is assessable for the
assessment year commencing on the first day of April, 1968, 3 years from the
last day of the assessment year;

(c) where the claim is in respect of income which is assessable for any other
assessment year, [one] year from the last day of such assessment year;

(d) where the claim is in respect of fringe benefits which are assessable for any
assessment year commencing on or after the first day of April, 2006, 1 (one) year
from the last day of such assessment year.
Refund on Appeal etc. [ Sec. 240 ]
Where, as a result of any order passed in appeal or other proceeding under this
Act, refund of any amount becomes due to the assessee, the Assessing Officer
shall refund the amount to the assessee without his having to make any claim in
that behalf:

It is further provided that

(a) an assessment is set aside or cancelled and an order of fresh assessment is
directed to be made, the refund, if any, shall become due only on the making of
such fresh assessment;

(b) the assessment is annulled, the refund shall become due only of the amount,
if any, of the tax paid in excess of the tax chargeable on the total income
returned by the assessee.]
Interest On Delayed Refunds [ Sec. 243 ]
Central Government shall pay the assessee simple interest at 15% p.a. [fifteen
per cent per annum ] on the amount directed to be refunded from the date
immediately following the expiry of the period of 3 months aforesaid to the date of
the order granting the refund.

(2) Where any question arises as to the period to be excluded for the purposes of
calculation of interest under the provisions of this section, such question shall be
determined by the Chief Commissioner or Commissioner whose decision shall be
final.

[(3) The provisions of this section shall not apply in respect of any assessment
for the assessment year commencing on the 1st day of April, 1989 or any
subsequent assessment years.
Interest On Refund Where No Claim Is Needed [ Sec. 244 ]
Where a refund is due to the assessee in pursuance of an order and the
Assessing Officer does not grant the refund within a period of 3 month [three
months] from the end of the month in which such order is passed, the Central
Government shall pay to the assessee simple interest at 15% p.a. [fifteen per
cent per annum ] on the amount of refund due from the date immediately
following the expiry of the period of 3 months [three] months aforesaid to the date
on which the refund is granted.
Interest on refunds [ Sec. 244A ]
Where refund of any amount becomes due to the assessee, he shall be entitled
to receive, in addition to the said amount, simple interest thereon calculated in
the following manner, namely :

(a) where the refund is out of any tax paid or collected at source or paid by way
of advance tax or treated as paid, during the financial year immediately
preceding the assessment year, such interest shall be calculated at the rate of
1 % [one-half per cent] for every month or part of a month comprised in the
period from the 1st day of April of the assessment year to the date on which the
refund is granted:

Provided that no interest shall be payable if the amount of refund is less than
10% [ten per cent] of the tax on regular assessment;

(b) in any other case, such interest shall be calculated at the rate of 1% [one-
half per cent] for every month or part of a month comprised in the period or
periods from the date or, as the case may be, dates of payment of the tax or
penalty to the date on which the refund is granted.

Introduction- (TDS)
The Tax on Total Income is collected in three ways---
Deduction of Tax at Source (TDS)
Advance Tax ; and
Tax on assessment through demand notice i.e. Direct Payment of Tax.
3.1. INTRODUCTION - DEDUCTION OF TAX AT SOURCE(TDS)
When a person responsible for paying any income deducts Income Tax on income at the
time of payment of income, it is called Deduction of Tax at source-TDS.
TDS is a scheme of collecting tax in the year in which the income has been earned by the
assessee.
Under the scheme , the person, who is making the payments under the specified sources,
is required to deduct tax at source at the prescribed rate.
The person who deducts tax is known as tax deducter or a payer of income.
if is the duty of the tax deducter to deposit the TDS into the Govt. treasury within the
specified time along with a statement, in the prescribed form.
if the Tax Deducter does not deduct tax at source or deducted but does not deposited with
the Govt. treasury he is treated as assessee in default and is liable for payment of interest.
Penalty proceedings may also be initiated.
The Tad Deducted at Source is regarded as the income of the assessee and it is included
in his gross total income
The Tax deducted at source is adjusted against the final payment of tax if proof of TDS
certificate is furnished along with the return of income.
The specified cases where tax is deducted at source are : Salaries, Interest on Securities,
Interest other than interest on securities, dividends, winning from lotteries and crossword
puzzles, payment to contractor, insurance commission, winning from horse races and
also on other sums chargeable under the Act, which are paid to non-resident.
Deduction of Tax from the Salary
[ Sec-192]
3.2. DEDUCTION OF TAX FROM THE SALARY [ SECTION-192]
The summarized provisions of Sec. 192 are given below :
Who is the taxpayer Employer
Who is the recipient Employee
Payment covered Taxable salary of the employee
At what time tax has to be deducted at
source
At the time of payment
Maximum amount which can be paid
without Tax Deduction
The amount of exemption limit ( i.e.
Rs.1,80,000 / Rs.2,25,000/Rs.1,50,000 for
the assessment year 2009-10.)
Rate of tax deducted at source Normal Rates applicable to an individual
Is it possible to get the payment without tax
deduction or with lower tax deduction
The employee can make an application in
Form No.-13 to the Assessing Officer to get
a certificate of lower tax deduction or no tax
deduction.
Note: - Rs. 1,80,000 is for Resident Women below 65 years
- Rs. 2,25,000 is for Senior Citizen 65 years or more.
How to deduct Tax When a Person is employed by more than one Employer :
Where, during the financial year, an assessee is employed simultaneously under more
than one employer, In such case, Tax will be deducted on the aggregate Salary by one of
the employers ( being the employer as the employee may choose, having regard to the
circumstances of his case, by submitting the information in Form No.12B.
Relief U/s 89 :
If the employee furnishes information in Form No- 10E to the employer, relief under
section 89 should be given to the concerned employee while deducting Tax at Source u/s
192. However, this facility is available only if the employer is Government or Public
Sector undertaking or company , co-operative society, local authority, University,
Institutions or association or Body.
Can the Employer Deduct Tax in Respect of Other Incomes of Employee :
The Provisions are given below :-
The employer may or may not declare his other incomes to the employer.
If the employee wants to declare his othe incomes to the employer, then such information
should be given on a plain paper to the employer.
The employee may declare details of his other incomes ( including loss under the head
Income from House Property but not any other loss ) and tax deducted thereon by
others. If such information is not submitted by the employee to the employer, then
employer cannot take into consideration other incomes of the employee.
Deduction Of Tax From Interest On Securities [ Section-193]
3.3 DEDUCTION OF TAX FROM INTEREST ON SECURITES [ SECTION-193]
The Provisions of section 193 are given below---
Who is the taxpayer Payer of Interest on Securities
Who is the recipient A resident person holding securities
Payment covered Interest on Securities
At what time tax has to be deducted at source
At the time of payment or at the time of credit, whichever
is earlier.
Maximum amount which can be paid without Tax
Deduction
-
Rate of tax deducted at source
- 10% in the case of listed debentures and - - 20% in he
case of non-listed debentures, if the recipient is resident
non-corporate assessee.
- 20% if the recipient is a domestic company ( these
rates are subject to surcharge, education cess and
secondary and higher education cess)
When the provisions are not applicable
Interest on Central / State Government Securities and
few more are there
Note : Rate of Tax includes .. Tax plus surcharges, education cess and secondary higher education cess.
Securities Interest which is not subject to Tax Deduction :
No Tax is deductible at source from the amount of interest payable to the following :

FY-2008-2009
1.
if the recipient is an Individual/ HUF/AOP/BOI and payment or credit subject to tax
deduction does not exceed Rs.10 lakh.
NIL
2.
if the recipient is an Individual/ HUF/AOP/BOI and payment or credit subject to tax
deduction exceed Rs.10 lakh.
10%
3. if the recipient is an Artifitial Judicial Person 10%
4.
if the recipient is Firm or a Domestic Company and payment or credit subject to tax
deduction does not exceed Rs.1 Crore.
NIL
5.
if the recipient is Firm or a Domestic Company and payment or credit subject to tax
deduction exceed Rs.1 Crore.
10%
6.
if the recipient is a Non-Domestic Company and payment or credit subject to tax
deduction does not exceed Rs.1 Crore.
NIL
7.
if the recipient is a Non-Domestic Company and payment or credit subject to tax
deduction exceed Rs.1 Crore.
2.5 %
8. if the recipient is a Co-operative Soceity or Local Authority. NIL
Education Cess ( as percentage of Income Tax and surcharge) 2%

Secondary and Higher Education Cess (as a percentage of income tax and
surcharge)
1%
Deduction Of Tax From Deemed Dividend
[ Section-194]
3.4. DEDUCTION OF TAX FROM DEEMED DIVIDEND [ SECTION-194]
The Provisions of section 194 are given below---
Who is the taxpayer Domestic Company
Who is the recipient Resident Shareholders
Payment covered Deemed Dividend u/s 2(22)(e)
At what time tax has to be deducted at source At the time of payment
Deduction
-
Rate of tax deducted at source 20%
When the provisions are not applicable Dividend covered by Section 115-O
Deduction Of Tax From Interest Other Than Interest On Securities [ Section 194A]
3.5. DEEUCTION OF TAX FROM INTEREST OTHER THAN INTEREST ON SECURITIES [ SECTION
194A]
The Provisions of section 194A are given below---
Who is the taxpayer
Any person paying interest other than interest on
securities ( not being an individual or a Hindu Undivided
Family whose books of accounts are not required to be
audited u/s 44AB )
Who is the recipient A Resident Person
Payment covered Interest other than interest on securities
is earlier.
Deduction
From June 1, 2007 tax is not deductible if payment /
credit does not exceed the specified amount.
10% if the recipient is resident non-corporate assessee
and 20% if the recipient is resident corporate assessee.
When Taxis not required to be Deducted at Source : Following interest payments are not subjected to TDS.
o When the aggregate of inters during the financial year is Rs.5,000 or less.
o Where interest is paid to any building company or co-operative society, LIC, UTI or any
company or co-operative society carrying on the business of insurance or any financial
corporation or nay institution as the Central Government may notify in the official gazette.
o Any scheme maintained at the post office.
o Interest paid by a firm to its partner.
o Where a declaration in Form 15G is furnished by the assessee.
Winning From Lottery Or Crossword
Puzzle Or Card game And Game Of Any
Sort [Section 194B]
3.6. WINNING FROM LOTTERY OR CROSSWORD PUZZLE OR CARD GAME AND GAME OF ANY SORT [
SECTION 194B]
The Provisions of section 194 B are given below---
Who is the taxpayer
Any person paying winning from lotteries / cross-word
puzzles / card games / other games.
Who is the recipient Any person
Payment covered
Winning from lotteries / cross-word puzzles / card
games / other games.
Deduction
If the amount of payment is Rs.5,000 or less than
Rs.5,000
30% plus surcharges, education cess and secondary
higher education cess
Winning From Horse Race
[ Section 194BB]
3.7. WINNING FROM HORSE RACE [ SECTION 194BB]
The Provisions of section 194 B are given below---
Who is the taxpayer Any person paying winning from Horse Races
Who is the recipient Any person
Payment covered Winning from Horse Races
Deduction
Rs.2,500
30% plus surcharges, education cess and secondary
higher education cess
Payment To Contractor
And
Sub-Contractor [
Section 194C]
3.8. PAYMENT TO CONTRACTOR AND SUB-CONTRACTOR
[ SECTION 194C]
Payment to Contractor
1. Who is require deduct Tax at source ( Tax Deducter) : Any
person responsible for paying any sum to any resident
contractor for carrying out any work (including supply of labor
for carrying out any work) in pursuance of a contract between
the contractor and following specified person.
Meaning of Specified Person
1. The Central Government or any State Government or
any local authority ; or
2. Any PSU or any company or any co-operative society
or any society and any trust ; or
3. Any authority, constituted in India by or under any law,
engaged either for the purpose of dealing with and
satisfying the need for housing accommodation or for
the purpose of planning ,development or improvement
of cities, towns and villages, or for both ; or
4. Any University including a deemed university.
5. Any Firm
Meaning of Work : The work shall also include ---
1. Advertising ;
2. Broadcasting and telecasting including production of
programmes for such broadcasting or telecasting ;
3. Carriage of goods and passengers by any mode of
transport other than by railways ;
4. Catering.
2. When to deduct tax at source : At the time of payment or at
the time of credit, whichever is earlier.
3. What is the Rate of TDS : Where a sum is payable to a
resident contractor for
1. Advertising contract @1% + surcharges & Education
Cess as applicable
2. Any other contract @2% + surcharges & Education
Cess as applicable
4. When Tax is not required to be deducted at source : Where
payment of such income is Rs. 20,000 or less in the previous
year.
Payment to Sub-Contractor
1. Who is require deduct Tax at source ( Tax Deducter) : Any
person responsible for paying any sum to any resident
contractor for carrying out any work (including supply of labor
for carrying out any work) in pursuance of a contract between
the contractor and following specified person.
However individual and HUF who are covered u/s 44AB (where
tax audit is compulsorily) are also required to deduct tax at
source.
2. When to deduct tax at source : At the time of payment or at
the time of credit, whichever is earlier.

3. What is the Rate of TDS : Where a sum is payable to a
resident Sub-Contractor, the Contractor shall deduct an amount
equal to 1% of sum payable + surcharges and education cess
as applicable.
4. When Tax is not required to be deducted at source :
a. Where payment of such income is Rs. 20,000 or less in the
previous year

b. Where an individual is a sub-contractor who is in the
business of playing, hiring or leasing goods carriages and who
has not owned more than two goods carriages at any time
during the previous year.
Tax Deducted At Source
From Insurance
Commission [ Section
194D]
3.9. TAX DEDUCTED AT SOURCE FROM INSURANCE
COMMISSION [SECTION 194D]
The Provisions of section 194 D are given below---
Who is the taxpayer
Any person paying Insurance
Commission
Who is the recipient A resident person
Payment covered Insurance Commission
At what time tax has to be
deducted at source
At the time of payment or at the time of
credit, whichever is earlier.
Maximum amount which can
be paid without Tax Deduction
If the amount of payment is Rs.5,000 or
less than Rs.5,000
10% + surcharges + education cess &
higher secondary education cess, if the
recipient is resident non-corporate
assessee
20% + surcharges + education cess &
higher secondary education cess, if the
recipient is resident corporate
assessee
Is it possible to get the
payment without tax deduction
or with lower tax deduction
The recipient can make an application
in Form No.13 to the Assessing Officer
to get a certificate of lower tax
deduction or no tax deduction.
Payments To Non-Resident
Sportsmen Or Sports
Associations [ Section 194E]
3.10 PAYMENTS TO NON-RESIDENT SPORTSMEN OR SPORTS
ASSOCIATIONS [ SECTION 194E]
Where any income referred to in section 115BBA is payable to a non-resident
sportsman (including an athlete) who is not a citizen of India or a non-resident
sports association or institution, the person responsible for making the payment
shall, at the time of credit of such income to the account of the payee or at the
time of payment thereof in cash or by issue of a cheque or draft or by any other
mode, whichever is earlier, deduct income-tax thereon at the rate of ten per
cent.]
Commission, Etc., On The
Sale Of Lottery Tickets
[Section 194G]
3.11 COMMISSION, ETC., ON THE SALE OF LOTTERY TICKETS [SECTION
194G]
Any person who is responsible for paying, on or after the 1st day of October,
1991 to any person, who is or has been stocking, distributing, purchasing or
selling lottery tickets, any income by way of commission, remuneration or prize
on such tickets in an amount exceeding Rs. 1000 shall deduct income-tax
thereon at the rate of 10% + surcharges + Education Cess & Higher Secondary
Education cess.
Payments To Non-Resident
Sportsmen Or Sports
Associations [ Section 194E]
3.10 PAYMENTS TO NON-RESIDENT SPORTSMEN OR SPORTS ASSOCIATIONS
[ SECTION 194E]
Where any income referred to in section 115BBA is payable to a non-resident
sportsman (including an athlete) who is not a citizen of India or a non-resident sports
association or institution, the person responsible for making the payment shall, at the
time of credit of such income to the account of the payee or at the time of payment
thereof in cash or by issue of a cheque or draft or by any other mode, whichever is
earlier, deduct income-tax thereon at the rate of ten per cent.]
Commission, Etc., On The Sale
Of Lottery Tickets [Section
194G]
3.11 COMMISSION, ETC., ON THE SALE OF LOTTERY TICKETS [SECTION 194G]
Any person who is responsible for paying, on or after the 1st day of October, 1991 to
any person, who is or has been stocking, distributing, purchasing or selling lottery
tickets, any income by way of commission, remuneration or prize on such tickets in an
amount exceeding Rs. 1000 shall deduct income-tax thereon at the rate of 10% +
surcharges + Education Cess & Higher Secondary Education cess.
Commission Or Brokerage [
Section 194H]
3.12. COMMISSION OR BROKERAGE [ SECTION 194H]
The Provisions of section 194 H are given below---
Who is the taxpayer
Any person paying Commission or Brokerage ( not
being an individual or a Hindu Undivided Family
whose books of accounts are not required to be
audited u/s 44AB )
Payment covered
Commission or Brakeage ( not being Insurance
Commission )
source
At the time of payment or at the time of credit,
whichever is earlier.
Rs.1,000
10% + surcharges + education cess & higher
secondary education cess.
Is it possible to get the payment without
tax deduction or with lower tax
deduction
The recipient can make an application in Form No.13
to the Assessing Officer to get a certificate of lower
tax deduction or no tax deduction.
Payment Of Rent [ Section 194 I ]
3.13. PAYMENT OF RENT [ SECTION 194 I ]
The Provisions of section 194 I are given below---
Who is the taxpayer
Any person paying Rent ( not being an individual or a
Hindu Undivided Family whose books of accounts are
not required to be audited u/s 44AB )
Payment covered Rent
source
is earlier.
If the amount of payment is Rs.1,20,000 or less than
Rs.1,20,000
10% - for Rent of Machinery or Plant or Equipment
for Rent of any Land or Building or Fittings 15% for
Individual or HUF & 20% for any other person.
Is it possible to get the payment without
tax deduction or with lower tax deduction
The recipient can make an application in Form No.13 to
the Assessing Officer to get a certificate of lower tax
deduction or no tax deduction.
Note : Rate of Tax includes .. Tax plus surcharges, education cess and secondary higher education
cess.
Fees For Professional Or Technical
Services [ Section 194J]
3.14. FEES FOR PROFESSIONAL OR TECHNICAL SERVICES [ SECTION 194J]
The Provisions of section 194 J are given below---
Who is the taxpayer
Any person paying Fees for Professional /Technical Service
/ Royalty ( not being an individual or a Hindu Undivided
Family whose books of accounts are not required to be
audited u/s 44AB )
Payment covered Fees for Professional /Technical Service / Royalty
At the time of payment or at the time of credit, whichever is
earlier.
Maximum amount which can be paid without
Tax Deduction
Rs.20,000
10% + surcharges, education cess and secondary higher
education cess.
Is it possible to get the payment without tax
deduction or with lower tax deduction
The recipient can make an application in Form No.13 to the
Assessing Officer to get a certificate of lower tax deduction
or no tax deduction.
Introduction-Filing
of Return
4.1. INTRODUCTION
Return of Income is a statement of total income and
tax liability filled in the prescribed from duly signed
and filed with the Income Tax Authority on or before
the due date of furnishing of Return. The Act
stipulates an obligation on the assessee that he files
Return regularly in every assessment year to the
department disclosing the income earned by him.
When Return is to be filed as Statutory
Obligation [ Sec. 139(1), (4A), (4B), (4C) ]
Taxpayer
Minimum income to
attract the provision of
filling Return of Income
Company or Firm [ Sec.
139(1) ]
Any Income or Loss
A person other than a
company or firm
Compulsory Return if
taxable income ( plus
deductions u/s 10A, 10B,
10BA and Sec. 80C to
80U ) exceeds the
exemption limit.
A person in respect of
income derived from
property held under a
Trust for Charitable or
Religious purposes [ Sec.
139 (4A)]
IF the income ( without
giving exemption u/s 11
to 12) exceeds the
amount not chargeable to
tax.
Chief Executive Officer of
every political party [Sec.
139(4B)]
If the income ( without
giving exemption u/s
13A) exceeds the
maximum amount not
chargeable to tax.
Scientific Research
Association, News
Agency, Association /
Institute for control or
supervision of a
profession, institution for
development of Khadi
and Village Industries,
Fund/Institution refereed
to , Educational / Medical
Institution, Trade Union
etc.
giving exemption u/s 10)
exceeds the amount not
chargeable to tax.
University / Educational
Institution existing solely
for educational purpose
and not for the purpose of
Profit if the aggregate
annual receipt does not
exceed Rs. 1 crore
exceeds the exemption
limit.
Hospital / other institution
existing solely for Medical
Purpose and not for the
purpose of Profit if the
aggregate annual receipt
does not exceed Rs. 1
crore.
exceeds the exemption
limit.
Any University / College /
Other Institution
Any Income or Loss (
return has to be
submitted whether there
is income or loss. Such
Return has to be
submitted even if it is not
required by any other
provision)
This provision applies to all persons whether they
are Resident or Non-Resident.
Time Limit For Filling Return Of Income [Section
139(1)]
4.2. TIME LIMIT FOR FILLING RETURN OF
INCOME [ SECTION 139(1)]
Description Due Date
1. Salaried Employees
2. Business Class - Non-
company Assessee
a)Whose accounts need NOT
be compulsorily audited
b)Whose accounts required to
be compulsorily audited
3. Co-operative Societies
4. Trust/Charitable Institutions
claiming exemption u/s11
5. Companies
July,31
July,31
September, 30
Note :
Failure to file Returns within the due date
attracts interest @ 1% p.m. on the balance tax
payable from the due date to the actual date of
filling.

If a person required to file Return u/s 139(1)
fails to file Return before the end of the relevant
Assessment Year a penalty of Rs. 5,000 shall be
levied.
When Return Of Loss Should Be Filed [Section
139(3)]
4.3. WHEN RETURN OF LOSS SHOULD BE
FILED [ SECTION 139(3)]
If any person who has sustained a loss in any
previous year under the head
1. "Profits and gains of business or
profession" or
2. under the head "Capital gains" and
claims that the loss or any part thereof should
be carried forward , he may furnish, within the
time allowed , a return of loss in the prescribed
form and verified in the prescribed manner and
containing such other particulars as may be
prescribed, and all the provisions of this Act
shall apply as if it were a return under sub-
section (1).
Can Return Be Filied Beyond Time
[Section 139(4)]
4.4. CAN RETURN BE FILIED BEYOND TIME [
SECTION 139(4)]
Any person who has not furnished a return
within the time allowed to him, or within the time
allowed under a notice issued , may furnish the
return for any previous year at any time before
the expiry of one year from the end of the
relevant assessment year or before the
completion of the assessment, whichever is
earlier:
Can Revised Return Be Filed
[ Section 139(5)]
4.5. CAN REVISED RETURN BE FILED [
SECTION 139(5)]
If any person, having furnished a return under
sub-section (1), or in pursuance of a notice
issued, discovers any omission or any wrong
statement therein, he may furnish a revised
return at any time before the expiry of one year
from the end of the relevant assessment year or
before the completion of the assessment,
whichever is earlier:
What Is A Defective Or Incomplete Return
[Section 139(9)]
4.6. WHAT IS A DEFECTIVE OR INCOMPLETE
RETURN [ SECTION 139(9)]
Where the Assessing Officer considers that the
return of income furnished by the assessee is
defective, he may intimate the defect to the
assessee and give him an opportunity to rectify
the defect within a period of 15 days from the
date of such intimation or within such further
period which, on an application made in this
behalf, the Assessing Officer may allow; and if
the defect is not rectified within the said period
of 15 days, the return shall be treated as an
invalid return and the provisions of this Act shall
apply as if the assessee had failed to furnish the
return:
Provided that where the assessee rectifies the
defect after the expiry of the said period of 15
days or the further period allowed, but before the
assessment is made, the Assessing Officer may
condone the delay and treat the return as a valid
return.
139(3)]
profession" or
section (1).
[Section 139(4)]
SECTION 139(4)]
earlier:
[ Section 139(5)]
SECTION 139(5)]
[Section 139(9)]
return:
return.
139(3)]
profession" or
section (1).
[Section 139(4)]
SECTION 139(4)]
earlier:
[ Section 139(5)]
SECTION 139(5)]
[Section 139(9)]
return:
return.
Who Should Sign The Return Of Income [Section
140]
4.7. WHO SHOULD SIGN THE RETURN OF
INCOME [ SECTION 140]
The return shall be signed and verified-
1. in the case of an individual,-
(i) by the individual himself;

(ii) where he is absent from India, by the
individual himself or by some person duly
authorised by him in this behalf;

(iii) where he is mentally incapacitated from
attending to his affairs, by his guardian or any
other person competent to act on his behalf; and

(iv) where, for any other reason, it is not possible
for the individual to sign the return, by any
person duly authorised by him in this behalf:
2. in the case of a Hindu undivided family,

(i) by the karta, and, where the karta is absent
from India or is mentally incapacitated from
attending to his affairs, by any other adult
member of such family;
3. in the case of a company,

(i) by the managing director thereof, or where for
any unavoidable reason such managing director
is not able to sign and verify the return, or where
there is no managing director, by any director
thereof:
Provided: that where the company is not
resident in India, the return may be signed and
verified by a person who holds a valid power of
attorney from such company to do so, which
shall be attached to the return:
a. where the company is being wound up,
whether under the orders of a court or
otherwise, or where any person has been
appointed as the receiver of any assets of the
company, the return shall signed and verified by
the liequidator.

b. where the management of the company has
been taken over by the Central Government or
any State Government under any law, the return
of the company shall be signed and verified by
the principal officer thereof;
4. in the case of a firm,

(i) by the managing partner thereof, or where for
any unavoidable reason such managing partner
is not able to sign and verify the return, or where
there is no managing partner as such, by any
partner thereof, not being a minor;
5. in the case of a local authority,

(i) by the principal officer thereof;
6. in the case of a political party,

(i) by the chief executive officer of such party
(whether such chief executive officer is known
as secretary or by any other designation);]
7. in the case of any other association,

(i) by any member of the association or the
principal officer thereof; and
8. in the case of any other person,

(i) by that person or by some person competent
to act on his behalf.
Permanent Account Number (PAN)
4.8. PERMANENT ACCOUNT NUMBER (PAN)
PAN is a 10 digit code allotted to each essessee
by I.T. Dept.
Following Assessee should own or obtain PAN :
1. Every person whose total Income exceeds the
Taxable Limit.

2. Every Business or Profession whose total
Sales, Turnover, or Gross receipts exceed Rs. 5
Lakhs.

3. Every person shall quote his PAN or GIR in all
documents pertaining to :

a) Who Sales / Purchases any immovable
property worth Rs.5 Lakhs or more.

b) Who Sells or Purchases Motor Vehicle or
Vehicle which require registration.

c) Who opens a Time Deposit Account with
Banks / Post Offices exceeding Rs. 50,000

d) Who deposits amount exceeding Rs.50,000 in
Post Office Savings Bank.

e) Who Sales or Purchases Securities exceeding
Rs. 1 Lakh.

f) Who opens a Bank Account * .

g) Who makes payment to Hotels & Restaurants
against bills exceeding Rs.25,000 at a time.

h) Who wants to purchase DD/Pay Order/
Bankers Cheque by payment of cash aggregate
Rs. 50,000 or more during any one day from a
Bank.

i) Payment in cash exceeding Rs.25,000 in
connection with Foreign Travel.

j) Payment of an amount of Rs.50,000 or more to
buy Mutual Fund, Shares, Debentures or Bonds.

* Those not having PAN/GIR No. can submit a
simple declaration in Form No. 60/61.
Any person who has not been allotted PAN/GIR
No. and who makes payment in cash otherwise
than by way of A/c payee Cheque or Draft or
issued by any Bank in respect of any of the
above listed transaction, should file a simple
declaration in Form No. 60 giving the particulars
of the transaction.

o

Meaning of Tax Planning
INTRODUCTION
The avid goal of every taxpayer is to minimize his Tax Liability. To achieve this objective taxpayer may
resort to following Three Methods :
o Tax Planning
o Tax Avoidance
o Tax Evasion
It is well said that Taxpayer is not expected to arrange his affairs in a such manner to pay maximum tax .
So, the assessee shall arrange the affairs in a manner to reduce tax. But the question what method he opts
for ? Tax Planning, Tax Avoidance, Tax Evasion !
Let us see its meaning and their difference.
5.1. MEANINNG OF TAX PLANNING
Tax Planning involves planning in order to avail all exemptions, deductions and rebates provided in Act. The
Income Tax law itself provides for various methods for Tax Planning, Generally it is provided under
exemptions u/s 10, deductions u/s 80C to 80U and rebates and reliefs. Some of the provisions are
enumerated below :
Investment in securities provided u/s 10(15) . Interest on such securities is fully exempt from tax.
Exemptions u/s 10A, 10B, and 10BA
Residential Status of the person
Choice of accounting system
Choice of organization.
For availing benefits, one should resort to bonafide means by complying with the provisions of law in letter
and in spirit.
Where a person buys a machinery instead of hiring it, he is availing the benefit of depreciation. If is his
exclusive right either to buy or lease it . In the same manner to choice the form of organization, capital
structure, buy or make products are the assesses exclusive right. One may look for various tax incentives in
the above said transactions provided in this Act, for reduction of tax liability. All this transaction involves tax
planning.
5.1.1. Why Every Person Needs Tax Planning ?
Tax Planning is resorted to maximize the cash inflow and minimize the cash outflow. Since Tax is kind of
cast, the reduction of cost shall increase the profitability. Every prudence person, to maximize the Return,
shall increase the profits by resorting to a tool known as a Tax Planning.
5.1.2. How is Tool of Tax Planning Exercised ?
Tax Planning should be done by keeping in mine following factors :
The Planning should be done before the accrual of income. Any planning done after the accrual
income is known as Application of Income an it may lead to a conclusion of that there is a fraud.
Tax Planning should be resorted at the source of income.
The Choice of an organization, i.e. Taxable Entity. Business may be done through a Proprietorship
concern or Firm or through a Company.
The choice of location of business , undertaking, or division also play a very important role.
Residential Status of a person. Therefore, a person should arranged his stay in India such a way
that he is treated as NR in India.
Choice to Buy or Lease the Assets. Where the assets are bought, depreciation is allowed and
when asset is leased, lease rental is allowed as deduction.
Capital Structure decision also plays a major role. Mixture of debt and equity fund should be
balanced, to maximize the return on capital and minimize the tax liability. Interest on debt is allowed
as deduction whereas dividend on equity fund is not allowed as deduction
5.1.3. Methods Of Tax Planning
Various methods of Tax Planning may be classified as follows :

1. Short Term Tax Planning : Short range Tax Planning means the planning thought of and executed at the
end of the income year to reduce taxable income in a legal way.
Example : Suppose , at the end of the income year, an assessee finds his taxes have been too high in
comparison with last year and he intends to reduce it. Now, he may do that, to a great extent by making
proper arrangements to get the maximum tax rebate u/s 88. Such plan does not involve any long term
commitment, yet it results in substantial savings in tax.
2. Long Term Tax Planning : Long range tax planning means a plan chaled out at the beginning or the
income year to be followed around the year. This type of planning does not help immediately as in the case
of short range planning but is likely to help in the long run ;
e.g. If an assessee transferred shares held by him to his minor son or spouse, though the income from such
transferred shares will be clubbed with his income u/s 64, yet is the income is invested by the son or spouse,
then the income from such investment will be treaded as income of the son or spouse. Moreover, if the
company issue any bonus shards for the shares transferred , that will also be treated as income in the hands
of the son or spouse.
3. Permissive Tax Planning : Permissive Tax Planning means making plans which are permissible under
different provisions of the law, such as planning of earning income covered by Sec.10, specially by Sec.
10(1) , Planning of taking advantage of different incentives and deductions, planning for availing different tax
concessions etc.
4. Purposive Tax Planning : It means making plans with specific purpose to ensure the availability of
maximum benefits to the assessee through correct selection of investment, making suitable programme for
replacement of assets, varying the residential status and diversifying business activities and income etc.
Tax Avoidance
5.2. TAX AVOIDANCE
It is an act of dodging tax without breaking the Law. It means when a taxpayer arranges his financial activities in
such a manner that although it is within the four corner of tax law but takes advantages of loopholes which exists in
the Tax Law for reduction of tax a liability. In other words though he has complied the letter of law but not the sprit
behind the law.

Following transactions are held as Tax Avoidance which are :
1. Where tax law is complied with by using colorable devices which means that use o dubious method or a
method which is unfair for reduction of tax liability.
2. Where the fact of the case is presented in a false manner.
3. Where the sprit behind the law is avoided.
4. There is a malafide intention.
It means that method adopted for reducing tax liability should be within the framework of law. If it is not within the
framework of law, it amounts to tax avoidance and not Tax planning.
Tax Avoidance
5.3. TAX EVASION
Any illegal method which leads to reduction of tax liability is known as Tax Evasion. The Tax Evasion is resorted to
by applying following dishonest means :
1. Concealing the Income
2. Claiming excessive expenditure
3. Falsification of accounts.
4. Willful violence of Rules
E.g. Claiming depreciation where no asset exist in the Business or claiming depreciation on the assets which is
used for residential purposes. It Is basically a fraudulent method of reduction in tax liability.
The Difference Between Tax Planning And Tax Management
5.4. THE DIFFERENCE BETWEEN TAX PLANNING AND TAX MANAGEMENT .
Tax Planning Tax Management
(i) The Objective of Tax Planning is to minimize
the tax liability
The objective of Tax Management is to comply with the
provisions of Income Tax Law and its allied rules.
(ii) Tax Planning also includes Tax
Management
Tax Management deals with filing of Return in time, getting
the accounts audited, deducting tax at source etc.
(iii) Tax Planning relates to future.
Tax Management relates to Past ,. Present, Future.
Past Assessment Proceedings, Appeals, Revisions etc.
Present Filing of Return, payment of advance tax etc.
Future To take corrective action
(iv) Tax Planning helps in minimizing Tax
Liability in Short-Term and in Long Term.
Tax Management helps in avoiding payment of interest,
penalty, prosecution etc.
(v) Tax Planning is optional. Tax Management is essential for every assessee.
The Difference Between Tax Avoidance And Tax Evasion'
5.5. THE DIFFERENCE BETWEEN TAX AVOIDACNE AND TAX EVASION
TAX AVOIDANCE TAX EVASION
(i) Where the payment of tax is avoided though
by complying with the provisions of law but
defeating the intension of the law is known as
tax Avoidance.
Where the payment of tax is avoided through illegal
means or fraud is termed as tax evasion.
(ii) Tax Avoidance is undertaken by taking
advantage of loop holes in law
Tax evasion is undertaken by employing unfair means
(iii) Tax Avoidance is done through not malafied
intention but complying the provision of law.
Tax Evasion is an unlawful way of paying tax and defaulter
may punished.
(iv) Tax Avoidance looks like a tax planning and
is done before the tax liability arises.
Tax evasion is blatant fraud and is done after the tax
liability has arisen.

Procedure for imposing Penalty [ Sec.
274]
INTRODUCTION
Income is Income and that has to taxed. But what about penalty ? Is it always livable for not complying with
law or any other matter connected with law ?
The purpose behind levying penalty is to compel the taxpayer to adhere to the law and also make the
taxpayer to comply with statutory obligations imposed by the law. It is deterrent against recurrence of default
on the part of the assessee. It also helps in stopping the practices which the Legislature considers to be
against the public interest.
6.1. PROCEDURE FOR IMPOSING PENALTY [ SECTION 274]
(1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or
has been given a reasonable opportunity of being heard.
(2) No order imposing a penalty under this Chapter shall be made-
(a) by the Income-tax Officer, where the penalty exceeds Rs. 10,000.
(b) by the Assistant Commissioner, where the penalty exceeds Rs. 20,000,
except with the prior approval of the Deputy Commissioner.
(3) An income-tax authority on making an order under this Chapter imposing a penalty, unless he is himself
the Assessing Officer, shall forthwith send a copy of such order to the Assessing Officer.
Various Types Of Penalties In The Event Of Default
6.2. VARIOUS TYPES OF PENALTIES IN THE EVENT OF DEFAULT
The Income Tax Act, 1961 prescribes various types of penalties in the event of defaults under the
Act. These are :
1. For failure to pay tax [ Sec. 221(1)]:
When an assessee is in default in making a payment of tax, he shall be liable to pay penalty as the
Assessing Officer may direct, and in the case of a continuing default, such further amount as the
Assessing Officer may direct, so, however, that the total amount of penalty does not exceed the
amount of tax in arrears.
2. Penalty For Concealment Of Income [ Secntion 271(1)(B) Or (C) ]
(A) PENALTY IS LEVIED IN FORLLOWING SITUATIONS
1. Where the income has been concealed. Concealed income is that income which has not
been shown in the return of income. During the course of assessment assessee discovers
concealed income. It can be calculated as Concealed In come = Assessed Income Income
shown in the return of income
1. Inaccurate pariculars of the income has been furnished . it is the duty of taxpayer not only
to furnish the return of income but also to furnish the correct return. He is committing an
offence for furnishing an inaccurate particulars. It is held by Courts that the person may
have disclosed his correct income ( i.e not concealed any income) but he may still be liable
if inaccurate particulars of income is furnished.
1. Fails to furnish his return of Income
(B) AMOUNT OF PENALTY LEVIED
Minimum Penalty = 100% of the amount of tax sought to be evaded.
Maximum Penalty = 300% of the amount of tax sought to be evaded.
Penalty is in addition to any tax payable by him.
3. Registered Firm [ Sec 271(2)]
When the person liable to penalty is a registered firm or an unregistered firm which has been
assessed u/s 183(b) , then the penalty imposable u/s 271(1) shall be the same amount as would be
imposable on that firm if that firm were an unregistered firm.
4. For Wrong Distribution Of Profit By Registered Firm [ Sec. 271(4)]
IF the profits of the registered firm are distributed in such a way that the share of partner is shown
below the real amount and if such a partner returns his income below the real amount, he shall in
addition to tax, if any payable by him, be liable to pay a penalty of 150% of the difference between
tax on partners income assessed and tax on income as returned. In such a case no refund or other
adjustment shall be claimable by any other partner by reason of such direction.
5. Penalty for failure to comply with the provisions of section 133B [ Sec. 272AA]
If a person fails to comply with the provisions of section 133B regarding entry of Income Tax
Authorities in any building etc. The penalty for non compliance may extend to Rs.1000.
Such Penalty can be levied only after the person has been given an opportunity of being hear.
6. Penalty for failure to comply with the provisions of section 139A. [ Sec. 272B]
(1) If a person fails to comply with the provisions of section 139A, the Assessing Officer may direct
that such person shall pay, by way of penalty, a sum of Rs.10,000.
(2) In case assessee quotes a false or incorrect permanent account number on nay document an
which he knows that it is false or incorrect, the Assessing Officer may direct him to pay a penalty of
Rs.10,000 . Such Penalty can be levied only after the person has been given an opportunity of being
hear.
7. Penalty for failure to comply with the provisions of section 206 CA i.e. Tax Collection Account
Number [ Sec. 272 BBB]
If a person fails to comply with the provisions of section 206CA i.e. to collect Tax Collection Account
Number, he shall, on an order passed by the Assessing Officer, pay, by way of penalty, a sum of
Rs.10,00.
Such Penalty can be levied only after the person has been given an opportunity of being hear.
Prosecutions
6.3. PROSECUTIONS
There are some lapses on the part of the assessee which are punishable hrough the courts.
Whenever, Income Tax department feels that a particular person has committed a particular offence,
a wrongful act or he is guilty of a crime, the department will initiate the proceedings before a
Magistrate. Punishment given by the department can be both in the shape of Monetary nature or/and
of imprisonments. But for that, the Income Tax Authority have to launch the proceedings in a court
of law. The following are cases where the person commits offence under the Act, making the guilty
persons liable to be punished by the court.
1. For removing any Assets, Books of Account, Documents etc. found during search in
contravention of order served U/s 132(3) [ Sec. 275A]
Whoever contravenes any order referred to in Sec. 132(3), shall be punishable with rigorous
imprisonment which may extend to two years and shall also be liable to fine.
2. Removal, concealment, transfer or delivery of property to avoid tax recovery [ Sec. 276 ]
When a person fraudulently removes, conceals, transfers or delivers to any person, any property or
any interest therein with the objective of thwarting recovery of tax, he shall be liable to rigorous
imprisonment upto 2 years and with fine.
3. Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B. [ Sec. 276B]
If a person fails to pay to the credit of the Central Government,

(a) the tax deducted at source by him as required by or under the provisions of Chapter XVII-B; or

(b) the tax payable by him, as required by or under
( i) sub-section (2) of section 115-O; or

(ii) the second proviso to section 194B,
he shall be punishable with rigorous imprisonment for a term which shall not be less than 3 months
but which may extend to 7 years and with fine.
4. Failure to pay the tax collected at source. [ Sec. 276BB]
If a person fails to pay to the credit of the Central Government, the tax collected by him as required
under the provisions of section 206C, he shall be punishable with rigorous imprisonment for a term
which shall not be less than 3 months but which may extend to 7 years and with fine.
5. Willful attempt to evade tax, etc. [ Section 276 (C)(1)]
If a person willfully attempts in any manner whatsoever to evade any tax, penalty or interest
chargeable or imposable under this Act, he shall be punishable,

(i) in a case where the amount sought to be evaded exceeds Rs. 1,00,000, with rigorous
imprisonment for a term which shall not be less than 6 months but which may extend to 7 years and
with fine;

(ii) in any other case, with rigorous imprisonment for a term which shall not be less than 3 months
but which may extend to 3 years and with fine.
6. Failure to furnish returns of income [ Sec. 276CC]
If a person willfully fails to furnish in due time the return of fringe benefits which he is required to
furnish or the return of income which he is required to furnish, he shall be punishable,

(i) in a case where the amount of tax exceeds Rs.1,00,000, with rigorous imprisonment for a term
which shall not be less than 6 months but which may extend to 7 years and with fine;

(ii) in any other case, with imprisonment for a term which shall not be less than 3 months but which
may extend to 3 years and with fine:
7. Failure to produce accounts and documents. [ Sec. 276D]

If a person willfully fails to produce on or before the date specified in any notice served on him such
accounts and documents, he shall be punishable with rigorous imprisonment for a term which may
extend to 1 year or with fine equal to a sum calculated at a rate which shall not be less than Rs,4 or
more than Rs.10 every day during which the default continues, or with both.
8. Abetment of false return, etc. [ Sec. 278]

If a person abets or induces in any manner another person to make and deliver an account or a
statement or declaration relating to any income [or any fringe benefits] chargeable to tax which is
false and which he either knows to be false or does not believe to be true or to commit an offence,
he shall be punishable,

(i) in a case where the amount of tax, penalty or interest which would have been evaded, exceeds
Rs.1,00,000, with rigorous imprisonment for a term which shall not be less than 6 months but which
may extend to 7 years and with fine;

(ii) in any other case, with rigorous imprisonment for a term which shall not be less than 3 months
but which may extend to 3 years and with fine.]
9. Offences by companies. [ Sec. 278 B]

Where an offence under this Act has been committed by a company, every person who, at the time
the offence was committed, was in charge of, and was responsible to, the company for the conduct
of the business of the company as well as the company shall be deemed to be guilty of the offence
and shall be liable to be proceeded against and punished accordingly:
10. Offences by Hindu undivided families. [ Sec. 278C]

Where an offence under this Act has been committed by a Hindu undivided family, the karta thereof
shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished
accordingly.

Fringe Benefit Tax (FBT)
STRUCTURE
7.1. Introduction
7.2. Salient Features Of FBT
7.3. Important Points Relating To Fringe Benefit Tax
7.4. Characteristics Of FBT
7.5. Classification Of Employer For FBT
7.6. Classification Of Not Employer For FBT
7.7. Direct Fringe Benefit
7.8. Deemed Fringe Benefit
7.9. Payment Of FBT To The Government
7.10. Filing Of FBT Return

7.1. INTRODUCTION
Fringe Benefit Tax was introduced as part of Finance Act, 2005 as an additional income-tax and came into force
from April 1, 2005.

The term Fringe Benefits means any consideration for employment provided by way of any privilege, service,
facility or amenity provided by the employer to the employees.

Fringe Benefit Tax is to be levied on the employer in respect of fringe benefits provided/deemed to be provided by
the employer to his employees during any financial year commencing on or after 1.4.2005

Fringe Benefit Tax is payable at the rate of 30% of the value of fringe benefits computed in the manner prescribed
under the Section 115WC.

7.2. SALIENT FEATURES OF FBT
Some of the features of FBT are listed as follows:
Fringe Benefit Tax payable by an employer is in respect of perquisites or fringe benefits provided or
deemed to have been provided by the employer to his employees in addition to the cash salary or wages
paid during the year.
Fringe Benefit Tax is levied in addition to the Income-Tax charged.
Fringe Benefit Tax is payable at the specified rate on the value of fringe benefits provided to the
employees. The value of fringe benefits is calculated in accordance with the provisions of Section 115WC
of the Income-Tax Act, 1961.
An employer has to pay Fringe Benefit Tax even if no Income-Tax is payable on the total income.
Like any other direct tax, Fringe Benefit Tax is not an allowable expenditure for the purpose of
computation of taxable income.
7.3. IMPORTANT POINTS RELATING TO FRINGE BENEFIT TAX
Some of the important points to be observed in FBT:
Rate is calculated on Net Expenses.
Expenses are not to be segregated between Paid to Employees and Paid to Outsiders.
Depreciation is calculated on the basis of Income Tax.
FBT is applicable on Service Tax paid on any of the expenditure chargeable to FBT.
Payment of FBT in case employers have employees based both in and outside India.
Medical reimbursement upto Rs. 15,000 per employee is charged to FBT.
Applicability of FBT in case an employer is engaged in two or more business activities.
Different rates of tax on the Fringe Benefits provided by different industries.
FBT is not payable on Advance paid.
Tax Rate is 30% + Surcharge @10% + Education Cess @ 2%.
One Ledger may have expenditure relating to different groups under FBT.
7.4. CHARACTERISTICS OF FBT
Some of the characteristics of FBT are:
It is a tax on expenditure, not income.
It is a tax on employer, not employees.
It is a surrogate tax on employers.
It cannot be recovered from the employees.
It is to tax benefits that are usually enjoyed collectively by the employees and cannot be attributed to
individual employees.
A combination of presumptive and non-presumptive approaches has been adopted.
7.5. CLASSIFICATION OF EMPLOYER FOR FBT
Under FBT, an Employer is defined as any of the following:
Company
Firm
Association of Persons or a Body of Individuals (except Fund or Trust or institution eligible for exemption
under section 10(23C) or registered under section 12AA)
Local Authority
Every Artificial judicial person, not falling within any of the above
Note: Under FBT, they are considered as Employer even if the Taxable Income is NIL.

7.6. CLASSIFICATION OF NOT EMPLOYER FOR FBT
The following are not included as Employer under FBT:
An Individual (i.e., Proprietorship concern)
Hindu Undivided Family
Association of Persons or a Body of Individuals exempt under section 10(23C) or registered under
section 12AA
Central Government
State Government
7.7. DIRECT FRINGE BENEFIT
Direct Fringe Benefit as classified under section 115(WB) (1) means:
Any privilege, service, facility or amenity, which is directly or indirectly provided by an employer to his
employees (including former employee or employees).
Any free or concessional tickets provided by the employer for private journeys to employees or their
family members.
Any contribution by the employer towards an approved superannuation fund for employees.
Any reimbursement, which is directly or indirectly made by the employer to employees for any purpose.
7.8. DEEMED FRINGE BENEFIT
The Fringe Benefits are deemed to have been provided if the employer incurs any expenditure or makes any
payment in the course of business or profession. This includes any activity whether or not such activity is carried
on with the object of deriving income, profits or gains. Any expenditure incurred or payment made for the following
constitutes deemed fringe benefit.
Entertainment
Hospitality
Conference
Sales promotion including publicity
Employee welfare
Conveyance, tours and travel
Hotel, boarding, lodging
Repair, running and maintenance of cars
Repair, running and maintenance of aircraft
Use of telephone
Maintenance of any accommodation in the nature of guest house
Festival celebrations
Health Club
Any other club
Gifts
Scholarship to employees children
Consumption of fuel other than industrial fuel
7.9. PAYMENT OF FBT TO THE GOVERNMENT
In accordance with the provisions, the FBT should be paid in advance during any financial year and the regular
assessment of fringe benefits is to be made in a later assessment year.
Advance Fringe Benefit Tax
Every assessee who is liable to pay advance tax has to pay tax on the current fringe benefits calculated in the
manner laid down.

The amount of advance tax payable in the financial year is 30% of the value of the fringe benefits paid or payable
in each quarter. This is payable on or before the 15th day of the month following each quarter except for the
quarter ending 31st of March.

For the quarter ending on the 31st of March of the financial year, the amount of advance tax (on an estimated
value) is to be paid on or before the 15th of March for the financial year.

If tax is not paid or the tax paid is less than the prescribed rate, the assessee is liable to pay simple interest at the
rate of 1% on the amount by which the advance tax paid falls short.

7.10. FILING OF FBT RETURN
An employer who has paid or made provision for payment of fringe benefits to his employees during the previous
year is required to furnish a return of fringe benefits in the prescribed form and manner to the Assessing Officer
before the due date.

For a company as an employer the due date is the 31st of October of the assessment year.

For a person who is an employer but not a company and whose accounts are required to be audited, the due date
is the 31st of October of the assessment year.

For any other employer, the due date for filing the return of fringe benefits is the 31st of July of the assessment
year.
After the due date, the Assessing Officer may issue a notice to the assessee requiring him to furnish a return in the
prescribed form and manner within a period of thirty days.

Failure to furnish a return of fringe benefits or delayed filing of such return will result in the levy of interest at the
rate of 1% for each month of delay or till the assessment is made on the amount of tax on the value of fringe
benefits.

Applicability Of Service Tax
8.2. APPLICABILITY OF SRVICE TAX
1. Territorial Application State of Jammu & Kashmir excluded
The provisions related to Service Tax are applicable to the whole of India except to the State of Jammu &
Kashmir. As a result, the services provided within the territorial limits of the State of Jammu & Kashmir are
excluded from the ambit of the levy of service tax.

In other words as clarified by the Department that any service provider who has his place of business in the
State of Jammu & Kashmir but provides taxable services to the clients in other parts of the country are liable for
payment of service tax. Further any service provider who has his place of business in any of the Indian States
other than the State of Jammu & Kashmir who provides the services to the persons in the State of Jammu &
Kashmir , is not liable to pay service tax. Accordingly when the recipient of the taxable service is in the State of
Jammu & Kashmir , the service is outside the service tax net.

2. Levy of Service Tax
The Service Tax is livable on notified service tax providers in respect of the value of the taxable service. In other
words, service tax is levied only in respect of notified service providers and not on all service providers. Further
a taxable service cannot be subjected to service tax twice under different classifications and is liable to tax only
once.

3. Levy of Service Tax- Threshold Exemption
With effect from 1-4-2008, i.e. from the Financial Year 2008-2009, the threshold exemption is raised upto Rs. 10
lakhs vide Notification NO.8/2008-ST,dt. 1-3-2008.

The expression aggregate value of taxable services means the aggregate value of services for which service
tax is payable and exclusive of services which are exempt from service tax by way of any general / specific
exemption.

The eligibility to avail threshold limit exemptions of Rs. 8 lakhs, Rs. 10 lakhs as the case may be is burdened
with various conditions. They are ,
1. No CENVAT Credit is availed on the service tax paid on input services used to render the subject
taxable service.
2. Similarly no CENVAT Credit is availed in respect of capital goods and inputs till the date of exhausting
threshold exemption.
3. Only capital goods and inputs received after the completion of availing exemption limit can alone
qualify for input credit.
4. Input Credit in respect of goods lying in stock or unutilized input credit lying in the books to the credit of
the service provider should not be utilized and shall also be reversed to the extent to service tax
payable.
5. The aggregate value taxable services rendered by the service provider shall not exceed Rs. 9 lakhs in
the preceding Financial Year.
6. With effect from 1-4-2008, i.e. from the Financial Year 2008-2009, the threshold exemption is raised
upto Rs.10 lakhs vide Notification No. 8/2008-ST,dt. 1-3-2008.
C-4. Levy of Service Tax- Not applicable
The levy of service tax on taxable services will not extend to the following receipt as there is no element of
service in such receipts and / or consideration is involved.
Value of goods and materials sold by the service provider subject to the condition that they should be
quantified and shown separately in the invoice.
Reimbursement of out-of-pocket expenses on actual basis subject to the condition that such expenses
are specified separately in the bills raised by the service providers under certain circumstances.
Taxable service provided free of charge without any consideration thought the service is otherwise
taxable
Service Tax Rate
8..3. SERVICE TAX RATE
(Increase in Effective Service Tax Rate w.e.f. 11th May 2007.)

Service Tax Rate has been hiked to 12.36 per cent as Secondary and Higher Education Cess of 1 per
cent on service tax has come into force. Consequently, w.e.f. 11th May 2007 the rate of service tax shall
be revised as follows:

Service Tax on taxable value 12.00%

Education Cess @ 2% of Service Tax 0.24%

Secondary and Higher Secondary Cess (SHE) 1% of taxable value 0.12%

Hence effective service tax works out to 12.36%
Kindly note that all three heads of taxes shall have to be separately displayed on the Invoice.
Registration Formalities


Payment & Refund Of Service Tax

Filling Or Returns of Service Tax

Assessments of Service Tax

Central Value Added Tax (Cenvat) Credit
of Service Tax

Penalties &
Prosecutions of
Service Tax
8.9. PENALTIES & PROSECUTIONS >> Failure to
apply for Registration :

Maximum Penalty may extend upto Rs. 1000/-
>> Failure to pay Service Tax :

Penalty shall not be less than Rs. 100 per day for
every day during which such failure continues but
failure continues but not more than Rs.200 per day for
every day during which such failure continues and in
any case it shall not exceed service tax payable by
the assessee.

With effect from 18-4-2006, the penalty shall not
be less than Rs.200 per day during which the
failure continues or amount calculated at the rate
of 2% per month on the Tax due which ever is
higher.
>> Failure to Furnish Tax :

Maximum penalty may extend upto Rs. 1000.

W.e.f. 11-5-2007. the maximum penalty is
enhanced to Rs.2000
>> Willful suppression of the value of taxable
service :
1. Penalty shall not be less than the service tax
sought to be evaded but shall not exceed
twice the amount of service tax sought to be
evaded.
2. If the assesses pays the service tax and
interest as determined within 30 days of the
ommunication of the order, penalty is
restricted to 25% the service tax so
determined.
>> Failure to comply with the notice issued by
assessing authority.

Since the Section 78 was omitted by the Finance ( No.
2) Act, 2004, the failure attracts residuary provision.
Under that provision, maximum penalty may extend
upto Rs.1,000
>> Contravention of the provisions of Act/Rules
there under, where no specific penalty is
provided:

Punishable with penalty which may extend to an
amount not exceeding Rs. 1,000/-.

Introductions -VAT (Value Added Tax)
9.1. INTRODUCTION
Value Added Tax (VAT) is an indirect tax on goods, introduced in lieu of sales
tax, to ensure transparency and greater compliance. The basic premise of VAT is
to tax the true value added to the goods, at each stage of the transaction chain.
This ultimately reduces:
1. Tax paid to the government.
2. Cost/tax passed onto the consumer.
VAT is a multi-point tax as against sales tax, which is a single-point tax. VAT
removes the cascading effect of tax on tax, by allowing a set off for input tax, i.e.
tax paid at earlier stage on purchases. It is an efficient, globally acceptable and
easy to administer taxation system.
VAT Composition
In order to relieve some small businesses of the need to keep detailed records,
the law has made provision for a simpler method of accounting for VAT. The
method of calculating, VAT payable is also made easier. Such a method is called
a VAT Composition Returns.

The VAT Composition Returns states that Small dealers with an annual gross
turnover not exceeding 5 to 50 lakhs and subject to respective state act and
rules, who are otherwise liable to pay VAT, shall however have the option for a
composition scheme with payment of tax at a small percentage of gross turnover.
The dealers opting for this composition scheme will not be entitled to input tax
credit.
This scheme is a special method of determining the tax liability for specified
dealers whose turnover in the year before April 1, 2005 or in the current year
exceeds Rs. 5 lakhs but does not exceed Rs.5
Concept of -VAT (Value Added Tax)
9.2. Concept of VAT
The essence of VAT is in providing set-off for input tax and this is applied
through the concept of input credit/rebate. This input credit in relation to
any period means setting off the amount of input tax by a registered dealer
against the amount of his output tax. Value Added Tax (VAT) is based on
the value addition to the goods, and the related VAT liability of the dealer is
calculated by deducting the input credit from the tax collected on sales
during the payment period.

VAT works in two different ways:
1. If VAT-registered business receives more output tax than the taxes
paid as input, they will need to pay the difference to the
Commissioner of Taxes (State)
2. If the input tax paid is more than the output tax collected,
1. You can carry forward the Input credit and adjust it against the
output tax in the subsequent months.
2. You can have the Input Credit refunded to you by the
Government at the end of the current or following year.
You can receive refunds for Input Credit on exports within a period of three
months.
Types of Dealers-VAT (Value Added Tax)
9.3. Types of Dealers
There are two types of Dealers.
Registered Dealers
Unregistered Dealers
Registered Dealers
A dealer whose gross annual turnover is above the VAT threshold limit is
required to register under VAT. This is mandatory. A new dealer will be
allowed 30 days time from the date of liability to get registered.

A VAT registered dealer will be eligible for input tax credit. All Registered
Dealers must follow the VAT law, irrespective of the size of the business. A
Registered Dealer may sell to both Consumers and Non- Consumers.

A registered dealer can opt for compositions scheme.
Unregistered Dealers
A dealer whose annual turnover is less than Rs.5 lakhs is an Unregistered
Dealer and has been granted the status of a Consumer. So, the VAT paid by
an Unregistered Dealer is treated as his cost and is charged no further VAT
on his sale. It is assumed that such small dealers will not be supplying
other industries or dealers. Therefore they are not included into the VAT
chain.

But if the small dealer is in the business of actually supplying to others
besides consumers, then he can optionally choose to register and gain the
benefits of a Registered Dealer.

The registered dealer pays VAT on goods purchased from unregistered
dealer.
General terminology used in VAT (Value Added Tax)
9.4. General terminologies used in VAT
Term Description
Input tax
Output tax

Input Credit

Composite
Dealers
This is a tax paid on purchases
This is a tax charged on sales
The amount of Input tax that is permitted to be set off against Output
tax.
Dealers with annual gross turnover not exceeding a certain
threshold (threshold - decided by the respective State Governments)
can opt for a composition scheme whereby they will pay tax as a
small percentage of their gross turnover. However, retailers opting
for this composition scheme will not be entitled to Input Credit.

The State Governments fix the periods and the procedures for the
payment of the lump sum.

Advantages of VAT over Sales Tax
9.5. Advantages of VAT over Sales Tax
As VAT is a multi-point tax with set-off for tax paid on purchases, it
prevents repeated taxation of the same product.
Simple and Transparent: In the Sales tax system the amount of tax
levied on the goods at all stages is not known. However, in VAT, the
amount of tax would be known at each and every stage of goods sale
or purchase.
VAT has the flexibility to generate large and buoyant revenues, as it
levies tax on value additions.
Zero rating of tax on exports is possible in case of VAT.
Fair and Equitable: VAT introduces uniform tax rates across the state
so that unfair advantage cannot be taken while levying the tax.
Procedure of simplification: Procedures related to filing of returns,
payment of tax, furnishing declaration and assessment are simplified
under the VAT system so as to minimize any interface between the
tax payer and the tax collector.
Ability to provide same revenue to the Government with lower rates
of tax.
Tax does not become a cost of doing business.
VAT Rates
9.6. VAT Rates
According to the White Paper, there are 550 categories of goods under the
VAT system. They are classified into the following four groups, depending
on the VAT rate:
VAT @ 4%
The largest number of goods (270) comprising of basic necessity items
such as drugs and medicines, agricultural and industrial inputs, capital
goods and declared goods are under 4% VAT rate.
Exempted from VAT
There are about 46 commodities under the exempted category. This
includes a maximum of 10 commodities that each state would be allowed to
select, from a broader approved list for VAT exemption. The exempted
commodities include natural and unprocessed products in unorganized
sector as well as items, which are legally barred from taxation.
VAT @ 1%
This is for a specific category of goods like gold, silver, etc.
VAT@12.5%
The remaining commodities are under the general VAT rate of 12.5%.
Computation of VAT and Profit

The above diagram depicts computation of (10 %) VAT at each stage of
business. Hence, it is not the manufacturers and retailers but only the consumer
who has paid 10% VAT to the government. The profits for manufacturers and
retailers thus remain unaffected
Items Covered in Indian VAT
9.8. Items Covered in Indian VAT
550 items covered 270 items of basic needs,
like medicine, drugs, agro
& industrial inputs, capital
& declared goods 4% VAT
Rest 12.5% VAT. Gold &
silver jewellery - 1%
Tea-producing states
options either percentage
VAT
Petrol, diesel, liquor,
lottery not included *
Sugar, textile & tobacco
excluded for one year
Note : * Some states like Delhi have imposed VAT on diesel at 20%, which is
higher than the 12% sales tax charged earlier. Similarly, Delhi imposed VAT on
LPG at 12.5%, which is also higher than the previous sales tax rate of 8 percent.
All business transactions carried on within a State by individuals, partnerships,
companies etc. will be covered by VAT.

"More than 550 items would be covered under the new Indian VAT regime of
which 46 natural and unprocessed local products would be exempt from VAT", a
PTI report quoted West Bengal Finance Minister and VAT panel chairman Asim
Dasgupta as saying.

About 270 items including drugs and medicines, all agricultural and industrial
inputs, capital goods and declared goods would attract four per cent VAT in
India.

The remaining items would attract 12.5 per cent VAT. Precious metals like gold
and bullion would be taxed at one per cent.

Considering the difficulties faced by the tea industry, it was decided that tea-
producing states would be given an option to levy 12.5 per cent or four per cent
subject to review in 2006.

Petrol and diesel would be kept out of VAT regime in India, which covers only
marketable items.

Dasgupta was quoted as saying that the panel was yet to take a view on CNG.

Following opposition from some of the states, it was decided that states would
have option to either levy four per cent or totally exempt food grains but it would
be reviewed after one year.

Three items - sugar, textile and tobacco - covered under Additional Excise
Duties, will not be under VAT regime for one year but the existing arrangement
would continue.

The Indian VAT panel relaxed the threshold limit for traders coming under VAT
regime from Rs 5-50 lakh of turnover from the previous stance of Rs 5-40 lakh.

Traders within this limit can pay a composite VAT rate of one per cent but would
not be entitled to input tax credit

Central Sales Tax (CST)
STRUCTURE
o Introductions
o Inter-State Sale
o What are the objectives of CST Act ?
o What are the conditions for CST Act to become applicable.
o Rate of CST
o Sale Price
o CST Transactions Forms
10.1. INTRODUCTION
Central Sales Tax (CST) is a tax on sales of goods levied by the Central
Government of India. CST is applicable only in the case of inter-state sales and
not on sales made within the state or import/export of sales.

Inter-state sale is when a sale or purchase constitutes movement of goods from
one state to another. Accordingly, consignments to agents or transfers of goods
to branch or other offices is not a sale as per the CST Act

CST is payable in the state where the goods are sold and movement
commences. The tax collected is retained by the state in which the tax is
collected. CST is administered by Sales Tax authorities of each state. Thus, the
State Government Sales Tax officer who assesses and collects local (state)
sales tax also assesses and collects CST.

Sales Tax is a tax, levied on the sale or purchase of goods. There are two kinds
of Sales Tax i.e. Central Sales Tax, imposed by the Centre and Sales Tax,
imposed by each state.

10.2. INTER-STATE SALE
An inter-state sale takes place when a sale or purchase:
Leads to movement of goods from one State to another State.
Is achieved by the transfer of documents of title while the goods are being
moved from one State to another State.
Example 1: A in Orissa sells and delivers goods to B in Gujarat.

Example 2: X in Orissa delivers goods to Y in Calcutta. Y sells it to C in
Delhi by transferring the document of title during the goods movement from
Orissa to Delhi.

Note: Goods that are sold within a state, but while transporting travel through
another state is not considered inter-state sales.

10.3. WHAT ARE THE OBJECTIVES OF CST ACT ?
1. Formulate principles for determining when a sale or purchase of goods takes
place :-
- in the course of interstate trade or commerce ; or
- outside a State ; or
- in the course of import into or export from India.
2. Provide for the :-
- levy of
- collection and
- distribution
Of taxes on sales of goods in the course of interstate trade or commerce.
3. Declare certain goods to be of special importance of inter state trade or
commerce.
4. Specify the restriction and conditions to which state laws imposing taxes on
the sale or purchase of such goods of special importance shall be subject.
5. Provides for collection of tax in the event of liquidation of a company.
6. Authority to settle disputes in course of interstate trade or commerce.
10.4. WHAT ARE THE CONDITIONS FOR CST ACT TO BECOME
APPLICABLE.
1. The sale should not take place in the course of import into or export from India.
2. There should be a Dealer and such dealer must be registered under the CST
Act.
3. He should made a sale to any buyer ( registered dealer or unregistered dealer)
4. He should carry on any business.
5. He should made a sale of any goods ( declared or undeclared)
6. The sale should be made in the course of interstate trade or commerce ( i.e.
the sale should not be a sale inside a state.
WHAT HAPPENS IF THE ABOVE CONDITION ARE SATISFIED
1. The CST Act becomes applicable and CST is levied at the Rate specified.
2. it is levied on Turnover, which in turn is computed on the basis of the sale
price.
3. it is payable by the dealer who makes the sale in the course of interstate trade
or commerce.
4. It is payable in respect of sale of goods effected by him during the year.
5. It is so payable to appropriate state in which the dealer has a place of
business.
10.5. RATE OF CST
In an inter-state sale to a registered dealer against form C the rate of CST
is 4% or local sales tax rate whichever is lower.
If under the local sales tax law, sale or purchase is exempt from CST the
CST is Nil.
In an inter-state sale to government against form D the rate of CST is 4%
or local sales tax rate whichever is lower.
Rate of CST in case of inter-state sale of declared goods without form C
or D is twice the rate of tax applicable to the local sale or purchase of such
goods in that state.
Rate of CST in case of other goods ( i.e. non-declared goods) is 10% or
the applicable local sales tax of that state, which ever is higher.
10.6. SALE PRICE
Sale Price means the amount payable to a dealer as consideration fro the sale
of any goods.
It does not include,
Cash Discount ( including Trade Discount, Quantity Discount, Additional
Discount ). This sum is deducted from sale consideration.
Cost of installation, freight and delivery is excluded ( if such cost is
separately charged).
Goods returned by buyer within 6 months.
Goods rejected by buyer.
It includes,
Consideration for sale any goods
Excise Duty ( whether included in sale price or separately charged)
Sales Tax payable by the dealer ( whether included in sale price or
separately charged)
Sum charged for anything done by the dealer in respect of the goods at
the time of or before the deliver thereof.
Cost of packing material and packing charges.
Insurance charges if the seller has insured the goods.
Bonus Disocunt / Incentive Bonus for attracting Sale Targets.
10.7. CST Transaction Forms
Dealers have to issue certain declarations in prescribed forms to buyers/sellers.
The type of forms are C, D, E1, E2, F, H and I. Forms C, E1, E2, F and H are
printed and supplied by Sales Tax authorities. Dealers have to issue declarations
in these forms printed and supplied by the Sales Tax authorities. Form D is to be
issued by government organization departments making purchases. These forms
are to be prepared in triplicate.

Form C
The sales tax on inter-state sale is 4% or the applicable sales tax rate for sale
within the State whichever is lower if the sale is to a dealer registered under CST
and the goods are covered in the registration certificate of the purchasing dealer.
The purchasing dealer is eligible to get these goods at concessional rate if a
declaration in C form is submitted to the selling dealer.

Form D
Sale to government is taxable @ 4% or applicable sales tax rate for sale within
the State whichever is lower. This concession on CST is applicable if Form D is
issued by the government department which purchases the goods.

Form E1
This form is issued by the dealer who makes the first inter-state sale during
movement of goods from one State to another. This enables the purchaser to
claim exemption from CST on the second inter-state sale during the movement of
goods by transfer of documents of title.

Form E2
This form is issued by the second or the subsequent seller when the goods move
from one state to another in a series of inter-state sales by transfer of documents
of title. This form enables the purchaser to claim exemption form CST on
subsequent sale of goods.

Form F
This form is issued when goods are despatched to another state as a
consignment or to the branch of a dealer in another State. The CST is not
payable if there is only inter-state stock transfer and there is no sale. To claim
inter-state movement of goods as not a sale, the dealer has to produce a
declaration in Form F received from Consignment Agent or Branch Office in
another State. One Form F covering receipts during one calendar month has to
be issued.

Form H
This form is issued by an exporter for purchase of goods. The purchase of goods
is for an export order or in pursuance of an export order. These goods are then
sold in export and the form enables seller of the goods to the exporter to claim
deduction on the goods sold for export.

Form I
This form is issued by a dealer located in a Special Economic Zone (SEZ). No
CST is levied when sales is made to a dealer located in SEZ.

Tax Collected at Source (TCS)
STRUCTURE
o Introductions
o Classification of Seller for TCS
o Classification of Buyer for TCS
o Goods and Transactions classified under TCS.
o Certificate of TCS
o TCS Exemptions
o Payment of TCS to the Government
o Electronic TCS (e-TCS)
o Filing of TCS Returns
11.1. INTRODUCTION
TCS is the Tax Collected at Source by the seller (collector) from the buyer/
lessee (collectee/ payee). The goods are as specified under section 206C of the
Income Tax Act, 1961.

If the purchase value of goods is X, the amount payable by the buyer is X+Y,
where Y is the value of tax at source. The seller deposits Y (tax collected at
source) at any designated branch of banks authorised to receive the payment.

The seller, lessor or licensor, is responsible for the collection of tax from the
buyer, lessee or licensee. The tax is collected for sale of goods, on transactions,
receipt of amount from the buyer in cash or issue of cheque, draft or any other
mode, whichever is earlier.
11.2. Classification of Seller for TCS
Under TCS, a seller is defined as any of the following:
o Central Government
o State Government
o Any Local Authority
o Any Statutory Corporation or Authority
o Any Company
o Any Partnership Firm
o Any Co-operative Society
o Any individual/HUF whose total sales or gross receipts exceed the
prescribed monetary limits as specified under section 44AB during
the previous year
11.3. Classification of Buyer for TCS
A buyer is classified as a person who obtains goods or the right to receive goods
in any sale, auction, tender or any other mode. The following are not included:
o Public Sector Companies
o Central Government
o State Government
o Embassy of High Commission, Consulate and other Trade
Representation of a Foreign State
o Any Club, such as social clubs, sports clubs and the like
11.4. Goods and Transactions classified under TCS
Goods and transactions classified under TCS are listed below:
o Alcoholic liquor for human consumption including Indian Made
Foreign Liquor (IMFL)
o Tendu leaves
o Timber obtained under a forest lease
o Timber obtained by any mode other than under a forest lease
o Any other forest produce not being Timber or Tendu
o Scrap (Scrap means waste and scrap from the manufacture or
mechanical working of materials which is usable as such because
of breakage, cutting up, wear and tear and other reasons)
o Licensing or leasing of Parking Lot, Toll Plaza
o Mining and quarrying
11.5. Certificate of TCS
The certificate of collection of tax at source has to be submitted in Form No-27D
by persons collecting tax at source within a week from the last day of the month
in which the tax was collected.

If there is more than one certificate to be issued to a buyer for tax collected at
source with respect to the period ending September 30 and March 31 in the
financial year, then the person collecting the tax on request from the buyer can
issue a consolidated certificate within one month from the end of such period.

If an issued TCS certificate is lost, the person collecting tax at source may issue
a duplicate certificate on plain paper, with necessary details as contained in
Form-27D.

The Assessing Officer (AO), before giving credit for the tax collected at source on
the basis of the duplicate certificate, has to get the payment certified and obtain
an Indemnity Bond from the assessee.
11.6. TCS Exemptions
TCS can be totally exempted or fixed at a lower rate under some circumstances.
Total Exemption: No TCS Collection
A declaration by the buyer in Form Number 27C (in duplicate) has to be made for
total exemption. The declaration is if the goods listed are to be used for the
purpose of manufacturing or processing and not trading. A copy of the
declaration has to be given to the person collecting tax.

The person collecting this declaration form has to submit the copy to the
authorities concerned on or before the seventh day of the following month.
Lower Rate of TCS
The buyer (Collectee) can apply to the Assessing Officer (AO) for a lower rate,
using Form No.13, subject to the condition that the AO is convinced that the total
income of the buyer (Collectee) justifies the lower rate. The AO may issue a
certificate, specifying the rate of collection.

11.7. Payment of TCS to the Government
The tax collected is to be paid to the Central Government within one week of the
last day of the month in which the tax was collected. This payment is made in
any branch of Reserve Bank of India (RBI), State Bank of India (SBI), or any
other authorised bank. The payment is made accompanied by income tax challan
281. If the tax is collected on behalf of the Government, then the amount can be
paid without the income tax challan.

11.8. Electronic TCS (e-TCS)
e-TCS is the filing of TCS returns using electronic media. It is mandatory for
corporate and government collectors to furnish TCS returns in electronic form,
from financial year 2004-2005. Collectors (other than government and
corporates) may file TCS returns in electronic or physical form.

NSDL collects the e-TCS returns from the Collectors on behalf of the Income Tax
Department.
TCS returns on computer media for e-TCS
TCS returns filed using computers should be in TCS specific form formats and
must contain all the information, details and particulars specified in such forms.

Computer media specifications are as follows (any of these):
CD ROM of capacity 650 MB or more
4mm 2GB/4GB (90M/120M) DAT Cartridge
3.5 Inches, 1.44 MB floppy diskette.
The returns must be accompanied by Form No.27B and verified.

11.9. Filing of TCS Returns
TCS returns are to be filed quarterly, in addition to annual returns.
The quarterly returns are to be filed in Form Number 27EQ on or before
July 15, October 15 and January 15, respectively for the first three
quarters of the financial year. For the last quarter, the returns are to be
filed on or before April 30.
Annual returns are to be filed in Form Number 27E on or before June 30
of the following financial year


METHODOLOGY

Analysis involves
o Analysis of the Global and Indian commodities
market.
o Analyze the working of Religare commodities
in Indian Commodity Market.

Global and Indian Commodities Market involves
o Collection of news for the commodities market keeping in mind
both domestic and global scenario.
o Analyzing the impact of major events like budget, reforms etc.
o Regulatory framework and its impact on the global and Indian
economy
o Growth prospects & future outlook of the global and Indian
commodities market.

Working of Religare Commodities.
o Analyzing the risk managing strategies of the company.
o Arbitrage and Hedging analysis.


SCHEDULE

I to III week Theoretical concept clarity of fundamental analysis, about
derivatives and
commodities market.

III to V week To collect data regarding the key factors that affect the commodity
markets allover, to study the different commodity exchanges,
factors that decide the commodity prices and analyze them.

V to XII week To study the various instruments (hedging, arbitraging etc.) for
managing risk from investor and company point of view and
deriving the useful conclusion regarding the performance of the
Indian exchanges in a globalize economy and the impact of
different factors on their performance.

XIII to XIV week Revision, report preparation and Presentation to the faculty
guide.


REFERENCES

Energy and metal research cell, Agri research cell, risk management cell

Market indices.(MCX AND NCDEX)

Websites
o www.Nymex.com
o www.Mcxindia.com
o www.Yahoofinance.com
o www.Riskglossary.com
o www.Lme.com
o www.Nseindia.com

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TRAINING REPORT ON TAXATION IN BUSINESS MANAGEMENT

MR. ASHUTOSH GOYAL ENROLLMENT NO. 11281114001 PGDT 2011-12 1

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