TIOL-DDT 597 · the untouched capture
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<div class=Section1>
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<p class=section1 style='margin:0in;margin-bottom:.0001pt'><b style='mso-bidi-font-weight:
normal'><span lang=EN-IN style='font-size:10.0pt;font-family:Verdana;
color:#663399;mso-ansi-language:EN-IN'>TIOL-DDT 597</span></b><b
style='mso-bidi-font-weight:normal'><span lang=EN-IN style='font-size:10.0pt;
font-family:Verdana;mso-ansi-language:EN-IN'><br>
20.04.2007<br>
Friday</span></b><span style='font-size:10.0pt;font-family:Verdana'><o:p></o:p></span></p>
<p class=section1 align=center style='text-align:center'><b><span
style='font-size:10.0pt;font-family:Verdana;color:green'>Exports – Service Tax –
Exempted?<o:p></o:p></span></b></p>
<p class=section1 style='text-align:justify'><span style='font-size:10.0pt;
font-family:Verdana;mso-bidi-font-weight:bold'>Every Newspaper and everyone in
the other media in the country screamed that Service Tax has been
abolished/waived/exempted on exports in the Foreign Trade Policy announced by
the Commerce Minister. Nobody has reported that it is not the Commerce minister
who decides about exemption of Service Tax. In 2004, the Hon’ble Commerce
Minister announced that <span class=SpellE>EOUs</span> are exempted from paying
Service Tax. But the Revenue Ministry was not impressed. And they did not issue
any notification to that effect. The hype about this new benefit should be subject
to the Notification from the CBEC! And most probably it will not come. A <span
class=GramE>lady</span> Development Commissioner of an SEZ once told me that
for the exporters, the Commerce Ministry is like a pampering mother while the
Revenue is like a disciplinarian father and in this case the father has the
last word. <span style='mso-spacerun:yes'> </span><o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span style='font-size:10.0pt;
font-family:Verdana;mso-bidi-font-weight:bold'>Please see our Breaking News
story </span><b><u><span style='font-size:9.0pt;font-family:Verdana;color:blue'>FTP
exempts exports from service tax but wait till <span class=SpellE>EoU</span>
story is not <span class=GramE>repeated !</span> </span></u></b><b><u><span
style='font-size:10.0pt;font-family:Verdana;color:blue'><o:p></o:p></span></u></b></p>
<p class=section1 align=center style='text-align:center'><span class=SpellE><b><span
style='font-size:10.0pt;font-family:Verdana;color:green'>EOUs</span></b></span><b><span
style='font-size:10.0pt;font-family:Verdana;color:green'> – Inter Unit Transfer
of Capital goods – What are <u>Capital Goods</u> – Board clarifies<o:p></o:p></span></b></p>
<p class=section1 style='text-align:justify'><span style='font-size:10.0pt;
font-family:Verdana;mso-bidi-font-weight:bold'>As per Notification No. 52/2003-<span
class=SpellE>Cus</span>., dated 31.03.2003, <span class=SpellE>EOUs</span> can
transfer capital goods to another <span class=SpellE>EOU</span>. Now the
question is what <i style='mso-bidi-font-style:normal'>capital goods</i> are.
Annexure 1 and 2 of the notification specifically mentions <i style='mso-bidi-font-style:
normal'>capital goods</i> and some other items, for example a generating set.
Now the confusion is whether the other items mentioned in the notification
which can also be capital goods will be considered as Capital goods. Board has
now clarified that even the other items can be considered as capital goods
depending upon their use. Board also clarifies that this would apply also to
the Central Excise exemption Notification No. 22/2003; Dated 31.03.2003. <o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><b style='mso-bidi-font-weight:
normal'><u><span style='font-size:10.0pt;font-family:Verdana;color:blue'>Circular
No. 16/2007-<span class=SpellE>Cus</span>., Dated: April 18, 2007</span></u></b><b
style='mso-bidi-font-weight:normal'><span style='font-size:10.0pt;font-family:
Verdana;color:blue'><o:p></o:p></span></b></p>
<p class=section1 align=center style='text-align:center'><span class=SpellE><b><span
style='font-size:10.0pt;font-family:Verdana;color:green'>Prilled</span></b></span><b><span
style='font-size:10.0pt;font-family:Verdana;color:green'> ammonium nitrate –
Dutiability Board accepts Tribunal judgement and withdraws earlier Circular<o:p></o:p></span></b></p>
<p class=section1 style='text-align:justify'><span style='font-size:10.0pt;
font-family:Verdana;mso-bidi-font-weight:bold'>Board Circular No. 44/89
instructed that no excise duty is payable on ammonium nitrate. But the CESTAT
Larger Bench later in 2000 decided that it was indeed dutiable. <i
style='mso-bidi-font-style:normal'>Respectfully</i> accepting the Tribunal’s
verdict, Board has now withdrawn the Circular No. 44/89. While covering the
draft circular <b><u><span style='color:blue'>DDT 580</span></u></b> Dated 26<sup>th</sup>
<span class=GramE>March,</span> 2007 had asked why it took the Board seven
years to accept the Tribunal Judgement which was in favour of Revenue.<o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><b style='mso-bidi-font-weight:
normal'><u><span style='font-size:10.0pt;font-family:Verdana;color:blue'>Circular
No. 848/06/2007-<span class=SpellE><span class=GramE>CX</span></span><span
class=GramE>.,</span> Dated: April 18, 2007<o:p></o:p></span></u></b></p>
<p class=section1 align=center style='text-align:center'><b><span
style='font-size:10.0pt;font-family:Verdana;color:green'><o:p> </o:p></span></b></p>
<p class=section1 align=center style='text-align:center'><b><span
style='font-size:10.0pt;font-family:Verdana;color:green'>Goods Imported for
display at fairs and exhibitions – No need of approval to pay duty<o:p></o:p></span></b></p>
<p class=section1 style='text-align:justify'><span style='font-size:10.0pt;
font-family:Verdana'>As per Notification No. 157/1990-Cus., dated 28<sup>th</sup>
<span class=GramE>March,</span> 1990, goods imported for display in Government
approved fairs are exempted, subject to certain conditions, like the goods have
to be re-exported within six months of import. If the goods are not re-exported,
the Customs duty has to be paid by the FICCI. However FICCI need not pay the
duty if the goods are sold in the exhibition “on payment of Customs Duty with
the prior approval of Government of India”. That means if some of the imported
goods are to be sold in the exhibition, duty has to be paid with the prior
approval of the Government of India. May be this <i style='mso-bidi-font-style:
normal'>prior approval</i> would take more than six months and now the
Government has amended this notification to delete the <i style='mso-bidi-font-style:
normal'>approval of the Government</i> and to allow sale of the goods “in
accordance with any law for the time being in force applicable to such goods
and on payment of the duties of customs which are payable in respect of such
goods”.<o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><b style='mso-bidi-font-weight:
normal'><u><span style='font-size:10.0pt;font-family:Verdana;color:blue'>Notification
No. 55/2007-<span class=GramE>Cus.,</span> Dated: April 12, 2007</span></u></b><b
style='mso-bidi-font-weight:normal'><span style='font-size:10.0pt;font-family:
Verdana;color:blue'><o:p></o:p></span></b></p>
<p class=section1 align=center style='text-align:center'><b><span
style='font-size:10.0pt;font-family:Verdana;color:green'>Anti-dumping duty on
white cement <o:p></o:p></span></b></p>
<div>
<div>
<p class=section1 style='text-align:justify'><span style='font-size:10.0pt;
font-family:Verdana;mso-bidi-font-weight:bold'>Anti-dumping duty on white
cement o</span><span style='font-size:10.0pt;font-family:Verdana'>riginating or
exported from UAE and <st1:country-region w:st="on"><st1:place w:st="on">Iran</st1:place></st1:country-region>
was imposed in 2001 and subsequently extended up to 13<sup>th</sup> <span
class=GramE>June,</span> 2007. Now after sunset review by the Designated Authority,
the Anti-dumping duty is re-imposed for a period of five years from 12<sup>th</sup>
<span class=GramE>April,</span> 2007. <o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span style='font-size:10.0pt;
font-family:Verdana'>Incidentally there was a confusion about the date of the
amending notification. Please see <b style='mso-bidi-font-weight:normal'><u><span
style='color:blue'>DDT 374</span></u></b> dated 31<sup>st</sup> <span
class=GramE>May,</span> 2006.<o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><b style='mso-bidi-font-weight:
normal'><u><span style='font-size:10.0pt;font-family:Verdana;color:blue'>Notification
No. 56/2007-<span class=GramE>Cus.,</span> Dated: April 12, 2007</span></u></b><b
style='mso-bidi-font-weight:normal'><span style='font-size:10.0pt;font-family:
Verdana;color:blue'><o:p></o:p></span></b></p>
</div>
</div>
<div>
<div>
<p class=section1 align=center style='text-align:center'><b><span
style='font-size:10.0pt;font-family:Verdana;color:green'>Service Tax adjudication
– Commissioners get All <st1:place w:st="on"><st1:country-region w:st="on">India</st1:country-region></st1:place>
jurisdiction.<o:p></o:p></span></b></p>
<p class=section1 style='text-align:justify'><span style='font-size:10.0pt;
font-family:Verdana;mso-bidi-font-weight:bold'>All Commissioners of Central
Excise can now adjudicate any case pertaining to any jurisdiction assigned by
the Board. The Notification has a table like this.<o:p></o:p></span></p>
<table class=MsoTableGrid border=1 cellspacing=0 cellpadding=0 width=528
style='width:5.5in;margin-left:41.4pt;border-collapse:collapse;border:none;
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<tr style='mso-yfti-irow:0;mso-yfti-firstrow:yes'>
<td width=38 valign=top style='width:28.5pt;border:solid windowtext 1.0pt;
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<p class=section1><b><span style='font-size:9.0pt;font-family:Verdana'>S. No.<o:p></o:p></span></b></p>
</td>
<td width=130 valign=top style='width:97.5pt;border:solid windowtext 1.0pt;
border-left:none;mso-border-left-alt:solid windowtext .5pt;mso-border-alt:
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<p class=section1><b><span style='font-size:9.0pt;font-family:Verdana'>Central
Excise Officer<o:p></o:p></span></b></p>
</td>
<td width=120 valign=top style='width:1.25in;border:solid windowtext 1.0pt;
border-left:none;mso-border-left-alt:solid windowtext .5pt;mso-border-alt:
solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt'>
<p class=section1><b><span style='font-size:9.0pt;font-family:Verdana'>Central
Excise Officer whose power are to be exercised<o:p></o:p></span></b></p>
</td>
<td width=108 valign=top style='width:81.0pt;border:solid windowtext 1.0pt;
border-left:none;mso-border-left-alt:solid windowtext .5pt;mso-border-alt:
solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt'>
<p class=section1><b><span style='font-size:9.0pt;font-family:Verdana'>Jurisdiction<o:p></o:p></span></b></p>
</td>
<td width=132 valign=top style='width:99.0pt;border:solid windowtext 1.0pt;
border-left:none;mso-border-left-alt:solid windowtext .5pt;mso-border-alt:
solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt'>
<p class=section1><b><span style='font-size:9.0pt;font-family:Verdana'>Purposes<o:p></o:p></span></b></p>
</td>
</tr>
<tr style='mso-yfti-irow:1'>
<td width=38 valign=top style='width:28.5pt;border:solid windowtext 1.0pt;
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padding:0in 5.4pt 0in 5.4pt'>
<p class=section1><span style='font-size:9.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>(1)<o:p></o:p></span></p>
</td>
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<p class=section1><span style='font-size:9.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>(2)<o:p></o:p></span></p>
</td>
<td width=120 valign=top style='width:1.25in;border-top:none;border-left:
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<p class=section1><span style='font-size:9.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>(3)<o:p></o:p></span></p>
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<p class=section1><span style='font-size:9.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>(4)<o:p></o:p></span></p>
</td>
<td width=132 valign=top style='width:99.0pt;border-top:none;border-left:
none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt;
mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt'>
<p class=section1><span style='font-size:9.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>(5)<o:p></o:p></span></p>
</td>
</tr>
<tr style='mso-yfti-irow:2'>
<td width=38 valign=top style='width:28.5pt;border:solid windowtext 1.0pt;
border-top:none;mso-border-top-alt:solid windowtext .5pt;mso-border-alt:solid windowtext .5pt;
padding:0in 5.4pt 0in 5.4pt'>
<p class=section1><span style='font-size:9.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>1<o:p></o:p></span></p>
</td>
<td width=130 valign=top style='width:97.5pt;border-top:none;border-left:
none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt;
mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt'>
<p class=section1><span style='font-size:9.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>All the Commissioners of Central Excise<o:p></o:p></span></p>
</td>
<td width=120 valign=top style='width:1.25in;border-top:none;border-left:
none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt;
mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt'>
<p class=section1><span style='font-size:9.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>The Commissioner of Central Excise<o:p></o:p></span></p>
</td>
<td width=108 valign=top style='width:81.0pt;border-top:none;border-left:
none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt;
mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt'>
<p class=section1><span style='font-size:9.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>Throughout the <st1:place w:st="on"><st1:PlaceType
w:st="on">territory</st1:PlaceType> of <st1:PlaceName w:st="on">India</st1:PlaceName></st1:place><o:p></o:p></span></p>
</td>
<td width=132 valign=top style='width:99.0pt;border-top:none;border-left:
none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt;
mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt'>
<p class=section1><span style='font-size:9.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>Investigation and adjudication of such cases, as
may be assigned by the Board<o:p></o:p></span></p>
</td>
</tr>
<tr style='mso-yfti-irow:3;mso-yfti-lastrow:yes'>
<td width=38 valign=top style='width:28.5pt;border:solid windowtext 1.0pt;
border-top:none;mso-border-top-alt:solid windowtext .5pt;mso-border-alt:solid windowtext .5pt;
padding:0in 5.4pt 0in 5.4pt'>
<p class=section1><span style='font-size:9.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>2<o:p></o:p></span></p>
</td>
<td width=130 valign=top style='width:97.5pt;border-top:none;border-left:
none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt;
mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt'>
<p class=section1><span style='font-size:9.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>The Commissioners of Central Excise Adjudication)<o:p></o:p></span></p>
</td>
<td width=120 valign=top style='width:1.25in;border-top:none;border-left:
none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt;
mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt'>
<p class=section1><span style='font-size:9.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>The Commissioner of Central Excise<o:p></o:p></span></p>
</td>
<td width=108 valign=top style='width:81.0pt;border-top:none;border-left:
none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt;
mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt'>
<p class=section1><span style='font-size:9.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>Throughout the <st1:place w:st="on"><st1:PlaceType
w:st="on">territory</st1:PlaceType> of <st1:PlaceName w:st="on">India</st1:PlaceName></st1:place><o:p></o:p></span></p>
</td>
<td width=132 valign=top style='width:99.0pt;border-top:none;border-left:
none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
mso-border-top-alt:solid windowtext .5pt;mso-border-left-alt:solid windowtext .5pt;
mso-border-alt:solid windowtext .5pt;padding:0in 5.4pt 0in 5.4pt'>
<p class=section1><span style='font-size:9.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>Investigation and adjudication of such cases, as
may be assigned by the Board<o:p></o:p></span></p>
</td>
</tr>
</table>
<p class=section1 style='text-align:justify'><span style='font-size:10.0pt;
font-family:Verdana;mso-bidi-font-weight:bold'>Now what is the difference
between the Commissioner at <span class=SpellE>Sl</span>. <span class=SpellE>No.1</span>
and that at <span class=SpellE>Sl</span>. <span class=SpellE>No.2</span>? Is
the Commissioner (Adjudication) not a Commissioner?<o:p></o:p></span></p>
<p class=section1><b style='mso-bidi-font-weight:normal'><u><span
style='font-size:10.0pt;font-family:Verdana;color:blue'>Notification No<span
class=GramE>.<span style='mso-spacerun:yes'> </span></span>16 /2007-Service Tax
Dated <span class=GramE>the<span style='mso-spacerun:yes'> </span>19</span><span
style='mso-spacerun:yes'> </span>April, 2007<o:p></o:p></span></u></b></p>
<p class=section1 align=center style='text-align:center'><b><span
style='font-size:10.0pt;font-family:Verdana;color:green'>Why delay in refunds?
CBDT Clarifies<o:p></o:p></span></b></p>
<p class=section1 style='text-align:justify'><span style='font-size:10.0pt;
font-family:Verdana;mso-bidi-font-weight:bold'>The Central Board of Direct
Taxes has clarified that News Paper reports that a large number of tax payers
are waiting for refunds from the Department up to three years is factually incorrect.
The Board wants you to appreciate certain facts <o:p></o:p></span></p>
<p class=section1 style='margin-left:.5in;text-align:justify;text-indent:-.25in;
mso-list:l0 level1 lfo2;tab-stops:list .5in'><![if !supportLists]><span
style='font-size:10.0pt;font-family:Verdana;mso-fareast-font-family:Verdana;
mso-bidi-font-family:Verdana;mso-bidi-font-weight:bold'><span style='mso-list:
Ignore'>1.<span style='font:7.0pt "Times New Roman"'>
</span></span></span><![endif]><span style='font-size:10.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>Forty Three Lakhs refund cheques amounting to Rs.
39,000 Crores were issued in 2006-07.<o:p></o:p></span></p>
<p class=section1 style='margin-left:.5in;text-align:justify;text-indent:-.25in;
mso-list:l0 level1 lfo2;tab-stops:list .5in'><![if !supportLists]><span
style='font-size:10.0pt;font-family:Verdana;mso-fareast-font-family:Verdana;
mso-bidi-font-family:Verdana;mso-bidi-font-weight:bold'><span style='mso-list:
Ignore'>2.<span style='font:7.0pt "Times New Roman"'>
</span></span></span><![endif]><span style='font-size:10.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>In 2005-06, Rs. 29,000 Crores was refunded. That is
there is a 33% increase in 2006-07.<o:p></o:p></span></p>
<p class=section1 style='margin-left:.5in;text-align:justify;text-indent:-.25in;
mso-list:l0 level1 lfo2;tab-stops:list .5in'><![if !supportLists]><span
style='font-size:10.0pt;font-family:Verdana;mso-fareast-font-family:Verdana;
mso-bidi-font-family:Verdana;mso-bidi-font-weight:bold'><span style='mso-list:
Ignore'>3.<span style='font:7.0pt "Times New Roman"'>
</span></span></span><![endif]><span style='font-size:10.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>In first two weeks April, 2007 Rs. 1834 Crores have
been refunded.<o:p></o:p></span></p>
<p class=section1 style='margin-left:.5in;text-align:justify;text-indent:-.25in;
mso-list:l0 level1 lfo2;tab-stops:list .5in'><![if !supportLists]><span
style='font-size:10.0pt;font-family:Verdana;mso-fareast-font-family:Verdana;
mso-bidi-font-family:Verdana;mso-bidi-font-weight:bold'><span style='mso-list:
Ignore'>4.<span style='font:7.0pt "Times New Roman"'>
</span></span></span><![endif]><span style='font-size:10.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>To speed up refunds, a refund banker scheme has been
launched in <st1:City w:st="on">Delhi</st1:City> and <st1:place w:st="on"><st1:City
w:st="on">Patna</st1:City></st1:place>.<o:p></o:p></span></p>
<p class=section1 style='margin-left:.5in;text-align:justify;text-indent:-.25in;
mso-list:l0 level1 lfo2;tab-stops:list .5in'><![if !supportLists]><span
style='font-size:10.0pt;font-family:Verdana;mso-fareast-font-family:Verdana;
mso-bidi-font-family:Verdana;mso-bidi-font-weight:bold'><span style='mso-list:
Ignore'>5.<span style='font:7.0pt "Times New Roman"'>
</span></span></span><![endif]><span style='font-size:10.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>The Department receives 3.2 Crores returns per year.<o:p></o:p></span></p>
<p class=section1 style='margin-left:.5in;text-align:justify;text-indent:-.25in;
mso-list:l0 level1 lfo2;tab-stops:list .5in'><![if !supportLists]><span
style='font-size:10.0pt;font-family:Verdana;mso-fareast-font-family:Verdana;
mso-bidi-font-family:Verdana;mso-bidi-font-weight:bold'><span style='mso-list:
Ignore'>6.<span style='font:7.0pt "Times New Roman"'>
</span></span></span><![endif]><span style='font-size:10.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>Processing of these returns do take time.<o:p></o:p></span></p>
<p class=section1 style='margin-left:.5in;text-align:justify;text-indent:-.25in;
mso-list:l0 level1 lfo2;tab-stops:list .5in'><![if !supportLists]><span
style='font-size:10.0pt;font-family:Verdana;mso-fareast-font-family:Verdana;
mso-bidi-font-family:Verdana;mso-bidi-font-weight:bold'><span style='mso-list:
Ignore'>7.<span style='font:7.0pt "Times New Roman"'>
</span></span></span><![endif]><span style='font-size:10.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>Tax payers do not furnish all the details like bank
account, ECS etc.<o:p></o:p></span></p>
<p class=section1 style='margin-left:.5in;text-align:justify;text-indent:-.25in;
mso-list:l0 level1 lfo2;tab-stops:list .5in'><![if !supportLists]><span
style='font-size:10.0pt;font-family:Verdana;mso-fareast-font-family:Verdana;
mso-bidi-font-family:Verdana;mso-bidi-font-weight:bold'><span style='mso-list:
Ignore'>8.<span style='font:7.0pt "Times New Roman"'>
</span></span></span><![endif]><span style='font-size:10.0pt;font-family:Verdana;
mso-bidi-font-weight:bold'>When the addresses are changed, the department is <span
class=GramE>not informed</span>.<o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span style='font-size:10.0pt;
font-family:Verdana;mso-bidi-font-weight:bold'>Apparently there is a reason for
delay.<o:p></o:p></span></p>
<p class=section1 align=center style='text-align:center'><b><span
style='font-size:10.0pt;font-family:Verdana;color:green'>Income Tax paid by the
employer - <u>multiple grossing up</u> method<o:p></o:p></span></b></p>
<p class=section1 style='text-align:justify'><span style='font-size:10.0pt;
font-family:Verdana;mso-bidi-font-weight:bold'>If your employer is paying your
income tax, how is the income calculated? The tax paid by your employer has to
be added to your income. But this is not all that easy. <o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span lang=EN-IN style='font-size:
10.0pt;font-family:Verdana;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold'>Suppose
the salary is <span style='mso-tab-count:1'> </span>Rs. 1,000/-<o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span lang=EN-IN style='font-size:
10.0pt;font-family:Verdana;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold'>The
tax is 30% <span class=SpellE>ie</span><span style='mso-spacerun:yes'> </span><span
style='mso-tab-count:2'> </span>Rs. 300/-<o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span lang=EN-IN style='font-size:
10.0pt;font-family:Verdana;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold'>Now
if this 300 is paid by the employer, the income becomes 1300 and the tax payable
is 390 and if this is also paid by the employer, the income is 1390 and the tax
is 417 and if this is paid by the employer, the income is 1417 and the tax is <b>425.</b>
And how far do you go? It can go up to infinity. But where do you stop and how
do you calculate it? <o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span lang=EN-IN style='font-size:
10.0pt;font-family:Verdana;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold'>Look
at it another way:<o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span lang=EN-IN style='font-size:
10.0pt;font-family:Verdana;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold'>1<sup>st</sup>
gross up <span style='mso-tab-count:2'> </span>= 1000x0.3 <span
style='mso-tab-count:1'> </span><span style='mso-tab-count:2'> </span>=
300<o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span lang=EN-IN style='font-size:
10.0pt;font-family:Verdana;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold'>2<sup>nd</sup>
gross up <span style='mso-tab-count:2'> </span>= <span class=SpellE>1000x0.3x0.3</span>
<span style='mso-tab-count:2'> </span>= <span
style='mso-spacerun:yes'> </span>90<o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span lang=EN-IN style='font-size:
10.0pt;font-family:Verdana;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold'>3<sup>rd</sup>
Gross up <span style='mso-tab-count:2'> </span>= <span class=SpellE>1000x0.3x0.3x0.3</span>
<span style='mso-tab-count:2'> </span>= <span
style='mso-spacerun:yes'> </span>27<o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span lang=EN-IN style='font-size:
10.0pt;font-family:Verdana;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold'>4<sup>th</sup>
Gross up <span style='mso-tab-count:2'> </span>= <span class=SpellE>1000x0.3x0.3x0.3x0.3</span><span
style='mso-tab-count:1'> </span>=<span style='mso-spacerun:yes'> </span><span
style='mso-spacerun:yes'> </span>8.1<o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><b><span lang=EN-IN
style='font-size:10.0pt;font-family:Verdana;mso-ansi-language:EN-IN'>Total <span
style='mso-tab-count:3'> </span>= 300+90+27+8 <span
class=GramE>= <span style='mso-spacerun:yes'> </span>425</span><o:p></o:p></span></b></p>
<p class=section1 style='text-align:justify'><span lang=EN-IN style='font-size:
10.0pt;font-family:Verdana;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold'>See
the tax liability is the same as above = <b>Rs. 425.</b><o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span lang=EN-IN style='font-size:
10.0pt;font-family:Verdana;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold'>There
is an easy way, something akin to the formula given in the celebrated <span
class=SpellE>MRF</span> judgement in respect of Central Excise. The formula is <o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span lang=EN-IN style='font-size:
10.0pt;font-family:Verdana;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold'>X/
1-R,<o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span lang=EN-IN style='font-size:
10.0pt;font-family:Verdana;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold'>Where
X is the salary and R is the rate of tax. So the calculation works like this:<o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span lang=EN-IN style='font-size:
10.0pt;font-family:Verdana;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold'>1000/
1-0.3 = 1000/0.7 = 1429<o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span lang=EN-IN style='font-size:
10.0pt;font-family:Verdana;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold'>So
if the salary is Rs. 1000/- and the tax is paid by the employer, the salary is
taken to be Rs. 1429 and on this tax @30% is Rs. 429/- . So the employee gets
his Rs. 1000/-, the Tax Department gets a higher tax of 429 instead of 300 and
everybody is happy.<o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span lang=EN-IN style='font-size:
10.0pt;font-family:Verdana;mso-ansi-language:EN-IN;mso-bidi-font-weight:bold'>My
friend Jai Kumar tells me that all tax laws are all about LHS = RHS and that I
add is <b>QED</b>. <o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><span style='font-size:10.0pt;
font-family:Verdana;mso-bidi-font-weight:bold'>Please see our <b><u><span
style='color:blue'>Breaking News</span></u></b> for a case on this subject.<o:p></o:p></span></p>
<p class=section1 align=center style='text-align:center'><b><span
style='font-size:10.0pt;font-family:Verdana;color:green'><o:p> </o:p></span></b></p>
<p class=section1 style='text-align:justify'><strong><span lang=EN-IN
style='font-size:10.0pt;font-family:Verdana;color:red;mso-ansi-language:EN-IN'>Until
Monday with more DDT</span></strong><span style='font-size:10.0pt;font-family:
Verdana'><o:p></o:p></span></p>
<p class=section1><strong><span lang=EN-IN style='font-size:10.0pt;font-family:
Verdana;color:red;mso-ansi-language:EN-IN'>Have a nice Weekend. </span></strong><span
style='font-size:10.0pt;font-family:Verdana'><o:p></o:p></span></p>
<p class=section1 style='text-align:justify'><strong><span lang=EN-IN
style='font-size:10.0pt;font-family:Verdana;color:red;mso-ansi-language:EN-IN'><u1:p></u1:p>Mail
your comments to</span></strong><span lang=EN-IN style='font-size:10.0pt;
font-family:Verdana;mso-ansi-language:EN-IN'> <a
href="mailto:vijaywrite@taxindiaonline.com"><b>vijaywrite@taxindiaonline.com</b></a></span><span
style='font-size:10.0pt;font-family:Verdana'><o:p></o:p></span></p>
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