AAKR ASSOCIATES

Taxation & Accounting

Coronavirus – 3 Month EMI Relief

Coronavirus – 3 Month EMI Relief

The Government has unveiled various compliance relaxations and economic measures to help people under lockdown. Today the RBI has announced various measures including a 3 month EMI moratorium to further help individuals and businesses in India as follows:

Moratorium on Term Loans

22. All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) (“lending institutionsâ€) are being permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020.

Analysis: From the above, it can be ascertained that all loan EMIs will be provided a 3 month moratorium. Thus all loan payments can be deferred and paid after 3 months. 

Deferment of Interest on Working Capital Facilities

23. In respect of working capital facilities sanctioned in the form of cash credit/overdraft, lending institutions are being permitted to allow a deferment of three months on payment of interest in respect of all such facilities outstanding as on March 1, 2020. The accumulated interest for the period will be paid after the expiry of the deferment period.

The moratorium on term loans and the deferring of interest payments on working capital will not result in asset classification downgrade.

Analysis: From the above, it can be ascertained that all loan interest to be serviced on working capital loans can be accumulated and paid at the end of 3 month moratorium period. Thus any interest payment need not be made for working capital facilities over the next three months. The above measures will not impact the CIBIL score or lead to NPA classification.

Easing of Working Capital Financing

24. In respect of working capital facilities sanctioned in the form of cash credit/overdraft, lending institutions are allowed to recalculate drawing power by reducing margins and/or by reassessing the working capital cycle for the borrowers. Such changes will not result in asset classification downgrade.

Analysis: From the above, it can be ascertained that banks can increase drawing power by reducing margins or reassess working capital needs without leading to asset classification downgrade.

25. The moratorium on term loans, the deferring of interest payments on working capital and the easing of working capital financing will not qualify as a default for the purposes of supervisory reporting and reporting to credit information companies (CICs) by the lending institutions. Hence, there will be no adverse impact on the credit history of the beneficiaries.

Analysis: From the above, it can be ascertained that any delay in payment of loans over the next three months will not lead to an impact on CIBIL score.

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CSR funds for COVID–19

CSR funds for COVID–19

Considering the spread of novel Coronavirus (COVID-19) in India, the Ministry of Corporate Affairs (MCA) has announced that spending of corporate social responsibility funds (CSR funds) for COVID-19 is an eligible CSR activity of a company. The Government clarified that the funds spent on measures to tackle the Covid-19 outbreak would be considered as the corporate social responsibility (CSR) activity of firms.

Corporate Social Responsibility (CSR)

Corporate Social Responsibility (CSR) defines as an organization’s sense of responsibility towards the environment (both ecological and social) and community which it operates. Companies can fulfil this responsibility by contributing to CSR funds.

Considering the spread of novel Coronavirus in India and  World Health Organisation (WHO) declaration of COVID-19 as a pandemic, the central Government of India has decided to treat Coronavirus (COVID-19)  as a notified disaster.

Contribution to COVID–19

The funds can be spent on various activities related to COVID-19 on the promotion of healthcare; including preventive healthcare and sanitation will be considered as the company’s CSR obligations.

The official notification of MCA related to the CSR contribution for COVID -19 is as follows:

Covid_23032020

Applicability of CSR Provision

According to the Companies Act 2013 , certain classes of profitable organizations have to shell out at least 2 per cent of the three-year annual net profit towards Corporate Social Responsibility (CSR) activities in a particular financial year.

The companies having following net-worth during the immediately preceding financial year can make CSR expenditure for COVID – 19 under Section 135 of the Companies Act, 2013, every company having

  • The net worth of Rs. 500 Crore or more
  • Turnover of Rs. 1000 crore or more
  • Net Profit of Rs. 5 crores or more

A foreign corporation having its branch office or project office in India, which fulfils the criteria mentioned above can also make the Corporate Social Responsibility (CSR) for COVID – 19.

Portal for CSR Contribution

For the purpose CSR contribution, the Government of India may immediately establish a portal on which specific requirements such as equipment, medicines, etc. will be posted, and the company may be permitted to contribute CSR funds in cash or kind towards those particular requirements.

In the new fiscal year, a significant portion of the CSR funds can transfer to the CSR fund without upsetting commitments to ongoing projects

Modification of Schedule VII of Companies Act, 2013 for COVID – 19

Because of the spread of novel Corona Virus in India, Ministry of Corporate Affairs amends Schedule VII under Section 135 of Companies Act, 2013. According to the Schedule VII of Companies Act, Corporate Social Responsibility Policies activities are as follows:

  • Eradicating extreme hunger and poverty
  • Promotion of education
  • Promoting gender equality and empowering women
  • Producing child mortality and improving maternal health
  • Combating human immunodeficiency virus (HIV), acquired immune deficiency syndrome, malaria and any other diseases
  • Employment enhancing vocational skills
  • Ensuring environmental sustainability
  • Social business project
  • Contribution to the National Relief fund of Prime Minister or any other relief fund set up by the Government of India
  • Government for socio-economic development and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women

Along with these activities, the Government has included disaster management, including relief, rehabilitation and reconstruction activities as Corporate Social Responsibility (CSR) Activities.

The official notification of the Ministry of Corporate Affairs regarding the changes in the Corporate Social Responsibility (CSR) Activities is as follows:

Notification_06062019

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KSFE Pravasi Chitty Scheme

KSFE Pravasi Chitty Scheme

Kerala Government has introduced KSFE Pravasi Chitty scheme in March 2018 as an insurance coverage and savings plan for the benefit of Non-Resident Keralites. Through the initiative, the Kerala Government plans to mobilize funds for various other schemes to solve the State’s infrastructure problem. In this article, we will look at the features and the benefits of the KSFE Pravasi Chitty Scheme.

KSFE

KSFE means ‘Kerala State Financial Enterprises’, which is a non-banking financial company owned by Kerala Government. KSFE offers various types of gold loan, personal loan, overdraft facility, trade loan, housing loan, chitty loan and savings deposits.

Objective 

Many of the Malayalees have migrated to Gulf countries and the remittance sent by the diaspora and their contribution to Kerala’s economy is very essential. Based on the above strength, the Kerala government has decided to raise a fund of Rs.10,000 crore from the scheme of KSFE Pravasi Chitty for the next five years for various developmental activities.

Features of KSFE Pravasi Chitty Scheme

  • Provides financcial stability to the non-resident Keralites.
  • Create a culture of savings to contribute and develop  the state’s economic level.
  • Android mobile app for the convenience of NRK’s.
  • Mobile and Internet-based chits.
  • Facility to remit online payments through installments.
  • Online auction by smartphone.
  • Safe, secure and transparent bidding process
  • Integrated chat-bot, e-mail, SMS, social media support
  • 24X7 contact center for grievance redressal
  • Application security tested as per international standards.
  • Coverage of remittances of chitty installments due to death.

Eligibility

People residing in India cannot apply to this scheme. The scheme is only applicable to the NRK’s residing in foreign country . Currently, the scheme is applicable only to UAE Malayalees.

After enrolling into the scheme, the subscriber has to pay a sum ranging between Rs.1,000 to Rs. 5,00,000 per month. Duration of this scheme can range from thirty months to one hundred months. Payment can be paid through the various online methods.

Benefits of the scheme

The scheme is inclusive of the following benefits:

  • Expats would be provided insurance cover, which effectively means that the family of the subscriber would receive funds on the demise of the subscriber. Moreover, they will be accorded with pension amounts if investments have been made for the same.
  • Chtties under KSFE are conducted in accordance with the regulations of the Central Chit Fund Act, 1982; and hence are considered safe for transactions.

The total of the periodic subscription, called the chitty amount, will be given out as “prize money†to the person who bids by allowing for the maximum reduction in the prize money. The maximum reduction possible is 25% as per the prevailing Chitty Act and if there are more than one subscriber interested in bidding at 25% reduction, the numbers of the such bidders will be put to a draw.

Monthly Installment

This scheme enables the candidate to make periodical payments from Rs. 1,000 to Rs. 5,00,000 per month. Duration of this scheme consists of thirty months to one hundred months. Payment can be paid through the various online methods.

Online Registration procedure

Step 1: Visit the official website of KSFE – https://portal.pravasi.ksfe.com/

Step 2: Enter your username and password to log in to the registration page.

Step 3: Click on the “Register Now” button.

Step 4: The KSFE  ‘Customer Registration Form’ will appear on the screen.

Step 5:  Enter your personal details; such as E-Mail Id, Passport Number, ISD code, National Identification Number and NRK ID.

Step 6: Click the button ‘NORKA ID,’  and the new tab will open. Generate the new ID by filling up the online form.

Step 7: After getting  ‘NORKA ID’, you should click at the ” VERIFY WITH NORKA” button and complete the registration.

KSFC Mobile Application

To check status, the person can use KSFC mobile app, through which the details of automatic calculations and reports, pending monthly installments; etc can be updated. A person can easily participate in the auction by downloading the KSFC mobile app which is available in the play-store.

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Should NRI opt for Lower Deduction of TDS (Practical Analysis)

Whenever an NRI receives any payment, TDS is required to be deducted on such payments. The person who is making the payment to the NRI deducts some amount (technically called […]

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Import and Registration of Bulk Drugs and Finished Formulations in India

Import and Registration of Bulk Drugs and Finished Formulations in India

For import of bulk drugs and finished formulations, the manufacturing site and products need to be registered with Indian drug regulatory agency – Central Drugs Standards Control Organization. This article talks about the procedure to obtain the Import registration certificate and import license for the import of bulk drugs and finished formulations in India.

Governing Rules and Regulations

The Drugs and Cosmetics Act 1940 and Drugs and Cosmetic Rules 1945 regulates import, manufacturing, sale, and distribution of bulk drug (Active Pharmaceutical Ingredients) and finished formulations in India. According to this act, for importing the bulk drugs and finished formulations into India, the registration certificate and import license are mandatory.

Licensing Authority

The Central Drugs Standard Control Organization (CDSCO), Ministry of Health and Family Welfare, Government of India, is the prescribed authority for the import and registration of bulk drugs and finished formulations in India. The application for a registration certificate and import license needs to be made to the Drugs Controller General (I) at CDSCO.

Fee Structure for Import Registration 

The fee structure for the Import and Registration of Bulk Drugs and Finished Formulations is as follows. 

Fee for the Manufacturing Unit Registration

The applicant needs to make a payment of 1500 USD or its equivalent to Indian Currency for registering the manufacturing premises.

Fee for the Drug Registration

The applicant needs to make a payment of 1000 USD or its equivalent to Indian currency for registering a single drug and additional charge of 1000 USD for each other drug in case the manufacturing unit remains the same.

Fee for Visiting the Manufacturing Premises

The applicant is required to pay 5000 USD or its equivalent to Indian currency for inspection or visit of manufacturing premises. (If required).

Fee for Examination Testing and Analysis of drugs

The applicant is liable to pay the price for examination testing and analysis of drugs directly to the testing laboratory approved by the central government in India or abroad.

Fee for a Duplicate Copy of the Registration Certificate

If the original registration certificate is defaced, damaged or lost, the applicant needs to pay an amount of 300 USD or its equivalent to Indian rupee to get the duplicate copy of the registration certificate.

Fee Structure for Import License

The applicant needs to pay the license fee of one thousand rupees for a single drug and an additional cost at the rate of one hundred rupees for each other drug 

Documents for Registration of Bulk Drugs and Finished Formulations 

The applicant is liable to furnish the following documents to obtain the Import Registration Certificate:

  • Covering Letter

    • The covering letter is an essential part of the import registration application, and the applicant needs to specify the intent of the import.
  • Information on the drugs to be imported
  • Manufacturer information like address and contact details 
  • Authorization Letter 
  • Application Form 
  • TR6 Challan 
  • Power of Attorney 
  • Wholesale License 
  • Schedule D(I) (Documents for Registration of the manufacturing Premises )
  • Schedule D(II) (Documents for Registration of the drugs)
  • Free Sale Certificate
  • Good Manufacturing Practice Certificate of WHO guideline or Certificate of Pharmaceutical Product (COPP)
  • Manufacturing License and Market authorization Certificate
  • Establishment License 
  • Inspection/Audit Report
  • An Undertaking from the proprietor of the firm in case of proprietorship firm
  • An Undertaking from the board of Directors in case of a Private Limited Company

Documents for Import Certificate

The applicant needs to furnish the bulk drugs and finished formulations registration certificate to obtain the import license.

Validity of Registration Certificate and Import License

The registration certificate and import license will be valid for three years from the date of its issue.

Eligible Person to Apply 

The following person can apply for the import registration certificate for the import of bulk drugs and finished formulations in India.

  • Foreign manufacturers ‘having a wholesale license for the sale or distribution of drugs in India.
  • Local Authorized Agent of the international manufacturer having either manufacturing or sale License 

Application Procedure

The application procedure is as follows:

 The applicant needs to apply for Registration and import to the Drugs Controller General (I) at Central Drugs Standard Control Organization, FDA Bhawan, Near Bal Bhawan, New Delhi. The prescribed format of the application is as follows:

Application for issue of Registration Certificate for import of drugs

The applicant needs to furnish the following details to obtain the import registration certificate.

  • The authorized signatory name, designation, department, and the complete address of the organization
  • The address of manufacturing premises
  • The full and correct Name of the Drugs to be imported in India The drug(s) name will be as below:
    • The brand name of the drug
    • Details of the different pack, pack size of the same brand of drugs

Note: If a single manufacturer has two or more factories situated in different places and manufacturing the same or different bulk drugs, separate import Registration Certificates need to get in respect of the drugs manufactured by each such factory.

Fee Payment

The fees need to pay through a prescribed TR 6 Challan in the Bank of Baroda, Kasturba Gandhi Marg, New Delhi-110001 and to be credited under the Head of Account “0210-Medical and Public Health, 04-Public Health, 104-Fees, and Fines.

TR 6 Challan

If the manufacture makes the payment directly from the country of origin, the prices can pay through Electronic Clearance System (ECS). The original receipt of the money transfer will treat as an equivalent to the bank TR- challan, subject to the approval by the Bank of Baroda, CDSCO.

Testing of Drugs 

For importing the drugs to India, a lab test will carry out, and three batches need to submit to the designated Laboratory for testing for which the applicant needs to pay the fee to the Laboratory as per their norms. The applicant needs to enclose adequate samples for reanalysis purpose from each of the three consecutive batches along with the following specifications

  • Method of analyses
  • COA tested in the export country’s Laboratory
  • Impurity Standard
  • Marker compounds
  • Reference Standard along with its
  • Certificate of Analysis (COA) where ever applicable

Registration Certificate

On receipt of an application, the licensing authority will issue the Import Registration Certificate within nine months from the date of receipt of application.

Application for Import License

After obtaining the import registration, the applicant can apply for the import license. After verifying the details, the concerned authority will issue the certificate.

Application for License to import drugs

Renewal of Import Registration

The application is to be made nine months before the expiry of the registration certificate. The applicant needs to submit the following documents:

  • Application form in the prescribed format          
  • Power of attorney (POA)
  • Good manufacturing practice (GMP) 
  • Certificate of a pharmaceutical product (COPP)
  • Registration certificate
  • Drug Master File (DMF)
  • Sale or manufacturing License of drugs 

The following information and undertakings need to be submitted along with the documents as mentioned above:

  • If any administrative action taken due to adverse reaction, the manufacturer or his authorized agent in India need to furnish the relevant documents.
  • In case of changes in the drug manufacturing process, packaging, labelling, testing, or documentation, the manufacturer or his authorized agent need to submit the relevant agreements.
  •  If any change in the constitution of the firm, including the name address of the registered factory premises operating, the details also need to be furnished. 
  • Details of drugs imported in India during the last three years
  • Submission of original Regional Certificate issued 

More details on Import and Registration of Bulk Drugs and Finished Formulations in India can be accessed below:

Import_guidance_doc

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Standard Input-Output Norms (SION)

Standard Input-Output Norms (SION)

The Direct General of Foreign Trade (DGFT) has published the Standard Input Output Norms (SION) to specify the required amount of inputs needed to produce a unit of outputs for exporting. SION is applicable for numerous products, including electronics, engineering, chemical, handicraft, plastic, leather, and many more; it is also suitable for various food products such as fish and other marine products. Advance licenses are issued based on the inputs and export items given under SION, and the applicant’s exporter needs to ensure that the goods sought for import and imported are used in the export product. The manufacturer exporter and merchant-exporter can modify these norms by applying DGFT.

SION for Advance Authorizations

As explained above, based on the Standard Input Output Norms (SION), the Government issues the advance authorizations for inputs and export items. The Advance Authorization allows duty-free import of inputs, which are physically incorporated in the export product. As per SION, the duty-free import of fabric is permitted under the Special Advance Authorization Scheme for the export of Articles of Apparel and Clothing Accessories.

Duty-Free Replenishment Certificate (DFRC) also shall be issued for import of inputs as per SION as indicated in the shipping bills.

Condition for Exports

The applicant’s exporter needs to ensure that the goods sought for import and imported used in the export product . According to SION, the customs authority will check whether the items allowed in the import license is co-related with the description of the export product in the Shipping Bill. For better understanding kindly go through this example:

If the input allowed in the SION is ‘relevant fabrics,’ only the specific types of fabric that are Polyester or nylon used in the products will be approved for export. Similarly, if the input-output norms provide for import of BOPP film against the trading of self-adhesive tape, only BOPP film required for the manufacture of Self Adhesive Tape will be allowed for shipping.

SION in Textile Product Group

SION for ‘Dipped Belting Fabrics (E.P.) Conveyor Duck/Synthetic Fabrics of Nylon 6/66 and Polyester 840 Denier in the Textiles Product is as follows:

Export Product Import item Quantity allowed
Dipped Belting Fabrics Conveyor Duck/Synthetic Fabrics Of Nylon 6/66 & Polyester 840 Pet Chips (Polyester chips) 782.25 kg
Spin Finish Oil 6.71 kgs
Relevant Industrial Yarn (Nylon 6/66) 305.00 kgs
V.P. Latex 65.00 kgs
Resorcinol 7.00 kgs
Formaldehyde 10.00 kgs
Bonding Agent (Grill Bond, Vulca bond, ISO-bond PC45) 5.00

SION in Golf Gloves made of Knitted/Crocheted/Woven/Non-woven fabric

Export item Import item Quantity allowed
Gloves’ made of Knitted/Crocheted/Woven/Non-woven fabric Relevant knitted, Crocheted, Woven, non-woven fabric or relevant inner lining materials 0.112 square meters
Elastic Tape Net content + 1% wastage
Binding tape Net content + 1% wastage
Velcro Net content + 1% wastage
Logo Net content + 1% wastage
Snap Fasteners Net content + 1% wastage
Lycra 0.02 Square meter
Relevant Knitted Ribbed fabric for Cuff 1.01 kg/kg of content in the export product

SION in Rubber Products

Export item Import item Quantity allowed
All Types of Steel Truck Radial Tyres (Tube Type Miscellaneous Chemicals

  • Microcrystalline
  • Wax
  • Resorcinol
  • Paraffin
  • Wax
  • Pigments
  • Softeners
  • Sulphur
  • Stearic Acid,
  • Process Oil
  • Dip
  • Chemicals
  • Mould
  • Release agents
  • Tackifiers
6.6425 Kg

Maximum Value Limit for Products

In respect of the following products, advance license or the duty-free replenishment certificate will be issued based on the maximum value limit indicated against each product.

Sl.No Products Maximum value limit
1 Perfumery compounds, chemicals, Natural essential oils, Resinods or Aromatic chemical Item wise value limit, as indicated in the relevant norm.
2 Rubber Chemical Upto 7% of FOB value of exports.  However, in the case of Break Diaphragms for Automobiles – Upto 5% of FOB value of export
3 Miscellaneous Chemicals

  • Break Diaphragms for Automobiles
  • Bicycle Tyres
  • Transmission Rubber Belting
  • Rubber pads
  • Rubber Polished Brakes
  • Synthetic Rubber Sheets
Upto 5% of FOB value of exports,
4 Dyes Item wise limit as provided in the relevant norm
5 Spin Finish Oil (Including Surface Active Agent u as a finishing oil in the manufacture of Polyester)

Upto 5% of FOB value of exports.

 

FOB: Freight On Board or Free On Board

Classification of Tile and Slab as per SION

For distinguishing tile from the slab in the SIONs for export products of Marble, Granite, Serpentine, consider the following parameters for classifying the product as Tile or Small be adopted:

Sl.No Product Thickness
1 Tile Upto 12  mm
2 Slab More than 12 mm

For getting more details regarding the Standard Input Output Norms , kindly access the official website of DGFT.

Application for Modification of Standard Input Output Norms (SION)

The manufacturer exporter and merchant-exporter can furnish a request for modification of existing Standard Input-Output norms to the Directorate General of Foreign Trade (DGFT). The format of the application is as follows:

b248f37bc4631d524680c20d8277989a

Along with the form, the applicant needs to furnish the following documents for modifying the Standard Input Output Norms (SION):

  • Technical Details of the Export Products
  • Chartered Engineer certificate certifying the import requirements of raw materials
  • Production and Consumption data of the manufacturer of the preceding three licensing years, duly certified by the Chartered accountant/ Cost & Works Accountant/ Jurisdictional Excise Authority.

Technical Details of the Export Products – For Modifying SION

The exporter need to produce the following technical details of the product to modify the norms:

Chemicals Products, Drugs, and Pharmaceuticals

  • Step-wise Manufacturing Process
  • Complete Chemical reactions of the manufacturing process with molecular and structural formula molecular weight along with stage-wise % yields on a molar basis.
  • Material balance for the entire manufacturing process
  • Essential and recovery of solvents used in the whole manufacturing process at each step
  • Authentic technical literature in support of percentage yield claimed in the manufacturing process as a whole
  • Details of products formed in the chemical process with their quantities and values
  • Information regarding the solvents charged, recovered and consumed in each step of the manufacturing process
  • Collaborator’s guaranteed norms
  • Percentage purity of the finished product and raw materials and percentage of any moisture in the export product
  • The end use of the chemical intermediates
  • Valid drug manufacturing license
  • Standard technical literature about the process as well as yields in case of new drug molecules
  • Pharmaceutical references such as the details of the export product – USP, B.P., etc

Engineering Products

  • The model number of the item, technical specification and specific quantity-both in terms of quantity and weight, of each export product
  • Details technical Note on the manufacturing process
  • Drawings/catalogues of each export product
  • Weight of each engineering product (if the inputs include raw material)

Textile Products

  • Detailed drawings of the items of manufacture that is an export product
  • Justification for wastages claimed regarding the items
  • Reason for import of particular grade of the raw material applied

Plastic or Rubber Products

  • Detailed manufacturing process along with the technical basis for wastages claimed at each stage of the manufacturing process
  • Technical descriptions including size, thickness and weight range of plastic of the products to be exported along with small samples of export product
  • The chemical name of Processing Aid, Blowing Agent, and pigment proposed to import
  • Percentage of rubber in the export product
  • Percentage of the composition of rubber compound in terms of different constituents

Pesticides

  • The manufacturing process for pesticides for both technical grade as well as formulation
  • Detailed material balance and chemical reactions along with the molecular weight of the reactants, % yield, and wastages at different stages of the manufacturing process supported by authentic technical literature.
  • Details of byproducts, if any, formed during the reaction along with its recovery in terms of quantity and value
  • Percentage purity of the finished product and raw materials and percentage of any moisture in the export product
  • Registration Certificate from Central Insecticides Board for the manufacture of pesticides (technical grade)

Paints, Surface Coatings and Printing Inks

  • Percentage of reliable resin content in the export product
  • The interest of pigment content in the export product
  • A portion of volatile content in the export product

Dyes and Dye Intermediates

  • Manufacturing process, material balance and flow chart
  • The balanced chemical reaction of the process showing all the reactants, product and byproducts (s) with the molecular formulas and molecular weights
  • Stage-wise percentage yield in respect of each reactant along with justification
  • Authentic technical literature in support of return or quantity of items applied for import
  • Details of solvents charged during the process, the amount recovered and loss in-process and recovery
  • Aspects of byproducts formed during the process and their improvement in terms of amount and value.
  • Details of standardization and % dye content of the export item

Paper and Paper Products

  • GSM of a product of export
  • The coating composition of coated paper and percentage coating weight in the export product

Format of the Chartered Engineer certificate certifying the import requirements of raw materials is as follows:

32B

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Income Tax Deduction from Salary 2019-2020

Grammar – Nil

Plagiarism – Nil

Income Tax Deduction from Salary 2019-2020

The Ministry of Finance (MoF) notified income tax deduction from salary for the year 2019-2020 through the Circular No.1/2019. The rules for the deduction shall be implemented through Section 192 of the Income Tax Act. The circular describes the following for deduction of income tax from the salary:

  • Rates of tax
  • Surcharge
  • Method of Tax Calculation
  • Relief when Salary Paid in Advance or Arrear
  • Computation of Income under the head – Income from House Property
  • Salary Paid in Foreign Currency
  • Due dates for payment of TDS
  • Income up to Rs.5 Lakh and other rules

Rates of Tax

Normal Rates of Tax

S.No. Total Income Rate of Tax
1 Total income maximum of Rs.2,50,000 Nil
2 Total income above Rs.2,50,000 but less than Rs.5,00,000 Five per cent on the amount exceeding above Rs.2,50,000
3 Total income above Rs.5,00,000 but less than Rs.10,00,000 20 per cent on the amount exceeding above Rs.5,00,000 and Rs.12,500
4 Total income above Rs.10,00,000 30 per cent on the amount exceeding above Rs.10,00,000 and Rs.1,12,500

Tax Rate for Individual and Resident of India (Age 60 years or more but less than 80 during the FY)

S.No.

Total Income

Rate of Tax

1

Total income maximum of Rs.3,00,000

Nil

2

Total income above Rs.3,00,000 less than Rs.5,00,000 5 per cent on the amount exceeding above Rs.3,00,000

3

Total income above Rs.5,00,000 but less than Rs.10,00,000 20 per cent on the amount exceeding above Rs.5,00,000 and Rs.10,000

4

Total income above Rs.10,00,000 30 per cent on the amount exceeding above Rs.10,00,000 and Rs.1,10,000

Tax Rate for Individual and Resident of India (Age 30 years or more during the FY)

S.No.

Total Income

Rate of Tax

1

Total income maximum of Rs.5,00,000

Nil

2

Total income above Rs.5,00,000 but less than Rs.10,00,000 20 per cent on the amount exceeding above Rs.5,00,000

3

Total income above Rs.10,00,000 30 per cent on the amount exceeding above Rs.10,00,000 and Rs.1,00,000

Surcharge on Income Tax

Income Tax for every Individual, Hindu undivided family or association of persons or body of individuals as per Section 111A, Section 112, or Section 112A

S.No. Total Income Percentage of Tax
1 Total income above Rs.50 lakh but less than Rs.1 crore 10 per cent
2 Total income above Rs.1 crore but less than Rs.2 crore 15 per cent
3 Total income above Rs.2 crore but less than Rs.5 crore 25 per cent
4 Total income above Rs.5 crore 37 per cent
5 Total income above Rs.2 crore but not covered under clause (c) and clause (d) of Section 111A and Section 112 15 per cent

The following person’s surcharge under Section 111A and Section 112A shall not exceed 15 per cent if the income exceeding:

S.No.

Total Income

1

Total income above Rs.50 lakh but less than Rs.1 crore

2

Total income above Rs.1 crore but less than Rs.2 crore

3

Total income above Rs.2 crore but less than Rs.5 crore

4

Total income above Rs.5 crore

Tax Relief When Salary Paid in Arrear or Advance

To avail tax relief under Section 89 , the following assessee shall furnish the details in Form 10E . The following are the assessee to avail tax relief as per Section 192(2A):

  • Government employee
  • An employee in a company,
  • Co-operative society employee,
  • Local authority employee,
  • A University employee,
  • An employee in an Institution or
  • An employee in an association or body

However, the assessee shall not be eligible for tax relief under the following circumstances:

  • Voluntary retirement or termination of service
  • Related with any scheme or schemes of voluntary retirement
  • As per Section 10(10C)(i) of a public sector company
  • Associated with any scheme of voluntary separation
  • If any amount received
  • Claimed by the assessee as per Section 10(10C)

Income from House Property

On account of including the loss from house property by the employee, the required details shall be sent to the DDO. The following information shall be attached along with Form No.12BB as per Rule 26C of Section 192(2D):

  • Total annual rent or value
  • Municipal Taxes receipt
  • Deduction claimed for the interest paid if required
  • Any other deductions claimed
  • Address of the property

Conditions to Deduct Interest on Borrowed Capital for Income from House Property

As per Section 24(b) the interest can be deducted from the income from houses. The following are the conditions to claim the deduction on borrowed capital:

  • The deduction shall be permitted if the employee owns the house property
  • The following are the maximum deduction allowed:
S.No. Purpose of Borrowing Capital Date of Borrowing Capital

Max. Deduction Allowed

1 Repair, renewal, reconstruction of the house Any time Rs.30,000
2 Purchase or construction of the house Before 01/04/1999 Rs.30,000
3 Purchase or construction of the house On or after 01/04/1999 Rs.1,50,000 (up to AY 2014-15)
Rs.2,00,000 (from 2015-16)

Note: The total deduction of S.No.1 and 3 of the table should not exceed Rs.2,00,000 from the FY 2019-20.

Condition to claim the deduction for Serial No.3 on the above table

  • The purchase or the construction of the house should have been completed within 5 years.
  • The DDO should have the ‘completion certificate’ of the property for which the deduction is being claimed
  • If any interest for the previous period from the applied FYs to the current FY shall be allowed to deduct in equal instalments
  • The employee seeking for deduction shall acquire the ‘completion certificate’ with the details on borrowed capital. If in the case of a new loan has been obtained to repay the previous loan, the certificate shall have the details of the loan availed.
  • The following documents should be provided:
    • Paid Interest and remaining interest to be paid
    • Name and Address of the lender
    • PAN or Aadhaar number of the lender

Due Dates for TDS

The following tables describe the payment or deposit of TDS to the credit of the Central Government:

For Office Other than the Office of Government

S.No.

Description

Depositing Time

1

Tax deducted in March

30th April next FY

2

Tax deducted apart from March

On the 7th Day of the next month

3

Tax on perquisites opted to be deposited by the employer

On the 7th Day of the next month

If following are the dates for quarterly payments of TDS if the DDO applies to Additional or Joint Commissioner of Income Tax:

S.No.

Description

Depositing Time

1

30th June 7th July

2

30th September 7th October

3

31st December 7th January

4

31st March 30th April next Financial Year

To know about Interest and Penalty for TDS, click here

Certificate for Tax Deducted

As per Section 203, the DDO or the bank shall provide the details of the tax deducted in Form 16. The following are the details furnished in Form 16:

    • PAN or Aadhaar number
    • Tax deduction and Collection account number (TAN)
    • Book Identification Number (BIN)
    • Challan Identification Number (CIN)
    • Receipts of all quarterly statements
  • If in the case the DDO fails to issue the certificate, the DDO shall be fined with Rs.100 every day.
  • The certificate shall be generated if the PAN or the AAdhaar number is valid
  • The status of Form 16 should match with Form 24G or OLTAS.
  • The employer should provide the total amount of the salary, including the exemption under Section 10.
  • The employer should provide the total amount of salary, excluding Section 10 in column 333 of Form 24Q.
  • The details of TDS on loss from House Property can be detailed in column 350.

Click here to know about Perquisites under Income Tax Act

Due Dates of filing Quarterly Statements in Form 24Q

S.No.

Ending date of the quarter of FY

Due Date

1

30th June 31st July of the FY

2

30th September 31st October of the FY

3

31st December 31st January of the FY

4

31st March 31st May of the FY (immediately following the FY in which the deduction is made)

Scroll down to know more on income tax deduction from salary 2019-2020.

Income-tax-deduction-from-salary-2019-2020

 

For filing Income Tax, click here

The post Income Tax Deduction from Salary 2019-2020 appeared first on IndiaFilings – Learning Centre .

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Alternate Minimum Tax (AMT)

Alternate Minimum Tax (AMT)

Tax is the prime source of revenue for the Government of India. To encourage tax payment, the Government has given the taxpayers the benefits of multiple deductions and incentives. However, this facility has resulted in some companies becoming zero tax paying units. In order to maintain a balance between such deductions and to ensure the levy of tax on zero tax paying units, the Alternate Minimum Tax (AMT) was introduced under the income tax act. In this article, we look at the Alternate Minimum Tax in detail.

Alternate Minimum Tax

Alternate Minimum Tax is the tax levied on income at the rate of 18.5% along with applicable surcharge and cess. AMT is levied on adjusted income in a financial year in case the tax payable on normal income is less than AMT on adjusted total income.

What is Adjusted Total Income?

Adjusted Total Income is a gross income that is increased by adding all the deduction covered under heading C of chapter VI-A. Therefore, all deduction from Section 80HH to Section 80RRB are added to the gross income except the Section 80P and Section 10AA.

Applicability of Alternate Minimum Tax (AMT)

The following are the entities applying for the Alternative Minimum Tax (AMT):

  • Any non-corporate taxpayers
  • Any taxpayer who has claimed the deductions under Section 80H to Section 80RRB . Also, this deduction is allowed to claim only by specific industries such as small scale undertakings, hotels, export business, infrastructure development, etc.
  • Any taxpayer who has claimed a deduction of 100% of capital expenditure incurred in a financial year under Section 35AD.
  • Any taxpayer who has claimed a deduction of 50% to 100% of profit provided to the units of SEZ under Section 10AA.

Note: Also, the provision of Alternate Minimum Tax applies to those non-corporate taxpayers holding taxable income with respect to the head of profits and gains from profession and business.

Exemption from Alternate Minimum Tax

The provisions under alternate minimum tax do not apply for the following:

  • Any assessee is an individual, Hindu Undivided Family (HUF), Associations of Persons (AOP), Body of Individuals (BOI), Artificial Juridical Person.
  • Any assessee who is a corporate taxpayer.
  • Any taxpayer whose adjusted total income not exceeding Rs. 20 lakhs.

Tax Rate as per AMT

The rate of tax as per the alternate minimum tax are tabulated below:

S.No Adjusted Total Income In the case of firms or cooperative society Any other non-cooperative assessee
1. If the adjusted total income is up to Rs. 1 crore. 19.055% (Inclusive of surcharge and cess) 19.055% (Inclusive of surcharge and cess)
2. If adjusted total income exceeding Rs. 1 crore. 21.3416% (Inclusive of surcharge and cess) 21.91325% (Inclusive of surcharge and cess)

Credit and Carry Forward of AMT

As per the section 115JD of the income tax Act, the Alternate Minimum Tax (AMT) is payable in case the normal amount of tax payable is less than the tax amount payable under AMT. Any difference between normal taxpayer and tax paid with respect to AMT is allowed as an AMT credit. Such credit can be adjusted with normal tax liability arising in subsequent or future year in which regular tax payable exceeding AMT.

The amount of tax credit can be set off and carried forward until the 15th assessment year following the assessment year in which such tax credit was allowed.

During any financial year, such tax credit is allowed to be set off to the extent of the excess of regular income tax over and above the tax payable under the provisions of AMT.

Claiming of AMT Credit

The following are the conditions to be satisfied for claiming of AMT credit.

  • The credit should set off up to the maximum period of the fifteen assessment year.
  • No interest is allowed to be payable on such credit
  • The tax credit under section 115JD varies in case the amount of normal income tax or any AMT changes due to order passed under the income tax act.

Note: The assessee is liable to set off bought forward AMT credit during the financial year even in which the total adjusted income is not exceeding Rs. 20 lakhs after claiming deduction under section 10AA, section 35AD or chapter VI-A.

Report

The assessee on whom the provisions under AMT apply should get a report in the prescribed format from a Charactered Accountant (CA) certifying that the total adjusted income and alternative minimum tax has been calculated as per the provisions of the AMT.

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TDS Conso File – TRACES Portal

TDS Conso File – TRACES Portal

Conso file download feature has been made available in TRACES from the Financial Year 2007-08. Basically, Conso file is a consolidated data of the TDS or TCS statement, both regular and correction, which is processed for the relevant Financial Year, quarter and form type.

Steps to download the Conso file from TRACES are summarized hereunder:

Following are the steps which the taxpayer needs to follow to download the Conso file from TRACES –

  1. Visit https://contents.tdscpc.gov.in/;
  2. Click on the Login icon and provide appropriate User Id, Password, TAN for deductor and verification code;
  3. Navigate the following path –

Statements / Payments > Request for Conso file;

  1. Provide the following information and click ‘Go’ –
    • Financial year;
    • Quarter; and
    • Form type.
  1. Complete the KYC validation for which following two options are available –
    • Digital Signature supported KYC validation; or
    • Normal KYC validation (i.e. without digital signature).
  1. Enter ‘Token Number’ of only regular, i.e. original statement corresponding to the Financial Year, Quarter and Form type displayed on the screen.
  2. Part 1 – Challan Identification Number / Transfer Voucher Details –

Tick the appropriate box and click on ‘Guide’ for selecting suitable challan option.

  1. Part 2 – Enter Unique PAN and amount combination for challan –

Tick the box in case there is no valid PAN corresponding to the challan details provided in Part 1. Click on ‘Guide’ for selecting appropriate PAN amount combination.

  1. Enter the ‘Authentication Code’ –

If the authentication code is already available, then, enter the same. However, if the authentication code is not available, you will need to verify the eTDS return details in order to generate the authentication code. Please note that the authentication code would be valid for one calendar year.

  1. On successful submission of Conso file request, the following message would be displayed –

‘Request for Conso file has been submitted. Request number is __________. The file would be available in ‘Downloads’.

  1. In order to ‘download’ the Conso file, after receiving the request number, follow the below steps –
    • Navigate path –

Downloads > Requested Downloads.

    • You need to select any one of the following –

      • Request Number;
      • Date; or
      • View all
    • On the basis of the above selection, files would be displayed with ‘Status’ like Submitted or Failed or Available. If the status is ‘submitted’, you need to wait for 24-48 hours and, if the status is ‘available’, the file can be downloaded by selecting the same.
    • There are two download options available which are –
      • HTTP Download – This download is preferred for small files.
      • Download Manager – This download is preferred for large files and when the internet speed is low.

Important points to be noted:

  • Before requesting for downloading the Conso file, it is important to check the ‘Statement Status’ under the ‘Statement / Payment Tab’. Request for the Consofile download is possible only when the statement status is either ‘Statement Processed with Default’ or ‘Statement Processed without Default’.
  • In case the paper return is filed, the Conso file for the same cannot be downloaded from TRACES .
  • The downloaded Conso file would be password protected and the password to open the Conso file is TAN_Request number. Please enter the password in capital letters.
  • The Conso file gets updated with each time a correction is filed for the particular Financial Year, Quarter and form type.

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Coronavirus Economic Relief

Coronavirus Economic Relief

The lockdown of India commenced on 25th March 2020. The Government has now worked to provide relief for various disadvantaged sections of the society with a 1,70,000 crore scheme.

50 Lakh Medical Insurance Cover

The Government will provide a Rs.50 lakh medical health insurance cover for all healtcare workers in the frontline of the battle against Coronavirus. This cover will be applicable for all Doctors, Nurse, Santiation Workers and others in the frontline helping Coronavirus patients.

Pradhan Mantri Garib Kalyan Yojana

Under the Pradhan Mantri Anna Yojana , 80 crore people are being provided with 5 KG of wheat or rice every month. Now, 5 KG of additional wheat or rice will be provided for the next 3 months for free. In addition, 1 KG of pulse will also be provided for each household for free over the next 3 months.

Support for Farmer

Farmers are currently receiving Rs.6000 annually under PM Kisan Yojana . Their first installment will now be released benefiting 8.6 crore farmers.

Manrega

Manrega will benefit 5 crore families. Wage rate is being increased to give Rs.2000 additional income.

Old-Aged People, Widows & Disabled

A onetime amount of Rs.1000 will be paid in 2 installments over the next 3 months. It will benefit 3 crore old-aged people, widows and disabled persons.

Jan-Dhan Yojana

Women Jan-Dhan account holders will get Rs.500 per month for the next three months. This will benefit 20 crore women.

Ujjwala Scheme

Under the Ujjwala scheme, nearly 8 crore families benefited by getting gas cylinders. For the next three months, Ujjwala scheme beneficiaries will get free gas cylinders.

Self-Help Group Women

7 crore households will be benefited by giving upto Rs.20 lakh collateral free loan who are operating self-help groups.

EPFO – Organised Sector Workers

Government of India will pay the EPF contribution both of the employer and employee put together 24% for the next 3 months by the Government of India. This is for establishment having upto 100 employees –  90% of whom are earning less than Rs.15000 per month.

4 lakh establishments will be benefited by changing EPFO regulations due to the pandemic to allow non-refundable advance of 75% of the amount standing to the credit of a member or 3 months of wages – whichever is lower. This will benefits 4.3 crore employees registered under EPF.

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