Dec 14, 2012

What Life Is All About

Once upon a time, there was a girl who could do anything in the world she wanted.  All she had to do was choose something and focus.  So one day she sat down in front of a blank canvas and began to paint.  Every stroke was more perfect than the next, slowly and gracefully converging to build a flawless masterpiece.  And when she eventually finished painting, she stared proudly at her work and smiled.
It was obvious to the clouds and the stars, who were always watching over her, that she had a gift.  She was an artist.  And she knew it too.  She felt it in every fiber of her being.  But a few moments after she finished painting, she got anxious and quickly stood up.  Because she realized that while she had the ability to do anything in the world she wanted to do, she was simply spending her time moving paint around on a piece of canvas.
She felt like there was so much more in the world to see and do – so many options.  And if she ultimately decided to do something else with her life, then all the time she spent painting would be a waste.  So she glanced at her masterpiece one last time, and walked out the door into the moonlight.  And as she walked, she thought, and then she walked some more.
While she was walking, she didn’t notice the clouds and the stars in the sky who were trying to signal her, because she was preoccupied with an important decision she had to make.  She had to choose one thing to do out of all the possibilities in the world.  Should she practice medicine?  Or design buildings?  Or teach children?  She was utterly stumped.
Twenty-five years later, the girl began to cry.  Because she realized she had been walking for so long, and that over the years she had become so enamored by everything that she could do – the endless array of possibilities – that she hadn’t done anything meaningful at all.  And she learned, at last, that life isn’t about possibility – anything is possible.  Life is about making a decision – deciding to do something that moves you.
So the girl, who was no longer a girl, purchased some canvas and paint from a local craft store, drove to a nearby park, and began to paint.  One stroke gracefully led into the next just as it had so many moons ago.  And as she smiled, she continued painting through the day and into the night.  Because she had finally made a decision.  And there was still some time left to revel in the magic that life is all about.
Source :

Dec 13, 2012

New Cheque formats under New Cheque Truncation System introduced by RBI

Replace your old Cheque books
he latest directive RBI’s says that one  may not be able to use the old cheques with the implementation of the new Cheque Truncation System (CTS-2010) from next year onwards.  The CTS 2010, eliminates physical movement of cheques for the purpose of clearing. Instead, only the electronic images of the cheques, along with the key information, will be captured and transmitted for clearing. This will make the clearing process faster, more efficient and secure. However, in order to that being successful, patrons have to switch to new cheques which have to be issued with prescribed standard features latest by December 31.

This means that if you haven’t received the new form of cheque books already, then speak to your banks as early as you can. The replacement can be done using the following methods:
1. Send new cheque books by registered post and ask users to cancel the old ones. Customers would or may be asked to show proof of the cancellations, to the bank.
2. The Banks may also ask customers to surrender their older cheques.
3. Alternatively, the customers can also visit the banks themselves and surrender their old cheques and receive the CTS-compliant ones.
The Banks will not charge any replacement fee for this purpose.
Handling of EMIs: In the event of having issued post-dated cheques (PDCs) for supporting any EMIs for loans, the customer will have to issue fresh cheques to the service provider. The NBFCs who have accepted post-dated cheques for future EMI payments from their customers, have to get them replaced with new CTS-2010 standard compliant cheques latest by December 31, 2012. This will be applicable to all banks as well. 
Old Cheque encashments: Any Cheque which is lying with you should be encashed and should not be delayed. The payments will be honoured till 31st Decemeber 2012 only as per the RBI mandate.

Dec 11, 2012

Save more in PF but take home less as Salary

EPFO Clubs Basic Pay and Allowances


Mumbai: In a move that would increase savings of salaried employees while cutting their take-home pay, the Employees Provident Fund Organization has released a circular saying PF must be computed on the basis of basic pay and all allowances being paid to the employee. 
If EPFO insists on implementing the circular, the PF amount of employees would go up at the cost of their take-home salary since most companies havebeen computing PF contributions (at 12% each by the employer and employee) against basic salary and dearness allowance only..
The circular dated November 30, 2012, was issued after internal review meetings held in late November and has been forwarded to Employee Provident Fund offices across India.
The definition of basic wages has long been a contentious issue, with PF authorities claiming that companies split the basic wages into various allowances to reduce the quantum of PF contributions.
The circular aims at addressing this issue.
Reveal true income or face action: Govt
The Centre on Monday issued a stern message to taxpayers, asking them to reveal their true incomes and pay advance tax by December 15 or face action. Only 14.62 lakh individuals and corporates have disclosed taxable annual income above Rs 10 lakh for the current fiscal, according to the finance ministry. P 23 HCs’ rulings on basic pay behind EPFO move
 T he EPFO circular states that basic wages will include all allowances which are “ordinarily, necessarily and uniformly” paid to the employees. Thus, various allowances such as conveyance, educational allowance, medical allowance etc, will have to be taken into consideration while computing the PF contribution. 
Last year, the Madras high court and the MP high court in two separate cases had held that allowances paid by the employer to employees under different heads such as conveyance, education, food concession, medical, special holidays, night shift incentives, city compensatory allowance etc, qualified as basic wages under section 2(b) of the PF Act and needed to be included while computing the PF contribution.
Based on these judgments, PF officials carried out audits on India Inc andraised demands to recover the differential PF contributions. Later, pending dismissal of the writ petitions filed by these companies, the audits were held in abeyance.
“Following this circular, the PF officials may once again commence audits of Indian companies to ascertain whether the PF contribution has been rightly computed and deposited,” says Yatin Pathak, CA. Sonu Iyer, partner, Ernst and Young, said there were ways to beat higher PF cuts. Proviso to paragraph 26A of the PF scheme allows PF contributions by the employer and employees on a maximum notional level of Rs 6,500 per month, instead of the entire salary (including allowances). The rate remains the same at 12% each for the employer and employee contributions respectively.
 “Not many employers have opted for this route, as PF is part of the employees cost to company and it also
 gives a tax shield to employees. Now, if the employer organization wishes to exercise this option and computes PF contributions only against Rs 6,500 per month, it is not clear whether the PF authorities will oblige,” Iyer explains. 
Expatriate workers from India also have to contribute to PF, even if their salary is paid outside India (unless they have exemption owing to a social security arrangement with the country to which they have been deputed).
Unfortunately, for them, this notional limit of Rs 6,500 doesn’t apply. “If an employer has expat workers, there is a higher likelihood of their being subject to scrutiny by PF authorities,” adds Iyer. A similar matter is up for interpretation before the Supreme Court, but until then, PF authorities are likely to commence audits and raise demands on India Inc, based on the circular.

Nov 24, 2012

Due date for payment of Service Tax and Late Payment Panelty


As per the service tax rules framed by the Government of India, Payment of Service Tax should be made at regular intervals. The service tax collected by the service provider shall be paid to the credit of Central Government on a regular basis before the due date for payment of service tax and in case of late payment of service tax - interest shall also be payable on the late payment as prescribed.

In case you are still not sure about rates of service tax, you can check the current rates in force by referring here - Service Tax Rates.

As per rule 6 of the service tax rules 1994, the due date for payment of service tax is separate for individual/partnership firms and others.


The due date for payment of service tax in case of individual/partnership firm is 5th of the following quarter in which payment is received or service is provided whichever is earlier. However, in case the service tax provider opt for online payment, he is given a grace period of 1 days and thus the due date for payment of service tax is 6th of the following quarter.


For all service tax payers (except individuals and partnership firms), the DUE DATE for payment of service tax is 5th or 6th (Depending upon mode of payment) of the following month in which payment is collected or service is provided which ever is earlier. 


In case there is late payment of service tax to the Central Government, the payment shall be made along with interest compounded @18% (Simple Interest). Earlier the interest rate on late payment of service tax was 13% but increased to 18% from 1st April, 2011.


  1. If there is excess payment is made by mistake or due to any other reason, the excess amount paid may be adjusted against the service tax liability in the coming period or may claim refund of service tax if self adjustment is not possible.
  2. If any person liable to pay service tax has collected an amount is excess of the amount due from the service recipient, the whole of such amount collected in excess shall be deposited with central Government.
  3. If the payment is made by way of cheque, the date of payment of service tax shall be the date of cheque rather than the date of clearing of cheque. 

Due dates for filing of TDS/TCS returns

Due dates for filing of TDS/TCS returns are as below:
[Subject to Extension by the CBDT for specific quarters of a particular FY]

Form Nos. 24Q & 26Q
Form No. 27Q
Form No. 27EQ
April to June15 July15 July15 July
July to September15 October15 October15 October
October to December15 January15 January15 January
January to March15 May15 May15 May
Late filing consequences
Following are the consequences for delayed filing of TDS returns.
  1. There is a penalty provision of Rs 100 per day, for delayed filing of Quarterly statement under TDS or TCS.
  2. The filing and thereby consequences are treated separately for Form 24Q, 26Q, 27Q and 27EQ.

Nov 23, 2012

Advance Tax Payment : Due Date and Interest on Late Payment

If the income tax liability of any assessee is more than Rs.10,000.00 in any financial year, then he is liable to pay such tax in installments during the year itself rather than paying this tax at the end of the year. This tax which is payable during the year is called "Advance Tax"  or pay as you earn tax as tax is liable to be paid at the time of income to be earned, i.e. during the year rather than paying this tax at the end of the year.

Advance tax receipts help the government to receive the constant flow of tax receipt throughout the year, so that expenses can be incurred rather than receiving all tax payments at the end of year. Advance tax liable to be paid by all assessee like Salaried, Self Employed, Businessman, etc. before the filling of Income Tax Return.

For the Individuals with the salary as the sole source of income, advance tax would be taken care of by the TDS deducted by the employer at the time of payment of salaries as reflected in form 16 and thus there would hardly be any advance tax payable.For all assessee earning income from any source other than salary, advance tax is payable in installments as explained below.


Advance tax is liable to be paid as per the following schedule :

Assessee other than Companies
Due Date Amount Payable
On or before 15th September Not less than 30% of the advance tax liability
On or before 15th December Not less than 60% of the advance tax liability as reduced by the amount if any, paid in earlier installment
On or before 15th March 100% of the advance tax liability as reduced by the amount if any, paid in earlier installment

In case of Companies
Due Date Amount Payable
On or before 15th June Not less than 15% of the advance tax liability
On or before 15th September Not less than 45% of the advance tax liability as reduced by the amount if any, paid in earlier installment
On or before 15th December Not less than 75% of the advance tax liability as reduced by the amount if any, paid in earlier installment
On or before 15th March 100% of the advance tax liability as reduced by the amount if any, paid in earlier installment 

Payment of advance Income tax is to be made through Callan no. 280 by selecting advance tax (100) as the type of payment.


Advance tax is liable to be paid by estimating the current year income and then applying the tax rates as per the Income Tax Slabs in force. The Advance tax shall be computed as under :

Add/Less Particular Amount
Income under 5 heads xxx
Less: Brought Forward losses and allowance xxx
Gross total Income xxx
Less: Chapter VI-A Deduction xxx
Estimated Total Income xxx
Tax on Estimated total income xxx
Add: Surcharge (if any) xxx
Total tax Payable xxx
Less: Relief U/S 89 xxx
Tax Liability xxx
Add: 2% Education Cess xxx
Add: 1% SAHEC xxx
Total tax Liability xxx
Less: Relief u/s 90, 90A, 91 xxx
Less: MAT Credit u/s 115JA xxx
Less: TDS as shown in form 16/16A and reflected in form 26AS xxx
Advance Tax Liability xxx


Although Advance tax is liable to be paid on all incomes including Capital Gains. It is not practically possible to estimate the capital gains which may arise in an year. Therefore, in such cases, it is provided that if any such income arises after the due date of any installment, then the entire amount of tax payable on such capital gain (after claiming exemption under section 54) shall be paid in remaining installments of capital gains which are due. If the entire amount of tax payable is so paid, then no interest on late payment will be leviable.


If the income tax is not payable as per the above schedule, interest is liable to be paid late payment of advance tax as follows :

  1. Interest under section 234C - Interest @ 1% p.m. is payable if the tax is not paid as per the above schedule, i.e. for Deferment of advance tax.
  2. Interest under section 234B - Interest @ 1% p.m. is payable if 90% of the tax is not paid before the end of the financial year, i.e. default in payment of advance tax.
For computing interest u/s 234A/B/C and any other interest income, Tax shall be rounded off to nearest hundred and fraction of hundred shall be ignored.


Tax on Interest on Saving Bank Account


Earlier the interest on saving bank account were fixed by the RBI and was 4% p.a. These interest rate were controlled by RBI and all banks were required to pay the same interest rate irrespective of the amount of money kept in the bank.

But on 25th October'11 RBI regularized the system of fixing the interest rates. This de-regularization meant that all banks were now free to fix the interest rates to be paid.This lead to different banks paid different rates and this is how this should be in a free economy.

Moreover, RBI stated that Banks can also opt for the option of paying differential interest rates, i.e. it can pay differential interest rates if the amount is less than Rs.100,000.00 and a different interest for amount over Rs.100,000.00

After this announcement of de-regularization of interest rates, different banks have started paying different interest rates. To attract more customers to open saving bank account in their banks, banks have also started paying high interest on saving bank account which has ultimately benefit to customer. From 4% p.a. being paid on saving bank account prior to the de-regularization, the interest rates have shot up considerably with some banks paying as high as 6-7% p.a.


Another change which has come after this de-regularization of interest rates is in the manner of computation of interest. Earlier interest was paid on the minimum balance kept in the bank during the month. Thus, if you have Rs.90,000.00 in your bank account for the whole month and for 1 day balance is Rs.10,000.00, you would be paid interest only on Rs.10,000.00 and not on Rs.90,000.00.

But now this has changed and the interest is paid on a daily basis on the end of day balance in the account. This has again benefited the customer as they would now be earning more interest not only due to higher interest rates but also due to change in the manner of computation.


The interest earned on saving bank account was earlier taxable as per the slab rates. But w.e.t 1st April'12 an amendment has been brought in the Income Tax Act and a deduction of Rs.10,000.00 is allowed under section 80TTA for interest earned from :


The amount earned over and above this Rs.10,000.00 would be liable to tax as per the Income Tax Slab Rates.
This exemption is only available to individuals and HUF's and is over and above the deduction provided under section 80C.