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Tuesday, November 2, 2010
Monday, October 25, 2010
Direct Tax Code 2010- Major Corporate tax provisions
Submitted by : admin on dated Thursday, October 21st, 2010
Minimum Alternative Tax (MAT)
Current situation: In light of the tax holiday available to the Power and Oil and Gas sector, MAT is a key provision impacting the sector. Currently, MAT is applicable at the rate of 18 percent (effective 19.93 percent considering surcharge and cess) of the book-profits computed after making specified adjustments to the net profit of the company. Further, the companies are allowed to carry forward the MAT credit (which is the excess of MAT tax paid over the tax computed in accordance with normal corporate tax provisions) to future years.
DTC Proposals: Under the Direct Tax Bill 2009, it was proposed that company shall pay tax on its gross assets at the rate of 2 percent. (0.25 percent in case of banking companies) if the tax liability is less than the tax on gross assets. The revised draft of the DTC reintroduced profit based MAT .Under the DTC, the rate has been increased from 18 percent to 20 percent of book profits.
Our Comments: DTC Bill 2009 had proposed to levy MAT on the basis of gross assets, which would had been a dampener for capital based industry like power, oil and gas. However, DTC has brought back MAT to Book Profits which is a positive step towards development of the industry.
Corporate tax provisions – Key provisions
Tax rates
Current Situation: Currently, the domestic companies are subject to corporate tax of 30 percent (plus surcharge and education cess) on their taxable income
DTC Proposals: While the Direct Tax Code Bill, 2009 stipulated the corporate tax rate as 25 percent, the Revised Discussion Paper had hinted that tax rates could be reviewed and suitably calibrated considering the reduction in the tax base due to certain tax benefits spelt out in the said paper.
The DTC now has retained the existing corporate tax rate of 30 percent.
Our Comments: Maintaining the corporate tax rate at 30 percent is not a positive development; in as much as other levies such as DDT of 15 percent and branch profit tax of 15 percent make the effective tax rate quite high.
Test of Residency
Current Situation: Under the provisions of the Act, a company is resident in India in any previous year, if the control and management of its affairs is situated ‘wholly’ in India.
DTC Proposals: Under DTC, it is proposed to shift the test of residence of a company from ‘control and management’ to ‘place of effective management’ in line with international practice.
Accordingly, a company incorporated outside India will be resident in India, if its ‘place of effective management’ is situated in India.
Place of effective management of the company would mean:
· Place where the board of directors or its executive directors make their decisions
· In cases where the board of directors routinely approve the commercial and strategic decisions made by the executive directors or officers of the company, the place where such executive directors or officers of the company perform their functions.
Our Comments: Although the concept of ‘place of effective management’ proposed under DTC is in line with international practice, it is important that this provision is administered in a fair and pragmatic manner. The new residency definition could impact businesses where key decisions are taken by Indian management / executives and merely adopted by the board overseas.
Treaty Override
Current Situation: Under the Act, the provisions of the tax treaties prevail over the domestic law to the extent they are more beneficial to the taxpayer.
DTC Proposals: The initial draft of the Direct Tax Code Bill, 2009 provided that in the case of a conflict between the provisions of a treaty and the provisions of the Code, the one that is later in point of time shall prevail. This led to apprehensions whether the proposal would lead to treaty override and render the existing treaties otiose. Post the Revised Discussion Paper, the DTC seeks to restore the beneficial treatment between the Act and the Tax Treaty except in specified cases-
· where GAAR is invoked or
· when CFC provisions are invoked or
· when Branch Profits Tax is levied.
Our Comments: The proposals seem to be in line with international practice.
Controlled Foreign Corporation (CFC) Provisions
Current Situation: Under the Act, there are no CFC provisions.
DTC Proposals: The introduction of the CFC provisions has come as a major surprise for India Inc. The CFC provisions have been brought in as an anti-avoidance measure. Under this, passive income earned by a foreign company controlled directly or indirectly by a resident in India, and where such income is not distributed to the shareholders, resulting in deferral of taxes shall be deemed to have been distributed to the shareholders in India. The CFC provisions are broadly summarized as under:
· The total income of a Resident taxpayer to include income attributable to a CFC which means a foreign company:
- that is a resident of a territory with lower rate of taxation (i.e. where taxes paid are less than 50 percent of taxes on such profits as computed under the DTC)
- whose shares are not listed on any stock exchange recognised by such territory
- individually or collectively controlled by persons resident in India (through capital, voting power, income, assets, dominant influence, decisive influence, etc.)
- that is not engaged in active trade or business (i.e. it is not engaged in commercial / industrial / financial undertakings through employees / personnel or less than 50 percent of its income is of the nature of dividend, interest income, income from house property, capital gains, royalty, sale of goods/services to related parties, income from management, holding or investment in securities/shareholdings, any other income under the head income from residuary sources, etc.)
- has specified income of such company exceeds INR 2.5 million.
· Tie breaker tests have been provided to determine the place of residence of a controlled foreign company.
- Scope of passive income also covers supply of goods / services to associated enterprises
- Specific formula prescribed for computing income attributable to a CFC. Income attributable to the CFC to be based on specified income. Specified income to be based on the net profit as per the profit and loss account of the CFC, subject to prescribed adjustments.
Our Comments: CFC provisions are likely to bring additional complexity in the tax legislation and could significantly impact Indian companies having outbound investment structures. Specifically, CFC provisions could create cash flow problems for Indian companies since they would be subject to tax without corresponding receipt of actual dividends. This may necessitate a review of the existing overseas investment structure
Exempt-Exempt-Taxable (EET) vs. Exempt-Exempt-Exempt (EEE) Regime for Saving Schemes
Current Situation: Under the Act, long-term saving schemes like Government Provident Fund (GPF), Recognized Provident Fund (RPF), Public Provident Fund (PPF), Life Insurance, etc. are covered under the EEE method, wherein the contributions, accumulations / accretions thereto and the withdrawals are exempt from tax.
DTC Proposals: All long-term retrial savings schemes moved to EEE regime as against EET proposed earlier. Deduction in respect of investment in approved funds such as Provident Fund, Superannuation Fund or Pension fund reduced to INR 100,000 from INR 300,000. Receipts under a life insurance policy on death/maturity would be exempt from tax.
Our Comments: The continuation of EEE regime is a welcome step as it will provide a tax free lumpsum amount to individuals to meet their post-retirement financial requirements.
Withholding tax provisions – Others
Current Situation: The withholding tax rate on royalty and fees for technical services payable to non-residents is 10 percent (excluding surcharge and education cess).
DTC Proposals: The withholding tax rate in respect of payment of royalties and FTS to non-residents is proposed to be increased to 20 percent.
Our Comments: The higher withholding tax rates would increase the overall cost of the Indian companies in case of payments to tax residents of the country with whom India does not have a Tax Treaty and grossing up of tax is required in case of tax is borne Indian company.
Transfer Pricing
Current Situation: Currently, there are no provisions under the Act in respect of Advance Pricing Arrangement (‘APA’).
DTC Proposals: It is proposed to introduce APA for upfront determination of pricing methodology of an international transaction.
Our Comments: Whilst the scheme specifying the procedure of APA has not yet been released, the industry would expect that the same is in line with the international practice.
Leased Assets
Current Situation: In the absence of any specific provision under the Act, there is a lack of clarity surrounding the treatment of assets obtained on finance lease by Power and Oil and Gas sector undertakings. In certain cases, companies are facing litigation from revenue authorities on the question of whether they are eligible to claim depreciation on such assets.
DTC Proposals: Under DTC, the lessee would be treated as the owner of assets obtained on finance lease and therefore, eligible to claim depreciation on the same.
Our Comments: This is an important provision for the companies in Power and Oil and Gas sectors and it will help to end the long drawn litigation regarding ‘ownership’ of such assets and depreciation eligibility with the Revenue authorities.
General Anti Avoidance Rule (‘GAAR’)
Current Situation: Under the Act, there are limited specific anti-abuse provisions.
DTC Proposals
· The Code seeks to introduce GAAR which provides sweeping powers to the Revenue authorities. The same is applicable to domestic as well as international arrangements.
· GAAR provisions empower the Commissioner of Income-tax (“CIT”) to declare any arrangement as “impermissible avoidance arrangement” provided the same has been entered into with the objective of obtaining tax benefit and satisfies any one of the following conditions:
– It is not at arm’s length
– It represents misuse or abuse of the provisions of the DTC
– It lacks commercial substance
– It is carried out in a manner not normally employed for bona fide business purposes
· An arrangement would be presumed to be for obtaining tax benefit unless the tax payer demonstrates that obtaining tax benefit was not the main objective of the arrangement.
· CIT to determine the tax consequences on invoking GAAR by reallocating the income or disregarding/recharacterizing the arrangement.
· Meaning of ‘tax benefit’ widened to include any reduction in tax bases including increase in loss
· GAAR provisions to be applicable as per the guidelines to be framed by the Central Government
· GAAR shall override Tax Treaty provisions
· Forum of DRP available in a scenario where GAAR is invoked. Our Comments:
The guidelines to be issued by the Central Government would need careful examination to assess the scope and impact of these provisions. It is an open question whether GAAR can be invoked for transactions undertaken prior to the enactment of DTC. A suitable clarification may be provided for this purpose.
Source : dtc 2010
Link : dtc 2010
Minimum Alternative Tax (MAT)
Current situation: In light of the tax holiday available to the Power and Oil and Gas sector, MAT is a key provision impacting the sector. Currently, MAT is applicable at the rate of 18 percent (effective 19.93 percent considering surcharge and cess) of the book-profits computed after making specified adjustments to the net profit of the company. Further, the companies are allowed to carry forward the MAT credit (which is the excess of MAT tax paid over the tax computed in accordance with normal corporate tax provisions) to future years.
DTC Proposals: Under the Direct Tax Bill 2009, it was proposed that company shall pay tax on its gross assets at the rate of 2 percent. (0.25 percent in case of banking companies) if the tax liability is less than the tax on gross assets. The revised draft of the DTC reintroduced profit based MAT .Under the DTC, the rate has been increased from 18 percent to 20 percent of book profits.
Our Comments: DTC Bill 2009 had proposed to levy MAT on the basis of gross assets, which would had been a dampener for capital based industry like power, oil and gas. However, DTC has brought back MAT to Book Profits which is a positive step towards development of the industry.
Corporate tax provisions – Key provisions
Tax rates
Current Situation: Currently, the domestic companies are subject to corporate tax of 30 percent (plus surcharge and education cess) on their taxable income
DTC Proposals: While the Direct Tax Code Bill, 2009 stipulated the corporate tax rate as 25 percent, the Revised Discussion Paper had hinted that tax rates could be reviewed and suitably calibrated considering the reduction in the tax base due to certain tax benefits spelt out in the said paper.
The DTC now has retained the existing corporate tax rate of 30 percent.
Our Comments: Maintaining the corporate tax rate at 30 percent is not a positive development; in as much as other levies such as DDT of 15 percent and branch profit tax of 15 percent make the effective tax rate quite high.
Test of Residency
Current Situation: Under the provisions of the Act, a company is resident in India in any previous year, if the control and management of its affairs is situated ‘wholly’ in India.
DTC Proposals: Under DTC, it is proposed to shift the test of residence of a company from ‘control and management’ to ‘place of effective management’ in line with international practice.
Accordingly, a company incorporated outside India will be resident in India, if its ‘place of effective management’ is situated in India.
Place of effective management of the company would mean:
· Place where the board of directors or its executive directors make their decisions
· In cases where the board of directors routinely approve the commercial and strategic decisions made by the executive directors or officers of the company, the place where such executive directors or officers of the company perform their functions.
Our Comments: Although the concept of ‘place of effective management’ proposed under DTC is in line with international practice, it is important that this provision is administered in a fair and pragmatic manner. The new residency definition could impact businesses where key decisions are taken by Indian management / executives and merely adopted by the board overseas.
Treaty Override
Current Situation: Under the Act, the provisions of the tax treaties prevail over the domestic law to the extent they are more beneficial to the taxpayer.
DTC Proposals: The initial draft of the Direct Tax Code Bill, 2009 provided that in the case of a conflict between the provisions of a treaty and the provisions of the Code, the one that is later in point of time shall prevail. This led to apprehensions whether the proposal would lead to treaty override and render the existing treaties otiose. Post the Revised Discussion Paper, the DTC seeks to restore the beneficial treatment between the Act and the Tax Treaty except in specified cases-
· where GAAR is invoked or
· when CFC provisions are invoked or
· when Branch Profits Tax is levied.
Our Comments: The proposals seem to be in line with international practice.
Controlled Foreign Corporation (CFC) Provisions
Current Situation: Under the Act, there are no CFC provisions.
DTC Proposals: The introduction of the CFC provisions has come as a major surprise for India Inc. The CFC provisions have been brought in as an anti-avoidance measure. Under this, passive income earned by a foreign company controlled directly or indirectly by a resident in India, and where such income is not distributed to the shareholders, resulting in deferral of taxes shall be deemed to have been distributed to the shareholders in India. The CFC provisions are broadly summarized as under:
· The total income of a Resident taxpayer to include income attributable to a CFC which means a foreign company:
- that is a resident of a territory with lower rate of taxation (i.e. where taxes paid are less than 50 percent of taxes on such profits as computed under the DTC)
- whose shares are not listed on any stock exchange recognised by such territory
- individually or collectively controlled by persons resident in India (through capital, voting power, income, assets, dominant influence, decisive influence, etc.)
- that is not engaged in active trade or business (i.e. it is not engaged in commercial / industrial / financial undertakings through employees / personnel or less than 50 percent of its income is of the nature of dividend, interest income, income from house property, capital gains, royalty, sale of goods/services to related parties, income from management, holding or investment in securities/shareholdings, any other income under the head income from residuary sources, etc.)
- has specified income of such company exceeds INR 2.5 million.
· Tie breaker tests have been provided to determine the place of residence of a controlled foreign company.
- Scope of passive income also covers supply of goods / services to associated enterprises
- Specific formula prescribed for computing income attributable to a CFC. Income attributable to the CFC to be based on specified income. Specified income to be based on the net profit as per the profit and loss account of the CFC, subject to prescribed adjustments.
Our Comments: CFC provisions are likely to bring additional complexity in the tax legislation and could significantly impact Indian companies having outbound investment structures. Specifically, CFC provisions could create cash flow problems for Indian companies since they would be subject to tax without corresponding receipt of actual dividends. This may necessitate a review of the existing overseas investment structure
Exempt-Exempt-Taxable (EET) vs. Exempt-Exempt-Exempt (EEE) Regime for Saving Schemes
Current Situation: Under the Act, long-term saving schemes like Government Provident Fund (GPF), Recognized Provident Fund (RPF), Public Provident Fund (PPF), Life Insurance, etc. are covered under the EEE method, wherein the contributions, accumulations / accretions thereto and the withdrawals are exempt from tax.
DTC Proposals: All long-term retrial savings schemes moved to EEE regime as against EET proposed earlier. Deduction in respect of investment in approved funds such as Provident Fund, Superannuation Fund or Pension fund reduced to INR 100,000 from INR 300,000. Receipts under a life insurance policy on death/maturity would be exempt from tax.
Our Comments: The continuation of EEE regime is a welcome step as it will provide a tax free lumpsum amount to individuals to meet their post-retirement financial requirements.
Withholding tax provisions – Others
Current Situation: The withholding tax rate on royalty and fees for technical services payable to non-residents is 10 percent (excluding surcharge and education cess).
DTC Proposals: The withholding tax rate in respect of payment of royalties and FTS to non-residents is proposed to be increased to 20 percent.
Our Comments: The higher withholding tax rates would increase the overall cost of the Indian companies in case of payments to tax residents of the country with whom India does not have a Tax Treaty and grossing up of tax is required in case of tax is borne Indian company.
Transfer Pricing
Current Situation: Currently, there are no provisions under the Act in respect of Advance Pricing Arrangement (‘APA’).
DTC Proposals: It is proposed to introduce APA for upfront determination of pricing methodology of an international transaction.
Our Comments: Whilst the scheme specifying the procedure of APA has not yet been released, the industry would expect that the same is in line with the international practice.
Leased Assets
Current Situation: In the absence of any specific provision under the Act, there is a lack of clarity surrounding the treatment of assets obtained on finance lease by Power and Oil and Gas sector undertakings. In certain cases, companies are facing litigation from revenue authorities on the question of whether they are eligible to claim depreciation on such assets.
DTC Proposals: Under DTC, the lessee would be treated as the owner of assets obtained on finance lease and therefore, eligible to claim depreciation on the same.
Our Comments: This is an important provision for the companies in Power and Oil and Gas sectors and it will help to end the long drawn litigation regarding ‘ownership’ of such assets and depreciation eligibility with the Revenue authorities.
General Anti Avoidance Rule (‘GAAR’)
Current Situation: Under the Act, there are limited specific anti-abuse provisions.
DTC Proposals
· The Code seeks to introduce GAAR which provides sweeping powers to the Revenue authorities. The same is applicable to domestic as well as international arrangements.
· GAAR provisions empower the Commissioner of Income-tax (“CIT”) to declare any arrangement as “impermissible avoidance arrangement” provided the same has been entered into with the objective of obtaining tax benefit and satisfies any one of the following conditions:
– It is not at arm’s length
– It represents misuse or abuse of the provisions of the DTC
– It lacks commercial substance
– It is carried out in a manner not normally employed for bona fide business purposes
· An arrangement would be presumed to be for obtaining tax benefit unless the tax payer demonstrates that obtaining tax benefit was not the main objective of the arrangement.
· CIT to determine the tax consequences on invoking GAAR by reallocating the income or disregarding/recharacterizing the arrangement.
· Meaning of ‘tax benefit’ widened to include any reduction in tax bases including increase in loss
· GAAR provisions to be applicable as per the guidelines to be framed by the Central Government
· GAAR shall override Tax Treaty provisions
· Forum of DRP available in a scenario where GAAR is invoked. Our Comments:
The guidelines to be issued by the Central Government would need careful examination to assess the scope and impact of these provisions. It is an open question whether GAAR can be invoked for transactions undertaken prior to the enactment of DTC. A suitable clarification may be provided for this purpose.
Source : dtc 2010
Link : dtc 2010
Saturday, July 3, 2010
True Love...Worth Reading...
It was a busy morning, about 8:30, when an elderly gentleman in his 80’s arrived to have stitches removed from his thumb. He said he was in a hurry as he had an appointment at 9:00 am..
I took his vital signs and had him take a seat, knowing it would be over an hour before someone would to able to see him. I saw him looking at his watch and decided, since I was not busy with another patient, I would evaluate his wound. On exam, it was well healed, so I talked to one of the doctors, got the needed supplies to remove his sutures and redress his wound.
While taking care of his wound, I asked him if he had another doctor’s appointment this morning, as he was in such a hurry.
The gentleman told me no, that he needed to go to the nursing home to eat breakfast with his wife. I inquired as to her health.
He told me that she had been there for a while and that she was a victim of Alzheimer’s Disease.
As we talked, I asked if she would be upset if he was a bit late.
He replied that she no longer knew who he was, that she had not recognized him in five years now.
I was surprised, and asked him, ’And you still go every morning, even though she doesn’t know who you are?’
He smiled as he patted my hand and said,
’She doesn’t know me, but I still know who she is.’ I had to hold back tears as he left, I had goose bumps on my arm, and thought,
’That is the kind of love I want in my life.’
True love is neither physical, nor romantic.
True love is an acceptance of all that is, has been, will be, and will not be.
With all the jokes and fun that are in e-mails, sometimes there is one that comes along that has an important message. This one I thought I could share with you.
The happiest people don’t necessarily have the best of everything; they just make the best of everything they have. I hope you share this with someone you care about. I just did.
While taking care of his wound, I asked him if he had another doctor’s appointment this morning, as he was in such a hurry.
The gentleman told me no, that he needed to go to the nursing home to eat breakfast with his wife. I inquired as to her health.
He told me that she had been there for a while and that she was a victim of Alzheimer’s Disease.
As we talked, I asked if she would be upset if he was a bit late.
He replied that she no longer knew who he was, that she had not recognized him in five years now.
I was surprised, and asked him, ’And you still go every morning, even though she doesn’t know who you are?’
He smiled as he patted my hand and said,
’She doesn’t know me, but I still know who she is.’ I had to hold back tears as he left, I had goose bumps on my arm, and thought,
’That is the kind of love I want in my life.’
True love is neither physical, nor romantic.
True love is an acceptance of all that is, has been, will be, and will not be.
With all the jokes and fun that are in e-mails, sometimes there is one that comes along that has an important message. This one I thought I could share with you.
The happiest people don’t necessarily have the best of everything; they just make the best of everything they have. I hope you share this with someone you care about. I just did.
’Life isn’t about how to survive the storm,
But how to dance in the rain.’
But how to dance in the rain.’
Tuesday, June 15, 2010
Know your Customer
First poster: A man lying in the hot desert sand...totally exhausted and fainting. Second poster: The man is drinking our Cola. Third poster: Our man is now totally refreshed. |
And Then these posters were pasted all over the place
"Then that should have worked!" said the friend.
"The hell it should have!? said the salesman. Didn't realize that Arabs read from right to left!"
CHANGE YOUR APPROACH
There was
a blind girl who hated herself because she was blind. She hated everyone, except her loving boyfriend. He was always there for her. She told her boyfriend, ' If I could only see the world, I will marry you. '
One day,
someone donated a pair of eyes to her. When the bandages came off, she was able to see everything, including her boyfriend.
He asked
her, ' Now that you can see the world, will you marry me? ' The girl looked at her boyfriend and saw that he was blind. The sight of his closed eyelids shocked her. She hadn ' t expected that. The thought of looking at them the rest of her life led her to refuse to marry him.
Her
boyfriend left in tears and days later wrote a note to her
saying: ' Take good care of your eyes, my dear, for before
they were yours, they were mine. '
This is how the human brain often works - when our status changes.
Only a very few remember what life was like before, and who was always by their side in the most painful situations.
Life Is a
Gift
Today
before you say an unkind word - Think of someone who can ' t speak.
Before
you complain about the taste of your food - Think of someone who has nothing to eat.
Before
you complain about your husband or wife - Think of someone who ' s crying out to GOD for a companion.
Today
before you complain about life - Think of someone who went too earl y to heaven..
Before
whining about the distance you drive -Think of someone who walks the same distance with their feet.
And when
you are tired and complain about your job - Think of the
unemployed, the disabled, and those who wish they had your job.
And when
depressing thoughts seem to get you down - Put a smile on your face and think: you ' re alive and still
around.
a blind girl who hated herself because she was blind. She hated everyone, except her loving boyfriend. He was always there for her. She told her boyfriend, ' If I could only see the world, I will marry you. '
One day,
someone donated a pair of eyes to her. When the bandages came off, she was able to see everything, including her boyfriend.
He asked
her, ' Now that you can see the world, will you marry me? ' The girl looked at her boyfriend and saw that he was blind. The sight of his closed eyelids shocked her. She hadn ' t expected that. The thought of looking at them the rest of her life led her to refuse to marry him.
Her
boyfriend left in tears and days later wrote a note to her
saying: ' Take good care of your eyes, my dear, for before
they were yours, they were mine. '
This is how the human brain often works - when our status changes.
Only a very few remember what life was like before, and who was always by their side in the most painful situations.
Life Is a
Gift
Today
before you say an unkind word - Think of someone who can ' t speak.
Before
you complain about the taste of your food - Think of someone who has nothing to eat.
Before
you complain about your husband or wife - Think of someone who ' s crying out to GOD for a companion.
Today
before you complain about life - Think of someone who went too earl y to heaven..
Before
whining about the distance you drive -Think of someone who walks the same distance with their feet.
And when
you are tired and complain about your job - Think of the
unemployed, the disabled, and those who wish they had your job.
And when
depressing thoughts seem to get you down - Put a smile on your face and think: you ' re alive and still
around.
Monday, June 14, 2010
Wednesday, June 9, 2010
Self Appraisal
A little boy went to a telephone booth which was at the cash counter of a store and dialed a number.
The store-owner observed and listened to the conversation:
Boy : "Lady, Can you give me the job of cutting your lawn?
Woman : (at the other end of the phone line) "I already have someone to cut my lawn."
Boy : "Lady, I will cut your lawn for half the price than the person who cuts your lawn now."
Woman : I'm very satisfied with the person who is presently cutting my lawn.
Boy : (with more perseverance) "Lady, I'll even sweep the floor and the stairs of your house for free.
Woman : No, thank you.
With a smile on his face, the little boy replaced the receiver. The store-owner, who was listening to all this, walked over to the boy.
Store Owner : "Son... I like your attitude; I like that positive spirit and would like to offer you a job."
Boy : "No thanks,
Store Owner : But you were really pleading for one.
Boy : No Sir, I was just checking my performance at the job I already have. I am the one who is working for that lady I was talking to!"
This is called
"Self Appraisal"
Boy : "Lady, Can you give me the job of cutting your lawn?
Woman : (at the other end of the phone line) "I already have someone to cut my lawn."
Boy : "Lady, I will cut your lawn for half the price than the person who cuts your lawn now."
Woman : I'm very satisfied with the person who is presently cutting my lawn.
Boy : (with more perseverance) "Lady, I'll even sweep the floor and the stairs of your house for free.
Woman : No, thank you.
With a smile on his face, the little boy replaced the receiver. The store-owner, who was listening to all this, walked over to the boy.
Store Owner : "Son... I like your attitude; I like that positive spirit and would like to offer you a job."
Boy : "No thanks,
Store Owner : But you were really pleading for one.
Boy : No Sir, I was just checking my performance at the job I already have. I am the one who is working for that lady I was talking to!"
This is called
"Self Appraisal"
Thursday, June 3, 2010
COSO issues report on "Fraudulent Financial Reporting, 1998 - 2007: Analysis of U.S. Public Companies".
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) recently issued a new report
entitled,
"Fraudulent Financial Reporting, 1998 - 2007: Analysis of U.S. Public Companies". The COSO study examined
financial statement
fraud allegations investigated by the U.S. Securities and Exchange Commission over a ten-year period.
The study's Executive Summary includes the following critical findings:
- There were 347 alleged cases of public company fraudulent financial reporting (FFR) from 1998 to 2007 as
The study's Executive Summary includes the following critical findings:
- There were 347 alleged cases of public company fraudulent financial reporting (FFR) from 1998 to 2007 as
compared to 294 cases
from 1987 to 1997.
- The dollar magnitude of FFR increased substantially in the last decade, with total cumulative misstatement or
- The dollar magnitude of FFR increased substantially in the last decade, with total cumulative misstatement or
misappropriation of nearly $120 billion across 300 cases fraud cases (mean of nearly $400 million per case) as
compared to a mean of $25 million per sample fraud in COSO's 1999 study.
- The SEC named the CEO and/or CFO for involvement in 89 percent of the fraud cases. Within two years of the
completion of the SEC investigation, about 20 percent of CEOs/CFOs had been indicted. Over 60 percent of those
indicted were convicted.
- Revenue frauds accounted for over 60 percent of the cases.
- 26% percent of the firms engaged in fraud changed auditors during the period examined compared to a 12
percent rate for no-fraud firms.
- Companies engaged in fraud often experienced bankruptcy, delisting from a stock exchange, or material asset
sales at rates much higher than those experienced by no-fraud firms.
- Long-term negative consequences of fraud were apparent. Companies engaged in fraud often experienced
bankruptcy, delisting from a stock exchange, or material asset sales following discovery of fraud – at rates much
higher than those experienced by no-fraud firms.
To download a pdf version of the complete report, click on the link
Wednesday, June 2, 2010
Meaning of Turnover or sales for the purpose of Tax Audit
Jun 1, 2010 Income Tax
A person is required to get his accounts audited u/s 44AB if turnover of business exceeds Rs 60 Lakhs, or In case of Profession Gross Receipts exceed Rs 15 Lakhs.
In case of business what should be the meaning of turnover/sales? Should it be Gross sales or net sales? Should it include VAT, Sales tax or excise duty? The meaning of turnover/sales for the purpose of tax audit is discussed as follows:
In case of business what should be the meaning of turnover/sales? Should it be Gross sales or net sales? Should it include VAT, Sales tax or excise duty? The meaning of turnover/sales for the purpose of tax audit is discussed as follows:
In the “Guidance Note on Terms used in Financial Statements” published by ICAI, “the expression “Sales Turnover” has been defined as: “The aggregate amount for which sales are effected or services rendered by an enterprises. The term ‘gross turnover/sales’ and ‘net turnover/sales’ are sometimes used to distinguish the sales aggregate before and after deduction of returns and trade discounts”
In the statement issued by ICAI on the companies (Auditors’ Report) Order 2003 the word ‘turnover’ has been defined as under-
“The term ‘turnover’ for the purposes of this clause may be interpreted to mean the aggregate amount for which sales are effected or services rendered by an enterprises”
Whether sales tax and excise duty to be included in the sales/turnover: In our opinion same should be included even if Assessee is have not included the same in Profit and Loss account and shown the same as current Liability.
Section 145A of the Income Tax Act,1961 states that purchase , sale and inventory shall be valued by taking into account the amount of any tax, duty, cess or fee . An extract of section 145A is as follows:
145A. Notwithstanding anything to the contrary contained in section 145,
(a) the valuation of purchase and sale of goods and inventory for the purposes of determining the income chargeable under the head Profits and gains of business or profession shall be(i) in accordance with the method of accounting regularly employed by the assessee; and(ii) further adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation.
Explanation.For the purposes of this section, any tax, duty, cess or fee (by whatever name called) under any law for the time being in force, shall include all such payment notwithstanding any right arising as a consequence to such payment.
Therefore , in my opinion , maintaining accounts of excise duty VAT separately is not correct in terms of section 145A of the I T Act. In that sense , for determining the meaning of the word “sales turnover” VAT or excise duty should also be considered for purpose determining the criteria for getting accounts audited u/s 44AB of the I T Act.
Sales of Scrap: Sales of scrap shown separately under the heading “Miscellaneous Income” will have to be included in the turnover.
Luxury Tax: Similarly a luxury tax collected by a hotelier also a trading receipt in his hand- Pandyan Hotels Ltd. v. CIT [2004] 266 ITR 172 (Mad.)
Trade Discount: Trade Discounts can be deducted from sales. Trade Discounts are generally allowed in the sales invoice, therefore the discount allowed in the sales invoice will reduce the sale price and therefore can be deducted from the turnover.
Cash Discount: Cash Discount otherwise than that allowed in a cash memo/sales invoice is in the nature of a financing charge and a revenue receipt and is not related to turnover. Hence the same should not be deducted from turnover.
Commission on sales: Commission on sales included in the sales payable to the consignee/third person should not be deducted from the figure of turnover for the purpose of section 44AB.
Sales Returns: Price of goods returned should be deducted from the figure of turnover even if the returns are from the sales made in earlier years.
Sales proceeds of fixed assets: Sales proceeds of fixed assets would not form part of turnover for the purpose of section 44AB since the fixed assets are not held for resale.
Sales proceed of any investment: Sales proceed of any property held as investment in property will not form part of turnover for the purpose of tax audit. Similarly sale proceeds of any shares, securities and debentures etc. which are held as investment will not form part of turnover. However if shares, securities, debentures, etc are held as stock in trade, the sale proceeds there from will form part of turnover for the purpose of tax audit.
The Views expressed are only Personal Views based upon my studies and interpretation of law.
Read more: http://www.taxguru.in/income-tax/meaning-of-turnover-or-sales-for-the-purpose-of-tax-audit.html#ixzz0pgODhmO8
Tuesday, June 1, 2010
Always Forgive
Summary:
The act of forgiving is a sublime act. By forgiving others, we maintain our sense of freedom. Despite our past hurts and agonies, we should not lose sight of forgiveness because it a natural and magical healer.
How wonderful to know,
that humans can still forgive;
despite the hurt and agony,
of their childhood past.
that humans can still forgive;
despite the hurt and agony,
of their childhood past.
A past that we can’t describe.
We know from the depths of our soul,
that life has been unfair in many ways,
be forgiving they say,
for we shall inherit the kingdom.
that life has been unfair in many ways,
be forgiving they say,
for we shall inherit the kingdom.
No relief or comfort can heal the trauma.
Trauma has a vivid memory,
even of things we try to repress.
even of things we try to repress.
But we need to tear down the shackles,
“be forgiving,” they say,
so you may have freedom;
freedom from the blows and attacks,
of miserable memories.
“be forgiving,” they say,
so you may have freedom;
freedom from the blows and attacks,
of miserable memories.
Sometimes, “be forgiving” is the only exit.
Freedom from Stress
Freedom From Stress
Jun 01 2010
Our existence is ironic in that things don’t always go like clockwork. When we plan something, we get derailed, forcing us to take the opposite direction. But this stress ultimately is what lies within us.
Life seems to pull us in painful directions,
we’re always running out of time,
we’re always facing unwanted challenges,
we’re always forced to do difficult things,
and always at the wrong time.
we’re always running out of time,
we’re always facing unwanted challenges,
we’re always forced to do difficult things,
and always at the wrong time.
But…just for a moment,
have you ever wondered,
if the pain and suffering of stress,
is not about what happens to you,
but how you accept what happens to you?
have you ever wondered,
if the pain and suffering of stress,
is not about what happens to you,
but how you accept what happens to you?
The next time life shows up on your door,
pulling you left when you want to go right,
asking for your attention when you’d rather sleep,
placing before you a challenge when you’d rather relax,
take a moment and look within.
pulling you left when you want to go right,
asking for your attention when you’d rather sleep,
placing before you a challenge when you’d rather relax,
take a moment and look within.
And let it be.
Do this one time only, and you’ll discover,
that the stress of life is not out there at all.
It is, and always has been, within you.
Do this one time only, and you’ll discover,
that the stress of life is not out there at all.
It is, and always has been, within you.
For more details go to:
Tuesday, May 11, 2010
Dont make a pre-determined notion of anyone about anything...Well listen to others and know their Perspective...it will make life happier...:-)
A teacher teaching Maths to five-year-old student asked him, "If I give you one apple and one apple and one apple, how many apples will you have? "Within a few seconds the student replied confidently, "Four!"
The dismayed teacher was expecting an effortless correct answer (three) She was disappointed. "Maybe the child did not listen properly," she thought. She repeated, "My boy, listen carefully. If I give you one apple and one apple and one apple, how many apples will you have?"
The student had seen the disappointment on his teacher's face. He calculated again on his fingers. But within him he was also searching for the answer that will make the teacher happy. His search for the answer was not for the correct one, but the one that will make his teacher happy. This time hesitatingly he replied, "Four&"
The disappointment stayed on the teacher's face. She remembered that this student liked strawberries. She thought maybe he doesn't like apples and that is making him loose focus. This time with an exaggerated excitement and twinkling in her eyes she asked, "If I give you one strawberry and one strawberry and one strawberry, then how many you will have?"
Seeing the teacher happy, the boy calculated on his fingers again. There was no pressure on him, but a little on the teacher. She wanted her new approach to succeed. With a hesitating smile the student enquired, "Three?"
The teacher now had a victorious smile. Her approach had succeeded. She wanted to congratulate herself. But one last thing remained. Once again she asked him, "Now if I give you one apple and one apple and one more apple how many will you have?"
Promptly the student answered, "Four!"
The teacher was aghast. "How my boy, how?" she demanded in a little stern and irritated voice. In a voice that was low and hesitating young student replied, "Because I already have one apple in my bag."
Moral of the Story:
When someone gives you an answer that is different from what you expect, don't think they are wrong. There maybe an angle that you have not understood at all. You will have to listen and understand, but never listen with a predetermined notion.
The dismayed teacher was expecting an effortless correct answer (three) She was disappointed. "Maybe the child did not listen properly," she thought. She repeated, "My boy, listen carefully. If I give you one apple and one apple and one apple, how many apples will you have?"
The student had seen the disappointment on his teacher's face. He calculated again on his fingers. But within him he was also searching for the answer that will make the teacher happy. His search for the answer was not for the correct one, but the one that will make his teacher happy. This time hesitatingly he replied, "Four&"
The disappointment stayed on the teacher's face. She remembered that this student liked strawberries. She thought maybe he doesn't like apples and that is making him loose focus. This time with an exaggerated excitement and twinkling in her eyes she asked, "If I give you one strawberry and one strawberry and one strawberry, then how many you will have?"
Seeing the teacher happy, the boy calculated on his fingers again. There was no pressure on him, but a little on the teacher. She wanted her new approach to succeed. With a hesitating smile the student enquired, "Three?"
The teacher now had a victorious smile. Her approach had succeeded. She wanted to congratulate herself. But one last thing remained. Once again she asked him, "Now if I give you one apple and one apple and one more apple how many will you have?"
Promptly the student answered, "Four!"
The teacher was aghast. "How my boy, how?" she demanded in a little stern and irritated voice. In a voice that was low and hesitating young student replied, "Because I already have one apple in my bag."
Moral of the Story:
When someone gives you an answer that is different from what you expect, don't think they are wrong. There maybe an angle that you have not understood at all. You will have to listen and understand, but never listen with a predetermined notion.
Wednesday, May 5, 2010
WHATEVER WE ARE TODAY – IT’S BECAUSE OF OUR TEACHERS !!
Heartfelt Thanx to our Dear Teachers, who have invested their valuable time & energies in shaping our personalities and making us believe in ourselves. It was because of their tireless efforts that we have reached wherever, we are today …..
Here is a Short Story, which says it all.....
A Teacher's Story
A Teacher's Story
There is a story many years ago of an elementary teacher.
Her name was Mrs. Thompson.
And as she stood in front of her 5th grade
class on the very first day of school, she told
the children a lie. Like most teachers, she looked at her
students and said that she loved them all the same. But that
was impossible, because there in the front row, slumped in
his seat, was a little boy named Teddy.
Her name was Mrs. Thompson.
And as she stood in front of her 5th grade
class on the very first day of school, she told
the children a lie. Like most teachers, she looked at her
students and said that she loved them all the same. But that
was impossible, because there in the front row, slumped in
his seat, was a little boy named Teddy.
Mrs. Thompson had watched Teddy the year before and noticed
that he didn't play well with the other children, that his
clothes were messy and that he constantly needed a bath.
And Teddy could be unpleasant. It got to the point where
Mrs. Thompson would actually take delight in marking his
papers with a broad red pen, making bold X's and then putting
a big "F" at the top of his papers.
At the school where Mrs. Thompson taught,
she was required to review each child's past records
and she put Teddy's off until last.
However, when she reviewed his file,
she was in for a surprise.
Teddy's first grade teacher wrote,
"Teddy is a bright child with a ready laugh.
He does his work neatly and has good
manners...he is a joy to be around."
His second grade teacher wrote,
"Teddy is an excellent student,
well-liked by his classmates, but he is troubled
because his mother has a terminal illness and life
at home must be a struggle."
His third grade teacher wrote,
"His mother's death has been hard on him.
He tries to do his best but his father doesn't
show much interest and his home life will soon affect
him if some steps aren't taken."
Teddy's fourth grade teacher wrote,
"Teddy is withdrawn and doesn't show much interest in school.
He doesn't have many friends and sometimes sleeps in class."
By now, Mrs. Thompson realized the problem an d she was
ashamed of herself. She felt even worse when her students
brought her Christmas presents, wrapped in beautiful ribbons
and bright paper, except for Teddy's.
His present was clumsily wrapped in the heavy,
brown paper that he got from a grocery bag.
Mrs. Thompson took pains to open it in the middle
of the other presents. Some of the children started to
laugh when she found a rhinestone bracelet with some of the
stones missing and a bottle that was one quarter full of perfume.
She stifled the children's laughter when she exclaimed
how pretty the bracelet was, putting it on, and dabbing some
of the perfume on her wrist.
Teddy stayed after school that day just long
enough to say, "Mrs. Thompson, today you
smelled just like my Mom used to."
After the children left she cried for at least an hour.
On that very day, she quit teaching
reading, and writing, and arithmetic.
Instead, she began to teach children.
that he didn't play well with the other children, that his
clothes were messy and that he constantly needed a bath.
And Teddy could be unpleasant. It got to the point where
Mrs. Thompson would actually take delight in marking his
papers with a broad red pen, making bold X's and then putting
a big "F" at the top of his papers.
At the school where Mrs. Thompson taught,
she was required to review each child's past records
and she put Teddy's off until last.
However, when she reviewed his file,
she was in for a surprise.
Teddy's first grade teacher wrote,
"Teddy is a bright child with a ready laugh.
He does his work neatly and has good
manners...he is a joy to be around."
His second grade teacher wrote,
"Teddy is an excellent student,
well-liked by his classmates, but he is troubled
because his mother has a terminal illness and life
at home must be a struggle."
His third grade teacher wrote,
"His mother's death has been hard on him.
He tries to do his best but his father doesn't
show much interest and his home life will soon affect
him if some steps aren't taken."
Teddy's fourth grade teacher wrote,
"Teddy is withdrawn and doesn't show much interest in school.
He doesn't have many friends and sometimes sleeps in class."
By now, Mrs. Thompson realized the problem an d she was
ashamed of herself. She felt even worse when her students
brought her Christmas presents, wrapped in beautiful ribbons
and bright paper, except for Teddy's.
His present was clumsily wrapped in the heavy,
brown paper that he got from a grocery bag.
Mrs. Thompson took pains to open it in the middle
of the other presents. Some of the children started to
laugh when she found a rhinestone bracelet with some of the
stones missing and a bottle that was one quarter full of perfume.
She stifled the children's laughter when she exclaimed
how pretty the bracelet was, putting it on, and dabbing some
of the perfume on her wrist.
Teddy stayed after school that day just long
enough to say, "Mrs. Thompson, today you
smelled just like my Mom used to."
After the children left she cried for at least an hour.
On that very day, she quit teaching
reading, and writing, and arithmetic.
Instead, she began to teach children.
Mrs. Thompson paid particular attention to Teddy.
As she worked with him, his mind seemed to come alive.
The more she encouraged him, the faster he responded.
By the end of the year, Teddy had become one of the smartest
children in the the class and, despite her lie that she would love
all the children same, Teddy became one of her "teacher's pets."
A year later, she found a note under her door, from Teddy,
telling her that she was still the best teacher he
ever had in his whole life.
As she worked with him, his mind seemed to come alive.
The more she encouraged him, the faster he responded.
By the end of the year, Teddy had become one of the smartest
children in the the class and, despite her lie that she would love
all the children same, Teddy became one of her "teacher's pets."
A year later, she found a note under her door, from Teddy,
telling her that she was still the best teacher he
ever had in his whole life.
Six years went by before she got another note from Teddy.
He then wrote that he had finished high school,
second in his class, and she was still the best teacher
he ever had in his whole life.
Four years after that, she got another letter, saying that while
things had been tough at times, he'd stayed in school,
had stuck with it, and would soon graduate from college
with the highest of honors. He assured Mrs. Thompson that she was
still the best and favorite teacher he ever had in his whole life.
Then four more years passed and yet another letter came.
This time he explained that after he got his bachelor's degree,
he decided to go a little further. The letter explained that she
was still the best and favorite teacher he ever had. But now
his name was a little longer. The letter was signed,
Theodore F. Stollard, M.D.
The story doesn't end there.
You see, there was yet another letter that spring.
Teddy said he'd met this girl and was going to be married.
He explained that his father had died a couple
of years ago and he was wondering if Mrs. Thompson might
agree to sit in the place at the wedding that was usually
reserved for the mother of the groom.
Of course, Mrs. Thompson did. And guess what?
She wore that bracelet, the one with several rhinestones missing.
And she made sure she was wearing the perfume
that Teddy remembered his mother wearing on their last
Christmas together.
They hugged each other,
and Teddy whispered in Mrs. Thompson's ear,
"Thank you, Mrs. Thompson, for believing in me.
Thank you so much for making me feel important
and showing me that I could make
a difference."
Mrs. Thompson, with tears in her eyes, whispered back.
She said, "Teddy, you have it all wrong.
You were the one who taught me that I could make a difference.
I didn't know how to teach until I met you."
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