March payments: TDS relief for tax-payers

Taxpayers are to get relief on their tax deducted at source (TDS) obligations with regard to their payments for expenses in March — the last month of the financial year for income-tax purposes.
“They will now get six months time to deposit the TDS related to payments made in March and also escape disallowance of expense under the Income-Tax law.
This relief forms part of the amendments moved to the Finance Bill 2008, which has been passed by Parliament recently. The important thing is disallowance of expenses will not be there in such cases,” Mr G. Ramaswamy, Central Council Member, ICAI, told.The amendments to the TDS provisions have been made on a retrospective basis from assessment year 2005-06.

Petrol, diesel prices hiked by Rs 5, 3 a litre

The government on Wednesday hiked petrol and diesel prices by Rs 5 and 3 a litre and that of LPG by Rs 50 a cylinder, while sparing poor man's cooking medium kerosene from any increase.
The government also announced customs and excise duty cuts on petroleum products with immediate effect. These cuts would entail a revenue implication of Rs 22,660 crore for the remaining 10 months of this fiscal. However, the hike was far less than the required Rs 21.43 per litre on petrol and Rs 31.53 per litre on diesel. The actual increase in LPG price necessary was Rs 353 per cylinder, Oil Minister Murli Deora told reporters.

Vital amendments in service tax vide Finance Act 2008

Some Vital amendments have been notified in the Service Tax Act vide Finance Act, 2008.

1) The definition of ‘input service' has been amended to provide that ‘clearance of final products up to the place of removal' will alone be considered as input service. It has also substituted the words ‘from the place of removal', used earlier, by ‘up to the place of removal'.

2) The definition of ‘output service' has been amended to exclude the taxable service of goods transport agency (GTA) from its purview. Since GTA service is no longer an output service, a GTA service provider cannot utilise input CENVAT credit towards the service tax payable by him on such GTA services.

3) Another amendment about the duration of removal of capital goods to any place by the service provider for output services. Now, there is no time limit for return of such goods. Earlier, a limit of 180 days was stipulated

RBI guidelines on FCEBs

The RBI is likely to come out with guidelines on Foreign Currency Exchangeable Bonds (FCEBs) within a month, a move that would give corporate more options to raise money from overseas markets.FCEBs are financial instruments similar to Foreign Currency Convertible Bonds (FCCBs) in nature and allow corporate to raise money by issuing bonds.While funds raised through FCEBs cannot be invested in capital markets and real estates in the domestic market, corporate will be able to use the funds for their operations overseas.

Notice Period u/s 143(2) slashed :

Any kind of discrepancy (like understating income) in your IT return form furnished after 1 April 2008 would be brought to your attention, soon. The IT department has virtually halved the period on this, from the earlier 12 months to the current six.
It asks for a notice to be issued under Section 143 (2) to the assessee within a period of 12 months of furnishing the returns. This made the notices received after the 12-month period invalid.
However new section 292 BB has been inserted to iron out such implications. Once the assessee has appeared in any of the IT proceedings or co-operated in any inquiry related to assessment or reassessment, such assessee cannot take objection to any proceedings or inquiry under the pretext that:
1) That the notice was not served upon him;
2) Not served upon him in time;
3) Served upon him in an improper manner.

CST slashed to 2% from 1st June

The central government on Friday notified reduction in central sales tax (CST) to 2% with effect from June 1, 2008 compared to the current 3%. Elimination of CST is crucial to implementation of unified goods and service tax (GST) from April 1, 2010. CST was to be reduced from 4% to 3% on April 1, 2007. Reduction was not carried out then as Centre and state governments failed to agree on the compensation package. States are estimated to lose Rs. 12,000-13,000 crore in revenue due to the reduction in CST rate from 3% to 2%

Donations Disallowable Expenditure?

Donations to trusts can not be treated as business expenditure, the tax tribunal said while giving a ruling in a case involving an advocate and the tax authorities. The Income Tax Appellate Tribunal (ITAT) recently gave this ruling in a case pertaining to an advocate from Indore who claimed tax benefit on donation made to a charitable trust with instructions to use the money for buying books for the court library. Turning down the argument of the advocate that the money donated was business expenditure, the ITAT held, “No direct nexus has been established between the expenditure by way of donation and the profession of the assessee, such expenditure cannot be allowed deduction under section 37 of the IT Act (business expense).”