Brief on New Pension Scheme - NPS

New Pension Scheme (NPS) is one of the best retirement products available today in India.  This is a Defined Contribution based pension scheme, which is being administered in India by Pension Fund Regulatory and Development Authority (PFRDA).  If planned properly and if the contribution is made by employer we can avail tax exemption under section 80CCE.  Main advantages of this scheme are

1. It is open to all citizens of India between the age of 18 and 55. 
2. Administration cost is one of the lowest, for non Government employees charge is subject to a limit of 0.25% which is lowest amongst all existing schemes
3. Scheme closely monitored by PFRDA
4. Clearly defined investment options which choice resting with employee or in case employee feels it can be an automated option, it is also available.  The auto choice is as below (Class G - Government securities; Class E - Equity; Class C - Corporate Debt).  The visibility is clear, higher the age lesser the risk and viceversa

 

The next question arises what is the return over the last 3 years.  I have been investing since 2010 April and in these 3 years I have received 8% returns which is a decent return considering the additional interest due to tax benefit which I received on contribution.  The calculation of my contribution is as below as on 7th May 2013 and on that date my fund value was Rs.37,350

I would recommend for all non governmental employees who do not have a proper pension plan to adopt NPS and start contributing from an early age to benefit from decent returns and a handsome corpus on retirement.

A Brief guide to Income tax returns filing - PY 2012-13 / FY 2013-14

Select your relevant form

 

ITR1

• Income from salary / pension
• Income from one house property (excluding losses brought forward from previous year)
• Income from other sources (excluding lottery, horse races)

ITR2 – ITR1 categories plus / or 

• Income from Capital Gains
• Income from other sources including Lottery, races 

ITR3 

• Income from partnership firms by way of salary, interest, bonus, commission includable under the head “Profits or Gains of business or profession”

ITR4

• Individual or HUF who is carrying on a proprietary business or profession

 ITR4S – ITR1 categories plus / or 

• Income from business computed under special provisions of section 44AD & 44AE of income tax act (presumptive taxation)

ITR5 

• Returns by Firms, Association of Persons, Body of Individuals

ITR6

• Returns by companies 

ITR7

• Returns under section 139(4A) , 139(4B), 139(4C) & 139(4D) – belated returns but before completion of assessment year

Compulsory E-filing of Returns with or without digital signature – Previous Year 12-13 / Assessment Year 13-14

ITR1, ITR2, ITR3, ITR4, ITR4S, ITR5 is mandated for compulsory e-filing (with or without digital signature) if income exceed Rs.5 lacs.  Income below Rs.5 lacs can go in for manual filing.

 

Compulsory E-filing of Returns with digital signature – Previous Year 12-13 / Assessment Year 13-14

 

ITR4 & ITR5 is mandatory for e-filing with digital signature if section 44AB is applicable (audit of accounts)

 

ITR6 is mandatory for e-filing with digital signature

 

How to file returns

Visit site https://incometaxindiaefiling.gov.in/ and download the relevant ITR in excel format.

 

View your 26AS following this link https://services.tdscpc.gov.in/serv/tapn/welcome26AS.xhtml. If you have not registered in income tax website, there will be a promt to register using your PAN.  After registration or login this site provides you all details of your tax deducted by your employer or any other person like your banker on interest income. Also it provides details of advance tax paid & details of high value transactions reported in your name. Cross check the tax deducted & advance tax, ensure that these figures are reflected in your ITR returns. If there is a mismatch then there will be query from income tax as to the mismatch. If there are any discrepancies take it up immediately with the TDS deducing authorities to correct if discrepancy is in TDS or take it up with your banker if discrepancy is in advance tax payment.

Once you have filled in the ITR, convert into an XML file and go to site https://incometaxindiaefiling.gov.in/e-Filing/MyAccount/UploadReturnsHome.html?ID=1707942105  to upload your returns. If you would wish to digitally sign your returns register your token in the “Profile settings” menu or follow this link https://incometaxindiaefiling.gov.in/e-Filing/MyAccount/UpdateDscDetailsLink.html?ID=579614307.  Upload the returns.

 

Download the acknowledgement and forward it to CPC Bengaluru, if you have digitally signed the return you need not forward to CPC Bengaluru.

Cheques / DD valid only for 3 months from 1.4.2012

From yesterday 1.4.2012 banks will not honour cheques / Demand Drafts which are more than 3 months.   So please ensure that your cheques / DDs are presented for clearing within 3 months.

This follows Reserve Bank of India has issued directions vide RBI/2011-12/251 - DBOD.AML BC.No.47/14.01.001/2011-12, under which it has directed banks from 1st April 2012, not to honour cheques / Drafts / Pay Orders / Banker’s Cheques which are more than 3 months old as against the current practice of 6 months.

100% FDI in Single Brand Retail

Department of Industrial Policy & Promotion (DIPP) has issued Press Note No.1 (2012 Series) dated 10.1.2012 through which it allows 100% FDI to be invested in Single Brand Retail.  International companies are now free to invest upto 100% in Single Brand Retail.  The following are the main conditions laid down for this 100% FDI investment

1. Products sold should be of Single Brand only
2. Products should be sold under the same brand internationally
3. The products should be branded during manufacture
4. The foreign investor should be the owner of the brand (not a person paying Royalty for the same)
5. If investment is more than 51% then 30% of the product sourcing should be done only through Indian Small / Cottage industries whose investment does not exceed USD 1 million in Plant & Machinery

Though the conditions stipulated above are quite stringent, there is always scope once the scheme is kicked in there will be further relaxation. 

Currently in Single Brand Retail sector there is not much investment due to the 51% cap, in fact as per statistics provided by Economic Times in its 11 Jan edition in the last three and half years only Rs.196 crores were brought in as FDI in Single Brand Retail, which surely does not talk about success of this scheme.  I also doubt by bringing in the above 5 conditions to run along with 100% FDI in Single Brand Retail there will be substantial flow of FDI.  It will be sometime before both the Government and FDI's get their act together and give this sector a much needed boost

Refund of excess TDS paid under Section 195

CBDT has issued circular number 7/2011 dated 27.9.2011 which seeks to amend circular number 7/2007 dated 23.10.2007.  If a deductor has deducted tax as per Double Taxation Avoidance Agreement (DTAA) and this rate of tax is higher than that prescribed under the Income Tax Act then the dedcutor can claim the difference between the lower income tax rate and DTAA rate as refund.  This amendment is made to avoid hardship to the resident deductor where deduction is made under a higher rate of DTAA

Documents Required for Registration under Service Tax

Order No.2/2011 - Service Tax dated 13.12.2011 issued under F.No.137/120/2011 of Ministry of Finance provide the following documents as mandatory for issuing registration under Service Tax Rules, 1994

• Copy of Permanent Account Number (PAN)
• Proof of Residence
• Constitution of Applicant
• Power of Attorney in respect of the Authorised Person

The above documents should be filed within 15 days of submitting of application for registration.  Within Seven days of submission of the application and all the above documents the Central Excise Officer should provide registration under Service Tax.

XBRL filing deadline extended to 31.12.2011

Ministry of Corporate Affairs has vide their Circular number 69/2011 dated 30.11.2011 extended the due date for filing of XBRL returns by eligible companies either within 60 days of their due date of filing of the returns or by 31.12.2011 whichever is later.  Technically the last date will be 31.12.2011 for all companies required to file XBRL returns this year.

"SET OFF" Imports vs Exports - Liberalisation of Procedures

Reserve Bank of India vide its circular

RBI/2011-12/264 A.P. (DIR Series) Circular No. 47 dt. 17.11.2011

has delegated powers to AD-1 Category banks to accept applications from exporters to "Set Off" Export Receivables against Import Payables.  Earlier this power was vested with RBI.  This is a step towards liberalisation of Export - Import procedures. 

 

The RBI cicurlar can be accessed at

 

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=6822&Mode=0

 

Apart from various conditions the main conditions which need to be followed by importer / exporters are :

• All documents relating to the transactions (import / export) should be provided to the banker
• Returns in Form "R" seperately for Import and Export transactions should be provided to AD
•  The "Set Off" will be against Imports & Exports which has been dealt with from the same overseas buyer and seller
• This facility will not be available from ACU countries namely - Bangladesh, Bhutan, Iran, Maldives, Myanmar, Nepal, Pakistan & Srilanka

This is quite a welcome step by RBI considering the volume of import / export transactions with a single entity.  This will be a beneficial move especially for companies which have subsidiary abroad or is a subsidiary of a company situated abroad.  This will not only help save transaction time but also transaction costs.

Extension of time for receipt of Export Proceeds to 1 year

RBI vides its circular

A.P. (DIR Series) Circular No.40, Dated- November 01, 2011

has yet again extended to twelve months (normal period six months) the period of realization and repatriation to India the full value of exports of goods or services. This effectively means that if an export is made on 1.10.2011 the proceeds of this export can be received within 1 year (ie) till 30.09.2012. This extension is applicable upto 30th September 2012.

This relaxation which is being now provided for almost 3 years now, is to help Indian exporters tide over American & European crises.

Validity of Cheques / Drafts / Pay Orders / Bankers Cheques reduced to 3 months

Reserve Bank of India has issued directions vide RBI/2011-12/251 - DBOD.AML BC.No.47/14.01.001/2011-12, under which it has directed banks from 1st April 2012, not to honour cheques / Drafts / Pay Orders / Banker’s Cheques which are more than 3 months old as against the current practice of 6 months.