Mahatma Gandhi May Help us on Fake Currency Notes

It may appear weird but its Mahatma Gandhi again who may help us get out from another problem of national concern- fake currency notes.
Apart from following the official guidelines issued by the Reserve Bank of India on how to identify fake currency notes there is another quick and easy observation you may make while accepting cash - especially currency of higher denominations.
On each currency note, Mahatma Gandhi's image appears to two sides. One of which is visible as outline on the left hand side in white watermark portion when seen in light. In a genuine currency note, you will find the Father of the Nation smiling while he is in a serious or angry appearance in a fake note.

Tax Savings Tips for Salaried People

As the last phase of the financial year is approaching we can see a number of tax saving tips being published. What I can observe in those tips that most of them don’t address to the needs of salaried people. For example- spreading income among family members is not an option for salaried people which however is the top choice among those tips. Below are some of the tax saving and planning tips that would specifically be beneficial to the salaried -

1.Choose the Right combination of Flexible Compensation Plan - As soon as your HR manager gives you the CTC (Cost to Company) amount, it is most important to use the right combination of different heads of salary income. This alone could save a substantial amount of tax.
Among others the golden rules for this purpose include –

• Ascertain the right amount of House Rent Allowance (HRA). If you are residing in a rented house then you get the benefit of the amount of rent paid. This is calculated on the basis of your salary and HRA. It’s important to allocate the sufficient amount to HRA to get maximum benefit.
• First exhaust the maximum amount allowable as tax free allowances like transportation, children education allowance etc. However the amounts involved here are not big but still its good to save even a penny.

2.Invest full allowable amount in Tax saving schemes – Upto Rs. 1 lakh invested in schemes available under section 80C of the income tax act can be claimed as a deduction from income for calculating taxable income. These schemes include LIC premium, National Saving Certificates (NSC), Mutual Funds, Provident Funds, Repayment of Principal amount of Home Loan, Bank Fixed Deposits (Specific), Children’s Tuition Fee etc. Often we miss this point and end up investing a lesser amount.

3.Know about section 80D – There is hope beyond Rs. 1 lakh under section 80C. You can deduct an amount upto Rs. 15000/- for mediclaim premium paid for yourself, spouse and children. Also an amount of Rs. 20,000/- is allowed for payment of mediclaim premiums for dependent parents above 65 years of age. Always remember not to pay mediclaim premiums in cash.

4.Home Loans – The amount of interest paid on home loans is allowed as deduction from income. However, the following facts are to be considered:

• If you are residing in the same house then the maximum amount allowed as deduction is Rs. 1,50,000 and the loan was taken after March 1999.
• If the loan was taken before March 1999 and you reside in the house then only Rs. 30,000 are allowed.
  You can also get a rebate of amount upto Rs. 20,000 on the home loan interest under section 88. Further the principal portion of loan installment repaid is allowed as a deduction from income under section 80C.
  

Image: taxation.guide

Also Read:

• Tax Saving Investment Options for 2009
• How Do We Get Tax Benefits of Rs. 33,990 on Insurance Policies?
• PAN Holders- View Your Income Tax Credit Status Online
• Online PAN Verification- Step Taken to Check PAN Frauds
• Why You Should Choose Tata Motors Fixed Deposit Scheme for Investment?

After ICAI its ICSI's Turn to Unveil Their Logos

It seems that the Premier Accounting Institutes of India are fast recognising the strength of making brand value. Not many days before it was ICAI who unveiled its logo to be used by its members. Now, The Institute of Company Secretaries of India (ICSI) has released its new logo. The institute has in fact released two logos, one reads 'CS' to be used for its members and the other one which reads 'ISCI' is the logo of the institute. Also the institute has decided that the letters 'CS' are to be used by its members as a prefix to their names.
ICSI's Concept behind the logos-

'CS'- A compact unit in itself, with the central arrow of growth and excellence , it represents stability and integrity , which are hallmark of the profession.
Set in a sober deep blue colour , it represents a very confident and upright professional.

'ICSI'- The new logo of ICSI is a strong , bold and cohesive wordmark , where four different elements(alphabets) come together to create a complete picture. The logo set in deep blue colour represents a multifaceted professional with a high degree of integrity and stability . "Connecting for a collective growth " is the core of the logo , visually depicted in the upward arrow formed by the letters "C" and "S" . The simple and elegant masthead with bold fonts lend it an air of authority and stability. The holistic perception of the identity reflects soft edges with a sharp interior.

ICAI to Organise Placement Programme for Experienced Chartered Accountants

The ICAI is organising Career Ascent from 23 – 25 January ’09. This is basically an extension of the regular placement programmes being organized by the institute for the placement of fresh chartered accountants.
The event is expected to be beneficial to both the corporates who will have access to experienced candidates and also the candidates who will be able to meet and explore better employment opportunities. ICAI has ensured that the information of the candidates will be kept confidential during the entire event.
Career Ascent will be for chartered accountants who had passed their final exams in November 2007 or before and have more than one year of industry experience. The minimum salary package is proposed to be Rs. 5 lakhs. ICAI is expecting more than 100 companies from varied sectors to participate in the event.
Registration and other details are available on http://www.cmii.icai.org/ and http://www.icai.org/

ICAI Goes Tough on CPE Compliance

The Institute of Chartered Accountants of India has decided that the names of such members who do not complete the required CPE credit hours, be not included in any panel that is forwarded by the Institute, on or after 1st January, 2009, to any regulators or other authorities. In the case of a firm, if any partner/paid assistant has not completed the requisite CPE credit hour for the year 2008, the names of such partners/paid assistants will not be included while considering the eligibility criteria and this fact will also be stated in case the firm is otherwise found eligible after excluding name(s) of such partner(s)/paid assistant(s).
The institute had made it mandatory for all its members holding Certificate of Practice (COP) (except senior members above 60 years of age or those who are residing abroad) to complete the (Continuing Professional Education) CPE credit hours requirement which is as follows:
1. at least 90 CPE credit hours in each rolling three year period starting from the calendar year 2008, of which 60 CPE credit hours should be of structured learning.
2. minimum 20 CPE credit hours of structured learning in each year.

Do all PAN Card Holders Need to File Income Tax Return?

Many of us believe that if we have a PAN then it is compulsory for us to file your income tax returns. However it is not true.
You only need to file your income tax return if your Gross Total Income is more than the exemption limit notified by the finance ministry for that year. For example if you are a male below 65 years of age and your gross total income in the financial year 2008-09 is upto Rs. 150,000 then you don’t need to file your return. Only if your income is above Rs. 150,000 you need to file your return. Also it is not necessary to continue filing returns once you have filed a return. It is your Gross Total Income for that year that decides whether you should file a return or not.

Here Gross Total Income is the actual income earned and should not be confused by net income derived after deducting benefits received under the Income Tax Act.

Also Read:

• Individuals- How to file your Income Tax Returns Electronically?
• PAN Holders- View Your Income Tax Credit Status Online
• Online PAN Verification- Step Taken to Check PAN Frauds
• How to read your Income Tax PAN?

Your Transactions that Income Tax Department Checks

The Income Tax Department in India receives annual information return from banks, financial institutions etc that gives the details of various high value transaction done in a year. There is a prescribed range of transactions which have to be mentioned in the return along with the PAN of the person who made the transactions. Following are the transactions that are reported to Income Tax Authorities :-

1. Cash Deposits in Bank Accounts - Cash deposits aggregating to ten lakh rupees or more in a year in any savings account of a person maintained in that bank.
2. Credit Card Transactions - Payments made against bills raised in respect of a credit card, aggregating to two lakh rupees or more in the year.
3. Mutual Funds - Payment of an amount of two lakh rupees or more for acquiring units of a Mutual F.
4. Debentures or Bonds- Payment of an amount of five lakh rupees or more for acquiring bonds or debentures issued by a Company or institution.
5. Shares - Payment of an amount of one lakh rupees or more for acquiring shares issued by a Company.
6. Immovable Property - Purchase or sale of immovable property valued at thirty lakh rupees or more.
7. Reserve Bank of India Bonds - Payment of an amount or amounts aggregating to five lakh rupees or more in a year for bonds issued by the Reserve Bank of India.

If you have incurred such transactions, the income tax department may scan your income tax returns to see if you mentioned enough income in previous years to fund such transactions and may even call you to explain the transactions’ details. However there is nothing to worry or scared about in doing large amount transactions but be sure that you have enough documentation to explain the transactions.

Also Read:

• Tax Saving Investment Options for 2009
• PAN Holders- View Your Income Tax Credit Status Online

How to Choose the Right Investment Plan?

We often receive phone calls from various financial institutions marketing for their investment plans. While at the first go the investment plan appears to be very much attractive with guaranteed high returns (often quite more than that offered by banks’ fixed deposits). Although some of the plans do actually perform that well but most of them don’t live up to our expectations- or we can say that we expected something that the plan was not even offering. This is sometimes because of our carelessness in studying the details and sometimes because of technical words and data presented by the representatives that are hard to be understood by a layman. But we can always ask them a few simple questions and adopt the following procedure that would guide us in choosing the right investment plan:-
1. Set your priorities – You should be clear as to the type of investment you are willing to make. If you have saved money for insurance, don’t go for just another investment scheme because it is offering very good returns. Ask the representative for schemes that match your priority. They always have the best scheme for everyone’s needs.
2. Ask clearly whether the returns offered are guaranteed or not - Almost every scheme that offers guaranteed returns has this fact clearly mentioned in its brochure. If this is not mentioned, the returns might not be guaranteed. Remember, there is a lot of difference in giving high returns over a past period and guaranteed returns.
3. Ask for the Lock-in period – Sometimes, investment plans offering good returns have a long lock in period which is not explicitly disclosed in their plan details. Be sure whether you are ready to put you money for such a long time. Also ask for the penalties and charges for withdrawing your money early. This would enable you to determine the right amount to invest. May be an amount which you would not require regularly in near future.
4. Get the details of Tax Incidents on Income – Be sure to ascertain that whether the income generated from the investment in tax free or not. Often a 10% tax free return is actually more beneficial than a 14% taxable return.
5. Note down all the benefits of the plan – Although all the benefits will be explicitly available in the brochure but it is always better to have them arranged at one place for evaluation. Sometimes some of the benefits mentioned may not be beneficial to you. For example, the plan has section 80C benefits on investments made. But since you had already invested Rs. 1 Lac under 80C benefits this is not useful for you.

How to read your Income Tax PAN?

The Income Tax Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Indian Income Tax Department.
A typical PAN for an individual would be AABPS1205E.
However, this appears to be a mysterious coded number to most of the people, there are some elements which would help you to validate a PAN.
The fourth letter of your PAN reflects your status. As such for an individual the letter will be 'P' for an HUF it will be an 'H', for firms - 'F' and for companies - 'C'.
The fifth letter of your PAN is the first letter of your surname in case of individuals and the first letter of the name in other cases. For example, in Nikhil Kumar's PAN the fourth letter will be 'P' and the fifth letter will be 'K'.
The other alphabets and numbers are allotted based on the Income Tax Department's series database.
More information on PAN

Also Read:

• Do all PAN Card Holders Need to File Income Tax Return?
• PAN Holders- View Your Income Tax Credit Status Online
• Online PAN Verification- Step Taken to Check PAN Frauds
• Individuals- How to file your Income Tax Returns Electronically?
• Your Transactions that Income Tax Department Checks

Advertise on ICAI website

The Institute of Chartered Accountants of India (ICAI) has started accepting advertisement banners to be hosted on its portal. The request can be made online at http://www.icai.org/advt.html by uploading your advertisement image file and giving the payment details. Currently the payment options include cheques, demand draft and pay order. However credit card or Internet banking payments could have been added.

Currentely ICAI is charging from Rs. 5 lakhs/month for a small 120 x 90 pixels banner to Rs. 10 lakhs/month for a large 468 x 60 pixels banner. These advertisement banners will be hosted on the ICAIs home page.

However, ICAI will not be accepting advertisement banners for products or commodities but this is a great opportunity for professional firms, financial software development companies , job portals and placement agencies, coaching centres offering coaching to CA students and also companies related to the financial world.

Ministry of Corporate Affairs Notifies New Annual Filing Forms

Its time for the companies to file their Annual Returns and Balance Sheets with the Registrar of Companies. The Ministry of Corporate Affairs (MCA) has notified the revision of four forms namely 20B, 21A, 23AC and 23ACA vide Notification NO: 655(E) dated 12-9-08. Revised Forms will come into force from 28th September 2008.
Form 20B is used for filing annual return by a company having a share capital .
Form 21A is used for giving particulars of annual return for the company not having share capital.
Form 23AC is used for filing Balance Sheet.
Form 23ACA is used for filing Profit and Loss account .

Accounting Technician- ICAI aims at matching the supply with demand

The Institute of Chartered Accountants of India (ICAI) has announced the launch of new curriculum to be named as ‘Accounting Technician’ (AT).
As we are aware that a very small percentage of total candidates who appear in the Chartered Accountancy exams (at various levels) manage to clear the examination, there was a constant need to have a certified degree which, though not equivalent to a full fledged Chartered Accountant, but could recognize the so called C.A. Intermediate in a better way.
The constantly growing KPO sector and also the local town businesses require professional accountants who have the basic knowledge and skills in accounting and financial sector. ICAIs AT aims at filling this vacancy in the best manner.
Similar to the concept, there are many institutes offering courses like ‘Tally Accountant’, ‘Business Accountant’, and ‘Industrial Accountant’ etc. Although an Accounting Technician is expected to have more or less the same level of knowledge as that of a these courses or more specifically a Commerce Graduate, but ICAI certification would ensure that s/he has a reliable level of working skills too.
To become an Accounting Technician, you need to first pass an eligibility test after senior secondary. After that you need to register for the course and complete studies and Information Technology (IT) training as prescribed by the board of studies and then appear for the AT exam.
After passing the examination, you will be required to have practical experience for a period of one year in accounting. You will also be required to undergo orientation programme to be conducted by the Board of Studies.

Individuals- How to file your Income Tax Returns Electronically?

E filing of income tax returns has been made mandatory by the Income Tax Department in India for companies and for firms who need to get their accounts audited u/s 44AB of the Income Tax Act, 1961. However, the option is available to other classes tax payers also.
E filing is also becoming quite popular among the salaried class who can easily prepare their return based on their salary certificate (Form No. 16) provided by their employer. Below are simple steps to be followed to prepare and e-file the income tax return for salaried people.

1. Choose the right form- Salaried people, who have income only from salary and interest can file ITR-1, others should file ITR-2. However if also have income from business sources, you need to file ITR-3 or ITR-4 which require some detailed information too. More help on choosing the form.


2. Once you have chosen your form, download it from the Income Tax India website and fill up the details.


3. After you have filled up all the details, click the 'validate file' button to check for any inconsistencies/errors. After validating your file click the 'generate' button to create the xml file. Save the xml file elsewhere.


4. Register yourself with the Income Tax Department. This is similar to creating an email id but you need to provide information that matches as that of Income Tax Department database prepared from your PAN (Permanent Account Number) application. Your user id will be your PAN.


5. Login to your account, give the path of xml file that you have saved, sign it with your digital signatures and upload your return.


6. Those who don't have digital signatures, can upload the e-return without them but they would additionally need to submit a hard copy of the return to the Income Tax Department.

Practically, e filing of income tax returns is only advantageous when you have digital signatures. Otherwise it doesn't make much sense to first e-file your return and then go to the income tax office to file it again.

Also Read:

• How to Make E-Payment of Taxes
  

Limited Liability Partnerships- An Opportunity for Globalisation of Professional Firms

The concept of Limited Liability Partnerships (LLPs) has facilitated the professional firms especially in the accountancy field to expand on a global scale.
Limited Liability Partnerships can be considered as a mixture of Corporations and Partnerships. Here the partners of the firm have limited as that of shareholders of a corporation. However it is distinct from a corporation in the context that the partners are the ones who manage the regular business of the corporation while the shareholders of a corporation have to appoint board of directors to manage the business.
Moreover, Limited Liability Partnerships can have any number of partners. This enables the partnerships to expand their scale of operations on a global perspective.
In countries like USA, the concept is quite popular. Formation of an LLP requires filing with the county and state offices. Although specific rules vary from state to state, all states have passed variations of the Revised Uniform Partnership Act (RUPA).
In India, the concept is soon expected to be placed before the Parliament for approval. If approved, it would be a major boost for the professional firms such as Chartered Accountancy Firms to have a multinational presence.

USA Tax Payers - How to avoid double taxation?

When calculating your income tax liability for 2008, you can take the advantage of taxes paid in foreign countries on your income. However, the advantage is limited only to those incomes which are included in your US Taxable Income i.e. you may not claim a foreign tax credit or deduction for taxes paid on income not subject to US Tax.
You can ascertain your foreign tax credit by using the following calculation:
Total Income from Foreign Sources x Your US Tax Liability/Your Total Worldwide Income

The amount of your foreign tax credit will reduce your total tax liability.
There is also an option to treat the foreign tax as a deduction from your taxable income but this would be less advantageous than taking the credit as deduction from taxes.
Also, the foreign tax credit is allowed based on some restrictions as to the residency status and types of incomes.

CA students get a bit of relief for Exams

Remember the days of your Chartered Accountancy Exams when you had to appear in stressful examinations for six to eight days consecutively. There used to be situation that owing to constant stress you felt like leaving everything.
Now ICAI has got some relief for the students appearing in November 2008 exams. They will be conducted with a gap of one day after each exam. This initiative will surely enable the students to revise their syllabus better and also be more relaxed and fresh in their exams. Hope we continue to get good news like this from ICAI in the future.

How to Make E-Payment of Taxes

Payment to Income Taxes through Internet Banking has been made mandatory by the Income Tax Department in India earlier this year for all the companies and others whose annual turnover is more than Rs. 40 Lacs. For others also this option is available though not mandatory.
To pay your taxes electronically, all you have to do is to have a net banking account (you may also use the account of someone else also) (list of authorised banks is available at https://onlineservices.tin.nsdl.com/etaxnew/Index.html ) and follow the below mentioned simple procedures :

1. Keep your PAN card available (as you need fill in details from it)
2. Go to https://onlineservices.tin.nsdl.com/etaxnew/tdsnontds.jsp
3. Select the type of challan you need to fill. Individuals need to fill Challan No. 280 for their taxes.
4. The Challan form will open up. Individuals and other tax payers who are not companies select '(0021) Income Tax Other Than Companies' option. Companies need to select '(0020) Income Tax on Companies' option.
5. Fill in the other details from your PAN card.
6. Select the relevant Assessment year. For those paying their advance taxes for their incomes of financial year 2008-09 the assessment year will be 2009-10. For those paying their taxes for their incomes of financial year 2007-08 the assessment year will be 2008-09.
7. Select the bank and click proceed.
8. You will be navigated to the internet banking login page of you bank.
9. Login into your account. The challan filled up by you will appear.
10. Enter the amount of tax to be paid and click on the 'Pay' button.
11. Enter your Net Banking Transaction Password and proceed.
12. The bank will authorise your transaction and you're done.
13. The copy of acknowledgement of payment will appear that can be downloaded and printed.

Cost Inflation Index 582 for F.Y. 2008-09

The Government of India has notified the Cost Inflation Index (CII)for the financial year 2008-09 to be 582.The index for the last year was 551.
This concept was started from Financial Year 1981-82 whose index is kept as 100 (base year). From then the Govt. has been continuously notifying the CII for each year based on the level of inflation. This is mainly used for income tax purposes for calculating the value of long term capital gains. The gain/loss on sale of asset is calculated by subtracting from the sale value, the indexed cost of the asset, which is calculated as follows:
Original Cost of the Asset x Current year CII /CII in the year of purchase

ICAI Members and Students- get your Email id@icai.org

ICAI has provided a new facility for its members and students. Now they can create their own email id with the ICAI domain. Eg: yourname@icai.org
For students, this facility is available for those registered with PCC or Final Course. This facility is powered by Google, so you can expect the good spam filtering as that of Gmail.com
Email ids can be created at http://www.icai.org/
To create an email id all you need to have is your Membership Number or Student Registration Number (SRN)

Send your comments for Simplification of US-GAAP EPS to comply with IFRS

IASB (International Accounting Standards Board) has proposed to simplify the calculation of Earning Per Share so that it complies with the methods of calculation in IFRS (International Financial Reporting Standards). For the purpose it has asked for public comments which will be received till December 05, 2008 by IASB.
Download the draft

Is TDS becoming TeDiouS? NSDL India gives you the procedure to cope with it

The obligations imposed on employers and other deductors by the Department of Income Tax for Tax Deduction at Source (TDS) are proving to be cumbersome day by day. The most basic problem faced by deductors is that of obtaining PAN in case on non salary deductors. However, NSDL has notified the procedure to cope up with this situation which says that file your eTDS return by the due date with the number of available PAN and then afterwards try to obtain the rest of PANs and file a correction return. (detailed instructions can be downloaded from http://tin-nsdl.com/)
The TDS exemption limits are not very high and as such even a non income tax assessee sometimes comes in its purview as deductee. TDS deductors now can only submit TDS return if they provide PAN for atleast 85% of entries in the case of non salary deductee payments and 95% for salary deductees. Non income tax assessees sometimes do not have a PAN (as they are not required to file a return) which poses problems for the dedcutors.
The deductors are left with no other option as a non deduction of TDS would result in penalties and even disallowance of the total expenditure.

Articled Assistants get relief from ICAI

Finally, here's some good news coming from ICAI for the students undergoing articleship. In one of its recent announcements, ICAI has clarified that form 112 has to be submitted only by those articled assistants who had registered after March 31,2008. 

Previously, many students who were undergoing a graduation course along with articleship had to make a choice between the two because of the articleship timing restrictions imposed by ICAI in one of its previous announcements. 

The announcement can be viewed through the following link- 

http://www.icai.org/post.html?post_id=3121&c_id=219