Vistra Insights

Vistra India Update 319

January 1st -15th, 2016

Income Tax

Salary TDS circular for FY 16-17

The Central Government has issued the salary TDS circular for FY 16-17.  The circular contains the rates of deduction of income-tax from the payment of income chargeable under the head "Salaries" during the financial year 2016-17 and explains certain related provisions of the Act and Income-tax Rules, 1962. This circular provides guidelines for both employer and employees with regard to deduction of tax from salary income.

Click to view the circular


Income–tax (1st Amendment) Rules, 2017

The Central Government has amended the Income tax rules with regard to quoting of Permanent Account Number (PAN) in certain specified documents / transactions.  Further, following the demonetization of Rs. 500/- and Rs. 1,000/- currency notes, in order to estimate/monitor the cash inflows into the banking system, the Central government has directed the banks to provide details of cash deposits received by them.  Highlights of the amended rules are as below.

  1. A person who has an bank account other than a time deposit and a Basic Saving Bank Deposit Account and has not quoted his PAN or furnished Form No. 60, as the case may be, at the time of opening of such account or subsequently, shall furnish his PAN or Form No.60 on or before the 28th February 2017 to the bank 
  2. Any specified person who receives any document in which PAN is mentioned or a declaration in Form No. 60, shall ensure that the valid PAN or the fact of furnishing of Form No.60, is duly mentioned in the records maintained for the transactions referred to in rule 114B and the PAN or the details of Form No.60 are linked and mentioned in any information furnished to the income-tax authority or any other authority or agency under any provision of the Act or any rule prescribed therein.
  3. The banks shall on or before 15th January 2017 furnish to the government details in respect of cash deposits aggregating to more than Rs. 250,000/- received during the period 9th November 2016 to 30th December 2016.
  4. The banks are required to furnish to the government details of cash deposit during the period 1st April 2016 to 9th November 2016 aggregating to 

a.  Rs. 1,250,000/- or more in one or more current account of a person or
b.  Rs. 1,250,000/- or more, in one or more accounts (other than a current account) of a person


Click to view the circular


Double Taxation Avoidance Agreement (DTAA) between the Government of Republic of India and the Government of Republic of Cyprus 

An Agreement and Protocol between the Government of the Republic of India and the Government of the Republic of Cyprus for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income (hereinafter referred to as the said Agreement and Protocol) was signed at Nicosia, Cyprus on the 18th November 2016. Now the Central Government has notified that all the provisions of the said Agreement and Protocol between the Government of Republic of India and the Government of Republic of Cyprus for the avoidance of double taxation and the Prevention of Fiscal evasion with respect to taxes on income, shall be given effect to in the Union of India with effect from the 1st April 2017.

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Ban on Overseas Direct Investment in an entity located in countries identified by Financial Action Task Force (FATF)

Reserve Bank of India has made amendment to Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 to direct that no Indian entity should make overseas direct investment in any entity that is located in countries identified as ‘non-cooperative countries and territories’  by FATF. This list of such countries and territories is available on FATF website  or as notified by RBI from time to time.

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Evidence of Import under Import Data Processing and Monitoring System (IDPMS)

With respect to imports through non-EDI ports, RBI has given new directions on matters relating to submission of evidence of import and subsequent settlement of import bills through Authorized Dealers (AD).  As per these new directions, Authorized Dealer bank will enter Bill of Entry (BOE) details like BOE number, port code and date as received from the importer and thereafter matches these details with BOE master in IDPMS while settling outward remittance message (ORM). Customs department has made necessary changes in their systems to capture AD code of importer. Customs will thereafter share this data on real time basis with ADs through RBI.  On settlement of ORM with evidence of import, AD will issue an acknowledgement slip to the importer. The importer needs to preserve the printed ‘Importer copy’ of BoE as evidence of import and acknowledgement slip for future use. ADs are instructed to follow up with importers where import bills are not paid within the duration of 180 days. 

Click to view the circular 


Service Tax

Rationalization of abatement % for tour operator services

Notification no. 26/2012-Service Tax dated 20th June 2012 prescribed multiple abatement rates to tour operator services based on type of services they provide like “Package Tour, or a tour, if the tour operator is providing services solely of arranging or booking accommodation for any person in relation to a tour”.  In order to rationalize the rate of abatement available to the services provided by the tour operator, the Department of Revenue has notified 60% as one uniform rate of abatement to tour operator services subject to certain terms and conditions. 

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Publishing of rate of exchange for conversion of the foreign currency

The Central Board of Excise and Customs (CBEC) vide Notification No. 1 /2017 - Customs (N.T.) notified the rate of exchange for conversion of the foreign currency into Indian currency or vice versa for Export and Import of goods, with effect from 6th January 2017.  

Click to view the circular


Labour Laws

Extension of due date for payment for provident fund contribution for Dec 2016

The provident fund department has given a grace period of 5 days for remittance of provident fund contributions for the month of December 2016 due to the problems faced by employers in upfront allotment of UAN, connectivity issues, login issues etc., in provident fund website. The due date for remittance of Provident Fund contributions for the month of December 2016 will be 20th January 2017 instead of 15th January 2017. 

Click to view the circular


Provident Fund employee’s enrolment Campaign 2017

In a welcome move, the Central Government has launched Provident Fund (PF) employee’s enrolment Campaign 2017 to give an opportunity to the employers to enroll their eligible employees under PF if they were not covered earlier.   As an enticer, the damages payable by the employer for non-enrolment of employees earlier has been reduced to just Rs. 1/- per annum and administration charges is exempted.  The key highlights of the Employees’ Enrolment Campaign, 2017 is given below:

  • The campaign will come into force on the 1st January, 2017 and end on the 31st March, 2017.
  • Employer is required to make declaration in a specified Form giving details of their employees who were required to become members under the EPF Act during the period 1st April 2009 to 31st December 2016 but were not enrolled as members for any reason
  • Employer will be responsible to pay the contributions and interest in accordance with the provisions of the EPF Act.
  • The employer will not be required to deposit employee’s contribution if the same has not been deducted from the employee’s salary.
  • The employer will be required to  pay damages at the rate of INR  1  per annum for contributions  made  during the Employees’ Enrolment  Campaign in respect of the employees enrolled  during the campaign i.e. between  1st January  2017 till 31st March 2017
  • No administrative charges will be leviable for the past periods in respect of the employees enrolled during the campaign i.e. between 1st January 2017 till 31st March 2017

Click to view the circular


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