27 tax laws session

8/13/2019 27 Tax Laws Session

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Tax Laws

Income Tax

Indian Stamp Duty

Service Tax


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Punjab National Bank

LEARNING OBJECTIVE

Will be able to explain: the important provisions relating

1) Income Tax Act,

2)Indian Stamp Act,

3)Service Tax,

TOPICS FOR DISCUSSION :

1) Nature of Tax Laws

2) The Income Tax Act as applicable to Bankers3) Provisions of the Indian Stamp Act

4)Provisions of Service Tax Act


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Taxation in India

Direct Taxes :-Income Tax Laws-Corporation Tax Laws-Property Tax-Estate Duty or Inheritance Tax-Gift Taxes

Indirect Taxes :-Customs Duty

-Central Excise Duty-Service Tax-Sales Tax + VAT


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Features of Tax Laws

Tax rates are subject to changes , decided at the time of the budgetperiod.

Different rates for different Taxes

Provision for Tax Deduction at the Source, by the Employer, or at the timeof making the payment.

Failure to recover the tax at the source by the employer , is an offence ,punishable with fine.

Employer has the authority/responsibility under the Income Tax Act :1) to assess the income of the employees & to deduct the appropriate tax2) to remit the tax to the govt & submit the required information / returnsto the I T officials, as per the I T act .

Types of Taxes :Corporate TaxMinimum Alternative TaxesPersonal Tax


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Important Sections of It Act

Section 80 C:

Investments in approved schemes up to Rs 1

.00 lakhs is allowed as deduction in the in the

Income. This includes repayment of theHousing Loan EMIs. (LIC, Pension Schemes ,

PPF ,EPF , NSCs, Fixed Deposits with Banks

/Post offices , Senior Citizens Savings Scheme)


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80 D : Health insurance

Popularly known as Mediclaim Policies, provides adeduction of upto Rs. 35,000.00

- Rs. 15,000.00 for premium payments towards policieson self, spouse and childrenand

(a) Rs. 15,000.00 for premium payment towards non-Senior citizen dependent parentsor(b) Rs. 20,000.00 for premium payment towardsSenior citizen dependent.

This deduction is in addition to Rs. 1,00,000 savingsunder IT deductions clause 80C.


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80 E: Interest on Educational Loans

Interest paid on the Educational Loan for

higher studies in the Country or abroad .

No benefit for repayment of the Principal

amount.


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:

Deduction of the Rent paid by the assesse,

who is not receiving the H RA .



Home Loan repayment

Repayment of the Principal amount :Up to Rs 1.00 lakh , part of 80CC section.

Interest up to Rs 1.5 lakhs if the house is self occupied ,no income is generated.

If the house is rented , the entire interest can claimedfor the exemption. But, the income generated isincluded as income for the tax .

Section 24 :Standard deduction of 30% of the Net Annual Value ofHouse property .Property Tax paid on the House is also reduced beforearriving the Net annual Value.


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Income Tax Act ( as applicable to

Bankers) An expenditure in excess of Rs 20,000/ will be permitted as an expense from the

Income if the payment is made by means of a Crossed Cheque,

Search warrants for Lockers signed by the Commissioner of Income Tax before thesearch is permitted,

Specified Income Tax Authorities may seek information on Customer accounts asmay be necessary,

If the aggregate of Principal & Interest Rs 20,000/ or more, then repayment has tobe made by means of A/C payee Draft or the Bankers Cheque, or credit thedepositors account,

Role of the Employer as Tax Deducting Authority :- Even recovery of the Tax from the employees-Payment of the Tax within the stipulated time-Submission of Form No 26 annually before 30 th April-No tax on NRI /FCNR deposits


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Other information

Penalty provision for not following the abovedirection ,

Attachment Orders

Tax Administration :-Demand by the IT officer, Customs Officer,Service Tax Officer,

-Appellate Tribunal-Jurisdiction of the High Court & the SupremeCourt


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TDS on deposits

Applicable to Interest on Term Deposits , on payment ofInterest of Rs 10,000/ & above , as and when the provisionis made in the bank books.

Not applicable to the Recurring Deposit Accounts. Interestearned will be taken as income at the time of maturity.

Interest on Savings Bank Accounts are outside the purviewof TDS up to Rs 10,000/ ( From this year)

Rates :Residents: Individuals 10.25%

Others -20 %

Submission of 15 G & H forms

Non submission of 15 G & H forms


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Service Tax

What is Service Tax and who pays this tax?Service tax is, as the name suggests, a tax onServices.

It is a tax levied on the transaction of certainservices specified by the Central Governmentunder the Finance Act, 1994.

It is an indirect tax (akin to Excise Duty or Sales

Tax) which means that normally, the serviceprovider pays the tax and recovers the amountfrom the recipient of taxable service.


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Who is liable to pay service tax?

Normally, the person who provides the

taxable service on receipt of service charges is

responsible for paying the Service Tax to the

Government (Sec.68 (1) of the Act).

See Appendix 1 of the Act to know the type of

service provider for paying the Tax.


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Administration of the Act

The Service Tax is administered by the CentralExcise Dept

In addition 7 Service Tax Commissonarates & 5

Large Tax Payers units will also administer, Registration is mandatory,

Returnshave to be submitted at half yearly

intervals, Penalty provision for non compliance of the

Act,


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Payment & Rate

How to make the payment, & the procedure

to make the payment :

Through the approved Bank Branches

electronically ,

Rate of service tax 12.36%


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Service Tax relating to Banks

Tax payable on Services :

-Fees & Commission received

-Merchant Banking Activities

-Advisory Services-Safe Deposit Locker services

-Foreign Exchange Brokerage

Tax NOT payable :- ON Interest Income


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Indian Stamp Act

Categories of Stamp:-Judicial Stamps,

-Non-Judicial Stamps,

Central Stamp Duty,

State Stamp Duty,

Proper Stamping:

-Right type of Stamps-Adequate Stamp Duty,

-Documents to be stamped before or at the time of the execution ,

-Adhesive Stamp should be properly cancelled as per law,

Effect of Under Stamping:

-Short payment of the Stamp duty in respect of:

a) 1) P N 2) Usance Bill of Exchange 3) Debt Acknowledgement letter , will make thesedocuments invalid, & will not be revived,

b) Agreements & undertakings can be adequately stamped before filing a Court Case,

Types of Stamp:

-Impressed Stamps :

-Adhesive Stamps,


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Indian Stamp Act

When to stamp the Documents:-Drawn in India,-Drawn out side India:To be stamped within three months from the date of receipt of thesame in the Country,-BOE/ DPN drawn outside the Country:

To be stamped by the first holder as required, Cancellation of Stamps:

-Purpose of the cancellation of stamps,-How to cancel the stamps,-Effect of not cancellation of the stamps,

Execution of documents in different States &Stamp duty payable, Refund of unused & obsolete stamps,

Penalty for under/non stamping,


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