“Swachh Bharat Cess”

• Introduction

SBC is tax in addition to Service Tax which shall be levied and collected in accordance with the provisions of Chapter VI of the Finance Act, 2015,called “Swachh Bharat Cess”.

SBC has been imposed for the purposes of financing and promoting Swachh Bharat initiatives by government.

• Applicable Rate

SBC is additional levy of 0.50% on all the taxable service with effect from 15th November 2015. SBC would be calculated in the same way as Service tax is calculated.

• Treatment

Swachh Bharat Cess will be levied only on taxable services. This means SBC will not be imposed on exempted services and non -taxable service in Negative list. 

• Separate Disclosure

SBC needs to be charged separately on the invoice, accounted for separately in the books of account. SBC may be charged separately after service tax as a different line item in invoice. It can be accounted and treated similarly to Education cesses.

• Journal Entry

1	Under Normal service tax treatment India Motors……………………. Dr           To, Sales – Service           To, Service Tax           To, SBC (Being - sale of service to India Motors)	1,00,000	18,825 14,000 500
2	Under Reverse charge mechanism Transportation  Charges………Dr            To, Bank a/c            To, Service Tax*            To, SBC** (Being - Transportation charges paid)	50,000	47,825 2,100 75
3	Payment Service Tax…………………………Dr SBC…………………………………….Dr            To, Bank a/c (Being - Service tax paid)	16,100 575	16,675

Note:	*Under reverse charge mechanism for Goods transport agencies, service tax will be
	charged for service recever at the rate of 0.042%(i.e.,14%x30%)
	**For SBC the rate under Reverse charge mechanism, SBC rate will be 0.0015%(i.e.,0.50%x30%)

• Credit of SBC cannot be availed. Further, SBC cannot be paid by utilizing credit of any other duty or tax.

          No Input Credit

• Point Of Taxation

Date of Completion of Service	Date of issue of invoice	Date of receipt of payment	Effective rate
Before 15/11/2015	After 15/11/2015	After 15/11/2015	14.50%
Before 15/11/2015	Before 15/11/2015	After 15/11/2015	14%
Before 15/11/2015	After 15/11/2015	Before 15/11/2015	14%
After 15/11/2015	Before 15/11/2015	After 15/11/2015	14.50%
After 15/11/2015	Before 15/11/2015	Before 15/11/2015	14%
After 15/11/2015	After 15/11/2015	Before 15/11/2015	14.50%

• Computation under reverse charge mechanism

As per Finance Act, 2015, the provisions of Chapter V of the Finance Act, 1994, and the rules made there under are applicable to SBC also. I.e., the reverse charge under the Finance Act, 1994, is made applicable to SBC.

• Computation in case of Abatement

Taxable services, on which service tax is levied on a certain percentage of value of taxable service, will attract SBC on the same percentage of value as applicable for service tax.

For example, in the case of GTA, computation would be (14% Service Tax + 0.5% SBC) X 30% = 4.35% (4.20%+0.15%) 

• Conclusion

Although SBC is referred to as Cess, it is levied on value of taxable service not on Service tax amount. By this the effective rate of Service tax rate will be 14.5%, which is increased from earlier rate 14%

What is CIN??

 Do you deal with companies? Have you ever come across a alphanumeric 21 digit code called CIN? Whenever you will look at Company’s details, you would see a CIN i.e. Company Identification Number. As the name suggests, every company that is incorporated in India is given a unique code at the time of its incorporation which is called the Corporate Identification Number (CIN) of that company. This code is given irrespective of whether the company is a listed company, private company, public company or One Person Company. You can look for CIN of the companies in a corporate directory. CIN is also mentioned on the letter head of the company. Can a Company’s CIN change? Yes. CIN is the number with which you identify a company. Typically CIN is to remain with the company for a lifetime but in few cases, the CIN of the company may change: Change in State where registered office of the company is situated The listing status of the company changes The industry of the company changes The company becomes public limited from private limited or vice versa Breaking the CIN Code CIN is not a random alphanumeric 21 digit code given to companies. It in fact, stores vital information in it. Let’s understand it by an example:

 CIN Number is basically divided into 6 parts.           

 Each part contains some information about the Company:

 1. First Digit represents the listing status – A Company may be either listed or unlisted. First Digit of the CIN indicates the Listing status of the company. If the company is listed, It will be mentioned “L”, if the company is unlisted, it will be mentioned “U” as the first digit of the CIN.

 2. Next Five Digits represents the Industry Code – Depending on the business line chosen by the company, the Company selects an industry in which it intends to operate. Accordingly, a suitable industry code is allotted to the company.

3. Next Two Digits represents the State Code – These digits represent the State in which the registered office of the company is situated. Therefore, it helps us know which Registrar or ROC is applicable with respect to the company. For Example: If the company has been registered in Maharashtra, the Code would be “MH”. In case, the company shifts its registered office to some other place later, the CIN would change due to change in the State Code.

4. Next Four Digits represents the year of incorporation of the Company – These digits represents the year in which the company was incorporated. By looking at the CIN of the company, one can tell that the year in which the company was incorporated.

5. Next Three Digits represents the type of the company – These three digits specify the type of the company. A company may be any of the following: – Public Limited Company (PLC) – Private Limited Company (PTC) – Government of India Company, Centre (GOI) – One person Company (OPC) – Company of State Government (SGC) – Section 8 Company – Not for Profit (NPL)

6. Last Six Digits – These last digits define the ROC Registration Number of the company. They are unique numbers given to every company at the time of incorporation by the ROC in which they are registering. This number depends on the ROC in which the company is registering and also the Industry which has been allocated to it. This is what the 21 digit CIN Code comprises of. Next time, you see CIN of a company, there would be many things that you should be able to tell.

Amendments in Service Tax

      The definition of “Chit”, “Entertainment event” and “Amusement facility” has been omitted by way of Notification

      The rate of Service Tax as increased from 12% to 14%

      After the rates has been increased, there is no Education Cess and Secondary and Higher Education Cess on service tax

      Exemption of carrying out an intermediate production process as Job work in relation to alcoholic liquor for human consumption is removed Mega Exemption Notification, & by making such services as taxable.

      For the following the exemptions are available:

• Admission to museum, national park, wild life sanctuary, tiger reserve or zoo
• Admission to exhibition of cinematographic film, circus, dance or theatrical performance including drama or ballet
• Admission to any sporting event organized by a recognized sports body where the participating team or individual represent any district, state, zone or country.
• Admission to award function, concert, pageant, musical performance, sporting event other than recognized sport event is exempted from levy of service tax provided consideration is not more than Rs.500/-

      Taxable services provided under Power System Development Fund Scheme of Ministry of Power are exempted from the whole of levy of service tax till 1st day of April 2017. Such exemption shall be eligible subject to production of Certificate before Central Excise Officer and other conditions.

      Increase in rates of service tax (in case of Composition scheme) for service provided by Air Travel agent, Insurance service, Forex (money changing service) and service provided by lottery distributor and selling agent.

1.       Air Travel Agent:

·         Domestic bookings of route for travel by air---- 0.7% of the basic fare

·         International bookings of route for travel by air---- 1.4% of the basic fare

2.       Insurance Service:

·         First year ----   3.5% of the gross amount of premium charged

·         Subsequent Year ---- 1.75% of the gross amount of premium charged

3.       Money Changing (Forex)

·         Upto Rs.100,000 ----  0.14% of the gross amount of currency exchanged or Rs.35 whichever is higher

·         Exceeding Rs.1,00,000 and upto Rs.10, 00, 000 ---- Rs.140 + 0.07% of the (gross amount of currency exchanged-Rs.1,00,000)

·         Exceeding Rs.10,00,000 ---- Rs.770 + 0.014% of the (gross amount of currency exchanged -Rs.10,00,000) or Rs.7,000/- whichever is lower

4.    Service provided by lottery distributor and selling agent

·         Where the guaranteed lottery prize payout is > 80% ---- Rs.8,200/- on every Rs.10 Lakh (or part of Rs.10 Lakh) of aggregate face value of lottery tickets printed by the organizing state for a draw.

·         Where the guaranteed lottery prize payout is < 80% ---- Rs.12800/- on every Rs.10 Lakh (or part of Rs.10 Lakh) of aggregate face value of lottery tickets printed by the organizing state for a draw

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Budget - 2015 - For Individuals & HUF

                            Budget - 2015 - For Individuals & HUF

                                Personal Income Tax (PIT)                            

There are no changes in the tax slabs including the Basic exemption limits. The previous year tax slabs to be continued for Individuals.

Basic Exemption limits are as mentioned below:

• For Senior Citizens, age between 60 – 79 years being a resident in India the basic exemption is Rs.3,00,000/‐
• For Senior Citizens, above the age of 80 years being a resident in India the basic exemption is Rs.5,00,000/‐
• For other assesses includingWomen Assessee, HUF, Non Resident, the basic exemption is Rs.2,50,000/‐

Maximum benefit for normal Individuals post this Budget is estimated to be Rs 4,44,200/-

• Surcharge increase from 10% to 12% on tax amount for Individuals and HUF whose Taxable Total Income is more than Rs. 1 Crore.
•  Surcharge has been increased from 10% to 12% where income exceeds One Crore rupees.

Deductions u/s 80C to 80U
The deduction limit under Section80CCC have been increased to Rs.1,50,000/- from Rs.1,00,000 for any amount received under LIC Annuity Pension Plan.
• Deduction under section 80CCD has been reduced to 50,000/- from 1,00,000/- for contribution to the pension scheme of central government.
• Limit of deduction of health insurance premium increased from Rs.15,000/- to Rs.25,000/- for assessee below age of 60 years and for senior citizens limit increased from Rs.20,000/- to Rs.30,000/- u/s 80D in case of individual and HUF.
• Very Senior citizens above the age of 80 years, who are not covered by health insurance, to be allowed deduction of 30,000/- towards medical expenditures u/s 80D in case of individual and also expenditure incurred on parents who are very senior citizen.
• Where the assessee is a HUF, the amount paid towards health insurance premium of any member of HUF the deduction amount has been enhanced from 15,000/- to 25,000/-.
• Where the assessee is a HUF, the amount paid on account of medical expenditure of any member of HUF (Very Senior Citizen) the deduction is allowed to the extent of Rs.30,000/-.
• Deduction in respect of maintenance including medical treatment of a dependent – who is person with disability - Section 80DD - is enhanced to Rs.75,000/- from 50,000/- .In case of dependant is a person with a severe disability deduction is enhanced to Rs.1,25,000/- from Rs.1,00,000/-.
• Deduction limit of Rs.40,000 with respect to specified disease of serious nature under section 80DDB limit has enhanced to Rs.80,000/- in case of very senior citizen.
• Donation made to National Fund for Control of Drug Abuse (NFCDA), Swachh Bharat Ko shandthe Clean Ganga Fund to be eligible for 100% deduction u/s 80G of Income - tax Act.
• U/s 80U - Person with disability Deduction limit is enhanced from Rs.50,000/- to Rs.75000 and with respect to severe disability the limit is increased to Rs.1,25,000/- from Rs.1,00,000.
• Payments to the beneficiaries including interest payment on deposit in Sukanya Samriddhi scheme to be fully exempt.

MAT Vs AMT

Minimum Alternate Tax (MAT) is levied on companies as per section 115JB of the Indian Income Tax Act, 1961.

Alternate Minimum Tax (AMT) is levied on limited liability partnerships (LLPs) as per section 115JC.

Minimum Alternate Tax u/s 115JB Income Tax Act India

If the income-tax payable by a Company, on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2011, is less than 18.5% of its book profit,

• such book profit shall be deemed to be the total income of the Company, and
• the tax payable by the Company on such total income shall be the amount of income-tax at the rate of 18.5% of the book profit.

Computation of Book profit:.

Net Profit as per Profit and Loss account
ADD
1	Income-tax paid or payable, and the provision thereof, including
2	Transfer to Reserves (Other than Section 33AC w.e.f. AY 2003-2004)
3	Amount set aside to meet unascertained liabilities,
4	Provision for losses of Subsidiaries,
5	Dividends Proposed or Paid,
6	Expenditure relatable to Income (eligible for deduction from Book Profit) exempt under section 10 or 11 or 12
7	Amount of depreciation, including amount of depreciation on Revalued amount of Fixed Asset,
8	Amount of deferred tax and the provision thereof,
9	Amount or amounts set aside as provision for diminution in the value of any asset.
(LESS)
	Only, if credited to the Profit and Loss Account
1	Amount withdrawn from Reserves or Provisions from those created before 01.04.1997 without debiting Profit and Loss Account,
2	Amount withdrawn from reserves created on or after 01.04.1997 if such amount was allowed to be charged to Net Profit for the purpose of Section 115JB or Section 115JA,
3	Income exempt under section 10 [other than 10(38), 10(23G)] or 11 or 12,
4	Amount of Deferred Tax
5	Amount withdrawn from Revaluation Reserve to the extent it does not exceed the depreciation on revalued amount of Fixed Asset charged to Profit and Loss Account
	Others
6	Amount of depreciation, excluding amount of depreciation on Revalued amount of Fixed Asset,
7	Lower of the following	Brought Forward Loss (as per Books) ? Loss does not include Depreciation
		Unabsorbed Depreciation (as per Books)
8	Profits eligible for deduction under section 80HHC or 80HHE or 80HHF, upto Assessment Year 2005-06
9	Amount of Profits of Sick Industrial Company, during the period of sickness.

Alternate Minimum Tax u/s 115JC Income Tax Act India:

When the AMT is Applicable?

Where the regular income-tax payable for a previous year by a limited liability partnership is less than the AMT payable for such previous year,

•  the adjusted total income shall be deemed to be the total income of the limited liability partnership for such previous year and
• it shall be liable to pay income-tax on such total income at the rate

Adjusted total income is the total income before giving effect to this Chapter as increased by, 

• Deductions claimed, if any, under any section included in Chapter VI-A under the heading Deductions in respect of certain incomes; and
• Deduction claimed, if any, under section 10AA.

 Every limited liability partnership to which this section applies shall obtain a report, from an accountant certifying that the adjusted total income and the AMT have been computed in accordance with the provisions of this Chapter.

Tax Credit for AMT u/s 115JD

The tax credit of an assessment year to be allowed shall be the excess of AMT paid over the regular income-tax payable of that year.

·         The amount of tax credit shall be carried forward and set off. But such carry forward shall not be allowed beyond the tenth assessment year immediately succeeding the assessment year for which tax credit becomes allowable.

·         In any assessment year in which the regular income-tax exceeds the AMT, the tax credit shall be allowed to be set off to the extent of the excess of regular income-tax over the AMT and the balance of the tax credit, if any, shall be carried forward.

Slab Rates(AY 14-15)

Partnership Firm
Particulars	AY 2013-14	AY 2014-15
Tax Rate	30%	30%
Surcharge (total income > Rs. 1 Crore)	NIL	10%
AMT (u/s 115JC)	18.50%	NIL
LLP
Particulars	AY 2013-14	AY 2014-15
Tax Rate	30%	30%
Surcharge (total income > Rs. 1 Crore)	NIL	10%
AMT (u/s 115JC)	18.50%	18.50%
Education Cess & SHEC	3%	3%
Domestic Company
Particulars	AY 2013-14	AY 2014-15
Tax Rate	30%	30%
Surcharge (total income Rs. 1-10 Crore)	5%	5%
Surcharge (total income > Rs. 10 Crore)	5%	10%
MAT (u/s 115JB) *	18.50%	18.50%
Surcharge on MAT (total income > Rs. 1 Crore)	NIL	5%
Education Cess & SHEC	3%	3%
Dividend Distribution Tax  -u/s 115-O	15%	15%
Surcharge	5%	10%
Education Cess & SHEC	3%	3%