Everything About Zero Depreciation Car Insurance policy - For those who love peace of mind.

A zero depreciation plan provides policyholders with full claims without any depreciation deduction. This extended cover encompasses the repairing costs of glass, fiber, plastic, rubber parts and wind-shield etc. 

A traditional approach

It was 2009 when Zero depreciation policies entered Indian Markets. Before that it was common to buy a comprehensive insurance plan. One major shortcoming of the comprehensive vehicle insurance plan is it doesn’t cover all expenses more over you will get claim only on depreciated value of parts. Insured people have to shell out money for renovating fiber, rubber and plastic parts. Owners of old cars also have to spend a large amount of money as their old motor parts are replaced by new ones. In a major road-mishap, the expense of restoring these parts can rise over Rs 1 lakh. The owner of the car has to bear these costs even though he or she is armed with a so-called comprehensive cover. 

An Example

Mr. Ayush bought a brand new car and purchased a comprehensive insurance plan for his new car.  Unfortunately his car met an accidents and he incurred Rs.1.5 lacs on repairs of the car. He was surprised to receive only Rs. 1.2 lacs for damages from insurance company as compensation. This is because his insurance company deducted depreciation from the claim amount. This means Mr Ayush could have saved 30,000 rupees if he would have bought zero depreciation policy.

Practical Approach

Most of the Insurance companies offer Zero depreciation policy only for a first few years of the Vehicle which range from 3 to 5 years. Opting for Zero depreciation policy will cost you more than a comprehensive policy but if you are a peace lover them you must go for it. 

You may also like to read http://armutha.blogspot.in/2015/03/all-about-start-ups-formation-and-your.html

Now private company can accept unsecured loans even from a relatives

MCA Update on Deposit From Relative By Private Limited Company:

Deposits rules are quickly getting aligned with old 58A exempted rules to private limited company.

Without any upper limit of amount, now a private company can  accept unsecured loans apart from director even from a relative (as per definition) of a director of the company with simple declaration saying the relative has not borrowed same from others. The relative need not be a shareholder of the company.

​http://www.mca.gov.in/Ministry/pdf/Amendement_Rules_15092015.pdf

Smart way to deal With Income Tax Notices

If you are the who has received notice from Income tax department then first you must understand few basics of notice. This article will surely help you on how to deal with Income Tax notices. Usually communication from the Income Tax department causes increase in heart beat for most of us. But you shall note that majority of letter or notices are of routine type and need fever attention. 

What to do when you receive an Income Tax notice?

1. Don’t Ignore: Handle the situation carefully and sincerely. Inform your consultant by email about the notice. if possible send a scan copy. Don't use WhatsApp to inform your Chartered Accountant so that you can always refer when did you inform Chartered Accountant about the notice.   

2. Back to basics: Check the whether the notice is really meant for you by checking basic things like PAN, Name, Assessment year  it related to issuing officer, signature, address with details of ward and circle number. Verify these details to avoid being cheated. To see details go to E filling website see know your AO

3. Preserve  the envelope: If the notice comes by  postal mail, preserve the envelope and staple it on the back of the notice. It serves as proof of the dates on which it was posted and received. I also suggest my clients to write the date time and receivers name on the back of the notice.

4. DIN: If the notice is delivered online, then check the Document Identification Number. In case of online notices also carefully check the authority to whom you should respond 

5. Identify the reason behind the notice: By normal reading one can easily indentifies the reason behind notice. Reasons could be a simple mismatch in TDS or inconsistency in your returns, or some serious concerns like income concealment. It can also be a survey or scrutiny of accounts.

6. Validity: Check the validity of the notice and the timely issuance. Also check the section under which the notice has been issued. For example: A notice under Section 143(3) for scrutiny assessment has to be served within six months of the end of the financial year in which the return was filed. If served later than this period, it will be considered invalid.

7. Gather the documents: Start collecting the documents that the department has requested via the notice. Documents needed can vary depending on the gravity of the notice, usually scrutiny notice may ask for several documents, including bank statements, pay-slips, rent receipts and brokerage statements. While it may not be possible to put all this together in the short time.

8. Letter: Prepare a covering letter along with the set of documents. Also mention list of all the documents enclosed. Many time it is observed that Documents and information produced for verification purpose in original are not mentioned in submission letter.

9. Acknowledgement: Prepare two set of all the documents required, along with a copy of the covering letter. Get your copy stamped to maintain personal records, and as a proof of submission of the documents thereby complying with the notice. In case the officer is absent on the date of submission make sure that your visit is recorded  and acknowledged. 

10. Reply in time: Always respond to the notice on time even if you are unable to collect the required documents. You can even ask for some time to gather all the documents. Timely response will help establish that you are honest, and cooperating with the law.

11. CA help:- If the notice is simply about a factual matter, such as an arithmetical error, TDS mismatch or deduction amount, a taxpayer may respond on his own, Only when it is a serious issue, such as a notice for scrutiny or reassessment under Section 148, should one get a professional to respond. But A chartered accountant will be better equipped to deal with the situation and provide responses.

GST update

GST Update 📢📣
Companies with an annual turnover up to Rs 25 lakh might be exempted from the proposed national goods and services tax (GST). The Centre and states are likely to settle for this threshold as they finalise the GST laws.

According to finance ministry officials, the draft of these laws is expected to be ready by the end of this month. The Centre and states are working on a mechanism to avoid dual scrutiny of companies by them. "The thinking now is that all legal entities with an annual turnover of up to Rs 25 lakh will be completely exempt. This will be applicable to one TIN (Taxpayer Identification Number)," said a ministry official.

The government is looking to reconvene Parliament's monsoon session to get the Constitutional amendment Bill on GST passed in the Rajya Sabha. Three Bills - on the Centre's GST (CGST), states' GST and Integrated GST -would come up after the Constitutional Bill is cleared. Work on the drafts is on.

States wanted a threshold of Rs 10 lakh to protect their revenue, while the Centre has assured them full compensation for five years. Besides, firms with an annual turnover between Rs 25 lakh and Rs 75 lakh will have an option to pay a flat rate of one per cent or GST rate. If they decide to opt for one per cent rate, firms will not get input credits because of which many, particularly dealers, may choose the GST rate.

The exemption limit from value added tax and service tax across states - except the North-East - is close to Rs 10 lakh turnover. "There will be an impact on revenue but it will depend on how many under the Rs 25 lakh to Rs 75 lakh annual turnover bracket opt for the one per cent rate. If 60-70 per cent opt for it, there will be loss of revenue for states but they will also get compensated by the Centre," said Bipin Sapra, tax partner, EY. From the manufacturing point of view, it was important to keep the exemption limit higher, he added.

While these are likely to be part of the GST laws, a final decision on this is to be taken by the yet-unformed GST Council. This is to be constituted within two months of enacting the Constitution amendment. It would comprise the Union and state finance ministers and will be empowered to take key decisions on GST.

The idea is that entities with a turnover of up to Rs 75 lakh will not attract any checks or audits from either the state or the Centre. The Centre will give states a free run on compliance checks for companies with annual turnover above Rs 75 lakh and up to Rs 1.5 crore. "Here, the Centre will only do online scrutiny. And, if states detect non-compliance with respect to CGST, only the Centre will issue a notice. States cannot issue a notice on our behalf," said an official. However, in case of companies with annual turnover of more than Rs 1.5 crore, there will be concurrent audits by both the state government and the Centre.

"The government is still discussing a mechanism of a risk-based selection so that the checks by Centre and states do not overlap," said the official.

The government on Sunday made a renewed appeal to Opposition parties to help pass the Constitutional amendment through an extended monsoon session. It is vital that this be cleared at the earliest for the government to stick to the GST implementation timeline of April 1, 2016. The three draft legislations will lay down the fine print of the uniform indirect tax regime.

With regards
CA Anand Mutha

Some simplification in Companies Act. Notified on 25th May, 2015

Companies(Amendment) Act, 2015 is Today notified by MCA.

Below are the vHIGHLIGHTS of the same.

1. Requirement of min. paid up capital to be do ne away with.

2. Having a Common Seal is not mandatory.

3. Section 11 pertaining to Commencement of Business Certificate to be ommited.

4. Penalty for violation of provision regarding acceptance/invitation of deposits stipulated by inserting section 76A. Min penalty 1 cr Max. 10 cr.

5. Dividend not to be given unless prev.yr losses/dep. not provided in prev. yr are set off from current year profits.

6. Auditor to report fraud/ offence involving prescribed amt. to CG. if the amt. is below it reporting to be done to audit committee/ Board and disclosure in board report.

8. Concept of omnibus approval for RPT by audit committee inserted in section 177.

9. Exemption given under rules of section 185 regarding giving loans to WOS and subsi to be incorporated in section itself.

10. Only ordinary resolution will be reqd for related party transaction.

11. No shareholder approval reqd. in case of RPT b/w holding and WOS if a/c of subsidiary consolidated.

CA Anand Mutha

Maharashtra government Boosts Small Industries- cleares most awaited labour reforms

The Maharashtra government has  decided to amend the Factories Act, 1948, in a bid to encourage growth of small-scale industries (SSI). Nearly 14,300 small-scale units will be freed from the inspector raj and about 190,000 new jobs will be created in the state.

At present, smaller industries may be excluded from the provisions of the Factories Act, 1948, which mandates safety guidelines and working conditions, applies to units with more than 10 workers in premises with power supply and 20 workers in premises without power. However, with the proposed amendment the limit has been increased from 20 and 40 workers.

Further, the condition with regard to prior approval of the management for overtime has been done away with. The government has proposed overtime of 115 hours from the present level of 75 hours to workers in SSI units. 

Moreover, women employees in these industrial units will now be allowed to work during 7 pm and 6 am which was not allowed under section 66 (1) of the Factories Act.

Change in rate of service tax and its impact

Service tax rate is increase to 14 % w.e.f. 1st June 2015. In this regard the provider of service must keep in mind the point of taxation rules in order to calculate the correct rate of tax. For the purpose of simplicity one can go through below mentioned point To understand the impact of change in rate of service tax.

1. Service Provision is complete till 31.05.2015 and Invoice raised till 31.05.2015 but Payment received on or after 01.06.2015- 12.36% applicable.

2. Service complete till 31.05.2015, Invoice raised on or after 01.06.2015 but Payment is received till 31.05.2015 - 12.36%

3. Service Provision complete till 31.05.2015 and Invoice raised on or after 01.06.2015 and Payment also received after 01.06.2015- 14%

4. Invoice raised till 31.05.2015 in advance and some part of total consideration has been paid till 31.05.2015 but Service Provision is being done on or after 01.06.2015 -12.36% for such part payment, 14% for balance to be recd.

5. Entire consideration received till 31.05.2015 but no invoice raised till 31.05.2015 and no service provided -14%

6. Even if entire service has been provided on or after 01.06.2015 but both payment as well as invoicing has been done till 31.05.2015 then -12.36%

Regards
CA Anand Mutha