TDS ON PAYMENTS IN INDIA


The % rate charge for the Financial Year 2013-14 i.e. Assessment Year 2014-15 in case of payments covered by income tax law. The same is applicable in A.Y.2015-16 till new budget submitted after election

Section Of Act Nature of Payment in brief TDS Rate %
HUF/IND Others
Minimum amt for tax
193 Interest on debentures 5000 10 10
194 Deemed dividend – 10 10
194A Interest other than Int on securities (by Bank) 10000 10 10
194A Interest other than Int. on securities (By others) 5000 10 10
194B Lottery 10000 30 30
194BB Winnings from Horse Race 5000 30 30
194C(1) Contracts 30000 1 2
194C(2) Sub-contracts/ Advertisements 30000 1 2
194D Insurance Commission 20000 10 10
194EE Payments out of deposits under NSS 2500 20 -
194G Commission on sale of lottery tkts 1000 10 10
194H Commission or Brokerage 5000 10 10
194I Rent (Land & building) 180000 10 10
Rent (P & M , Equipment, furniture & fittings) 180000 2 2
194J Professional/Technical charges/Royalty & Non-compete fees 30000 10 10

New indian post – office interest rates for the year 2014-15


Postal savings scheme Rate of interest w.e.f.01.04.2013 Rate of Interest w.e.f. 1.04.2014
Savings Deposit 4.0 4.0

1 Year Time Deposit 8.2 8.4
2 Year Time Deposit 8.2 8.4
3 Year Time Deposit 8.3 8.4
5 Year Time Deposit 8.4 8.5
5 Year Recurring Deposit 8.3 8.4
5 Year SCSS 9.2 9.2
5 Year MIS 8.4 8.4
5 Year NSC 8.5 8.5
10 Year NSC 8.8 8.8

PPF 8.7 8.7

INDIAN TRUSTS-Sec-2(15) of Income Tax Act –Is it really boon for the Public Charitable Trusts?


The Charitable institutions play important supplementary role, apart from Govt of India/States social welfare depts., in uplifting the poor from poor economic conditions to and try to shield them from starvation. Such Charitable institutions undertake charitable activity in the form of relief of the poor, education, medical relief and advancement of any other object of general public utility. In order to encourage private sector/individual in this charitable field in the form of public charitable institutions, Govt of India allowed exemption from tax to the income of the said trusts according to sec. 11,12 and their sub-sections and 13 of Income tax Act, 1961. This helped to relieve burden of Govt to help the poor to great extent. The most important condition for a trust to be for public charitable purpose is that the beneficiary should be of general public and none of the objects of memo of association should benefit any private individuals and it should cater to all irrespective of caste, creed or religion.

The expression ‘Charitable purpose” is defined under sec.2(15) of the Act of Income Tax Act 1961 which includes:

  1. Relief of the poor.
  2. Education.
  3. Medical relief.
  4. Preservation of environment including water sheds, forest and wild life.
  5. Preservation of monuments or places of historic interests and
  6. the advancement of any other object of general public utility.

Sslno.1 to 6 are called as limbs to sec.2(15) which will be referred later. The definition of Charitable purposes has undergone number of changes which include two provisos and amendment of such proviso.

The Finance Act 2008 has substituted sect. 2(15) of the Act w.e.f. 1.4.2009 with first proviso. The first proviso to this Sec.2(15) states that “the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce, or business or any activity of rendering any service in relation to any trade, commerce or business for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity.”
Para 180 of Finance Act brought by Finance Minister Mr. Chidambaram specifies the following reason for bringing the first provision:
“”Charitable purposes” includes relief of the poor, education, medical relief and any other object of general public utility. These activities are tax exempt as they should be. However some entities carrying on regular trade, comer or business or providing services in relation to any trade, commerce or business and earning incomes have sought to claim their purposes would also fall under “Charitable Purposes’. Obviously, this was not the intention of Parliament and hence I propose to amend the law to exclude the aforesaid cases. However Genuine charitable organizations will not in any way affected.”
The aforesaid provision is operative from 1.4.2009 onwards. In order to clarify the above, circular no. 11 of 2008 dt 19.11.2008 was issued by income tax dept wherein the implications of the amendment were given. “The newly inserted proviso to sec.2(15) will not apply in respect of the first three limbs of sec.2(15) i.e. relief of the poor, education, or medical relief. Any commercial activities in connection with these three activities will come under ‘Charitable activities”.

But Relief of the poor encompasses a wide range of objects for the welfare of economically and socially disadvantaged or needy. There it will include within its ambit such as

  • relief to destitute, orphans or the handicapped.
  • disdvantaged women or children
  • small and marginal farmers
  • indigent artisans or
  • senior citizens in need of help.

Entities who have these objects will continue to be eligible for exemption even if they incidentally carry on a commercial activity subject however to conditions stipulated under sec.10(23C) or Sec.11(4A) which states that

  1. the business should be incidental to attainment of the objects of entities (trusts)
  2. Separate books of accounts should be maintained in respect of such business.

The above conditions are applicable to second and third limb also.

So this newly inserted proviso to sec.2(15) will apply only to entities whose purpose is “advancement of any other object of general public utility” i.e. Sixth limb of sec.2(15). Hence such entities will not be eligible for exemption under Sec.11 or Sec 10(23C) of the Act if they carry commercial activities.

In order to help the small trusts which rely on profit from small trade etc,, second proviso has been added to sec. 2(15) vide the Finance Act 2010 with retrospective effect from 1.4.2009.The second provisio to this Sec.2(15) states that “The first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is Rs.10 lakh rupees or less in previous year.”

At present, the litigation point is how to demarcate public charitable trust which runs profitable trade and fully uses the proceeds to public benefits. IncomeTax dept likes to keep them under sixth limb in order to increase revenues for govt and tax them when the trust is helping the public at large with subsidized food and medical treatment etc. Public Trusts want themselves to be classified under first limb and seek tax exemption for the profitable trade/commerce/business it carries to supplement its activities of charity. It is natural and fair if Subsidized food/medical treatment to general public taken under ‘poor category or needy category’ as it is impossible to identify poor among masses in any outlet. If the trust serves senior citizens, destitute, orphans with free food and subsidized food for the handicapped, disdvantaged women or children, small and marginal farmers ,indigent artisans, senior citizens apart from general public, then they should come under first limb and should not be taxed for the business activities it runs. State Govt themselves are bringing these types of canteen/eating places where subsidized food are served to general public. So deciphering ‘relief to poor’ with applicability point of view by tax dept will help many trusts to use the money saved for public. Mostly rich people will not go for subsidized food and it is needy people like middle and lower class people only prefers subsidized food and medicine. So it is better to interpret the rules for the objective they are formed. Covering these types of trusts under first limb of category will help Finance Minister to keep his words that genuine charitable organizations will not in any way affected. At least Public charitable trusts whose trust deed specifies to spend all income of trade/commerce for public and not to benefit any individual or firm or any entity should not be taxed under sixth limb but exempted under first limb. Corrective step will help avoid litigation as some trusts may move courts as the rules under 2(15) goes against the assurance of finance minister in Lok Sabha.

CR Venkataramani

AICWA

The AAP Effect- Revolutionary or Martyr or Just another political party!!


Indian mainstream politics is at an interesting junction. The election of 2014 is going to one of the most significant elections of the modern era and has thrown up several questions. So far the politics of India has been dominated by two parties, Congress and the BJP (In the past this has had many avatars including the Jan Sangh). Of this Congress has ruled for almost the entire period from 1947 onwards barring a period of around 10 years where the others namely BJP, Janata Party and Janata Dal have had brief reigns at governance. It is fair to say that the current generation is unhappy with the state of governance that it currently finds in this country in with corruption and beauracracy crippling the common man.

It is in this backdrop that a revolution known as AAP has emerged. It started as a breakaway faction of the Anti Corruption movement started by Anna Hazare. One of key aides Arvind Kejriwal decided that the only way to change the system is to become part of the system and change it. Given that it came at a time when the incumbent Congress government is so besotted by scams, lack of basic governance and messiah like attitude towards general public, AAP caught the public imagination. To add to these, the debates on TV channels started to get extremely heated and political leaders cutting across political parties started appearing arrogant and overbearing making a mark on the psyche of the electorate about the political crass that is now holding the reins of the country.

The first major effect that AAP had was that it shook some of the politicians who used to make remarks such as “You can only criticize, but you cannot enter the system to clean it.” Mr. Mani Shankar (chaiya shop) Aiyar actually claims that his remark was the one that led to the formation of AAP. Probably he wants to be acknowledged as the founder of AAP. Secondly, it led a lot of politicians to drop their arrogance, at least to some extent now that the fear has crept into them that the public is no longer going for just biryani and beers, but are also starting to think about other aspects. Next up, the focal point of the discussions changed from pseudo secularism comments and “Maut ke saudagar” remarks to more meaningful governance discussions as both parties realized the only point on which they have an advantage over AAP is in experience over governance!! On all these points, AAP was a major revolutionary who fulfilled it’s claim of changing the way politics is done in India. Unlike one of the prime ministerial candidate who disowns his own party and makes statements about revolutionizing the way politics is done in India, AAP actually managed to do it.

The adulation and support that AAP recieved probably took AAP members by surprise. Suddenly they were the second largest party in Delhi Assembly within touching distance of BJP who emerged as the single largest party. Such an unprecendent wave for a new political party sans film stars and big political names on the one hand shook the foundations of the so called big political names. Shiela Dixit had to bite the dust after being the face of Congress for 3 straight elections. But, on the other hand, the rush of power and responsibilities came a wee-bit too early for AAP and that caused internal ripples.

So the party first took support from Congress, the party that it said it will not touch with a barge pole. The reason given by AK was that the people want us to give them a clean government and we will do it. It was clear to all and sundry who have observed the Indian politics why Congress was supporting them, but AAP decided to go forward. Immediately, the political parties and media put the microscope on this fledgling party so that they live up to the high standards and moral base that they had claimed to. AK started well by coming to take oath in a metro, but then came the bungalow issue. A cheif minister staying in a bungalow is not big deal and AK could have justified it for the nature of jobs that his post requires. Instead he decided to take moral high ground, by first rejecting it, but later it was found that it was AK who had first requested for it.

Next came the ministry formation and Mr. Binny suddenly started acting wise and rebelled against the party he joined only a few months back. He was expelled from the party after a few more dramatics on this part. Meanwhile Mr. Bharti decided to act on complaints of some local people by raiding some appartments in the night. While it is laudable of government to act on the complaints of citizens, but there is a process and a mechanism for it. Raiding houses with warrants and then holding the policeman responsible showed an irresponsible streak that is high on dramatics and low on real value. The Dharnas and the protests that went after really did not solve any problems for the Delhites. It only caused a lot of drama without any true value. At the end of the day a law maker cannot be a breaker of the law else he is no different from the current lot from which they want to stand apart!!

Then came the Lokpal Bill which was the one bill on which AK had staked his government on. Though it was delayed a bit from his election proposal, it was not as much of a delay as the Congress Party did after promising Anna. But the way the whole episode played out was a sham. Here is a government that has come up with a bill which it wants to be the law of the land. It was trying to introduce the bill in the Assembly without following the rules introduction of such bills. Neither did it try to coordinate with the other parties to try and help it bring the bill. Instead the approach we are going to introduce this bill in this manner and if you block it we resign. All the other parties gleefully agreed to this deal and AK has now resigned. So where does this leave AK’s orginal reason for taking support from Congress “People want us to give them a clean government and we will do it.” If you want to govern a state are your not supposed to have the nuances of governing a state or are you simply allowed to say I am an Aam Aadmi, so it is not my fault. I am such a small man. The question is then why take the responsibility when one cannot fulfill it.

So now the political parties can celebrate and come back saying, look you tried this new party which promised a see change, now see the change. Absolutely nothing, there is no government in Delhi and they have done what other political parties have been doing of taking support from opponents if it suits the purpose. They also have in-fighting when it comes to ministry berths. They also are unable to stand by their own high moral grounds, though they just started. So though they want to change the politics of the country, they are just the same as any other party. Additionally they too support reservations, in fact Yogendra Yadav wants more reservations for some sections, they also support Khaps and if convenient they will also meet with Maulvis during election time!! So what is the difference.

On the face of it, it does seem that maybe the revolution has fallen flat on it’s face. But that would be a wrong statement and it would undermine a lot of good things to emerge from this AAP movement. For starters, the politicians of the other parties got the scare they needed to put some control measures and bring back some level of morality and decency to proceedings. It has also helped veer the political discussion on some of the more meaningful topics and we are seeing some rearrangement of the political class with the pseudo secular tone dropping and people like Pawar suddenly remembering court verdicts.

On the other hand for AAP and other revolutionaries it is a big moment for introspection. Emotion is a very strong sentiment and it could result in unexpected and quick gains. But emotions also tend to tire individuals very quickly and hence they can change quickly. To hold on to the initial gains gathered through emotions, long term processes driven by logic need to be put in place. Emotions can build a euphoria that can place one at the top of the pack. But then once one reaches there he needs to have the logic and processes in place to build on the emotions and gather sincere respect and following. For long term success this is essential.

So to me, AAP was a welcome revolution. But whether it is the utopia which was promised or a flash in the pan, it would depend on how they move forward from here on. They have disappointed me and probably a lot of others with the way they handled the Delhi job and their bail out was more a political stroke than a real attempt at helping the Aam Aadmi. In many ways I think they are prisoners of their own success. Had they recieved a lot fewer seats and sat in the opposition, they might have been better served at the start of their political journey. At this moment their reaction was like a thin fuse wire recieving too much power and short circuiting dramatically. But I look forward to their next step, though I am sure that they are not ready to be handed over the reins of the country yet!!

All Indians are equal!! Are we?


As we get ready for one of the most important elections since independence, the core and probably the only topic at the center seems to be Corruption. But corruption is a multi-headed hydra. You cut one head and another rises in it’s place. You cannot simply sweep it off with a broom, but need a more comprehensive clean-out policies where we need to re-examine a lot of concepts which has shaped the last 60-70 odd years. Of course, there would be differing views, but a national debate needs to start on these concepts and thought processes and it is high time for our politicians to stop petty bickering and calling each other names and tell us their views on these topics. One of the topics which I have a very strong view off is the concept of Indian equality.

During the Civics classes in my school, I have been taught that India is a secular and democratic country and that all citizens of this country are equal. I felt a lot of pride while reading it and even believed in that until the reality hit me.

When it came to studies, a reality suddenly hit me that even if I study hard and get good marks, 50% of the engineering seats were not open to me. They were reserved for the unprivileged classes of the society. Fair enough. The only part was what is this unprivileged class of society that we talk about. During my schools, I saw some people belonging to this class who had a bigger house than ours, came to school in their own cars while all we could afford was a scooter. The irony was these so called under-privileged class members required only to pass their test to get a coveted engineering seat at a top class college, while I had to ensure that I get 90% plus scores and hope that not enough number of people had the same level of scores. Today the cost of a seat for doctor for a person from one of the privileged classes is in crores in payment seats if the person does not score over 95% in the tests. Imagine that in a country where we do not have enough doctors, there is a huge number of potential doctors who cannot fulfill the need, just because some one in the government has decided that this person is a privileged person because of his birth and he cannot therefore be eligible for 50% of the seats available!! All Indians are equal!!

Anyhow once the frustrations and struggles of getting through college got over, it was becoming clear that irrespective of what our constitution says we are not equal. The next natural step came when the search for job and again we realize that the government of this country has decided that the so called majority class of this country is not eligible for 50% of seats in the government by the same convoluted logic. The result of this is that the best brains in India are left with the only option of joining private sector jobs which are based on merit rather than birth or to simply settle down in other countries which tend to respect merit. Then we have some politician come out in the open talking about the Brain Drain. The reason is obvious, there is no equal opportunity for every Indian in the jobs within India. All Indians are equal!!

Going by the logic of these reservations, I am just wondering how far are we from reservations for hospital berths? 50% of the beds in all hospitals in India will be reserved for the under-privileged sections. So what if some of the privileged section die because though they belong to the privileged section they are not financially well off!! All Indians are equal!!

When it came time for my marriage, I came to know about another version of inequality. A certain section of Indians were allowed to marry four times, while the remaining Indians could only have one marriage. So to get this straight, it is a crime for certain sections to have more than one spouse, while to the other section they can have 4 spouses. And this is done based on the religion of the person as India is secular country. Now, as far as I have read my history and the historical epics of another of India’s religion, I see no reservation in that religion for polygamy. Most kings of the Sanatana Dharama had more than one wives due to various reasons like strengthening alliances, love and a need for children. To make it truly equal, the females of these societies have also been depicted with multiple husbands, the most famous example being one of Draupadi who lived with 5 husbands. So suddenly someone decides that if you are born in a family following the Sanatana Dharma you can only marry once, but if you are born in a family that follows Islam, you can marry 4 wives. If you are female, then tough luck!! You can only have one spouse. Actor Dharmendra found this very useful when he converted to Islam to marry his second wife!! But not sure whether his beliefs really changed or whether it was just to spook a finger in the eyes of the law. All Indians are equal!!

Personally, I do not care which law we pick, either from Islam or from Manu smriti. But whichever law we pick should be applicable equally to all Indians. So if you decide that there should be a limit of 4 spouses on individuals, then it should be 4 spouses irrespective of religion, caste, creed and gender!! Or if the lawmakers decide one should be sufficient, then that should be equally applicable to all Indians.

Some years back, BJP did put forward the concept of Uniform civil code and I was a big fan of that. It was one issue which mattered to me the most. I was least worried whether we have one more temple in the country as there are already enough and visiting them all is in itself an onerous task. Having one more temple really did not matter, but the concept of Uniform Civil Code really held out a charm for me. Unfortunately, it was one of the first casualty of the coalition dharma that they adopted.

In my humble opinion, time bound reservations based on economic conditions is fair enough. Any other types of reservation is just another way of implementing one of the evils of the medieval India when people were born higher caste or lower caste based on their birth. Now we have two classes, the privileged and the under- privileged. Of course, all privileges now are with the under-privileged.

Are we ready for a debate on this topic? Would this be one of the topic that actually the “Nation needs to know”? Unfortunately, in the skewed debates we are having on corruption, the real topics that are the root causes of corruption is getting ignored!!

Cheers!
Ram

PS: Kindly note that the views expressed here solely mine and do no represent the views of any organization I represent or work with.

Things that my history book did not teach me about!!


As a student I was always fascinated by History. One aspect though used to bother me, whenever I used to visit my cousins in Tamil Nadu for my vacations, I used to find that their view of the history is slightly different than mine. As I grew up I have kept trying to understand why there is a difference in understanding our own history between two parts of India as my education predominantly happened in the Northern part of India. As I started examining a few startling facts came up and I tend to question why did my history books not tell me these facts? I checked with quite a few of my friends with decent knowledge of history and none of them seemed to know this either!!

1) The longest ruling dynasty in India was the Pandyan kingdom starting from 500 BC right until 16 century A.D. Compare this with the Mughal empire which lasted from 1526 to 1857 and I remember studying one chapter dedicated to each Mughal ruler, but hardly a full chapter on the Pandya kingdom. Other kingdoms that had more duration and area under their rule compared to the Mughals are Cholas, Cheras, Satavahanas and the Vijayanagara Empire.

Resources:

http://en.wikipedia.org/wiki/Pandyan_Dynasty

http://en.wikipedia.org/wiki/Chola_dynasty

http://en.wikipedia.org/wiki/Mughal_Empire

2) Goa Inquisition: Probably one of the darkest religious chapter in India. The Goa inquisition went on from 1560 to 1774 affecting a total of around 16,172 people officially and many others unofficially. By the end of the inquisition around 1800 Hindu temples were destroyed. This also led the conversion of almost the entire population from Hinduism to Christianity to survive the inquisition. To this day these converts retain some traces back to their Hindu past.

Resources:

http://en.wikipedia.org/wiki/Goa_Inquisition

http://en.wikipedia.org/wiki/Roman_Catholic_Brahmin

3) Tamil happens to be the oldest classical language in the world to be still in existence in common usage. As per the oldest literature document available the emergence of Tamil is traced to 2nd century B.C. Amongst Indian languages only Sanskrit pre-dates Tamil though the fact is not strictly established. Other classical languages still in popular use are Oriya (2nd BC), Kannada(850 AD), Telugu (1067 AD) and Malayalam (12th century). Somehow when I learnt my history the only two ancient languages talked about were Sanskrit and Devanagri script which emerged during the 7th century A.D.

Resources:

http://en.wikipedia.org/wiki/Classical_language

http://en.wikipedia.org/wiki/Languages_of_India

http://en.wikipedia.org/wiki/Devanagari

4) The first major and probably the longest running literary conferences were the Tamil Sangams or Cankams as they were called then. The first Sangam lasted for a whopping 4440 years (9600 BC to 5200 BC). The second one lasted 3700 years (before 2000 BC)and the third and the final sangam lasted around 1800 years. Of these, there are a lot of unsolved mysteries of the first two cankams and some of the claims seem to be exaggerated. But the artifacts that were discussed during the third cankam still remain in existence and include some of the finest literature in Tamil history. It’s high time that historians try to bridge the gap of these understanding and separate the fact from the myths.

Resources:

http://en.wikipedia.org/wiki/Tamil_Sangams

http://en.wikipedia.org/wiki/Sangam_landscape

http://tamilandvedas.wordpress.com/2012/02/25/three-tamil-sangams-myth-and-reality/

As we near one of the most important elections in our country, it might be interesting for some of our youth to read up on the real history of India and form views on what leadership is all about and what kind of leadership is required to preserve the Indian culture and Indian way of doing things.

Cheers!

Ram

PS: Kindly note that the views expressed here solely mine and do no represent the views of any organization I represent or work with.

2013 in review


The WordPress.com stats helper monkeys prepared a 2013 annual report for this blog.

Here’s an excerpt:

The concert hall at the Sydney Opera House holds 2,700 people. This blog was viewed about 18,000 times in 2013. If it were a concert at Sydney Opera House, it would take about 7 sold-out performances for that many people to see it.

Click here to see the complete report.

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