Section 234C – Shortfall in payment of advance tax on account of impossibility to estimate income – Assessee not liable to pay interest.

Kumari Kumar Advani vs. Asstt. CIT (Mum) Members: G.S.Pannu (A. M.) and Ram Lal Negi (J. M.) ITA No.: 7661 /MUM/2013 A.Y.: 2012-13.

The assessee, an individual, had filed her return of declaring income of Rs. 13.91 crore. While processing such return u/s. 143(1), interest u/s. 234C of the Act was levied on account of shortfall in payment of advance tax on first and second installments, due on 15/09/2011 and 15/12/2011, in respect of gift of Rs.10.00 crores claimed to have been received on 17/12/2011. On such deferment in payment of instalments, interest of Rs.7.66 lakh was charged. On appeal, the levy was confirmed by the CIT(A).

Before the Tribunal, the assessee argued that the income in question, namely gift of Rs.10.00 crore received on 17/12/2011 was in the nature of a windfall gain and, therefore, it was not possible for the assessee to estimate its accrual or receipt at any time when the payment for first and second installments of advance tax were due. However, the revenue justified the orders of the lower authorities on the ground that the charging of interest u/s. 234C of the Act was mandatory in nature and relied on the judgment of the Delhi High Court in the case of Bill and Peggy Marketing India Pvt. Ltd. vs. ACIT (350 ITR 465).

The Tribunal noted that section 209 provides the computational mechanism of calculating advance tax to be paid. According to it, section 209 envisages calculation of advance tax based on the ‘estimate of current income’. A reading of section 209 would reveal that in order to calculate the amount of advance tax payable, an assessee is liable to estimate his income. Considered in this light, the facts of the present case clearly show that the gift of Rs. 10 crore, which has been received by the assessee on 17/12/2011 could not have been foreseen by the assessee so as to enable him to estimate such income for the purpose of payment of advance tax on an anterior date viz., 15/09/2011 or 15/12/2011. In such a situation, according to the Tribunal, the decision of the Hyderabad Bench of the Tribunal in the case of ACIT vs. Jindal Irrigation Systems Ltd. (56 ITD 164) relied upon by the assessee clearly militates against charging of interest u/s. 234C. As per the Hyderabad Bench of the Tribunal, an assessee could not be defaulted for a duty, which was impossible to be performed. To the similar effect is the decision of the Chennai Bench of the Tribunal in the case of Express Newspaper Ltd (103 TTJ 122). Therefore, the Tribunal held that the levy of interest u/s. 234C was untenable.

How to bequeath wealth to our legal heirs using nomination, joint accounts and will? •

Writing and Registering a Will is the best Option

The best way to pass on one’s wealth after death is to write and register a Will in favor of those persons whom one would like to get the estate.

Also Have Joint Accounts
However, other than writing and registering a Will, there are other ways to pass on the wealth without any hassles is by having joint accounts with the person whom you want to pass on the wealth (namely, one’s spouse). Joint accounts are more hassle free even compared to a Will.

On the death of the person, the estate automatically passes on to the surviving account holder with minimum of paper work. The operation instructions in the joint account has to be mentioned as ‘Either or Survivor’. By producing a copy of the death certificate the remaining account holder will become the sole account holder.

If a person is unwilling to allow the joint account to operate the account along with him during his life time, s/he may simply change the operation instructions to ‘Former or Survivor’ and s/he will operate the account as long one is alive and only after the death the other account holder will be able to access the account.

Nominations Helps Further

The nomination facility in banks and elsewhere helps further in passing on one’s wealth to the desired person. In such case, the person may not open a joint account, but appoint the person as nominee in the account. In case of his/her death, the nominee has to provide identity and address proof along with death certificate of the deceased account holder to get the account transferred in his/her name.

Nominations also helps when one has a joint account with one’s spouse, and s/he feels that it may happen that of they may die at the same time (accident or sickness), in that case having a nominee to whom they would desire to pass on the wealth, s/he can be nominated and when the death happens the person becomes the owner of the wealth.

However, one has to be careful to see that the person’s name as beneficiary in the will should be the same as nominee. If the persons are different in the will and in the nomination, then the beneficiary in the Will, will not receive the wealth in the account, it will go to the nominee, though the beneficiary is entitled to receive it.

Then beneficiary needs to legally claim it and get it from the nominee. To avoid this make the beneficiary in the will as the nominee. Then it becomes easy for the beneficiary to transmit the asset in his/her name.

Please Review Your past Wills/ Joint Accounts/ Nominations

People when they are young and are not married and do not have children, they often have joint accounts with father/ mother/ brother/ sister and also may nominate them in the accounts with banks and other investments like LIC policies/ provident fund/ shares/ mutual funds etc. Sometime they also make a will in which some or of them are the beneficiaries. Once a person gets married and have children, they should review the names in the joint accounts/ nominations and their will from time to time and make suitable changes as and when required.

This will prevent the following situation from happening…

“I am Sapna and I am having a big problem. My husband before our marriage had written a WILL stating that all the wealth will go to his elder sister after his death. After marriage he was thinking to change the will, but by the time he could do it he died of an accident. His sister has claimed all our property and bank balance because of that WILL. What can I do?”

Truly speaking, the lady can’t do anything … her husband was lazy and ignorant about these things and now she will pay for his mistakes!

To summarize

One should have a joint account, as the first account holder, with the person to whom s/he desires to pass on the wealth after his/her death…

Wherever, possible nominate a person, to whom you want your money should go after your death…

Review past Wills, names of persons in investment and nominations to make it up to date with changing times and your preferences to pass on your wealth after your death.

Source : Taxguru

Income Tax Ombudsman ?

Similar to Ombudsman for banking services, the income tax department has its own ombudsman. Ombudsman is an official appointed to investigate the complaints of taxpayers against Income Tax department. So, he acts in an independent capacity to resolve the issues raised by the tax payers.

Who can approach Ombudsman?
Any individual who has grounds alleging deficiency in the working of the Income Tax department may file a complaint with Ombudsman.

What type of grievances?
• Delay in issue of refunds including sending envelops without refund vouchers!
• Non-adherence to the principle of ‘First Come First Served’ in sending refunds
• Non acknowledgement of letters or documents sent to the department
• Lack of transparency in identifying cases for scrutiny and non communication of reasons for selecting the case for scrutiny
• Delay in disposal of rectification applications
• Delay in allotment of permanent account number (PAN)
• Non adherence to prescribed working hours by Income Tax officials
• Unwarranted rude behaviour of Income Tax officials with assessees
• Any other matter relating to violation of the administrative instructions and circulars issued by the Central Board of Direct Taxes in relation to Income-tax administration. The details are given in The Income Tax Ombudsman Guidelines 2010’

How to file the complaint?
• The complaint shall be duly signed by the complainant and his authorized representative, if any, and shall state clearly the name and address of the complainant, the name of the office and official of the Income-tax Department against whom the complaint is made, the facts giving rise to the complaint supported by documents, if any,relied on by the complainant and the relief sought from the Ombudsman.

• But before making the complaint, one should try to find the solution at department level (similar to banks, where the customer should try to find the solution at bank’s level before going to Ombudsman. Read here to know more about banking ombudsman – Can you complain against your bank for poor quality of service?)

Where to complain?
The offices of Ombudsman are located in select cities such as Delhi, Mumbai, Chennai, Kolkata, Hyderabad, Kochi, Bhopal, Bangalore etc.

What happens after you complain?
The Ombudsman will forward your complaint to the concerned officer/authority and will try to resolve the issue through mediation. If the department fails to act within a month from the date of submitting the complaint, the ombudsman is empowered to award a token compensation (Rs.1000) for the loss suffered by the complaint and also persuade the authority to perform his duty.

Will it really works?
Yes. It works, provided you have a real problem (doubly check your records before raising a red flag). Especially, many refund cases have got sorted out through this route.

Frequently Asked Questions -FAQ

Can I complaint for not receiving or delay in receiving Income tax Refund?
If you have not received income tax refund or there is an undue delay in processing your refund claim, you can always approach income tax ombudsman. However, Before you approach the Ombudsman, you should have submitted a written complaint with your income tax officer and marking a copy to income tax authority superior to the jurisdictional assessing officer. If you feel that the complaint has not addressed to your complete satisfaction, or if the officer rejects your complaint, or if no reply is received within 30 days of writing the complaint, only then should the issue be raised to Ombudsman.

I have received an intimation under section 245 of Income tax Act 1961 where in it shows the outstanding demand of Rs. 1,60,694/- pertaining to Assessment year 2009-10. However I have paid all the tax due for the said assessment year. Can I file complaint to income tax ombudsman?

Please check intimation received u/s 245 of income tax whether demand was raised by CPC or uploaded by Jurisdictional AO (Assessing Officer). If it is processed by CPC, request for intimation u/s 143(1) after logging into income tax e-filing portal if you had not received intimation earlier to ascertain demand. Thereafter file rectification can be done online. If CPC fails to process your rectification, you can file complaint to income tax ombudsman. If it is uploaded by jurisdictional AO, write a letter seeking rectification u/s 154 of income tax officer marking a copy to income tax authority superior to the jurisdictional assessing officer with all necessary documents in support of your claim. If assessing officer fails to rectify mistake and delete demand without any valid reason within 30 days filing letter seeking rectification, you can file a complaint to income tax ombudsman.
I had filed my income tax return online for the assessment year 2014-15 on June 2014 claiming refund of Rs. 42500/-. However I have not got refund even after 4 months of filing return. Can I file a complaint to Income tax Ombudsman?
The Return filed online will be processed by Central Processing Centre (CPC), Bangalore. You have to wait CPC to process your return. Income tax department has provided the facility to tax payer to check status of processing income tax return filed online on its e-filing portal. You can check ITR processing status in “My Account” after logging into your account on income tax department efiling portal.
Is there any cost involved in filing complaints with Income Tax Ombudsman?
No. The Income Tax Ombudsman does not charge any fee for resolving assessees’ complaints.

Can I raise complaints to Ombudsman for not giving credit of TDS or advance tax legitimately claimed in the income tax return?
If your return was filed online, before raising complaint you must file a rectification request through online and wait for Central Processing Centre (CPC), Bangalore to process rectification request and thereafter send a letter to CPC asking them to give credit of TDS or advance tax as per rectification request filed online. If CPC fails to process online request, you can raise complaints to Ombudsmen. If your return was physically filed and processed by jurisdictional income tax officer, write a letter seeking rectification of mistake marking a copy to income tax authority superior to the one complained against. If your grievances remain unaddressed even after 30 days raise a complaints to Ombudsmen.

Is there any procedure or standard format for filing the complaint before the income tax Ombudsman?
No. A complainant can file a complaint with the Income Tax Ombudsman simply by writing on a plain paper. Till today no standard format has been prescribed for addressing complaint to the Ombudsman. But one must include the following details while writing the complaint
• Name, address and PAN of complainant.
• Name and designation of the official against whom the complaint is.
• Facts on which the complaint is based along with supporting documents.
• The relief sought from the Ombudsman.

How can I get Income tax Ombudsman office address?
To know your Ombudsman office address you can visit

Can I raise complaint to Ombudsman without making a written representation to the income tax authority superior to the one complained against?
No complaint to the Ombudsmen shall stand unless you have made a written representation to the income tax authority superior to the one complained against and your grievance remains unaddressed.

Is there any Time Limit for Filing Complaint with Ombudsman?
Yes. The complaint should be filed within one year from the date of unsatisfactory reply received or from the date complaint is rejected by Income Tax Official; or if no reply is received within 30 days of sending the application.

Source : Simplifiedlaws

“Black Money” for Income Tax Purpose

All payments made out of unaccounted funds, which have not borne the due tax liability, are black money transactions. Similarly, if the retailer decides to record only a part of his cash sales, he would also be generate income on which he would not pay any tax, and consequently such income would acquire the character of black money. Thus he would be in possession of disposable black money with which he would, in turn, buy goods and services in cash.

There is a thriving retail market and bustling cash economy in our country. The sheer size of it is mind boggling. When we go a shopping for groceries and other goods of daily use, we carry cash with us as most shopkeepers only accept cash payments. Even high value goods, like jewellery, watches, cameras, designer clothing, and electronic goods like computers, iPods, plasma TVs, cell phones, etc. are more often than not purchased in cash. Payments for services of plumbers, electricians, mechanics, housemaids, etc. are also made in cash. School and college fees for children are invariably paid in cash. Large payments to hotels, restaurants and travel agents may also be made in cash. Payments made in cash could be out of accounted or unaccounted funds.

We often hear a remark in the context of immovable property transactions, i.e. when we want to buy or sell a property. It usually goes thus — “How much by cheque or in Number 1 and how much by cash or in Number 2?”

Invariably, when the transaction for sale of property is between two private parties, i.e. in the secondary market, the sale consideration may partly be paid by cheque and partly by cash. This is the accepted norm and it is extremely difficult to carry out a transaction without being a party to this practice. The amount which is paid in cash, or the so called Number 2 component or the “on money”, remains unaccounted both for stamp duty purposes and income tax purposes. For the buyer, the source of the amount paid in cash cannot be questioned by anybody as it does not come on record. Since the sale deed is executed only on the amount paid by cheque, the stamp duty paid is less than what would be payable on the actual consideration. The seller also shows only the recorded price for capital gains purposes and thus evades income tax. In this manner, huge amounts of unaccounted cash or Number 2 money or black money change hands in real estate transactions and get invested in property.

Then we have the capitation fee business. It is well known that for admission to private colleges imparting technical education in the fields of medicine, engineering and management, huge amounts are paid in cash by way of capitation fee or donation by students who otherwise do not qualify for admission on merit. For admission to a private medical college, the amount to be paid is said to run into several lakhs of rupees, as we often hear. Even admission to private schools at entry level is bedevilled by the donation phenomenon. The amount paid is the unaccounted money or black money as it is paid “under the table”, without being disclosed to any authority. It is an illegal payment, barred by law. It also results in evasion of income tax both by the giver and the recipient.

Doctors, dentists and other medical practitioners running their own clinics, pathological and testing labs, imaging centres, nursing homes and private hospitals, etc. are known to charge hefty fees from the patients, and fees are almost always received in cash. If such cash receipts are not fully recorded in the books of account, black money is immediately generated as no taxis paid on such professional receipts, which are not recorded. Similarly, other professionals like consultants, advocates, chartered accountants, architects and interior decorators may not fully disclose their professional receipts for tax purposes, thereby contributing to the black money kitty.

Then we have the business segment. The manufacturers may suppress production of goods with a view to reducing their excise duty liability, which, in turn, also leads to generation of income which escapes income tax and thus acquires the character of black money. Service providers may not disclose their full turnover with a view to reducing service tax liability and thus contribute to suppression of income in the books and generation of black money. Traders, both wholesale traders and retail traders, are also not duty bound to fully record their turnover. They may keep some of their sales outside their books of account and thus generate unaccounted income. All such incomes, which are not recorded in the regular books of account and are meant to escape taxation become black money in the hands of the recipients.

Businessmen commonly resort to the modus operandi of inflating their expenses in the books of account. They often record more expenses than they have actually incurred; this helps reduce their taxable income and, in turn, the tax payable. Let’s say a person who undertakes job work for manufacturers has incurred expenditure of 15 lakh on wages paid to the skilled and semi-skilled workers; however, he chooses to record 25 lakh in the books. He will thus reduce his profit in his books of accounts by 10 lakh and would generate black money of an equivalent amount. Inflation of expenses under various heads like “salaries”, “wages”, “office expenses”, “travelling expenses”, “commission payments”, “advertisement and publicity”, “legal fees”, etc. are often adopted for reducing taxable income. In this manner, by claiming higher business expenditure, businessmen generate black incomes.

We keep hearing of the wealth stashed away in secret bank accounts in Switzerland, Mauritius, Cyprus, Bahamas, St. Kitts and other tax havens. These amounts taken out of the country to places where these cannot be detected easily, and where the taxes are almost negligible, may be the illegally earned black incomes of the corrupt and the unscrupulous.

There are incomes earned from sources such as smuggling, betting, gambling, prostitution, black marketing of goods and services, trading in protected wildlife, unauthorized sale of licenses, insider trading, etc., which, on account of their very nature, are not reported to the authorities. There are innumerable such examples where money earned from illegal transactions is not disclosed to the authorities. All such incomes from illegal sources are black incomes.

Then there are the bribes taken by corrupt officials and politicians, and the huge kickbacks from irregularly awarded contracts. Also the illegal money earned through frauds and scams or by manipulating the systems cannot obviously be brought on record. All such incomes, therefore, acquire the character of black incomes. In fact, corruption and black money are closely linked phenomena.

Black money accumulated over a period of time manifests itself in various forms like investment in properties, investment in gold and jewellery, opulent lifestyle, foreign travel, lavish expenditure on marriages and other social functions, investment in unaccounted stocks, deposits in unreported bank accounts, etc.

In reality, black money is a serious matter, not as sweet as made out in the above ditty. Its bitterness is known only when one is caught.

Various definitions of the expression black money have been attempted. defines it as “income, especially from illegal activities, not reported to the government so as to avoid paying taxes on it.” Business defines it as “unaccounted for and untaxed cash generated by dealings in a black economy, black market, or organized crime. Holders of black money try to convert it into legitimate money (clean money or white money) through money laundering.”

For income tax purposes, all such income which has been concealed and on which tax has been evaded, irrespective of the source of such income or the motive for earning such income, acquires the character of black money. Thus, all income which is not reported to the tax authorities becomes black income even though there may have been no illegality involved in earning such income.

A common perception that prevails is that only transactions in cash are black money tranactions whereas all transactions / payments / receipts by cheque cannot be treated as black money transactions. This is a misconception and needs to be dispelled. All transactions whether carried out in cash or through banking channels could be black money transactions if the amounts involved have not borne the due tax liability. The reverse is also true. Transactions made out of funds duly disclosed for income tax purposes, even if carried out in cash, cannot be treated as black money transactions. To cite an example, if a tax payer maintains a bank account in which he deposits interest receipts earned from his money lending business, the income from which has not been disclosed to the Income Tax Department, and a cheque is issued from such a bank account for making payment of LIC premium, it would be a black money transaction. On the other hand, if a trader makes payment towards LIC premium in cash out of the cash sales made by him, which are duly recorded in the books of account, it would not be a black money transaction. In this example, a payment by cheque is a black money transaction whereas a payment by cash is not. It is not the mode of payment but the source out of which the payment is made or received which determines whether it is a black money transaction or not.

Source : Income taxmanagement

How black money is converted into white money

Let’s understand the basics of black money in this article.

What is Black Money – Black money is tax evaded income. It can be earned through both legal and illegal means. The majority of the black money is the income received in cash not accounted in books and not revealed to the government for tax purposes.

How does the black money get generated?
Corruption– Mr. Blackappa, an officer in government service, demands Rs.1 lakh from Mr.Shortcut for doing a favour (say to approve the building sanction plan). Mr. Shortcut hands over Rs.1 Lakh to the officer in cash (no one takes a bribe in cheque/demand draft!). This money will not be accounted in the books of Blackappa and he won’t pay any taxes on it (it may be good to legalize bribe and collect taxes on it) Count # 1 – Rs.1,00,000 black money is generated.

Sale of property – Mr. Greedy buys a property from Mr. Cheat for a total sale value of Rs.50 Lakhs. He takes Rs.35 Lakhs in cheque/DD and the balance in cash. He pays stamp duty on Rs.35 Lakhs, and the seller pays capital gain tax considering the value as Rs.35 Lakhs. Count # 2 – Rs.15,00,000 black money is generated.

Sale of goods/services without invoice – You buy a sofa set from a furniture dealer. What is the price? The shopkeeper will tell “the price is Rs.60000 plus taxes at 14.5%”. Any discount? The answer from him will be “Yes madam, I can offer it at Rs.58,000 without the bill. If you want, I can write on a piece of paper or on a quotation” Count # 3 – Rs.58,000 black money is generated.

Accounting for fictitious expenses – A businessman tells his accountant “I can’t pay so much tax. Do something, reduce the taxes” The accountant accommodates by booking fictitious expenses. If the businessman declares a profit of Rs.15 Lakhs against the actual profit of Rs.25 Lakhs, black money of Rs.10 lakhs is created. Count # 4 – Rs.10 Lakhs black money is generated.

How is it converted?
The difficult part is converting the black money into white money without any taxes. In all the above examples, the people who have earned money in cash (black money) can’t deposit it in the bank. Right? So, they have to hoard the cash somewhere, say in a bank locker, suitcase, etc. Or they can also spend this amount in cash towards the purchase of property, white goods, etc. Let’s understand the ways of converting black money.

Showing fictitious sales – There was a movie casted by the son of a powerful politician. This movie was an utter flop. But, it ran ‘houseful’ (fictitious) in Kalpana Theatre of K G Road for a year! During those days, people were talking that the black money earned by the father is converted into white by showing the income from the movie!

The money earned through illicit means or corruption is converted with the help of businessmen by booking fictitious sales in the books of the company.
Increase the sale price of an asset – One of my clients decided to buy a property from a senior government officer for a price of Rs.42 Lakhs. But the Officer wanted him to pay Rs.60 lakhs in cheque! In turn, he wanted to return the difference amount of Rs.18 Lakhs and additional stamp duty/registration charges in cash to the buyer. Thereby the Officer converted Rs.18 Lakhs of black money to white without paying any taxes. (He reinvested the sale proceeds in another property and got the long term tax exemption!)

Hawala Route – Have you heard about hawala transactions? If not, I will tell you in simple words. Assume Mr.ABC, a politician or government officer in Bangalore has Rs.25 Lakhs in cash. Since it is black money, he can’t deposit the same in the bank. So, he identifies a hawala agent (don’t search in google, you won’t get one!). The Hawala operator takes the cash in Bangalore and through his counterpart, hands over Rs.25 Lakhs worth in dollars/pounds/dirhams in a foreign country to his/to his representative. Mr.ABC gets this money back to India as Foreign Direct Investment (FDI) or seed fund in a private company, etc. Or he may choose to invest abroad in properties / shares. Thus, he converts black money to white without paying any taxes.

Depositing in banks less than Rs.50000 – This route is taken by small time operators. They open multiple bank accounts and deposit cash upto Rs.50000 at a time. Remember, if you have to deposit over Rs.50000, you have to give PAN details to the banker. Mostly, these kind of petty transactions goes unnoticed by the income tax department and thus, black money is converted to white without paying any taxes.
Agricultural Income – Agricultural Income is exempt from Income Tax. This means the money earned from the sale of paddy, pepper or wheat is exempt from tax. So, the people who earn black money will obtain a fictitious receipt from traders in agricultural commodities as if they have sold the products. For the sake of records, these people will acquire or show the proof of ancestral property in villages!
Gifts from relatives and friends on occasions – Any amount of money received from relatives (gift) is exempt from Income Tax. Is it not an easy way to convert black money to white? Simple, show the cash received in your son’s or daughter’s birthday as gifts from relatives!

Gifts from non-relatives and friends attract income tax. But those who have huge black money can show gift and pay taxes. Still the money earned through corrupt practices can be converted into white (after paying taxes). One of the classic examples is the amount of gift declared by a former Chief Minister who paid huge taxes during that year. She declared around Rs.200 Crores as gift received from her well-wishers and paid taxes on it!

Sale of Gold and Diamonds – Well-known professionals suggest this route. Suppose, Mr.XYZ has Rs.25 Lakhs cash and gives this amount to a Jewellery shop (not all shops will do this kind of dirty job). The Jewellery shop will issue a receipt for having bought Gold/Diamond worth Rs.25 Lakhs and make payment in a cheque to Mr.XYZ. For facilitating this transaction, he will charge a fee. Thus Mr.XYZ converts his black money into white, without paying any income tax.

Avenues for spending black money in black
Investing in property – The middle-class black money earners spend/invest them in black. For example, Mr.GHK sells a house for Rs.90 Lakhs (of which, he takes Rs.30 Lakhs in Cash – black) and reinvests/buys another flat/plot by giving Rs.30 lakhs apart from white money. So, the rule is Black for Black and white for white
Spend on weddings and functions – I needn’t explain it. If you attend the weddings at Palace Grounds in Bangalore and hi-fi wedding halls, you will get to see the ‘real color’ of black money. As I understand there are people who spend 2-5 Crores for a wedding! A large sum of corrupt money is spent on social events and functions.
Buying goods/services where the identification is not mandatory – For example, white goods, building houses and its interiors, etc., are done using black money earned in cash.

School Fee and donations – You may be aware of donations! For the medical seat, over a crore of rupees to be paid as a donation in cash!

Buying gold / precious metals – Instead of accumulating cash, people will buy gold, diamond and other precious metals. People buy gold in small quantities, from different shops, in the name of all members of the family.

Elections – As per the Election Commission of India, a maximum of Rs.70 lakhs can be spent by a candidate per Lok Sabha Constituency. Do you believe that they spend only Rs.70 lakhs? I understand that each candidate spends over Rs.30 Crores per Lok Sabha Seat! From where is this kind of money available? Corrupt money is spent in elections.

Source : simplifiedlaws

Step by step GST Enrolment procedure for existing VAT dealer

Government has launched GST Portal (i.e., for the GST enrolment or registration of existing taxpayers of VAT, Service Tax and Excise for smooth transition to GST. Existing dealers have to collect provisional ID from tax officer, update their profile information and upload the required documents on the GST portal.

The goods and services act will be applicable in the country effective on the appointed date. Before this date, all the registered tax payers under Central excise, Service Tax, VAT, Entry Tax, Luxury Tax and Entertainment Tax need to enrol at the GST common portal To begin with all state VAT Department will be issuing Provisional ID and password to registered taxpayers with the VAT department. The taxpayer registered with other tax departments and not under VAT department will be shared the provisional ID at a later date. The state wise schedule for enrolment with GST is available in the link. Provisional ID received from one department is enough for merging all tax registration into GST.

GST enrolment process:
• The State VAT Department will be communicating provisional ID and password to every registered tax payer.

• In case you are a registered tax payer with state VAT department and you have not received your provisional ID and password, contact your State Vat Department.

• Once you get provisional ID and password, you need to access the GST common portal to create unique username and new password using provisional ID and password.

• Before you create user name and password for GST common portal, you need to have a valid e-mail and mobile phone number.

• After creating user ID and password login to the GST common portal

• Fill Enrolment Application and provide business details.
• Verify the auto populated details from state VAT system
• Sign the Enrolment Application electronically.
• Submit Enrolment Application with necessary attachment electronically
• Once submitted, the details will be verified by the GST systems.
• If details are satisfactory an Application Reference Number (ARN) will be issued to you in ‘migrated” status. The status of provisional ID will change to “Active” on the approved date and a provisional registration Certificate will be issued.

Electronically signing of Enrolment Application:
After verifying the Enrolment application, you need to sing the form. There are two option to electronically sign the Application, You can E-Sign or sign using Digital Signature Certificate (DSC).

You can e-sign only if Aadhaar details of the authorised signatory are provided in the authorised signatory tab of the Enrolment Application.
In case of Companies, LLP, it is mandatory to sign the form electronically using DSC.

Mandatory information and document required for GST enrollment.
Before enrolling with GST system portal, you must ensure to have the following information and documents available with you

• Provisional ID and password received from VAT authority
• Valid e-mail address
• Valid Mobile Number
• Bank Account Number
• Bank IFSC code
• Registration number of all department ie Central Excise, Service Tax, Laxury Tax etc

• Proof of constitution of business
• In case of Partnership Firm – deed of Partnership
• In case of others- Registration Certificate of Business Entity
Proof of proncipal place of Business.
Photo of Promotor, Partner, Karth of HUF
Proof of appointment of Authorosed Signatory
Photo of Authorised signatory
Opening page of Bank Passbook / Statement containing Bank Account Number, , Branch address, address of account holder and latest transaction details.
Details auto populated and migrated from State VAT system
Following details will suto populated and migrated from state VAT system which can’t be eddited

• Legal Name of Business (As per PAN)
• Legal Name of Business (AS per current Tax Act)
• PAN of the Business
• State
• Zone/District/Word

Once you verify details the enrolment application, it will be assumed that the detailes migrated from VAT system are correct and you will be registered with the same details in the GST system.

Primary Authorized Signatory:
A Primary authorized signatory is the person who is primarily responsible to perform action on the GST System Portal on behalf of taxpayer. All communication from the GST System Portal relating to taxpayer will be sent to him. For example:- in case of proprietor, the proprietor himself or any person authorized by him, in case of partnership any of the partner authorized or any person authorized, in case of Company/LLP, Society, Trust, the person who is authorized by Board or Governing Body etc. can act as Primary authorized signatory. Copy of authorization needs to be uploaded.

In case of multiple authorized signatory for single business entity, one authorized signatory should be designated as primary authorized signatory and email and mobile number of that person shall be provided at the enrolment.

In case of single authorized signatory for a business entity, he shall be assumed as primary authorized signatory for that business entity.

What is Principal Place of Business?
Principal Place of Business is the primary location within the State where a taxpayer’s business is performed. The principal place of business is generally where the business’s books of accounts and records are kept and is often where the head of the firm or at least top management is located

How does E-Sign work?
E-Sign stands for Electronic Signature. E-Sign is an online electronic signature service to facilitate an Aadhaar holder to digitally sign a document. If the Applicant opts to electronically sign using the E-Sign service, the following actions are performed:-

Taxpayer need to click on “E sign” button.
System will ask to enter Aadhaar number of Authorized signatory.

1. After validating the Aadhaar Number, the GST system Portal will send a request to UIDAI system to send a One Time Password (OTP).

2. UIDAI system will send OTP to email address and mobile number registered against Aadhaar number.

System will prompt user to enter OTP.

The user will enter the OTP and submit the document. The e-Signing process is complete.

Source : simplifiedlaws/prakash

Income Which ‘Accrues’ Or ‘Arises’ In India under IncomeTax Act.

Income can be held to accrue or arise to an assessee only when the assessee obtains a right to receive that income. No amount can be said to accrue unless it is actually due.

Accrue means “to fall as natural growth or increment, to come as an accretion or advantage” and arise means “to spring up, to come into existence” according to Oxford dictionary. It has been held that these two expressions—accrue and arise—are for all purposes synonymous. Jiwan Dass v. Commissioner of Income Tax, Lahore. [A.I.R. (1929) L4H 609].

Income accrues or arises at a place where the origin or source of growth of income is situated.

As regards salaries, income accrues or arises in India if it is earned in India.

(i) Income accrues or arises to a person, who is entitled to demand and receive the income.

(ii) Income accrues or arises at a time or date when it ripens into a debt, i.e., at that moment when assessee acquires a right to receive it.

(iii) In the case of salaried employees, the salary is earned in India if the person renders services in India. Income earned in India obviously arises in India.

(iv) In case of dealer of goods, if the purchases and sales of goods take place in India, the profits out of such sales arise in India.

(v) Profit from such transaction where goods are manufactured outside India but are sold in India will be split up into manufacturing profits and only mercantile profits, i.e., accruing from sale transaction will be income arising in India.

Source : Income taxmanagement