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Friday, November 29

CAse Law : AO empowered to launch fishing and roving enquiry with a view to detect tax evasion

S. 133(6): AO empowered to launch fishing and roving enquiry with a view to detect tax evasion

The ITO issued a issued a notice u/s 133(6) to the assessee-bank u/s 133(6) of the Act calling for general information regarding details of all persons who have made cash transactions and time deposits of Rs. 1,00,000/- and above for the period of three years between 01.04.2005 and 31.03.2008. The assessee claimed that s. 133(6) does not empower the ITO to conduct a roving or fishing enquiry into the affairs of the assessee or regarding the deposits made by its customers. It was also contended that the AO can only seek “case specific” or “area specific” information u/s 133(6). The High Court dismissed the Writ Petition. On appeal by the assessee to the Supreme Court HELD dismissing the appeal :


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The legislative intention behind s. 133(6) was to give wide powers to the income-tax department to gather general particulars in the nature of survey and store those details in the computer so that the data so collected can be made use of for checking evasion of tax effectively. It would not fall under the restricted domains of being “area specific” or “case specific.” S. 133(6) does not refer to any enquiry about any particular person or assessee, but pertains to information in relation to “such points or matters” which the assessing authority issuing notices requires. This clearly illustrates that the information of general nature can be called for and names and addresses of depositors who hold deposits above a particular sum is certainly permissible (Karnataka Bank Ltd vs. Government of India (2002) 9 SCC 106 followed; M.V. Rajendran vs. ITO 260 ITR 442 (Ker) approved)

Download full judgement here

Thursday, November 28

Sting Operation : Banks violate RBI norms to deny zero-balance (Small) accounts

Banks have been found to use the Reserve Bank of India's norms as an excuse to avoid opening zero-balance accounts. In a sting operation conducted by a web portal, an IIT Mumbai professor sought to open a basic bank account in 19 banks without address or identity proof. In all the 19 branches, the professor was shooed away although RBI regulations require banks to open a 'small account' without address or identity proof.

The professor's sting operation seeks to expose how banks use the pretext of 'know your customer' guidelines to turn away business that is unprofitable. Incidentally, these are the same banks which fell victim to a sting operation by a web portal which exposed their willingness to violate the 'know your customer' guidelines to grab business. The professor's experience was that the underprivileged were chased away from bank branches by intimidating them, citing RBI norms and account opening requirements ranging from Rs 500 to Rs 3 lakh. The lenders included public, private and foreign banks.

The surprising part was that even when confronted with RBI regulations, nearly all front office staff were clueless. None were aware that RBI norms do indeed allow customers to open an account with zero balance requirement and ATM card facility merely on the basis of an application form, a photograph and a self-declaration.


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Ashish Das from the department of mathematics at IIT Bombay conducted the survey across bank branches as part of a study, titled Banks Violating Prevention of Money-Laundering Act for Excluding the Excluded. The study has now been published by the department and also released in the form of a report.

The notification on the basic savings account facility was issued by RBI on August 2012. RBI norms on its website state that a basic account can be opened with simplified KYC norms. But if simplified norms are used, the account would be treated as a 'small account'. In other words, such accounts will be eligible for a maximum balance of Rs 50,000 and maximum withdrawals cannot exceed Rs 10,000 in a month. Also, these accounts cannot be used for receiving money from abroad. While the limits ensure that these accounts cannot be misused for money laundering, it provides individuals without address proof or identity cards the opportunity to maintain savings with banks and also use ATMs.

But rather than open these accounts, banks are instead pushing underprivileged customers to 'business correspondents', who charge for opening bank accounts. Das's report shows that majority of bank employees are unaware that RBI norms allow a small basic bank account on the basis of a mere application form and declaration that proof of address will be provided within a year.

Even at the head office level, the awareness of account opening requirements appear to be low. Six of the banks covered gave RBI norms as a reason not opening the basic accounts.

RBI has not made it any easier for banks to open small accounts. The requirement for banks to open a 'small account,' without address or identity proof, comes in a directive from the finance ministry notification dated December 16, 2010. The reference to the notification on simplified KYC norms is buried in an annexure to RBI on directions for opening small accounts.





Source : Times of India

Digital signatures will be available in USB Token Only

The Security of Private Keys Corresponding to the DSCs being issued by Certifying Authorities (CA) to subscribers has always been matter of concern. In this regard the Certificate policy pertaining to India PKI lays down the technical security controls for the key pair generation and installation.

CAs are advised to ensure that procedures to give effect to the above are immediately incorporated in the DSC issuance process (if not done yet) so that Security of Private Keys is maintained. 

A Compliance to this should be reported to the Office of CCA within a month.

Read below full letter

F.No. CCA/DC (T)/2013-98 (pt.)
Government of India
Ministry of Communications &Information Technology
Department of Electronics & Information Technology
Office of Controller of CertifyingAuthorities
New Delhi
25th October 2013
OFFICE ORDER


Detailed instructions were also issued on vide our letter No. 13(2)/2009-CCA dated 23rd September 2009covering guidelines for storage of Private Keys and the same has been reemphasized subsequently in meeting held with the CAs (ref. minutes of meeting held with all CAs on 19thOctober 2012 and 23rd January 2013). The Compliance to this requirement is however not entirely satisfactory and it is imperative that procedures are put in place to ensure that no Class 2 or Class 3 DSCs are issued in cases where the key pair has not been generated on a FIPS 140-1/2 Level 2 validated Hardware Cryptographic Token.

CAs are advised to ensure that procedures to give effect to the above are immediately incorporated in the DSC issuance process (if not done yet) so that the Security of Private Keys used bysubscribers is maintained.

In respect of Class 1 Certificate, in case the subscriber does not wish to procure a Cryptographic device, the corresponding risk should be made known to the subscriber and an undertaking taken from him/her to the effect that he/she is aware of the risks associated with storing private Key(s) on a device other than a FIPS 140-1/2 validated cryptographic module.

A Compliance to this should be reported to the Office of CCA within a month. This is being incorporated on the audit process.

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RBI instructed banks to levy SMS charges on actual usage basis

Banks were advised to identify basic banking services on the basis of broad parameters indicated by the Working Group constituted by Reserve Bank of India for the purpose and the principles to be adopted/ followed by them for ensuring reasonableness in fixing and communicating the service charges for the basic banking services.

Banks are required to put in place a system of online alerts for all types of transactions irrespective of the amounts involving usage of cards at various channels.

With a view to ensuring reasonableness and equity in the charges levied by banks for sending SMS alerts to customers, banks are advised to leverage the technology available with them


Read full instructions below.

RBI/2013-14/381
DBOD. No. Dir. BC. 67/13.10.00/2013-14
November 26, 2013
All Scheduled Commercial Banks
(Excluding RRBs)

Dear Sir/ Madam

Charges Levied by Banks for Sending SMS Alerts
Please refer to paragraph 37 of the Second Quarter Review of Monetary Policy Statement 2013-14 announced on October 29, 2013 (extract enclosed) on ‘Customer Service- Charges Levied by Banks for Sending SMS Alerts’.

2. In this connection, a reference is also invited to our circular DBOD. No. Dir. BC. 56/ 13.03.00/ 2006-2007 dated February 2, 2007 on ‘Report of the Working Group to Formulate a Scheme for Ensuring Reasonableness of Bank Charges’ whereby banks were advised to identify basic banking services on the basis of broad parameters indicated by the Working Group constituted by Reserve Bank of India for the purpose and the principles to be adopted/ followed by them for ensuring reasonableness in fixing and communicating the service charges for the basic banking services.

3. Banks are required to put in place a system of online alerts for all types of transactions irrespective of the amounts involving usage of cards at various channels in terms of circular RBI/ DPSS No. 1501/ 02.14.003/ 2008-2009 dated February 18, 2009 and DPSS. CO. PD. 2224/ 02.14.003/2010-2011 dated March 29, 2011. Banks have accordingly put in place a system of SMS alerts so as to help customers in fraud mitigation and have been levying uniform service charges to various categories of customers.

4. Considering the technology available with banks and the telecom service providers, it should be possible for banks to charge customers based on actual usage of SMS alerts. Accordingly, with a view to ensuring reasonableness and equity in the charges levied by banks for sending SMS alerts to customers, banks are advised to leverage the technology available with them and the telecom service providers to ensure that such charges are levied on all customers on actual usage basis.

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Saturday, November 23

Air-Conditioned factory canteens exempted from Service Tax

As per notification dates 22'nd october 2013 , A/C Restaurant or Canteens in Factory premises serving food to workers and employees has been excluded from purview of service tax. Due to Negative List restaurant & catering services was included in taxable services, where genuine service of catering to workers at nominal price without intention of earning profit been taxed. To abolish the anamoly MoF decided to exempt the same. 

Read full notification as below.


[TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY,]
Government of India
Ministry of Finance
(Department of Revenue)


Notification No. 14/2013-Service Tax
New Delhi, 22nd October, 2013

 G.S.R.____ (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994,  (32 of 1994),  the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.25/2012-Service Tax, dated the 20thJune, 2012, namely:-

            In the said notification, in the opening paragraph, after entry 19, the following entry shall be inserted, namely:-

“19A. Services provided in relation to serving of food or beverages by a canteen maintained  in a factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-conditioning or central air-heating at any time during the year.”.

[F. No. B1/13/2013-TRU]

(Akshay Joshi)
Under Secretary to the Government of India 


Note.- The principal notification was published in the Gazette of India, vide notification No.25/2012-Service Tax, dated the 20th June, 2012, vide G.S.R.467(E), dated the 20th June, 2012 and was last amended by notification No.13/2013-Service Tax, dated the 10th Sep, 2013 vide G.S.R.616(E).
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Friday, November 22

IPC & CA Final Nov. 13 - Question papers

We will try to bring you the question papers of the Novemeber 2013 attempt earliest. Please download it and share it with everyone, it will be beneficial for students who are preparing for upcoming attempts.

Join the conversation on facebook & twitter using #Nov13 .




CA IPC




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CA Final



For Previous year papers for IPCE, Final, PCE

Wednesday, November 20

Important Announcement for CS Executive & Professional Student regarding relaxation on procedural issue of Oral Coaching & Response Sheet

Council of Institute has decided to omit the requirement of submission of coaching completion certificate with immediate effect for appearing in CS Executive / Professional Programme Examinations

This would make students eligible for enrolment to Executive and Professional Programme examinations after expiry of six months or nine months as the case may be, from the date of registration to the respective programme.

Henceforth, students of Executive Programme and Professional Programme are not required to:

a. submit response sheets to test papers on various subjects to the Institute under Postal Tuition Scheme, or
b. obtain coaching completion certificate from the Institute or from Class Room Teaching Centres of the Institute, or

c. submit coaching completion certificate for enrollment to examinations of Executive and Professional Programmes.

Download full Announcement click here

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Zone Shifting of Candidates for CPT exam to be held on 15th December 2013

Announcement – Zone Shifting of Candidates for 15th December – 2013 CPT. - (20-11-2013)

November 19, 2013

Subject: Zone-shifting of candidates for 15th December - 2013 CPT

Due to paucity of accommodation in certain Zones opted by the candidates in the cities of Chennai, Delhi and Indore, some of the candidates have been allotted examinations centres in the zone other than the zone opted by them. In view of this, it is not possible to accede to the requests of the candidates for transfer to an examination centre in a particular zone of the city opted by them. 

While inconvenience caused in the matter is deeply regretted, we seek the cooperation from the examinees and other stakeholders in this regard.

(G. Somasekhar)
Additional Secretary (Exams)





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source: icai.org

Tuesday, November 19

May 2014 CA exams likely to be held as per schedule, there are less chances of postponements. STOP SPREADING RUMORS. - CAhelpers

ATTENTION : May 2014


We are receiving numerous querries that whether the MAY 2014 CA examinations will get postpone due to the General Elections during May - June 2014.














To address this question, we are writing this post.

Please go through below facts carefully-
1. The term of current UPA Government will get over on 31st May, 2014 officially.
2. There are high chances that UPA Govt. will complete it's full term.
3. There are remote chances, that UPA government leave it's power before the term and declare election before due time.
4. Seeing to the current political scenario in India, there are less chance that election will be held in May 2014.
5. ICAI have not issued any announcement on this part yet..
6. Even if the government surrenders power and declare early election, then we can see a postponement but chances are remote.
7. Generally ICAI does not pre-pone exams, but it can do on request by Election Commission or in interest of students, so we can even see 5-7 days pre-ponement of exams. 
8. ICAI has not issued even schedule of May 2014 examinations yet.

There may be a possibility of election in June 2014, that means the CA exams will not be postponed and may even be pre-poned to get exams finished by 15th May, 2014. So we request everyone not to spread rumor of postponement of exam and also do not believe on rumors.Please do not take rest, study hard, burn your midnight oils, the exams are near now.



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We request every student appearing in May 2014 exams, to prepare as hard as possible and not to get relaxed believing on rubbish rumors of postponement of exams. There is no announcement by ICAI. And as stated by us there are remote chances of postponement. So please study as if exams are in May 2014 only. Please do not get relaxed. Team CAhelpers is always available for your help.

As and when ICAI issues an announcement regarding, pre-ponement or postponement or schedule of May 2014 examinations, we will be updating you on our websites as well as social media. 

Issued in interest of students by CAhelpers

Monday, November 18

The Companies Act, 2013 will NOT BE APPLICABLE in May 2014 CA exams

Non-applicability of Companies Act, 2013 for May 2014, Examinations
Announcement dated 18th November, 2013


Attention: Intermediate (IPC) and Final Course students

This is to bring to the notice of students that the Companies Act, 2013 notified in the Official Gazette on 30th August, 2013 (with partial enforcement of only 98 sections of the Companies Act, 2013 from 12th September, 2013) shall not be applicable for May 2014 examinations both at the Intermediate (IPC) and Final levels.

The examinations will be based only on the existing syllabus.


Director, BOS

Source : ICAI.org

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P.S.

THE COMPANIES ACT, 2013 will not be applicable for IPC and Final exams of ICAI, and paper will be based on THE COMPANIES ACT, 1956 only. There is no announcement by other institutes like ICSI and ICAI (Cost) regarding their courses.

Friday, November 15

DTC wind again in the air, DTC bill likely to be tabeled in winter session

In a time when high inflation is blowing holes in pockets of consumers, if a relaxation is granted on tax deduction, consumers will definitely get a reason to celebrate. Well, Ministry of Law and Justice has approved the proposal to raise annual income tax exemption limit from 2 lakh to 3 lakh.

The Direct Tax Code (DTC) draft will now be sent to Cabinet for approval. Thereafter, the approved draft will be introduced in Parliament. According to an official of Ministry of Finance, Parliamentary Committee has nearly agreed to the tax exemption limit under the latest draft of future DTC bill.

The proposal was first drafted by the standing committee led by former Finance Minister Yashwant Sinha. The committee had raised the cap of annual tax exemption from Rs. 2 lakh to Rs. 3 lakh. Moreover, the committee has recommended maintaining the tax percentage at 10% for income group earning annual pay up to Rs. 10 lakh.

Current tax rates

Currently, income tax rate for income group of Rs. 2–5 lakh is 10%. Professionals earning annual income of Rs. 5–10 lakh are required to pay an income tax of 20%. Finally, the income group of Rs. 10 lakh above must 30% of their income as tax to the government.


Way through the Parliament

The DTC draft is expected to be introduced to the Winter Parliamentary Session commencing on 5 December. If the government is indeed keen to consider the DTC bill, it has to be introduced while the winter session. The bill shall not be delayed post the coming session, because in the following session Budget shall be presented to secure ‘vote on account’.

Finance Ministries

Three drafts of the DTC bill have already been prepared so far. The first draft was charted by P Chidambaram back in 2009, when he held the position of Finance Minister. The Ministry was however dissolved after that as the Ministry was taken over by Pranab Mukherjee. Mukherjee charted a fresh draft; however, neither of the two drafts could be taken forward.


Chidambaram is now a Finance Minister again and Pranab Mukherjee is now President of India. The Finance Minister has prepared a new draft on the proposal. It is now to be seen how far the proposal proceeds as there is little time left in general elections 2014.

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Super Rich Category

The super rich may have something to cheer about. The finance ministry, which is all set to introduce amendments to the Direct Tax Code (DTC) in the Parliament in the winter session, is likely to withdraw or at least dilute the provision of the additional tax slab of 35% on those earning more than Rs10 crore annually, which is contained in the recommendations. The code seeks to overhaul the Income Tax Act, 1961 and widen the tax base.

The DTC has been on the drawing board for the last couple of years and the bill was introduced in Parliament in 2010. In March last year, Parliamentary Standing Committee on Finance headed by ex finance minister Yashwant Sinha gave its recommendations on the bill. Since then, the finance ministry has been working on amendments to be introduced in accordance with the recommendations – an exercise, which officials concede is now over. The changes, however, could not pass the cabinet muster in August this year.

A senior finance ministry official told dna on condition of anonymity, “A section of the government was not comfortable with the provision of introducing 35% taxation on earnings of Rs10 crore or above. The ministry has revisited the matter among others and we will approach cabinet so that the amendments go to Parliament. We are looking at introducing the amendments in the winter session.”

The finance ministry had planned to introduce the amendments to the DTC in the monsoon session, but could not do so because of the cabinet red flag.


The other provisions contained in the code are for the setting up of a special court for black money cases, wealth tax of .25% for those having net worth in upwards of Rs50 crore, and disincentive on keeping houses vacant by owners.

Thursday, November 14

Facility for Downloading the Result Card of CPT (Examination)

Facility for Downloading the Result Card of CPT (Examination)

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Common Proficiency Test (CPT) - (Paper-pencil Mode examination) is held twice in a year i.e. in the months of June and December. Eligible candidates appeared in the last CPT (examination) can download their Result Cards from the website www.icai.nic.in/cptresultcard by using their Roll number or Registration number along with their four digit PIN (Personal Identification Number) as filled up by them in their CPT examination application form for the respective CPT (examination), as per tentative schedule given below:


June CPT - from 10 days after declaration of result to 20th November subsequent to the declaration of result.


December CPT - from 10 days after declaration of result to 20th May subsequent to the declaration of result.

The downloaded Result Card of CPT bearing the photograph and signatures of the candidate is a valid document for admission to the next level of C.A. Course, i.e. Intermediate (IPC) Course.



ONE MORE LAST MINUTE CHANGE : Change of Examination Centre in Bareilly (U.P.) on 21st November, 2013



No. 13-CA (EXAM)/N/2013/Ann./6
November 11, 2013

Change of Examination Centre in Bareilly (U.P.) on 21.11.2013



Due to unavoidable circumstances, the Final examination scheduled to be held on 21st November 2013 at F. R. Islamia Inter College, Naumelha Road, Civil Lines, Bareilly will now be conducted in R. N. Tagore Inter College, Opposite Yuveera Library, Near SAI Stadium, Cantt. Bareilly, Bareilly

Accordingly, all the candidates of Final Examinations of 21st November 2013 allocated to the examination centre initially in F. R. Islamia Inter College, Naumelha Road, Civil Lines, Bareilly have been re-allocated to R. N. Tagore Inter College, Opposite Yuveera Library, Near SAI Stadium, Cantt. Bareilly, Bareilly.

The admit cards already issued shall remain valid. All other details also remain unchanged.



(G. Somasekhar)
Additional Secretary (Exams)

Source : ICAI.org


P.S. :
Team CAhelpers humbly requests ICAI
on behalf of all students not to announce last minute changes. 
And if last minute changes are unavoidable, ensure that such information reaches all students as everyone does not check ICAI website, social media, etc. and that too during 
exam days.


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How Time management plays role in success for CA

Time is the most important asset of our lives. Organising 24 hours of a day is a difficult task for some people. Every one has only 24 hours in a day. It’s only in your hands to spend it wisely and your success depends on it. From morning lectures to audit assignments, outstation audits, Homework,self study, seminars, office meetings, a CA article have to manage all in best way which is not possible without Time Management.
Here we are providing some tips which is essential for time management.



TIME MANAGEMENT (in Brief)

First of all, we should know what Time Management is a type of self management which includes techniques, strategies, skills etc for organising the time with an aim to achieve efficiency in time utilisation. 

Importance of Time management 

Time Management is important for different persons for different reasons. Some of them are: 

a. It helps to become aware of your time wasters. 

b. It helps to determine your priorities. 

c. It ensures that you have time for all the important activities. 

d. It helps in setting goals and achieving them. 

e. It helps you to structure your 24 hours of a day effectively. 

Tips for TM


  • Preparing TO – DO – LIST:Using TO – DO – LIST will help you very much in controlling your tasks and keep yourself organised. Writing on a paper helps you to work on it and will help you in prioritizing your tasks according to you needs. 
  • Start Today:Do not delay your work. You are wasting lot of unnoticed time by this. So never procrastinate. Start your work today. 
  • Apply 80/20 rule: This rule states that 20% of your efforts account for 80% of your TO – DO – LIST. Some things have higher return than other. Invest your time and energy more in those activities.
  • Learn to say NO: Some people become commit themselves for more and more tasks because of their inability to say NO. They waste time on some of the unimportant things. Learn to say NO to things which have low priority and invest your time to do important activities. 
  • Prioritizing: It is a process of deciding which tasks are more important of the several tasks. Priorities are decided by your goals and values. Determine your priorities by analysing the benefits, demerits of the tasks and how they help you to achieve your goals.
  • Develop Speed Reading:Try to read with speed effectively. Use a pointer while reading. Learn where to slow and where to speed up. Effective reading will help you to remember the topic you may not require to repeat the study number of times. 
  • Divide your Work:Divide your big tasks into small manageable tasks. Each divided task should be completed with some breaks in between in your study. 
  • Always be proactive not reactive 
  • Build in extra time for unexpected events 
  • Perform one task at a time 
  • Develop procedures for routine matters 
  • Complete every assigned task
  • Use spare time intelligently 
  • Always be enthusiastic 

Obstacles which stops you from effective organisation of your time

Procrastination: It is most important enemy to you. Delaying your day’s work will lengthen your time in achieving your goals. 

Never leave ’till tomorrow which you can do today.- Benjamin Franklin


A wise person does at once, what a fool does at last. Both do the same thing; only at different times.- Baltasar Gracian

Lack of Self – Discipline: Self – discipline make you aware of the top most priorities. Lack of it may lead you into a state of jeopardy. 


Unexpected Events: These events include Drop in visitors, Distractions, Phone calls etc. They eat away lot of your time without notice.

Ineffective Study: It means has to study number of times again and again to understand a topic.

Stress:  During articleship due to workload and hactic schedule many times we stressed up which ends in spoiling our routine & planned activities, which should be avoided by taking rest at appropriate intervals. 


Attempting to do too many things, this ends up in doing nothing. 


Inadequate planning:
Solid planning should be done for each activity. there should be backup for each plan in case of failure of first plan.


Quotes, you should remember



  • Don’t be fooled by the calendar. There are only as many days in the year as you make use of. One man gets only a week’s value out of a year while another man gets a full year’s value out of a week.- Charles Richards 
    • Ordinary people think merely of spending time. Great people think of using it. 
    • Never let yesterday use up today.- Richard H. Nelson 
    • You may delay, but time will not.- Benjamin Franklin 
    • The great dividing line between success and failure can be expressed in five words: “I did not have time.”- Franklin Field                                                     
    • Better three hours too soon, than one minute too late.- William Shakespeare 
    • Nothing is a waste of time if you use the experience wisely.- Rodin 
    • To do two things at once is to do neither.- Publius Syrus 
    • Whether it’s the best of times or the worst of times, it’s the only time we’ve got.- Art Buchwald 

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    Tuesday, November 12

    Announcement - No Change in the schedule of Nov.'13 examination due to MUHARRAM

    No Change in the date of examination scheduled for 15th November, 2013



    Certain enquiries are being received as regard to the holding of examination on 15th November, 2013 since the same has been declared as a holiday on account of Muharram. 

    In this connection, attention of the candidates of CA Examinations November, 2013 and other stakeholders is invited to the Notes for information of the candidates made available with the examination application form that there will no change in the date/s of examinations on account of any change in holiday or any other reason.

    Accordingly, it is clarified that the CA examinations of Paper-5 Advanced Accounting of Intermediate (IPC) and Paper - 5 of ITL & WTO (Part I) shall be held on 15th November, 2013 (Friday) as already scheduled and notified. In other words, there will be no change in the schedule of ongoing examinations.

    It is further clarified that 14th November, 2013 (Thursday) shall remain as examination holiday.



    Source : www.icai.org

    Announcement : No.13-CA(Exam)Nov-2013 dated 12.11.2013



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    FAQs on TDS u/s 192

    Section 192 of The Income Tax act 1962 is one of the most complicated section of TDS in term of mechanism of calculation of TDS. Team CAhelpers has tried to simplify it by using simple question format which arose during practical experience among professionals.



    Manner Of TDS Deduction

    Q-1: Whether TDS is to be deducted from the beginning of the financial year? Or, can it be deducted during the last few months of the FY?
    Ans: TDS from salary income should be deducted uniformly throughout the year starting from the month of April based on the projected salary for the whole year and considering the savings declaration (no specified format) given by the employee. In subsequent months, adjustments can be done for any changes in salary or tax savings plan of employees.


    Q-2: Can I request my employer to deduct TDS on my other income also?
    Ans: Yes, if you submit the particulars of your any other income (including loss on house property) in plain paper [Earlier Form 12C was prescribed but since 2003 it is not required], employer is bound to deduct TDS on it. Anyhow, the particulars to be mentioned on the declaration are exactly in the same format as earlier Form 12C.

    Please note that in case of loss from house property, detailed computation has to be enclosed. Further for claiming tax benefits on home loan [interest u/s 24(b) & principal repayment u/s 80C], a certificate from the lender specifying the amount of interest paid / payable during the financial year also needs to be furnished.


    Q-3: Whether TDS is also to be deducted on the non-cash benefits provided to the employees?
    Ans: Yes, from the current financial year (FY 2009-10) tax burden on fringe benefits / perks has again been shifted back to the employees (the FBT stands abolished). So all the non-cash benefits provided by the employer (e.g. official car, ESOPs, company owned or leased accommodation, gift vouchers, interest free or concessional loans, club membership etc) will have to be taken into account for the purpose of tax deduction at source from salary. The valuation of these perquisites will be as per the CBDT notification issued in December 2009.


    Q-4: What if due to an error the employer deducts TDS in excess?
    Ans: According to section 192(3) of the IT Act, any excess or shortfall can be adjusted subsequently but within the same financial year. In other words, excess / shortfall TDS of one financial year can’t be carried forward for adjustment in subsequent financial year.

    The other point worth noting is that there is no bar on inter-employee adjustment i.e., if there’s a excess deduction on account of one employee and short deduction from the salary of other employee, those can be adjusted.


    Exemptions and Deductions


    Q-5: What if my employer doesn’t allow HRA exemption while calculating TDS on salaries?
    Ans: If in fact you are residing in a rented accommodation and paying rent, I don’t think any employer will refuse deduction on account of HRA. Only in a very exceptional case, employer will refuse HRA deduction against rent paid by you. In such an eventuality, you can always claim it while filing your return of income and receive tax refund.


    Q-6: Can an employer allow both the tax concessions: HRA as well as Home loan tax benefits while calculating TDS from salary?
    Ans: Yes, indeed! As long as you’re eligible for both, employer should not have any objection in allowing both: HRA exemption u/s 10 (13A) as well as tax benefit on a/c of repayment of housing loan [interest u/s 24(b) and principal repayment u/s 80 of the IT Act 1961].

    There are many possible scenarios where you can claim HRA along with housing loan tax benefits.


    Q-7: Whether employer can insist on travel proof for allowing LTC exemption while calculating TDS on salary?
    Ans: Yes, of course employer can insist on production of documentary evidence to satisfy regarding the genuineness of the LTA claim. Mere submission of a declaration for the purpose of claiming LTA / LTC exemption u/s 10(5) of the IT Act, 1961 is not enough.

    Though in a judgement delivered in 2009, the Supreme Court exempted the employers from collecting travel bills to allow LTA / LTC exemption to employees while calculating TDS on salaries; however, most employers still demand it.


    Q-8: Whether employer can allow 80G deduction while calculating TDS from salary income?
    Ans: Employer is  allowed to take into account section 80G deduction in respect of donations made for charitable purposes while calculating TDS on salaries.


    Q-9: Section 80DD allows a fixed deduction Rs 50,000 / Rs 75,000 irrespective of the amount of expenditure incurred on the medical treatment of handicapped dependent. However, my employer doesn’t agree and he is only allowing the actual expenditure incurred by me?
    Ans: Law is law no matter how illogical or absurd it is. Logic dictates that either there should be allowed a fixed deduction without any stipulation as to the actual incurring of the expenditure and in case it is made dependent on actual incurring of expenditure then the expense actually incurred should be allowed subject to a maximum limit.

    It doesn’t make sense to make the deduction / exemption conditional on incurring of the expenditure but allowing a fixed amount irrespective of the actual expenditure incurred. In simple words, it is highly illogical to allow a fixed tax deduction of, say, Rs 75,000 irrespective of whether you spend Rs 100 or Rs 60,000 but disallow it if you don’t incur any expenditure.

    But understand that law is not what it should be but what it is. So, your employer shouldn’t have any objection in allowing you the fixed deduction of Rs 50,000 / Rs 75,000 (as applicable) allowed u/s section 80DD so long as you’re incurring any expenditure on account of medical treatment of your handicapped dependent (even Rs 1 will do).


    Q-10: What are the various investments allowed for the purpose of tax savings?

    Ans: For complete list of various tax savings investments and expenses allowed under section 80C, For mediclaim / health insurance premium and other expenses allowed while calculating taxable income u/s 80D.

    Q-11: Do we have to submit the original proofs for claiming exemptions and deductions?

    Ans: No, you can submit self-attested photocopies of all the documentary evidence / proofs (e.g., rent receipts, ELSS account statement, life insurance premium receipt, school fee receipt etc) required by the employer for the purpose of allowing you various deductions and exemptions.
    However, for the purpose of verification your employer might ask you to show the originals also. But remember original can be required only for verification and not for submission, so don’t forget to get them back and file in your tax file for future reference and any query from tax authorities.


    Change of Employment: Form 12B 


    Q-12: For an employee joining in the middle of a FY, is it the responsibility of employer to ask for salary details of previous employment? In other words, is it mandatory for the current employer to deduct TDS on salary income received from previous employer? Can the employer force the employee to submit the information for TDS purpose? Or, is it at the total discretion of the employee? Can the current employer adjust if there any shortfall or excess TDS deducted by previous employer?
    Ans: According to section 192, it is the option / discretion of the employee whether or not to file Form No 12B. The current employer can’t insist on filing of Form No 12B. If the employee chooses not to file, then employers’ obligation is limited to compute TDS on salary payable by him.

    If Form 12B is filed, then current employer can deduct the TDS on salary paid by previous employer (in case no TDS was deducted by previous employer). And if the TDS was deducted by previous employer, any excess or shortfall can also be adjusted.

    It is always in the interest of an employee to furnish such details because otherwise there can be duplication of exemptions and deductions and there can be a shortfall in tax deduction and as a result the employee would become liable to deposit advance tax.


    Q-13: Who’s responsible for filling up the Form 12B: My previous employer or me?

    Ans: It is the responsibility of the employee to fill the declaration in Form No 12B and also attach Form 16, if any, issued by your previous employer. It is required to be filled up even if there was no TDS deducted by your previous employer due to the salary being less than the basic exemption limit. It is quite possible that after combining your current and previous salary, your total salary income exceeds the maximum amount not chargeable to tax.

    Q-14: How to fill Form No. 12B for giving it to my current employer so that income (and tax already deducted thereon, if any) from my previous employment can be considered for the purpose of TDS from my current salary income?

    Ans: Fill up Form 12B based on the Form 16 (if TDS deducted) or on the basis of salary certificate (if no TDS deducted or pending issuance of form 16) issued by your previous employer. You can also take the help of your salary slips. In case of any difficulty, you can take guidance from your previous or current employer.

    Q-15: Can my current employer still refuse to deduct TDS on my previous salary once I submit Form 12B?

    Ans: No, once you submit Form 12B, it becomes the obligation of the employer to deduct TDS on your consolidated salary after accounting for TDS deducted (if any) by your previous employer.


    Issue of Form 16 


    Q-16: What is Form 16? What’s the difference between Form 16 & Form 16A?
    Ans: Form 16 is the Tax Deduction Certificate issued by an employer to his employee against the income tax deducted from his salary. On the other hand Form 16A is issued by organizations against TDS deduction from certain payments made to contractors, service providers, professionals and certain other payments like rentals, interest etc. For example, bank issues you Form 16A against TDS deducted on FD interest.

    Q-17: What if my employer or previous employer doesn’t issue me a TDS certificate?

    Ans: Now a days you don’t need to submit any documents with your IT return as these are annexure-less. But, although Form 16 is not required to be attached with return of income but still it is the duty of employer to furnish it to the employee. It is required because

    a. It shows your salary income (various components are shown separately). In its absence it might not be possible for you to calculate tax on your salary income (particularly if no salary slips are issued at the time of payment of salaries)

    b. It shows the details of TDS deducted by your employer which is also required to be mentioned in the Tax Return.

    c. You’ve to show it to the income tax authorities if asked for at the time of assessment.

    As per section 203, TDS certificate in form no 16 is required to be furnished by the employer to the employee within one month of the close of the financial year. But you don’t have any remedy against your employer if he refuses to issue you the TDS certificate although he is accountable to the tax authorities.

    Therefore, the only option left to you if the employer doesn’t issue the certificate is to register yourself on http://www.tin-nsdl.com/ and get the TDS status as shown in Consolidated Tax Credit Statement (Form no 26AS) from that site. Based on this online statement, you can file your return.


    Q-18: Is it compulsory to issue TDS certificates even in case of an employee where no TDS is deducted due to the total income falling below the maximum exemption limit on account of various deductions allowed u/s 80C?Ans: No, it’s not! There is no obligation on the employer to issue Form 16 in case tax is not deducted by virtue of claims of exemptions and deductions.


    Q-19: Is the TDS amount shown in my Form-16 final figure of my tax liability?

    Ans: No, the tax shown by your employer on the form 16 is not the final figure of your tax liability. Your actual tax liability may differ on account of following reasons:

    i). You might have other income (loss) from other sources of income: Income from house property (rental income), business income, capital gains (e.g., profit / loss on sale of shares or mutual fund units) other income (interest on your savings bank account or FDs).

    ii). Your employer might have made excess / short deduction of tax at source from your salary income by not considering any, exemption / deduction or inadvertently allowing any deduction in excess.

    It’s your responsibility to show the actual tax on your total income while filing your tax return which might differ from the TDS figure shown in Form 16.

    Saturday, November 9

    Countdown for CPT Examination Dec2013, Some Important points you should not miss


    Keep in mind

    1. Only passing marks are required. Marks and rank obtained in CPT are not considered for the next stage IPC

    2. You need not have a maths background. If you are not good in maths, you can score more in other subjects and less in maths. Remember, final goal is to score 100 or above

    3. Practice is the key to success in CPT, practice daily as many questions as possible

    4. Subjects that are considered scoring in CPT are: 
    (a) Accounts, 
    (b) Mercantile Law and 
    (c) Macro Economics portion of Economics

    5. For practice at home, try solving questions of a topic immediately after reading theory

    6. Practice with as many model and sample question papers as possible

    Strategy in the examination hall:

    1. Read all the instructions carefully

    2. In the examination hall, for section 1, you should solve Mercantile Law questions first

    3. Next, solve Accounts questions

    4. Competition is tough, try solving the maximum number of questions

    5. Even if you are confident that the first option in the question is correct, read all the options before answering the question

    6. Even if you are confident that the first option in the question is 100% correct, check if “all of the above” option is given below or not
    7. If the question asks about which one is NOT CORRECT, check if “none of the above” option is given below or not

    8. Be extra careful on very easy and easy questions. Sometimes, these questions are tricky. Many students mark wrong answers for easy questions and regret later
    9. Use elimination method for those questions whose answers you don’t know directly. Eliminate those options which can’t be right, and then choose your answer from the remaining options
    10. Leave those questions about which you are not confident at all, remember there is negative marking. Don’t bring your score down by attempting questions whose answers you don’t know at all
    11. Where in doubt, always consider your first guess or the answer that came in your mind first as the right answer

    12. Always recheck your answers after 
    attempting all questions.