Payroll and Compliance The Monthly Chronicle - June, 2016 ****** Service Tax increases from 14.5% to 15%

Consequent to the proposal made in Feb, 2016; effective June 1, 2016; a ‘Krishi Kalyan Cess’ of 0.5% will be levied on all taxable services. Hence, the effective rate of service tax stands revised to 15% and includes the following:

  • ⪫ Service Tax - 14%
  • ⪫ Swachh Bharat Cess – SBC - 0.5%
  • ⪫ Krishi Kalyan Cess – KKC - 0.5%

The Finance Bill receives its presidential assent

The Finance Bill which was presented in the Lok Sabha on Feb 29, 2016 has received the presidential assent on May 14, 2016. The Bill was passed by the Lok Sabha on May 5, 2016, and subsequently by the Rajya Sabha on May 11, 2016. Consequent to the President’s approval, the Finance Bill has become an Act and the proposed changes have become mandatory.

The major changes in the Finance Bill made post presentation at Lok Sabha was the roll-back of Provident Fund amendments (i.e. taxing the PF withdrawal). This was revoked due to mass opposition from the public. ADP has prepared a microsite providing detailed information on all changes proposed in Finance Budget, 2016. To get further information on changes proposed and made, with regards to, please click here.

Form 12BB

To this day, there has been no standard reporting format or template available for furnishing the details of investment or expenditure proofs. The government for the first time has introduced an investment declaration format (Form 12BB) for the salaried tax payers in order to compute the Tax Deduction at Source and avail the income tax exemption. This has been recently released by the Central Board of Direct Taxes (CBDT).

Effective June 1, 2016, to evidence claims for income tax deductions, every employee needs to submit the new Form 12BB to their respective employers. Additionally, it is mandatory to submit documentary proof of investments and expenditures. Form 12BB which hereon in is, the new standard form for salaried tax payers to claim tax deductions with respect to:

  1. LTA (Leave Travel Allowance) / LTC (Leave Travel Concession)
  2. HRA (House Rent Allowance)
  3. Interest payable on Home Loan (Section 24)
  4. All tax deductions under Chapter VI-A which relates to allowable deductions under various sections including Section 80C, Section 80CCC, Section 80CCD, Section 80D and all subsequent sections under Chapter VI-A.

To download the Form 12BB form: Click here

To read the notification: Click here

****** Important changes in Provident Fund for FY 2016-17
  1. Advances can be taken against EPF for reasons specified under the EPF Scheme, 1952. The amount drawn can be a combination of employee/employer contribution and interest. Employees access EPF balances primarily to fund purchase of property and for funding medical emergencies.
  2. Anyone over 54 years of age or within one year of attaining superannuation can withdraw up to 90% of the accumulated balance with interest. Recognized Provident Fund interest is at 8.8% and the interest rate of Public Provident Fund is at 8.10% for FY 2016-17.
  3. A member may withdraw the full amount standing to their credit in the fund on;
    • retirement from service after attaining the age of 55 years, or in other circumstances as prescribed and;
    • cessation of employment and not being re-employed for at least two months.

  4. Any withdrawal of accumulated Provident Fund deposit exceeding ₹50,000 before completing 5 years is taxable at 10% under section 192A.
  5. EPF mobile application, SMS based Universal Account Number (UAN) activation and missed call services have been launched for smooth administration and subscriber’s value adding service.
  6. To make the withdrawal policy easy, the department provides the following service: Provident Fund (PF) subscribers whose ‘Aadhaar Number’ and ‘Bank Account Number’ have been synced to their UAN, can now submit claim forms directly to the Employees’ Provident Fund Organization (EPFO) without the attestation of their employers.
One Employee, One EPF Account

Issuing UAN (Universal Account Number) for all EPF members was launched in October, 2014. The UAN facilitates linking of all PF account numbers and seed KYC data with one UAN. This integration of members’ multiple PF accounts will enable the continuance of a lifelong PF membership and allow PF, pension and insurance as a combined service. Subsequently, the expected pay-outs to members on superannuation would be significant.

As of April, 2016, around 6.77 crore UANs have been issued. Aadhaar has been uploaded against 1.30 crore UANs; and out of this, 1.03 crore Aadhaars have been digitally authenticated by the establishments. EPFO seeks to encourage members to continue their PF membership by offering increasingly better services with ease of convenience.

Minimum Wages proposed to be increased up to ₹10,000

As per the Contract Labour (Regulation & Abolition) Central Rules, 1971, the wages of a contract labourers shall be according to the minimum wages prescribed under Minimum Wages Act, 1948. Furthermore, it should be on par with the regular workers, in cases where the contract worker performs the same kind of work as the former. The current minimum wage for such workers is ₹6000 per month in few sectors but the government now proposes to increase it to ₹10,000 as minimum monthly income. The same is applicable for contract workers as well. Although the move is welcome by contract labourers, it may impact the small-scale industries and thus receive strong reaction from industrialists and business owners.

Income Declaration Scheme 2016

The Income Declaration Scheme, 2016, incorporated as Chapter IX of the Finance Act, 2016, provides an opportunity to all personnel who have not declared income accurately in earlier years to come forward and declare such undisclosed income(s). Under the Scheme, such income as declared by the eligible persons, would be taxed at the rate of 30%, plus a ‘Krishi Kalyan Cess’ of 25% on the taxes payable, and a penalty at the rate of 25% of the taxes payable, thereby totaling to 45% of the income declared under the scheme.

The scheme shall remain in force for a period of 4 months, from June 1, 2016 to Sep 30, 2016, for filing of declarations; and the subsequent payments towards taxes, surcharges and penalties must be made latest by Nov 30, 2016. Declarations can be filed online or with the jurisdictional Commissioners of Income tax across the country.

To view the CBDT press release, click here. Andhra Pradesh Labour Law Changes

The government of Andhra Pradesh has enacted the “Integrated Registration and furnishing of Combined Returns under various Labour Laws by certain Establishments Act” as of Apr 23, 2015. In reference to the new Act and rules, industries can have a consolidated single registration and return filing for the below 8 Acts:

  • ⪫ The Beedi and Cigar Workers (COE) Act, 1966 and A.P. Beedi & Cigar Workers
       (COE) Rules, 1968.
  • ⪫ The Minimum Wages Act, 1948 and A.P. Minimum Wages.
  • ⪫ The Plantation Labour Act, 1951.
  • ⪫ The Maternity Benefit Act, 1961.
  • ⪫ A.P. Labour Welfare Fund Act, 1987 and A.P. Labour Welfare Fund Rules, 1988.
  • ⪫ The Payment of Bonus Act, 1965.
  • ⪫ The Child Labour (P&R) Act, 1986 and A.P. Child Labour (P&R) Rules, 1995.
  • ⪫ The Trade Unions Act, 1926, and A.P. Trade Union Regulations, 1927.

Compliance Calendar for the month of June, 2016 Due date Nature of transaction Existing rules Mode Professional Tax - States - Remittances 10th June 16 Andhra Pradesh & Madhya Pradesh State-wise regulations By Challan 15th June 16 Gujarat Gujarat PT regulations By Challan 20th June 16 Karnataka Karnataka PT regulations By Challan & Online 21st June 16 West Bengal West Bengal PT regulations By Challan 30th June 16 Assam & Orissa State-wise regulations By Challan 30th June 16 Maharashtra Maharashtra PT regulations Online PF Central 15th June 16 Remittance of Contribution EPF & MP Act, 1952 Online ESI Central 21st June 16 Remittance of Contribution (Main code and Sub codes) ESIC Act, 1948 Online TDS 7th June 16 TDS Payment Income Tax Act, 1961 Online Labour Welfare Fund Remittances 20th June 16 Kerala State-wise regulations By Challan Sources: Government Notifications, Circulars, Press releases. Share us on           var switchTo5x=true;stLight.options({publisher: "a774d07d-a09d-4a2f-a103-57088fe922e2", doNotHash: false, doNotCopy: false, hashAddressBar: false, tracking: false});


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