Mechanism and chargeability on Service tax

Most of the income sources to the Indian government come from the Service tax, and many service providers seek the legal advice to know whether they are applicable for the service tax.The service tax is the part of the Financial Act, and in the Union list they added this tax to assist the constitution to impose the tax. They impose the tax only on the services and not on the goods, but even for the services there are certain rules it has to abide to pay tax.A service provider should know the type of business he runs, he should know whether he sells goods or provides services, or providing both goods and services. And if the business provides both goods and services, then they are liable to pay the service tax along with a VAT. Example for this kind of business is Constructors, Restaurant, Builders, etc. And if the business is providing the services, they have to know about the charging section of the tax.

The services provided outside India is not liable, only those services provided in India are taxable under the service tax, and the non-profit business is not liable to tax. Two individuals are necessary to impose the service tax. Thus, even if there is any business within the department of a same company without any return is not applicable to tax.An individual has to check if the business is under the negative list or declared services; if they are in the declared service list, then they are also under the service tax, hence liable to pay the service tax. For the business that is not mentioned in the negative list have to check if there are any exemptions. Because if there are any exemptions then they are not applicable to the tax.For the business that has an annual income of less than ten thousand, are not applicable to pay the tax, because the small scale business have the SSI exemption, and the rate of the tax is also considered. Thus understanding the business and knowing the service tax mechanism will enable a service provider to know whether their service is applicable to the Service tax.

Smartphones can provide Instant loans

The Reserve Bank of India allowed one hundred and forty five banks to give mobile banking service and they can provide instant loan as a provider of the mobile wallet.With an increase in the number of smartphone users and the growth of the mobile banking is encouraging the service providers to facilitate an added service. The companies like One MobiKwik, Payworld and Paytm are planning to offer instant loans in addition to the existing e-debit card service.According to the recent research, the mobile transaction has a rapid growth with around 39.49 million settlements which values around forty nine thousand crore, and people are welcoming the idea of using their smartphone for the transaction. The experts are expecting one thousand two hundred crore transaction in the near future because of the increasing number of users.

Bipin Preet Singh, founder of One MobiKwik Systems said in an interview that they are planning to launch the micro credit programme in the beginning of May; the trials are over and they are waiting for the official approval. He said that in the testing phase, they provided small loans for hundred to five hundred rupees, and after the official approval, they will offer five thousand rupees as an instant loan amount for the eligible users.The mobile wallet companies partner with the non-banking finance companies and commercial banks to analyze the users who have got the instant loan. The Paytm is going to open a payments bank, and the users who have an account in their banks can only avail the instant mobile loans. The date for repayment of the loan amount and the interest rate will depend on the user’s transaction history.In case of security, a user cannot access another user’s e-wallet even if he has the username and password. Once when they find a duplicate or fraud account, that user is blocked from the system, and he can no longer create a new account.

State government is answerable to the online company

The Gujarat state government made an amendment in the state’s tax on March 31st, 2001 on the Entry of Specified goods in the local area.Flipkart is an ecommerce industry where the sellers and buyers can meet in one platform, the sellers can display their products and the customers can place their orders. The website is only a medium where the buyers and sellers make their business transactions. This online company filed a petition against the Gujarat state government for imposing the entry tax on the goods sold in the state through the online shopping. In the State financial budget for the financial year 2016-17 the Gujarat government introduced the entry tax on ecommerce businesses. And the government ordered the online company to differentiate the VAT between Gujarat and the state from where they supply the product and vice versa.

The company filed a petition in the Gujarat high court under R S Reddy, the Chief Justice and V M Pancholi, the Justice regarding the tax imposition. The company said that they registered all the sellers in their business, according to the state Value added tax CST (Central Sales Tax).Dhaval K Shah, the advocate of Flipkart submitted the list of sellers and their registration under the Value Added Tax CST, and also said that the detail can be found on the website. The sellers outside the state also pay their respective Central sales tax. The advocate also said that the company is only a medium for managing their logistics, because the sellers hand over the invoice and the particular product to the logistics department to deliver it to the customer.On hearing the case, the Gujarat high court ordered the Sales tax Commissioner and the state government to respond to the petition by June 3rd, 2016.

Small diamond units closed because of tax levy

The Surat Municipal Corporation (SMC) started to campaign on collecting the professional tax from the diamond manufactures. The government has an annual target of seventy five crore from the diamond industry.
Mahidharpura, Varachha and Kataragam are the diamond hubs in Surat. Navadiya said that and on hearing the campaign by the Surat Municipal Corporation, the diamond merchants threatened to close their units. The government imposed the professional tax to increase the revenue of the government.By the end of March, the civic body sent a notice to the small diamond merchants to pay their professional tax. On receiving the notification, about 2 dozen merchants in Varachha who have 4 to 5 diamond emery wheels closed their units.

The merchants requested help from the SDA (Surat Diamond Association) and the GJEPC (Gems and Jewellery Export Promotion Council) to solve the issue between them and the Municipal Corporation.In Surat, there are about two thousand small diamond units that process diamonds and they also work for the medium and big diamond units. The small diamond unit employs less than thirty workers in their unit, and they are not permanent workers. And they do not record the changing diamond workers. To pay the professional tax, the small unit owners deduct a certain amount from the worker’s wages. The small diamond unit owner, Mansukh Mangukia had fifteen workers in his unit; because of the imposition of the professional tax he closed his unit. He also said that the government only targets the small scale industry while the big diamond merchants have no pressure regarding tax issues.

Economy move towards higher growth and lower inflation

India is a developing country and to sustain in growth rate the government has to focus on the business, and it involves tax policies and also the issues related to the lands.Morgan Stanley is an American multinational financial services corporation, with its affiliates and subsidiaries provide services and securities to customers like individuals, corporations, financial institutions and governments. A report from Morgan Stanley stated that, the root cause of fighting against the macro environment in the past years is a sharp decline in productivity dynamics. Morgan Stanley also said that government policies helped to reverse productivity degrading policy and helped to cope up the macro adjustment cycle. And to maintain the growth, it is important to concentrate on the labor tax, infrastructure policies, land, etc.

And because of the lack of majority in the upper house, and due to constant resistance from the opposition party, the chance to approve a new bill in the parliament is lesser. But the government has plans to publicize the ordinance to change the Land Acquisition Act of 2013. A committee of members of the parliament is analyzing the bill and they have got the 6th extension of the term within four months. To facilitate the techniques of doing the business important, but minute steps is taken, especially in terms of the investment approval tasks. And the government is expecting state level competition for new investments in the market and it is focusing on the marketing sector. And in the case of the tax reforms, the lower house passed the GST (Goods and services tax) amendment bill. But the selected committee looks after the GST in the upper house of the parliament.

Most of the Indians fail to pay their Income tax

The government of India made the public direct tax for the past fifteen years as a part of the financial transparency.The government published the data only for the assessment year 2012-13 which includes the taxes of the financial year. According to the data, only one percent of the overall population paid the income tax and that is about one crore and twenty five lakh, but five thousand four hundred and thirty individual paid one crore as the tax.
The report shows that two crore eighty seven lakh individuals filed the income tax return form in that particular financial year, but only one crore and twenty five lakh people paid the tax which is approximately equal to one percent of the population. And the remaining one crore sixty two lakh individuals failed to pay the tax and Uptra Accounting Services.

The tax outlay for eighty nine percent of the taxpayers is less than one lakh fifty thousand, and the average tax payable is twenty one thousand. And 3 individuals in the tax slab Rs.100 to Rs.500 crore paid four hundred and thirty seven crore and the average tax outlay of Rs.145.80 crore.The tax rate for many individuals was between one crore to five crore for more than five thousand taxpayers, and thus the overall outlay of tax was eight thousand nine hundred and seven. And the report showed that many taxpayers who filed the tax return form for the assessment year 2012-13 received an annual payment between six lakh to ten lakh. And around twenty lakh individuals received annual salary of three lakh, and about six individual received fifty to hundred crore as an annual income. The total tax collection for the year 2015-16 is nine times greater than 2000-01.

Blue star fined for not paying service tax

Blue star, refrigerator and air conditioner manufacturer was charged with INR 135.72 crore service taxes. Principal Commissioner of service tax-, Kolkata sent an order to the company regarding the short payment of service tax summing up to 67.86 crore and penalty over this amount. The taxation period is from financial year 2007 to 2012. The penalty of 67 crore was imposed under section 78 of the finance act, 1994. Along with this the interest is calculated according to section 75 of the finance act, 1994. Blue star, however disagreed to the tax levied on them and will challenge the order in an appropriate forum. The company quoted the order as “patently erroneous” following advice from its tax advisors.

The company stated that it faced a similar order in another jurisdiction consequently the case was dismissed and the ruling was in favor of Blue star.This comes at a time when the government has been trying to reduce its fiscal deficit and has been conducting stringent tax raids. The finance ministry in a bid to raise its revenue with less amount of hassle has also given tax amnesty period.In the given tax amnesty period the tax defaulters can pay their due amounts of previous financial years without any further action from the government. The state is also probing willful tax evaders and the disproportionate agricultural incomes.According to recent RTI and PIL filled following it, reveals that several crores of money is being declared as farm income to evade tax.

Lack of tax compliance leads to tax evasion

The sad reality of Indian tax situation is the low number of tax payers in the country. The figures are as low as 3 to 5 percent leading to a staggering amount of fiscal deficit. The numbers shed light on the reality that recovering domestic tax money is more important than chasing black money. There are only 11 lakh people with annual income of 10 lakhs according to government data, practically very low figure. Maharashtra and Delhi alone contribute to half the tax amount paid in the country. The reality here is that there are Indians who can afford expensive life but are not willing to pay taxes. This has led to the position where the government has to borrow money to run the country.

The government is trying to increase the tax amount by burdening the already burdened salaried class. The government is trying to expand the base of tax payers. To achieve this government has to bring in stringent compliance rules and the state monitoring has to increase.The government believes (Goods and services tax) GST will bring in the much needed change. GST is a way of unifying all the taxes and increase transparency in the system. The state is also increasing the requirement of PAN in high valued transactions to track flow of money. Recently efforts were taken to eliminate false PAN numbers to prevent people using multiple Ids to hide transactions. The GST bill is awaiting clearance in Rajya Sabha and once cleared will bring positive results in the Indian taxation system.

Income Tax Statistics revealed

All India Income tax statistics for the year 2012-13 was released in the month of April, 2016 by the finance ministry. The statistics is released after a gap 15 years. The last statistics was released in the year 2000 and latter only aggregate level data was made available such as total number of tax payers, total revenue etc.
The data was revealed after the popular request of French Economist and author of the best seller “Capital in the twenty first century”, Thomas Piketty. He is known for his work on wealth and inequality and took part in the “Jaipur literature festival”.

Chief economic advisor Arvind Subramanian had given assurance in releasing the statistics and also accused the previous government for not doing it. However Piketty has stressed that the statistics of one year was not sufficient for making a meaningful analysis on income distribution. The data released by the government will be helpful in studying the evolution of income distribution. Central Board of Direct Taxes (CBDT) released income tax assessment statistics for the year 2012-13, PAN allotment data for 2013-14 The government further has agreed to reveal all the statistics for the years 2010-15. The statistics have revealed the poor compliance norms in India. The country has only one tax payer for every 28 voters. 1 percent of the population pays 80 percent of the tax.

Tips to repay loans easily

Repaying loans is a tough task but planning it in appropriate manner will ease the burden. Here are some interesting tips to it:Repay costly loans:Pay all the dues which charge you high interest they are mostly credit cards and personal loans. This is nothing but prioritizing loans while doing this consider the tax benefits associated with the interest. For example, interest paid on education loan is tax deductible. Rise the EMI paid.Whenever you have an appraisal try to increase the EMI paid. This will effectively reduce the time period of re-payment and also the total amount of interest. On an average an increase of 5 percent in EMI will reduce the 20 year time period to 12 years and saves interest amount up to 12 lakhs.Use windfall gains:

Whenever you receive fat bonus or returns from your investment try to use it to repay loans and do not waste the money over other things. Effectively channel your monetary resources to fill the loans. Credit card dues:Change your credit card dues to EMI to reduce the interest charged over them. Up to 50 days repayment is not an issue but exceeding it will lead to 3 to 4 percent interest.Refinance:Take a personal loan; though it is costly it is definitely lesser than credit card interest. In case of huge credit card interests try to repay it with personal. Loans against assets have lesser rate of interest compared to other loans.Finally the most important aspect:Lifestyle changes:Try to make minor changes to your lavish expenditure and cut down throwing money on unnecessary things.