Roll-back of taxes - possible?

Article in Nanayam Vikatan dated 29/12/2013 by CA G Karthikeyan FCA:

வருமான வரி ரத்து...

நடைமுறையில் சாத்தியப்படுமா?

வருமான வரி இல்லாத நாடுகளின் வரிசையில் இந்தியா வருமா?

'நாங்கள் ஆட்சிக்கு வந்தால் வருமான வரி, உற்பத்தி வரி, விற்பனை வரி விதிப்பை ரத்து செய்வோம்' என்று பா.ஜ.க தலைவர் நிதின் கட்காரி கூறியது வியாபாரிகளிடமும், தொழில்புரிவோர்களிடமும் பெரும் பரபரப்பை ஏற்படுத்தியுள்ளது. இன்றைய பொருளாதாரச் சூழ்நிலையில் உற்பத்தி வரி, விற்பனை வரி மற்றும் வருமான வரி ஆகியவற்றை ரத்து செய்வது நடைமுறைச் சாத்தியமா என்பது பெரிய கேள்வி. முதலில், குறைந்தபட்சம் வருமான வரியையாவது நம்மால் ரத்து செய்ய முடியுமா என்பது குறித்து ஆராய்வோம்.

வரி விதிப்பு ஏன்?

வருமான வரி, மத்திய விற்பனை வரி மற்றும் உற்பத்தி வரி ஆகிய மூன்றும் இந்தியாவின் கடந்த ஆண்டு பட்ஜெட் வருவாயில் 50 சதவிகிதத்துக்கும் மேல் திரட்ட வழிவகுத்தது. இதனைக்கொண்டு  நாட்டின் அபிவிருத்தி, பாதுகாப்பு மற்றும் இதர அரசு திட்டங்களுக்கு செலவிடப்படுகிறது.

உலக நாடுகளில், வளரும் நாடுகள் மற்றும் வளர்ந்த நாடுகளில் 96 சதவிகிதத்துக்கு மேற்பட்ட நாடுகளில் வருமான வரி இன்றும் நடைமுறையில் இருந்துவருகிறது. 'வரிச் சொர்க்கம்’ என்று சொல்லப்படும் வருமான வரி இல்லாத நாடுகள் இயற்கைவளம் அல்லது எண்ணெய் வளம் மிகுந்ததாகவும், குறைவான மக்கள்தொகையுடனும், வருமான வேறுபாடு அதிக அளவில் இல்லாததாகவும் உள்ளது. இதனால், வருமான வரி இல்லாமல் இந்த அரசுகள் செயல்பட முடிகிறது.  

மொரீசியஸ், சைப்ரஸ், கேமன் தீவுகள், பஹாமா போன்ற சில நாடுகள் தங்கள் நாட்டின் மூலம் மற்ற நாடுகளுக்கு முதலீடு செய்ய சேவை வழிவகுக்கும் கேப்பிட்டல் கெய்ன் டாக்ஸ் மற்றும் இதர வரிகளை ரத்து செய்துள்ளன. இதனால் ஏற்படும் வருமானத்தை மனதில் கொண்டு வருமான வரியை முற்றிலும் ரத்து செய்துள்ளன.

மாற்றுத் திட்டம் என்ன?

வருமான வரி, உற்பத்தி வரி போன்ற வரி விதிப்பினால், அரசாங்கம் ஆண்டுக்கு சுமார் 14 லட்சம் கோடி ரூபாய் பெறுகிறது. இந்த வரிகள் ரத்தானால், இந்த வருவாய் நமக்கு வராமலே போகும். இதனை சரிக்கட்ட பா.ஜ.க தலைவர் சொல்லும் மாற்றுத் திட்டம், செய்யப்படும் செலவுகள் அல்லது வங்கிப் பரிவர்த்தனைகள்மேல் 1.5% வரி விதிப்பு செய்வதுதான். இதனைச் சுருக்கமாக, 'செலவு வரி’ என்று சொல்லலாம். இதனால், ஆண்டுக்கு 40 லட்சம் கோடி ரூபாய் அரசுக்கு வருமானமாகக் கிடைக்கும் என்று கணிக்கப்படுகிறது. 'இது வரி விதிப்பைவிட சில மடங்கு கூடுதலான வருமானமாகும்’ என்கிறார் பா.ஜ.க தலைவர்.

மாற்றுத் திட்டத்தின் சவால்கள்!

தற்போதுள்ள வருமான வரி விதிப்பானது, அதிக வருமானம் உள்ளவர்கள் அதிகவரி கட்டவும்; குறைந்த வருமானம் உள்ளவர்கள் குறைந்த வரி கட்டும் வகை யிலும் ஏற்படுத்தப்பட்ட முற்போக்கான வரிவிதிப்பு (Progressive Taxation) முறையாகும்.

ஆனால், செலவு வரி என்பது எல்லாவித செலவுகளுக்கும் அனைத்து மக்களாலும் செலுத்தப்படவேண்டிய வரி. அம்பானி முதல் ஆட்டோ ரிக்ஷா ஓட்டுநர் வரை ஒரே விகித வரியைச் செலுத்தவேண்டும். இதனால், ஏழைகள் அதிக ஏழைகளாகவும்; பணக்காரர்கள் அதிக பணக்காரராகவும் மாறவே  வாய்ப்பு அதிகரிக்கும். இதனால், ஏழை - பணக்காரர் வித்தியாசம் பெருகவே செய்யும்.  

வருமான வரிச் சட்டப் பிரிவுகளின்படி, 20,000 ரூபாய்க்கு மேல் கடனாகக் கொடுப்பது, பெறுவது மற்றும் கொள்முதல் செய்வது போன்றவை தவிர்க்கப்படவேண்டிய விதிகளாக தற்போது உள்ளது. வருமான வரிச் சட்டமே ரத்து செய்யும்போது, எப்படி வங்கிப் பரிவர்த்தனைகளை வங்கிகள் மூலம் அமல்படுத்தி அதற்கு வரி விதிக்க முடியும் என்பது ஒரு கேள்விக்குறி.

வருமான வரி நாட்டின் வருவாயாக மட்டும் அல்லாமல், பணச்சலவை மோசடி மற்றும் தீவிரவாதிகளின் செயல்கள் ஆகியவற்றைக் கண்காணிக்க ஏதுவாகும் சட்டமாக இருந்து வருகிறது. இதற்கு மாற்றுத் திட்டத்தில் எப்படி சட்டத் திருத்தம் செய்யப்படும் என்கிற விளக்கம் இல்லை.

ஜிஎஸ்டி (Goods & Services Tax) என்ற வரியை அமல்படுத்த அரசாங்கம் இவ்வளவு ஆண்டுகள் எடுத்துவரும் நிலையில், நீண்டகாலமாக இருந்துவரும் வரிகளை முற்றிலும் நீக்கி, புதிய செலவு வரித் திட்டத்தை ஏற்படுத்தி அமல்படுத்துவது என்பது ஒரு கானல் நீர்போல உள்ளது. புதிய வரிச் சட்டத்தை ஏற்படுத்தி அதை நடைமுறைக்கு கொண்டு வருவது அதிக குளறுபடிக்கே வழிவகுக்கும்.

அரசு நிர்வாகக் குறைகளை அகற்றுவது, குறைந்த வரி விதிப்பு, தொந்தரவில்லாத வரி வசூலிப்பு, வசூலித்த வரியை சரியான முறையில் செலவிடுதல் போன்ற சாத்தியமான மாற்றங்களைச் செய்தாலே போதுமே!

http://www.vikatan.com/new/article.php?module=magazine&aid=90466

Repatriation of home sale funds from India - Article in The Hindu

We live in an age where many youngsters go abroad for higher studies or job and have already settled down in other countries. Many of them are citizens of another country and have only family/ancestral ties to their homeland – India.

The other side of this situation is that the aging parents who are still in India must fend for themselves and find it easier to live in gated communities or in senior citizen homes to have easier access to immediate medical care, companionship, safety and help with errands.

As a result, many of the older generation are selling off independent homes and moving into such gated communities/senior homes. It goes without saying that a substantial portion of sale proceeds is willed to their Non-resident Indians (NRI) children. 

Sometimes, ancestral property is also received by NRIs by way of partition deeds or gifts from parents or grandparents and they prefer to sell the property and repatriate the funds.

Most NRIs who have settled down abroad would like to repatriate these funds from sale proceeds. It may be of use for the education of their children or to buy a property in their adopted homeland.

Additionally, with most countries tightening up on foreign investments and related reporting, it has become a hassle to maintain accounts and property here and then report the same to tax authorities in both countries.

Residents of the U.S. especially face this dilemma as they are required to report every year details of their foreign financials assets held in excess of certain prescribed dollar limits.

Thus, it is essential to be aware of the formalities involved in repatriating funds abroad from India as such repatriation leads to movement of forex and is governed by RBI and FEMA regulations.

General permission is available to the NRIs or Person of Indian Origins to repatriate the sale proceeds of immovable property inherited from a person resident in India.

The NRIs/PIO may repatriate an amount not exceeding USD one million, per financial year, on production of documentary evidence in support of acquisition / inheritance of assets, an undertaking by the remitter and certificate by a Chartered Accountant in the formats prescribed by the Central Board of Direct Taxes.

The sale proceeds of immovable property acquired by way of gift/inheritance should be credited to NRO account only. From the balance in the NRO account, NRI/PIO may remit up to USD one million, per financial year, subject to the satisfaction of Authorized Dealer and payment of applicable taxes.

The capital gains tax is also payable in their country of residence though they can avail credit for the taxes paid in India.

Breaking ties with the homeland is never an easy task, no matter how green the grass may be on the other side. Questions of inheritance, sale and repatriation of funds only add to the confusion.

G. Karthikeyan,

Coimbatore-based

Chartered Accountant.

If original return is efiled, so should be the revised return

Centralised Return Processing Scheme, 2011 is out vide NOTIFICATION NO.2/2012[F.NO.142/27/2011-SO(TPL)], DATED 4-1-2012 by which CBDT in exercise of the powers conferred by sub-section (1A) of section 143 of Income Tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes  specifies scheme for processing of returns of income. Here are major points of scheme

Receipt and Acknowledgment of Return of Income.—

There is no major change in mode of filing return by digital signature or without digital signature .Three important points to note however are

1. The date of transmitting the data electronically shall be the date of furnishing the return if the Form ITR-V is furnished in the prescribed manner and within the period specified.
2. In case Form ITR-V furnished after the prescribed time is rejected on account of it being unsigned, illegible, mutilated, bad quality or not as per specification, it shall be deemed that the return in respect of which the Form ITR-V has been filed was never furnished and it shall be incumbent on the person to electronically file the return of income again followed by submission of the new Form ITR-V.
3. The Commissioner may call for fresh Form ITR-V in special circumstances, where the Form ITR-V earlier submitted cannot be considered for technical reasons.

Revised return of income.—

(1) If the original return of income is an electronically filed return, the revised return shall be filed through electronic mode only.

(2)  The Centre will process only the revised return and no further action will be taken on the original return if it has not already been processed.

Invalid or defective return.

(i)  The Commissioner may declare-

(a)  a return invalid for non-compliance of procedure for using any software not validated and approved by the Director General.

(b)  a return defective under sub-section (9) of section 139 of the Act on account of incomplete or inconsistent information in the return or in the schedules or for any other reason.

(ii)  In case of a defective return, the Centre shall intimate this to the person through e-mail or by placing a suitable communication on the e-filing website.

(iii)  A person may comply with the notice regarding defective return by uploading the rectified return within the period of time mentioned in the notice.

(iv)  The Commissioner may, in order to avoid hardship to the person, condone the delay in uploading of rectified return.

(v)  In case no response is received from the person in reply to the notice of defective return, the Commissioner may declare a return as not having been uploaded at all or process the return on the basis of information available.

Processing of Returns.—

(i)  The Centre shall process a valid return of income in the following manner, namely:-

(a)  the sum payable to, or the amount of refund due to, the person shall be determined after credit of such Tax collected at Source (TCS), Tax Deducted at Source (TDS) and tax payment claims which can be automatically validated with reference to data uploaded through TDS and TCS statements by the deductors or the collectors, as the case may be, and tax payment challans reported through authorised banks in accordance with the procedures adopted by the Centre in this regard.

(b)  an intimation shall be generated electronically and sent to the person by e-mail specifying the sum determined to be payable by, or the amount of the refund due to, the person; and

(c)  any intimation to the person to pay any sum determined to be payable shall be deemed to be a notice of demand as per the provisions of section 156 of the Act and all other provisions of the Act shall be applicable accordingly.

Rectification of mistake.—

(i)  With a view to rectifying any mistake apparent from the record under section 154 of the Act, the Centre, on its own or on receiving an application from the person, may amend any order or intimation passed or sent by it under the provisions of the Act.

(ii)  An application for rectification shall be filed electronically to the Centre in the format prescribed and will be processed in the same manner as a return of income-tax.

(iii)  Where the rectification order results in a demand of tax, the order under section 154 of the Act passed by the Centre shall be deemed to be a notice of demand under section 156 of the Income-tax Act.

(iv)  In case of error in processing due to an error in data entry or a software error or otherwise, resulting in excess refund being computed or reduction in demand of tax, the same will be corrected on its own by the Centre by passing a rectification order and the excess amount shall be recovered as per the provisions of the Act.

(v)  Where a rectification has the effect of enhancing an assessment or reducing the refund or otherwise increasing the liability of the person, an intimation to this effect shall be sent to the person electronically by the Centre and the reply of the person has to be furnished through electronic mode only.

10. Adjustment against outstanding tax demand.—The set-off of refund, if any, arising from the processing of a return, against tax remaining payable will be done by using the details of outstanding tax demand lying against the person as uploaded onto the system of the Centre by the Assessing Officer.

Appellate Proceedings.—

(i)  Where a return is processed at the Centre, the appeal proceedings relating to the processing of the return shall lie with Commissioner of Income-tax (Appeals) [CIT(A)] having jurisdiction over the jurisdictional Assessing Officer and any reference to Commissioner (Appeals) in any communication from the Centre shall mean such jurisdictional CIT (Appeals).

(ii)  Remand reports, giving effect to appellate order and any other reports to be furnished before the CIT (Appeals) shall be submitted by the Assessing Officer having jurisdiction as regards the person.

No personal appearance in the Centre.—

(i)  A person shall not be required to appear either personally or through authorised representative before the authorities at the Centre in connection with any proceedings.

(ii)  Written or electronic communication from such person or authorized representative in the format specified by the Centre in this respect shall be sufficient compliance of the query or clarification received from the Centre.

(iii)  The Centre may call for such clarification, evidence or document as may be required for the purpose of facilitating the processing of return and all such clarification, evidence or document shall be furnished electronically.

Service of notice or communication.—

(i)  The service of a notice or order or any other communication by the Centre may be made by-

  a.  sending it by post;

  b.  delivering or transmitting its copy thereof, electronically to the person sent by the Centre’s e-mail;

  c.  placing its copy in the registered electronic account of the person on the official website ; or

  d.  any of the modes mentioned in sub-section (1) of section 282 of the Act.

(ii)  The date of posting of any such communication on official website, e-mail or other electronic medium shall be deemed to be the date of service.

(iii)  The intimation, orders and notices shall be computer generated and need not carry physical signature of the person signing it.

TDS relevance for foreign commissions

The question is if the commission payment to a non-resident is chargeable to income tax in India.

Gangesh Exports Ltd is engaged in the manufacture of precision sorting machinery for agricultural products. It sells machinery to various countries, especially developing countries, through agents in the respective countries.

These overseas agents are paid commission for effecting sales abroad. No TDS was deducted by Gangesh Exports on these commission payments, in view of the fact that the payments were made outside India, and the overseas agents are non-residents.

However, during the assessment proceedings, the Assessing officer held that the payment is not only commission for effecting sales, but also qualifies as related services rendered for sales, and hence it should have been subjected to TDS.

The Assessing officer's contention is that the said commission amount be disallowed as expenditure, and be added as income under Section 40 (a) (i) in view of non-deduction of tax on such commission payment.

Circular 23 is explicit that if an overseas agent operates in his own country, the entire commission received by him from an Indian exporter isn't liable to tax in India. However, recent withdrawal of Circular 23 provided a perception for some tax officials that such a situation would warrant withholding of tax on commission payments to overseas agents.

Though few Tribunal rulings are clear that no withholding tax is required on mere sales commission, the Revenue seems to prefer the verdict of the court in such an instance.

SECTION 195

For many of the exporters, especially of capital goods, payment of commission to overseas agents is inevitable, and the RBI has permitted payment of that without any prior approval.

The withholding provisions for foreign payments are governed by Section 195 of the Income Tax Act, which says that any person who makes payment to a non-resident has tax deduction obligations at specified rates, if the said payment is chargeable to income tax in India.

The next question that needs an answer is if the commission payment to a non-resident is chargeable to income tax in India. Taxable income of a non-resident includes all income, from whatever source derived, that is deemed to accrue or arise in India.

The income deemed to arise/accrue includes any income of any person who has business connections in India, as well as any fees received towards technical services. Also, if the overseas agent has any permanent establishment in India, it shall be included as income.

In the given situation, Gangesh exports has paid mere sales commission for effecting the sales, and there is no other activity involved in this transaction; hence, it doesn't necessitate deduction of TDS on sales commission.

PERMANENT ESTABLISHMENT

However, the situation would have been different had that overseas agent carried out additional functions, such as demonstration of the machinery, imparting initial training to the buyers team etc, in which case, it would be fees for technical services.

Such situations not only warrant the Indian exporter to withhold tax, but also to examine if the Indian exporter would be deemed to have a Permanent Establishment (PE) in the respective country. A reverse situation would depict the picture clearly, wherein a German exporter of machinery, having an agent in India, who not only sells machinery but also imparts training, would be construed as a PE in India.

The major test is if the source of income stems outside India or in India, which is determined by the nature of activities taken up by the agent, though actual payment is made outside India. Therefore, care needs to be exercised while deciding on TDS applicability and evaluating the nature of activities rendered by the overseas sales agent, though the nomenclature may be “agent”.

The current scale of industrialisation and globalisation across the globe makes it impossible for countries to remain independent of each other as far as complex international financial transactions are concerned. Tax law changes in any country influence its trade and policy decisions. Tax structures also determine inflow and outflow of investment and capital, and can inhibit or promote growth.

It is a recommended practice to get the views of your professional tax consultant whenever or wherever a question of such demarcation arises.