TIOL-DDT 505 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT
505</font><br>
05 12 2006<br>
Tuesday</strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <font color="#006600"><strong>CBDT
notifies Tax Return Preparer Scheme </strong></font></font></p>
</div>
<font face="Verdana, Arial, Helvetica, sans-serif">
<p align="justify"><font size="2"><strong>The Tax Return Preparer Scheme, 2006
</strong>has come into force from 1st December, 2006. The highlights:-</font></p>
<p align="justify"><font size="2"><strong>Educational qualification for Tax Return
Preparers – </strong>Degree in Business Administration or Management or
Commerce or Economics or Law or Mathematics or Statistics and not more than
35 years old.</font></p>
<p align="justify"><font size="2"><strong>No return through Tax Return Preparer
if</strong></font></p>
</font>
<blockquote>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
The assessee is required to get his accounts audited</font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++The
assessee is not a resident Indian.</font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
In case of revised return, if the original return was not furnished through
the preparer.</font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
If the return is required to be furnished in response to a notice from the
department.</font></font></p>
</blockquote>
<font face="Verdana, Arial, Helvetica, sans-serif">
<p align="justify"><font size="2">The Tax Return Preparer will prepare and furnish
the return of income to the Assessing Officer having the jurisdiction over the
concerned assessee or to any other officer or agency as may be directed by the
Resource Centre with the approval of the Board and hand over the acknowledgement
of having furnished the return to the concerned eligible person.</font></p>
<p align="justify"><font size="2"><strong>Want to avail the service? Then ensure
that </strong></font></p>
</font>
<blockquote>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
Your return of Income falls under this Scheme</font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
Approach and authorize any Tax Return Preparer to prepare your return</font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
before verifying and signing the return, ensure that the facts mentioned in
the return are true and correct.</font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
You certify the amount paid to the Tax Return Preparer.</font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
You take a receipt of the payment made to the Tax Return Preparer</font></font></p>
</blockquote>
<font face="Verdana, Arial, Helvetica, sans-serif">
<p align="justify"><font size="2">And what will the Tax Return Preparer do?</font></p>
<p align="justify"><font size="2">(i) prepare the return with due diligence;</font></p>
<p align="justify"><font size="2">(ii) affix his signature on the return prepared
by him;</font></p>
<p align="justify"><font size="2">(iii) furnish the return with the Assessing
Officer </font></p>
<p align="justify"><font size="2">(iv) hand over a copy of the return to the person
whose return is prepared </font></p>
<p align="justify"><font size="2">(v) retain a copy of the acknowledgment of having
furnished the return;</font></p>
<p align="justify"><font size="2">(vi) maintain record of the following, -</font></p>
</font>
<blockquote>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
the name of assessees whose returns of income have been prepared;</font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
the permanent account number of assessees;</font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
assessment year;</font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
date of furnishing the return;</font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
acknowledgment number;</font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
jurisdiction of the Assessing Officer;</font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
amount of income declared in the return;</font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
amount of tax payable;</font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
amount of tax paid;</font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
the amount disbursable to him </font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
the fee charged and received by him </font></font></p>
</blockquote>
<font face="Verdana, Arial, Helvetica, sans-serif">
<p align="justify"><font size="2">He should furnish a statement of the above particulars
for every month on or before the seventh day of the immediately following month
to the Resource Centre. </font></p>
<p align="justify"><font size="2"><strong>Incentive to Tax Return Preparers.</strong></font></p>
</font>
<blockquote>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
three per cent of the tax paid on the income declared in the return of income
for First Eligible Assessment Year </font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
two per cent of the tax paid on the income declared in the return of income
for the Second Eligible Assessment Year </font></font></p>
<p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif"><font size="2">++
one per cent of the tax paid on the income declared in the return of income
for the Third Eligible Assessment Year </font></font></p>
</blockquote>
<font face="Verdana, Arial, Helvetica, sans-serif">
<p align="justify"><font size="2">subject to a maximum of Rs. 1000/- per assessee.</font></p>
<p align="justify"><font size="2"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=35&filename=notification/cbdt/2006/it06not0358.htm">NOTIFICATION
NO. 358/2006 Dated: November 28, 2006 </a></font></p>
<p align="center"><font size="2"> <strong><font color="#006600">RBI circular on
NBFC deposits – aftermath of Margadarsi?</font></strong></font></p>
<p align="justify"><font size="2">Recently we had carried a detailed story on
the huge deposits collected by Margadarsi, a HUF owned by press baron Ramoji
Rao and the RBI’s request to Ramoji to protect depositor’s interests.
Now the RBI has issued a draft circular regarding deposits by NBFCs. The salient
features:-</font></p>
<p align="justify"><font size="2">All systemically important non deposit taking
NBFCs shall : </font></p>
<p align="justify"><font size="2">i) maintain a minimum capital adequacy ratio
of 10%; </font></p>
<p align="justify"><font size="2">ii) comply with single and group exposure norms,
which are similar to those applicable to deposit taking NBFCs; </font></p>
<p align="justify"><font size="2">Banks may assume exposure on a single NBFC (both
deposit taking and non-deposit taking) up to 10% of their capital funds, and
to all NBFCs up to 40% of their capital funds. These limits may be exceeded
by 5% and 10% of capital funds, respectively, if the additional exposure is
because of funds on-lent by the NBFCs to infrastructure sector. </font></p>
<p align="justify"><font size="2">NBFCs promoted by the parent / group of a foreign
bank having presence in India, which is a subsidiary of the foreign bank’s
parent / group or where the parent / group is having management control would
be treated as part of that foreign bank’s operations in India and brought
under the ambit of consolidated prudential regulations. </font></p>
<p align="justify"><font size="2"> NBFCs which are subsidiaries of banks or where
banks have a management control will also be allowed to offer discretionary
portfolio management scheme to their clients, on a case by case basis. </font></p>
<p align="justify"><font size="2">Banks in India, including foreign banks operating
in India, shall not hold more than 10 % of the paid up equity capital of a deposit
taking NBFC. This restriction would, however, not apply to investment in housing
finance companies. </font></p>
<p align="justify"><font size="2">NBFCs set up under the automatic route will
be permitted to undertake only those 19 activities which are permitted under
the automatic route. Diversification into any other activity would require the
prior approval of FIPB. Similarly a company which has entered into an area permitted
under the FDI policy (such as software) and seeks to diversify into NBFC sector
subsequently would also have to ensure compliance with the minimum capitalisation
norms and other regulations as applicable. </font></p>
<p align="justify"><font size="2">Taking into account the likelihood that some
of the banks/NBFCs may not be in compliance with some of the elements of the
revised regulatory framework it has been decided to provide for a transition
period up to end March 2007. Accordingly, banks and NBFCs should comply with
all elements of the revised framework with effect from April 1, 2007. </font></p>
<p align="justify"><font size="2">And Margadarsi says none of these restrictions
are applicable to it as it is a HUF. Banks cannot collect funds, big corporations
cannot collect funds, NBFCs cannot collect funds without restrictions, but an
HUF, an individual can collect 2200 Crores and lose 110 Crores of it and still
RBI requests the man to ensure that deposits are safe. There is something terribly
illogical about all this. Is RBI helpless or have they also bungled? </font></p>
<p align="justify"><font size="2"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/locker.htm">RBI
DBOD. No. FSD. 5046 / 24.01.028/ 2006-07. Dated: November 30, 2006</a></font></p>
</font>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Bank
lockers – RBI’s proposed instructions – arms in lockers?</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The RBI proposes
to issue revised guidelines to the banks regarding bank lockers and a draft
circular has been issued yesterday.. The salient features:-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Allotment
of Lockers -</strong> linking the lockers facility with placement of fixed or
any other deposit beyond what is prescribed is a restrictive practice and should
be prohibited forthwith.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Relationship of
the bank with the locker hirer - the relationship between the bank and the locker
hirer is in the nature of a 'bailor and bailee' and not 'landlord and tenant'
though the bank has no knowledge of the contents of the locker and the bank
is required to exercise due care and necessary precaution for the protection
of the lockers provided to the customer. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Operations of Safe
Deposit Vaults/Lockers - Banks are advised to review the systems in force for
operation of safe deposit vaults / locker at their branches on an on-going basis
and take necessary steps to strengthen them by identifying the loopholes in
the procedures and take remedial action. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Adherence to KYC
Guidelines (High, Medium & Low Risk Category) for allotment of lockers /
Measures relating to lockers which have remained unoperated - In a recent incident,
explosives and weapons were found in a locker in one of the bank's branches.
This emphasises that banks should be aware of the risks involved in renting
safe deposit lockers. In this connection, banks are advised to take following
measures :</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) The KYC assessment
for the safe-deposit locker customers (either new or existing), should be done
at least to the levels prescribed for medium risk or the risk categories attributable
to their bank account, if higher. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Where the
lockers have remained unoperated for more than one and three years for high
and medium risk categories respectively, banks should immediately contact the
locker-hirers and advise them to operate the lockers or surrender the lockers
even if the rents are being paid regularly. In case the locker-hirers still
do not operate the locker, banks should consider opening the lockers with the
help of police after giving due notice to the locker-hirers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) Banks should
have an explicit policy for taking appropriate action including breaking open
the lockers in cases where the rents are not paid by the locker-hirers </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Access
to locker (with survivor / nominee clause)</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) In case of
death of a sole locker-hirer (where there is nomination) access to locker may
be given to the nominee. In such cases, except death certificate and identification
of nominee, no other document should be obtained.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) In case of
death of one of the hirers, where there are joint locker-hirers and as per the
contract of locker hire, the locker is to be operated jointly, and where there
is nomination, access to the locker may be given to the nominee jointly with
the surviving hirer(s). In such cases, except death certificate and identification
of nominee, no other document need be obtained. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) Where both
/ all the joint locker hirer(s) die and where there is nomination, access to
the locker may be given to the nominee(s). In such cases, except death certificate
and identification of nominee(s), no other document need be obtained.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) Where there
are joint locker-hirers having a contract of hire with survivorship clause such
as 'either or survivor', 'anyone or survivor' etc., but the locker is not to
be operated jointly, access to the locker may be given only to the survivor
in case of death of one of the hirers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Access
to locker (without the survivor / nominee clause)</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) In case of
death of a sole locker-hirer (where there is no nomination) and there is a valid
will, access may be given to the executor / administrator. In other cases, access
may be given to the legal representative of the deceased. In such cases, death
certificate and proof of legal representation should be obtained. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) Where there
are joint locker-hirers and as per the contract of locker hire, the locker is
to be operated jointly, and where there is no nomination, if one of the hirers
die, access to the locker may be given to the survivor jointly with the legal
heirs (or the executor / administrator, if appointed) of the deceased hirer.
In such cases, death certificate and proof of legal representation should be
obtained. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iii) Where there
are joint locker-hirers having a contract of locker hire with a 'either or survivor'
clause and where there is no nomination, access to the locker may be given to
the survivor in case of death of one of the hirers. In such cases, only death
certificate should be obtained. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(iv) Where there
are joint locker hirers, and all the hirers die and where there is no nomination,
access to the locker may be given jointly to the legal heirs of all the deceased
hirers (or the executor / administrator if appointed). In such cases, only death
certificate and proof of legal representation should be obtained.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Return
of safe custody article in case of sole depositor</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) In case of
death of a sole depositor of safe custody article (where there is nomination),
such article may be returned to the nominee. In such cases, except death certificate
and identification of nominee, no other document should be obtained.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) In case of
death of an individual depositor of safe custody article (where there is no
nomination), such article may be returned to the legal representative of the
deceased (or the executor / administrator if appointed). In such cases, death
certificate and proof of legal representation should be obtained. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Return of safe
custody article in case of joint depositors - The facility of nomination is
not available in case of deposit of article for safe custody with a bank by
more than one person. In case of joint deposit of safe deposit articles,</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) when one or
more of the joint depositors of safe custody articles die, such article may
be returned to the survivor(s) provided there is a survivorship mandate. In
such cases, except death certificate, no other document need be obtained. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) In case there
is no survivorship mandate, such article may be returned to the survivor(s)
jointly with the legal heirs of the deceased depositor(s) (or the executor /
administrator if appointed). In such cases, death certificate and proof of legal
representation should be obtained. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(c) When both or
all the joint depositors of safe custody article die, such article may be returned
jointly to the legal heirs of all the deceased depositors (or the executor /
administrator if appointed). In such cases, death certificate and proof of legal
representation should be obtained. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Disclosure
:</strong></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++
At the time of providing safe deposit lockers/safe custody facility to new
customers, it shall be incumbent upon the banks to provide printed information
as contained in the circular to the customer along with the account opening
application form. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++
For existing safe deposit locker holders, banks should mail the printed instructions.
The existing safe deposit locker accounts which do not have a nomination or
survivorship clause should be reviewed and the exercise of obtaining the option,
if any, of the account holder should be completed within one year.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">++
Banks may also popularise the availability and utility of nomination/survivorship
clause facility to facilitate hassle free settlement of claims in respect
of deceased safe deposit locker holders.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/locker.htm">DBOD.No.Leg
5049 /09.07.005/2006-07 dated December 4, 2006</a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>19
fake universities – liable to pay Service Tax?</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
MOS in the HRD ministry, D. Purandeswari yesterday informed Parliament that
UGC has detected 19 fake universities across the country. Now are these fake
universities liable to pay Service Tax under Commercial coaching and training?
</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>21
years and not a single promotion</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">That’s the
plight of Central Excise inspectors in the West Zone. They were inspectors much
before Modvat was born. Even Modvat became Cenvat but they remain as inspectors.
This was the major concern at their national convention in Pune yesterday. While
the Inspector was watching in the sidelines, those who joined along with him
either as a clerk or an Assistant Commissioner must have got about five promotions.
“This gross neglect will have an impact on revenue collections”,
feels an inspector.</font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until
tomorrow with more DDT </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice day. </font></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail
your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@taxindiaonline.com">
vijaywrite@taxindiaonline.com</a></font></p>
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