JUNE 23, 2009
Income Tax: Dear FM, give employees more 'direct relief'
By TIOL Netizens Community
EVERY tax payer other than salary employees are paying Income Tax on Net Receipts (Gross Income less expenses) but Salary employee pays tax on Gross Income. Hence standard deduction should be given to salary employees.
Punjab Mokase
Even salaried employee need to be allowed some standard deduction to meet their other expenses, otherwise huge chunk of their hard earned money is deducted as tax having no option to show deductions as in case of business income.
Sanjay Heda
Taxation of gain on shares & securities sold through stock exchange
For individuals it is very difficult to maintain the detail account concerning their sales of equity shares etc
Presently individuals are having on line facilities to buy and sell their investment.
Volume of such transaction because of available facilities are substantially higher as very often it includes short term / same day transaction, because they prefer to shift from one transaction to other due to various reasons, may be booking of some profit available to them in short term.
The transaction already suffered a number taxes such as STT, turnover tax, etc etc.
It is suggested that all sales transaction through the exchange should also be made subject to TDS , and the individuals may be allowed to exercise the option to treat the TDS on such transaction as discharge of their liability relating to such transaction , granting them an exemption from including such transaction in their tax return.
For them the total income and gross total income should be as one excluding the transaction through stock exchange. However they may claim relief on account excessive TDS if they like so following the normal provision.
This will certainly increase the volume of transaction through stock exchange, as it will avoid the litigation including the risk concerning the nature of transaction as business venture/gain besides the requirement of maintaining the details of transaction etc.
A reasonable rate of TDS may be prescribed incorporating the provision for TDS on all consideration of sales transaction. Rate of TDS may be one half the STT amount.
Zero point five per cent of sales consideration may uniformly be treated as income/gain on all such transaction and a TDS @ zero point zero one per cent will cover the liability on income/gain as the case may be, as a few thereto are long term exempted, while the other be the short term and so on.
VK Shah
Scrap Wealth Tax
1. FBT should be scrapped due to the procedural rigors. In any case, should be removed for items like travel.
2. Wealth tax in the present arena should be scrapped.
3. Depreciation rates should be enhanced
Apurva Shah
TDS – Impossible?
Latest CBDT circular on TDS remittances is highly impossible since
++ Forms are not downloaded in income tax website
++ For all sections one challan is allowed
++ In case of monthly line items were more than 1000 nos. , due to internet connectivity, chances of failure in uploading process would be more. We come across many such situations while processing challans in SBI website now.
++ Signing authority for Form No.15CA is Managing Director, how practically it is possible
++ When present e-tds upload allows 90% of deductees with PAN nos. why new procedure of upload of Form No.15CA/15CB/Form No.17 requires 100% deductees should have PAN nos.
++ Allow more than one remittance for each month so that line items shall be reduced at the time of upload of monthly load on 7 th
++ Try to extend the date of upload to 15 th , since all corporates would be busy in month close activities till 5 th / 6 th of every month.
S.Meenakshi Sundaram
Bank Advances
Hon'ble FM,
1. Section 36(1)(viia)(a) allows deduction in respect of provision for doubtful loans and advances made by scheduled banks (other than foreign banks) in respect of rural branches. The limit at present is aggregate of 10% of average monthly advances made by rural branches of the bank and 7.5% of total income (before allowing deduction under this clause and before allowing deduction under Chapter VI-A).
2. Section 36(1)(vii) of the Act allows deduction in respect of bad debts. The Proviso to clause (vii) of sub-section (1)of section 36 stipulates that in the case of an assessee to which clause (viia) applies, the amount of the deduction relating to bad debts shall be limited to the amount by which such bad debt exceeds the credit balance in the provision for bad and doubtful debts made..
3. Section 36(2)(v) provides that where bad debt relates to advances made by the assessee to which clause (viia) of sub-section (1) of section 36 applies, no such deduction shall be allowed unless the assessee has debited the amount of bad debt in that previous year to the provision for bad and doubtful debts account made under that clause.
4. The controversy arises whether the Proviso to clause (vii) of sub-section (1) of section 36 and clause (v) of sub-section (2) of section 36 relate to advances made by rural branches only or they relate to advances made by rural branches and non-rural branches of the bank. The judicial interpretation made by Kerala High Court and other courts and different benches of the tribunal (e.g. South Indian Bank, Catholic Ceriyan Bank, Karnataka Bank, Federal Bank, etc.) on the basis of various circulars of CBDT is that the Proviso to clause (vii) of sub-section (1) of section 36 and clause (v) of sub-section (2) of section 36 relate to non-performing advances made by the rural branches of bank. They do not relate to non-performing advances made by urban or semi-urban branches of bank. Therefore, in case of rural advances the amount of bad debts shall be allowed, if the amount of such debts exceeds the credit balance of provision for bad and doubtful debts allowed till the previous assessment year and such debts are debited to provision for bad and doubtful debts account. In other words, deduction for provision for bad and doubtful debts under section 36(1)(viia) is allowed only in respect of advances made by rural branches and the restriction under the Proviso to clause (vii) of sub-section (1) of section 36 is meant only for such rural advances of a bank and deduction for bad debts in respect of non-rural branches is not to be limited by the Proviso to clause (vii) of sub- section (1) of section 36. Thus bad debts pertaining to non-rural brnches should be allowed as deduction under section 36(1)(vii) if such debts are actually written off in the books of account of the bank as held in the case of Oman International Bank.
5. On the other hand the Revenue has been taking a stand that in so far as the Proviso to clause (vii) of sub-section (1) of section 36 and clause (v) of sub-section (2) of section 36 are concerned there is no distinction between rural branches and non-rural branches and accordingly, seeks to allow the aggregate amount of bad debts of both rural and non-rural branches , if such amount exceeds the credit balance of provision for bad and doubtful debts account. The spirits of the departmental circulars, intention of the legislature and the judicial interpretation are not considered by the Revenue. As a result a number of appeals involving substantial amount are pending at various appellate forums as of today.
6. In view of above Your Honour is requested to kindly look into this matter and bring appropriate certificatory amendment in section 36(1) and 36(2) of the Act to resolve the controversy once for all.
7. There is another controversy whether banks can claim deduction for provision for bad and doubtful debts for the amount calculated by applying the formula laid down in section 36(1)(viia), even if the amount of provision for bad and doubtful debts made in the books of account is less than the amount calculated by applying the said formula. One judicial interpretation is in favour of the assessee. Kelkar Committee had recommended for amendment to provide specifically that the amount of deduction under section 36(1)(viia) should be limited to the amount of provision for bad and doubtful debts made in the books of account of the assessee. This amendment may also be brought in by your Honour.
CA Barun Kumar Ghosh