VOL.IV, PART NO.

03

SAI
CIRCULARS
(A MONTHLY MAGAZINE ON UPDATION OF INDIAN TAX PROVISIONS)

” JUNE ”
2008
” NON - RESIDENTS (IN INDIA) ”
” SPECIAL”
 SAI CIRCULARS
(A Monthly Magazine on Updation
Of Indian Tax Provisions)
9/14 EAST PATEL NAGAR,
(Near JayPee Sidhartha
Hotel)NEW DELHI – 110008
(O) +9111-25769111 / 25753888/2757 /
+919312275519
(M-Advisor) : +919811081957
E-MAILS:- saicirculars@saicirculars.com
Web Site:- www.saicirculars.com

JUNE CA. SATISH AGARWAL

2008 ÖI N D E XÖ Advisor to Editorial Board

S.NO PARTICULARS PAGE NO

I Important legal Obligations for the month of July, 2008
(A) Income Tax Act, 1961 (B) Central Excise Act, 1944
(C) Employees Provident Funds (EPFs) And Miscellaneous Provisions Act, 1952 3
(D) Miscellaneous Acts ([i] Service Tax [ii] ESI [iii] Delhi Value Added Tax (DVAT))
II Recapitulation of Contains in the ‘Significant’ Courts’s / Tribunals’s
and AARs’s Judgements
(A) Income tax Act, 1961 (B) Service Tax (Finance) Act, 1994 4&5
III Recapitulation of Contains in the ‘Significant Latest’ Circulars,
Notifications, Instructions and the Press Releases
(A) Income tax Act, 1961 (B) Service Tax (Finance) Act, 1994 6&7
(C) Central Excise Act, 1944 (D) FEMA, 1999 and RBI Act, 1934 7&8
(E) SEBI Act, 1992 (F) FDIs (Foreign Direct Investments) ‘In India’ 8 to 11
IV Recapitulation of Contains in the different tax provisions
*Finance Act (Budget) 2008 (Part-IInd)
(A) Post Finance Bill (Budget) 2008 Amendments (B) TAX Deducted at Source (TDS) 11 to 13
(C) WithHolding Tax (WHT) 13
(D) Significant Amendments, for the Agricultural and Charitable incomes 14
(*Section 10 & 11)
(E) ‘Neutralising effect’ of the ‘courts’s judgements’, against the Income tax 15
deptt. ‘Retrospectively’.
*Non-Residents (In India)
(A) Definitions (*Section 2) (B) Taxability of the Income (*Section 5,6 and 9) 16 & 17
(C) Exempted Incomes (*Section 10) (D) Special provisions, for the Computing Incomes 18 & 19
for the ‘Certain business’ (*Section 44B & 44DA)
(E) Special provisions, for the Foreign head office’s expenditures (*Section 44C) 19 & 20
(F) Capital gains (*Section 47) 20
(G) Special provisions, for the Overriding effect of the tax treaties (*Section 90) 20
(H) Special provisions, for the Tax relief, where is No DTAA (*Section 91) 20
(I) Avoidance of the Income tax, by a transaction, resulting in transfer of Income to 21
the Non-Resident (*Section 93)
(J) General and Special rates of tax, for the ‘Certain non-business incomes’ 21 & 22
(*Section 115A)
(K) Special provisions, for the Non-Resident Indians (*Section 115C to 115-I) 22 & 23
(L) Special provisions, for the Shipping business, being carried by a Non-Resident 23
(*Section 172)
(M) Special provisions, for the Recovery of Tax, from the Assets of the Non-Resident 23
(*Section 173)

2 SAI CIRCULARS JUNE- 2008

 (I) Important legal Obligations for the month of July, 2008
Last
S.No Nature of the Obligations Types Of Entities
Dates
(A) Income Tax Act, 1961
By all types of entities, for TDS/TCS
01 7th Deposit Monthly TDS/TCS collected
Return By all types of entities, for Non-
02 14th Filing Quarterly (Statement) Resident ‘deductees’
of TDS
Return By all types of entities, for Non-
03 15th Filing Quarterly (Statement) Resident ‘deductees’
of TDS
Return of Income By all types of entities , for Non –
04 31st Filing Annually
Tax and FBT Audit cases
By the banking entities
05 31st Filing Quarterly Return for ‘non’-deduction of TDS
By all types of entities, for
06 31st Issue Monthly Certificate TDS/TCS deduction and deposited.
(B) Central Excise Act, 1944
01 5th Deposit Monthly Duty By all types of units ‘except’ SSIs

02 10th Filing Monthly Return By all types of units ‘except’ SSIs

By all types of units,
03 10th Filing Monthly Return for CENVAT credits availed
By all types of units in
04 10th Filing Monthly Return EOUs/FTZs/SEZs
By all types of units, for receipts and
05 10th Filing Monthly Return Consumptions of inputs out of PLA
exceeding’ Rs.one (1) crore (in a year)
06 15th Deposit Monthly Duty BY SSI units (only)

(C) Employees Provident Funds (EPFS) And Miscellaneous

Provisions Act, 1952
01 15th Deposit Monthly EPF By all types of entities
02 15th Filing Monthly Return For new employees ‘joined’ (Form 5)
03 15th Filing Monthly Return For old employees, ‘left’ (Form 10)
04 15th Filing Monthly Return By all types of entities (Form 12 A)

(D) Miscellaneous Acts ([i] Service Tax [ii] ESI And [iii] Delhi Value Added Tax (DVAT))

01 5th Deposit Monthly Service Tax By Corporate (only)

01 21th Deposit Monthly ESI-Payments By all types of entities

By dealers having annual turnover
03 28th Deposit Monthly Dvat-Tax
‘exceeding’ Rs. five (5) crores
By dealers having annual turn-
04 28th Filing Monthly Dvat-Return
over ‘exceeding’ Rs. five (5) crores
By dealers having annual turn-
05 28th Filing Monthly Dvat-Return
over ‘exceeding’ Rs. five (5) crores
By dealers having annual turn-
06 28th Deposit Quarterly Dvat-Tax
over ‘exceeding’ Rs. five (5) crores
By dealers having annual turn-
07 28th Filing Quarterly Dvat-Return
over ‘exceeding’ Rs. five (5) crores

3 SAI CIRCULARS JUNE- 2008

 SATISH S AGARWAL & CO.
Chartered Accountants
9/14, East Patel Nagar
(Near Jaypee Siddhartha Hotel)
New Delhi-110008
Tel (off) +9111-25769111/25753888/25752757
Mob : +919811081957
Email : satishagarwal307@yahoo.com

*Expertises & Specialisations*

(I) Auditing/Certification under US GAAP (Regd. with PCAOB)
(II) International Taxation :-
(1) Development of the longterm strategy
(2) Preparation of the documents, for the Transfer Pricing
(3) Study of the Transfer Pricing
(4) Audit of the Transfer Pricing
(5) Assessment of the Transfer Pricing
(6) Strategy, for the tax structure, by availing of the tax incentives, tax
holidays and tax benefits
(7) Strategy, for the optimisation of tax liability, by networking of the DTAT
(Double Taxation Avoidance Treaties)
(8) Taxation and tax planning, for the non-residents and expatriates
(9) Guidance, for the Advance Rulings
(III) Accounting Conversions :-
(1) From INDIAN GAAP To US GAAP
(2) From INDIAN GAAP To IFRS
(3) From US GAAP To Indian GAAP
(4) From IFRS To Indian GAAP
(IV) Regulatory Approvals, Registrations & other matters :-
(1) ROC (Registrar of companies) (6) SEZs (Special Economic Zones)
(2) RBI (Reserve Bank of India) (7) 100% EOUs (100% Export Oriented units)
(3) STPI (Software Technology park of India) (8) CBEC (Central Board of Excise and Customs)
(4) FIPB (Foreign Investment promotion board) (9) DOT (Department of Telecommunications)
(5) SIA (Secretariat of Industrial approvals) (10) CST (Central Sales Tax)
(V) Audits :-
(1) Statutory Audits (12) Cost reductions analysis Audits
(2) Internal Audits (13) Working capital management Audits
(3) Tax Audits (14) Budget analysis Audits
(4) Compliances Audits (15) Financial disbursements Audits
(5) Management Audits (16) Revenue and capital expenditures Audits
(6) Verifications Audits (17) Systems Audits
(7) Stocks Audits (18) Manpower planning Audits
(8) Capital structuring Audits (19) Raw material planning Audits
(9) Fund flows Audits (20) Resources planning Audits
(10) TDS Audits (21) Borrowings planning Audits
(11) FBT Audits
 (II) Recapitulation of Contains in the ‘Significant’ Courts’s/
Tribunals’s and AARs’s Judgements
(A) Income Tax Act, 1961
01 (I) Compensation received, on ‘one time’
under ‘non-compete agreement’ ‘and/or’
under ‘restrictive convenant’ is treated as
‘capital receipt’.
(II) Compensation (abovementioned) received,
on ‘regular basis’, ‘to compensate’, the ‘loss
of a source of income’, is treated as
‘revenue receipt’.
(III) Conclusion :-
Compensation received, is treated as
‘capital receipt’ or ‘revenue receipt,
‘depend on’ the agreement entered into
between both parties. Henceforth an critical
analysis of the agreement is an important,
to treat the amount of the compensation
received, as ‘capital’ ‘or’ ‘revenue’.
(IV) *As per decided case of Mr. ROHITASAVA
CHAND Vs. CIT (New Delhi) decided on
20.03.2008, decided by the High court, at
New Delhi.
02 (I) A person is ‘ordinary resident’ (in India),
where (a) Residing ‘minimum 9 (nine) years’,
‘out of’ 10 (ten) years ‘and’ (also) (b) Residing
‘minimum 730 (Seven hundreds thirty) days’,
‘out of’ 7 (seven) preceding years.
(II) In view of the abovementioned, the person
is ‘non-ordinary resident’ (in India), where
(a) Residing ‘maximum 9 (nine) years’, ‘out
of’ 10 (ten) years ‘and’ (also) (b) Residing
‘maximum 730 (seven hundreds thirty) days’,
‘out of’ 7 (seven) preceeding years.
*Section 6 (6)
(III) *As per decided case of MR. PRADIP J.
MEHTA Vs. CIT (Ahemdabad) decided on
11.04.2008, decided by the Supreme court
of India at New Delhi.
03 (I) Expenditures (payments) made, by the
assessee, on account of the damages, for
‘breach of contract’ are allowable expendi-
tures *Section 37 (1)
07 (I) ‘No penalty’ is leviable, for the
(II) ‘Infraction of law’ is different, from the
breach of the ‘business contract’. Henceforth
breach of the ‘business obligations’ are
treated as ‘normal incident to the business’.
Therefore expenditures (payments) for ‘breach
of contract’ are treated ‘expended wholly
and exclusively, for the purpose of business.
4 SAI CIRCULARS JUNE-2008
(III) *As per decided case of M/s JAMNA
AUTO INDUSTRIES (YAMUNA NAGAR) Vs. CIT
(ROHTAK) decided on 30.01.2008, decided by
the High court Punjab and Haryana at
Chandigarh.
04 (I) ‘No unsecured loan’ is treated as
‘unexplained cash credit’ *Section 68
where assessee has discharged his liability,
by explaining the sources of the unsecured
loans alongwith (a) ‘Identity’ (b) ‘Capacity’
of the lender and (c) ‘Genuineness’ of the
transacion.
(II) *As per decided case of CIT-V (New Delhi)
Vs. M/s Real Time Marketing (P) Ltd, decided
on 07.04.2008, decided by the High court at
New Delhi.
05 (I) Provisions of expenses, under the head
‘gratuity’, on the ‘actuarial valuation basis’
are treated as ‘acertained liabilities’, for the
purpose of computating of ‘adjusted profit’,
for MAT (Minimum alternate tax)
*Section 115JB
(II) *As per decided case of CIT-IV (New Delhi)
Vs. M/s HEWLETT PACKARD INDIA (P) LTD,
decided on 31.03.2008, decided by the High
court at New Delhi.
06 (I) AO (Assessing Officer) is (mandatory) required,
‘to give’ a reasonable ‘opportunity of
being heard’, before ordering, for the
special audit *Section 142 (2A)
(II) ‘Audit report’ (in abovementioned case)
is required, to be furnished, with in the
specified time (Including extended time).
However ‘maximum time’, for the furnishing
report is 180 (one hundred eighty) days
(by the CA Firm). *Section 142 (2C)
(III) *As per decided case of M/s SAHARA
INDIA (FIRM) LUCKNOW Vs. CIT (Central-I)
decided on 11.04.2008, decided by the
Supreme court of India, at New Delhi.
concealment of the incomes, where facts
and circumstances are strongly indicated,
that an ‘inducement’ and ‘allurement’ had
been made on the assessee, during the
search and seizure
*Section 271 (1) (c)S
 (II) Facts of the case :-
(a) Assessee was ‘compelled to disclose’ the
certain incomes, with the ‘verbal assurance’
that ‘no penalty’ *Section 271 (1) (c)
would be levied.
(b) Assessee has offered the incomes, by
filling of the revised return and ‘paid tax’
(B) Service Tax (Finance) Act, 1994
01 (I) ‘No penalty’ is leviable, where the service
provider (including liable person) has made
payment of the Service tax ‘alongwith’
interest (also) ‘before issue of the show cause
notice’, for the levy of penalty *Section 78
(II) ‘No penalty’ is (also) leviable, where ‘lapse
was pointed out’, by the deptt., but the
Service tax ‘alongwith interest (also) has been
paid’, ‘before issue of the show cause
notice’, for the levy of (abovementioned) penalty.
(III) ‘No penalty’ is leviable, in view of the
Section 73 (3) ‘and’ (also) a board’s
circular, where assessee is ‘permitted to
clear’ the Service tax ‘alongwith’ interest,
‘before issue of the show cause notice’, for
levy of the (abovementioned) penalty.
(IV) *As per decided case of M/s TIDEWATER
SHIPPING PRIVATE LIMITED Vs.
Commissioner of Service tax (Banglore) decided
on 12.03.2008, decided by the CESTAT,
South zonal bench at Banglore.
02 (I) ‘No penalties’ are leviable, where Service
provider (including liable person) had ‘genuine
doubt’ with regard to their ‘Service tax
liablity’ ‘and’ (also) there is ‘no ultimate
revenue loss’ to the deptt.
*Section 75A, 76, 77 and 78
(II) ‘No Penalties’ (abovementioned) are
leviable, where service provider is ‘able to
prove’, that there was ‘reasonable cause, for
the failure’
*Section 80
(III) Facts of the case :-
(a) Service provider was receiving
commission, ‘without raising bill’ to his
principal, where principal was (also) ‘entitled
to avail the CENVAT credit’.
(b) Service provider has ‘applied, for the
registration’, ‘during the amnesty scheme’
announced in July 2004.
(c) Service provider has ‘paid Service tax
5 SAI CIRCULARS JUNE-2008
due thereon, ‘based on the (abovementioned)
verbal assurance’.
(III) *As per decided case of M/s
SUDARSHAN SILKS & SAREES Vs. CIT
(Karnataka) decided on 11.04.2008, decided
by the Supreme court of India, at New Delhi.
alongwith interest’ (also) ‘before issue of the
show cause notice’, for levy of the
(abovementioned) penalties.
(IV) *As per decided case of M/s ATHUNGAL
SALES CORPORATION (VADDAKKEN CHERRY)
Vs. Commissioner of Central Excise (Cochin)
decided on 13.02.2008, decided by CESTAT,
South zonal bench at Banglore.
(I) ‘Service tax’ is leviable, on the ‘works
03
(‘composite’) contracts’, from the
‘04.06.2007’
*Section 65 (105) (zzzza)
(II) ‘Service tax’ is leviable, on the Erection
contracts, from the ‘16.06.2005’.
(III) ‘Service tax’ is leviable, on the
‘commissioning or installation’ contacts,
from the ‘01.07.2003’.
(IV) ‘Exemption’ (abatement) @67%, on the
liability of Service tax is applicable, from the
01.03.2003
*As per Notification no. 19/2003-ST dated
‘21.08.2003’.
(V) CENVAT credit is (also) available, on the
‘inputs services’ received against the
‘taxable output services’.
(VI) ‘No penalties’ *Section 75,76 and 78
are leviable, ‘where law itself was not
certain’, and govt. has (also) made ‘frequent
changes’ in the law, ‘which has created
ultimate uncertaintees’.
*As per decided case of M/s Jai Prakash
Industries Ltd Vs. CCE, Chandigarh, decided
by the Supreme court of India at New Delhi.
(VII) Facts of the case :-
(a) Service provider has entered into a
‘composite turnkey work contract’ (with his
client), for ‘Erection, commissioning or
installation’, of the ‘fire proofing work’,
where the ‘fire proofing work’ is (only) liable,
for the Service tax, from the ‘01.06.2007’.
(VIII) *As per decided case of M/s FIREPRO
SYSTEMS PRIVATE LIMITED, decided on
13.03.2008, decided by the CESTAT, South
zonal bench at Bangalore.
 (III) Recapitulation of Contains in the ‘Significant Latest’ Circulars,
Notifications, Instructions and the Press Releases
(A) Income Tax Act, 1961
01 PAN Vs. e-TDS return
(I) ‘No TDS return’, without mentioning of
PAN:- (a) For the ‘salary return’, is 95
(ninety five)% (b) For the ‘non-salary
return’, is 85 (eighty five)%
(II) Applicable, for the returns, which are to
be filed, for the quarter ending on the
31.03.2008 (i.e. last date of filing of return is
15.06.2008).
(III) *As per Press release, dated
31.03.2008.
02 DTAA (Double taxation avoidance agreement) with
govt. of the UNION of MYANMAR (commonly
knowns as VARMA).
*Special features of the (abovementioned)
DTAA :-
(I) Taxes covered :-
‘In India’ :- (a) Income tax (b) Surcharge
(both)
‘In Myanmar’:- (a) Income tax (b) Profit
tax (both).
(II) Income tax is leviable, on the ‘business
profits’, in the ‘state of its source’, where
the activities of the enterprise is
constituting a PE (Permanent establishment) in
the ‘state of its source’.
(III) PE includes :-
(a) A branch (b) A factory (c) A place of
management (d) A sales outlet ‘etc’.
(IV) Profits of (a) Construction (b)
Assembly or (c) Installation project are
liable to Income tax, in the ‘state of its
source’, where the ‘project continues’, for
the ‘minimum period of 270’ (two hundreds
and seventy) days.
(V) Profits of the operations of (a) Ship
(b) Aircraft, are liable to Income tax, in the
‘state of its residence’ ‘and’ (also) in the
‘state of its source’ (‘both’).
(B) Service tax (Finance) Act, 1994
01 Guidelines, for the records, which are to be
maintained/produced, by the exporters,
for the claiming of refunds.
(I) Services provided, by the ‘customs
house agent’, (to the exporters) agent).
*Section 65 (105)(h)
(a) Invoices, (issued by the agent) specifying:-
(aa) Number and date of the shipping bill
6 SAI CIRCULARS JUNE-2008
(VI) ‘Maximum rate of the taxes’, which are
to be charged, in the ‘state of its source’
(a) @5 (five) % on, the incomes, under the
head ‘dividend’.
(b) @10 (ten)% on the incomes, under the
head (ba) ‘Interest’ and (also) (bb) Royalties
(both)
(c) Incomes, under the head ‘capital gains’
on the ‘sales of the shares’, are (‘only’) liable
to Income tax, in the ‘state of its source’.
(VII) DTAA, is (also) incorporating provisions,
for the (a) Exchange of the informations
(b) ‘Anti-Abuse provisions’, to ensure, that
the benefits of DTAA are being availed, by
the genuine residents of the both states.
(VIII) *As per Press release, dated
03.04.2008.
02 Guidelines, for the attribution (computation) of
amount of expenditure, against the
incomes, ‘not included’ in the ‘taxable
incomes’ (commonly known as ‘exempted incomes’)
*Rule 8C (2)
(I) 100 (one hundred) % ‘attribution’ of the
‘direct expenditures’, on the ‘non-taxable
incomes’.
(II) ‘Proportionate’, ‘attribution’ of the
‘indirect-expenditures’ on the ‘non-taxable
incomes’ i.e. expenditures, under the head
‘interest’.
(III) 0.5 (half) % (‘average value of the investments’)
are to ‘be attributed’ (on lum-sum basis),
towards the expenditures, under the head
‘non interest’, against the ‘non-taxable
incomes’.
(IV) *As per Notification no. 45/2008, dated
24.03.2008.
(ab) Description of the exported goods
(ac) Number and date of the invoice (issued by
the exporter).
(ad) Details of the ‘all charges’ (collected by the
(b) Details of the ‘other taxable’ services
(provided by the agent).
 (II) Services provided, by the banking
company/financial institution/NBFC/other
body corporate, for the banking and other
financial services *Section 65 (105) zm
*Abovementioned records are to be
maintained /produced, for the evidences,
‘to link’ the uses of the services, against
the exported goods (only).
(III) Services provided, by the commission
agent, ‘located outside India’, for the sale
of exported goods
*Section 65 (105) (zzb)
(a) Agreement/contract/any other
document, for the providing services, by
the commission agent (‘located outside India’).
(b) ‘Declaration’ of the amount of
commission paid/payable, to the
(abovementioned) agent, in the ‘shipping bill’
(C) Central Excise Act, 1944
01 Guidelines, for the ‘fixation of the ‘special
rate’, of Excise duty for the ‘purpose of
‘value additions’ and refunds.
(I) ‘Replacement of the words’
(a) Existing words :-
To the ‘amount of duty paid’, by the
manufacturer of goods, ‘other than’ the
amount of duty paid, ‘by way of utilization
of CENVAT credit’ (under the CENVAT Credit
Rules, 2001).
(b) Amended words :-
To the ‘duty payable, on value additions’,
under taken in the manufacture of the said
goods, by the said unit.
(II) ‘Rates of excise duty have been fixed’,
for levying excise duty, on the ‘value
additions’ (in production/manufacturing of the
goods).
(III) ‘Deemed duty paid’, where duty
payable is ‘in excess of the actual duty
paid in cash’ (other than CENVAT Credit Utilized)
‘based on the (abovementioned) rates fixed’.
Henceforth ‘no penal provisions are
applicable’, for the ‘short excise duty
paid’.
(IV) Available CENVAT Credit shall be ‘first
utilized’, where goods produced (by
manufacture) are eligible, for the exemption
(under this notification) and ‘second balance’
shall be paid in cash (if any).
(V) ‘Refund of duty’ is available, where
exemption is available (to the manufacturer),
by the Asst./depty (as case may be)
commissioner of the Central excise duty,
against the ‘excise duty paid’, through
7 SAI CIRCULARS JUNE-2008
itself.
(c) Documents, evidencing of actual export of
the goods.
(d) ‘No refund’ of the services tax, ‘exceeding’
‘ither’ (da) ‘Actual Service tax paid’ ‘or’
(db) ‘2 (two) % of the FOB value’ of the
exported goods, ‘whichever is lower’.
(e) ‘Commission’ paid/payable should ‘not
be, for’ (ea) Export of the canalized items
(eb) Project exports (ec) Export financed,
under lines of the credit extended, by govt. of
India/Exim bank (ed) Exports made, by the
Indian partners, for the purpose of their
equity participation, in the foreign joint
venture/wholly owned (100%) subsidiary.
(IV) *As per Notification no. 17/2008-Service
tax, dated 01.04.2008.
‘cash and CENVAT credit’ (both).
(VI) Manufacturer is (also) permitted, ‘to take
credit’, for the utilization, in the payment of
excise duty, ‘in the subsequent months’,
such credit shall (also) be utilized, as ‘excise
duty paid in cash’. However manufacturer is
permitted, to avail the (abovementioned)
‘option by applying in writing to the deptt’.
Moreover the (abovementioned) option shall ‘not
to be withdrawn’, during the remaining part
of the financial year.
(VII) ‘Penal provisions’ are applicable, where
manufacturer has:-
(a) ‘Irregularly availed’ the credit ‘or’
(b) ‘Excessively availed’ the credit
Henceforth the (abovementioned) manufacturer
is (mandatory) required ‘to return’, with in the
‘specified period’.
Moreover deptt. is (also) permitted, ‘to
recover’ as recovery of the ‘duty of excise
erroneously refunded’.
(VIII) Fixation of the ‘special rate’, for
levying of Central excise duty, on the ‘actual
value additions’ :-
(a) Manufacturer is (also) permitted ‘to apply’,
to the appropriate commissioner of Central
excise, ‘for fixation of the (abovementioned)
special rate’.
(b) Manufacturer is (mandatory) required, ‘to
submit’, a certificate obtained from the
statutory Auditor, for the estimation of the
‘actual value addition’, based on the Audited
balance sheet of the preceding financial year.
(c) ‘Time limit’, for the fixation of special
rate is 6 (six) months.
 (d) Manufacturer is (also) permitted, to apply (a) ‘Sales value’ of goods :- ‘Excluding’
in writting, for granting of ‘provisional excise duty, VAT and other ‘indirect tax’ (if
refund’, till the special rate is fixed. any)]
(e) ‘Revocation’ of the ‘special rate’ is (also) + ‘Value of goods’ available as ‘closing
permitted, by the appropriate commissioner inventory’ (commonly known as ‘closing stock’).
of the Central excise.
- ‘Cost of raw’ materials and packing
(f) ‘Special rate’ is to be computed in the
material ‘consumed’.
ratio of :-
- ‘Cost of fuel consumed’ (where such fuels
‘Actual value addition’ is divided by the ÷ are eligible, for input credit, under CENVAT credit
‘Sale value’ [excluding excise duty, VAT and other rules, 2004).
indirect taxes (if any)]. - ‘Value of goods, available as ‘opening
(g) ‘Refund’ payable, shall be equivalent to inventory’ (commonly known as ‘opening stock).
the percentage of ‘total duty payable’, over
(b) Computations (abovementioned) are based
the ‘special rate’.
on the financial records of the ‘preceeding
(h) ‘No refund’, exceeding the excise duty, financial year’.
‘paid in cash’ (‘other than’ the CENVAT credit).
(X) *As per Notification no. 17/2008-
(IX) Computation of the ‘actual value Central excise, dated 27.03.2008,
addition’ of the goods:- applicable from 01.04.2008.
(D) FEMA, 1999 and RBI Act, 1934
01 Liberalisation, for the overseas (II) Liberalised provisions :-
investments, by the SEBI registered (a) USD 7 (seven) billions
domestic (Indian) mutual funds. (b) USD 1 (one) billion, for the overseas
(I) Existing provisions :- exchange traded fund’, shall (also) ‘be
(a) USD 5 (five) billions continued’.
(b) USD 1 (one) billion, for the ‘overseas (III) *As per Circular RBI/2007-2008/274,
exchange traded funds’. A.P (Dir Series) no. 34, dated 03.04.2008.
(E) SEBI Act, 1992
01 ‘No PAN’ is mandatory :- (I) Fees, for submitting of the (a) ‘Offer
(I) Investors residing in the state Sikkim, document’ and (b) Copy of ‘public
are exempted from the (mandatory) announcement’ :-
requirement of PAN, for the purpose of (a) Offer size Fees
‘Opening/Operating’ BO (Beneficial owner) Upto 10 (ten) crores Rs. 1 (one) Lac
accounts, with the depository participants (b) Upto 1000 (one thousand) @ 0.125% of
‘Trading in cash market’ (c) Investment in crores the ‘offer size’
the Mutual funds.
Upto 5000 (five thousands) Rs.1.25 crore +
(II) However ‘sufficient documentary crores @0.03125 ofthe
evidences’ are required, to prove the offer size,‘exce
‘residency of sikkim’. Moreover mutual eding’Rs. 1000
funds are (also) adviced ‘to ensure’, strict crores
compliance of the applicable ‘KYC’ (Know
your client) norms. ‘More than’ 5000 (five Rs.3 (three)
thousands)crores crores Lum
(III) *As per Circular no. MRD/DOP/MF/Cir-
08/2008, dated 03.04.2008. sum
(II) Fees, for the submitting of the ‘draft
02 ‘Investment limit’, for the overseas offer document’, by the ‘merchant banker’.
investments by the SEBI registered, (a) ‘Public Issues’ :-
domestic (Indian) mutual funds :-
(I) Existing limit :- Offer size Fees
USD 5 (five) billions
Upto 10 (ten) crores Rs.25000
(II) Amended limit :- (twenty five
USD 7 (seven) billions thousands)
(III) *As per SEBI/IMD/CIR No. 2/
122577/08 dated 08.04.2008. Upto 5000 (five thousands) @0.025%of the
03 Revision in the filing fees and registration crores
fees
8 SAI CIRCULARS JUNE-2008
 Upto 25000 (Twenty five Rs. 1.25 crore Upto 10 (ten) crores Rs. 1 (one) lac
thousands) crores + @ 0.00625%
ofthe Issue size Upto 1000 (one thousand) @0.125%
‘exceeding’ Rs. crores
five thousands Upto 5000 (five thousands) Rs. 1.25 crore
(5000) crores crore + 0.03125% in
excess of 1000
‘More than’ 25000 (twenty Rs. 3 (three) (onethousand)
five thousands) crores crores Lum crores
sum
‘More than’ 5000 (five Rs. 3 (three)
(b) ‘Righ Issues’ :- crores
thousands) crores-Lum Sum
Offer size (including intending Fees (V) Fees, for submitting of the ‘offer
retention of the subscription)
documents’, by the ‘venture capital funds’
Upto 10 (ten) crores Rs.25000 is rupees 10 (ten) lacs.
(twenty five
(VI) *As per Circular, SEBI/IMD/CIR No.
thousands)
1/122201/08, dated 03.04.2008.
Upto 500 (five hundreds) @0.005%
crores 04 Introduction, of the ‘bond index’ (both by the
corporates and GOI).
‘More than’ 500 (five Rs. 5 (five) lacs (I) Bond index (abovementioned) shall have (a)
hundreds) crores
Futures and (b) Options index (both)
(III) Fees, for the submitting of the ‘offer (II) Stock exchanges are free, ‘to adopt’ (a)
documents’, by the ‘mutual fund’ is @ Bond index computation models (available
0.005% of the NFO (New fund offer) subject to globally) or (b) ‘To develop’ their ‘own
‘minimum of Rs. 1 (one) lac’ and ‘maximum models’.
of Rs. 50 (fifty) lacs’. (III) *As per Circular, SEBI/DNPD/-/Cir-
(IV) Fees, for the submitting of the ‘draft 36/2008, dated 04.04.2008.
letter of offer’, by the ‘acquire of the company’ :-

(F) FDIs (Foreign Direct Investments) ‘In India’

01 Guidelines, for the ‘Foreign investments’
in the ‘credit information companies’
(CICs).
(I) ‘Credit informations’ :-
(a) ‘Amounts’ and ‘nature’ of the
loans/advances (b) ‘Amounts outstanding’,
under the credit cards and other credit
facilities (granted by a credit institution to any
borrower). (c) ‘Nature of the security’ taken
(d) ‘Guarantee furnished’ (e) ‘Non-fund
based facility’ granted (f) ‘Credit
worthiness’ of the borrowers (g) Any other
matter, which the RBI may, consider as
necessary, for the inclusion.
(II) ‘Credit information company’ :-
A company formed and registered, under
the Companies Act, 1956, accordance with
the credit information companies
(regulation) Act, 2005.
(III) Policy, for the FDIs in the ‘credit
information companies’ (in India) :-
(a) FDIs (in India) are governed, by schedule
1 of regulation 5 (1) of the FEMA
(Transfer/issue of security, by a (a) ‘Commodity exchange’ is a ‘recognized
non-resident)
regulation, 2000
(b) Foreign investments, by the (registered)
FIIs (Foreign Institutional Investors) are
9 SAI CIRCULARS JUNE-2008
governed under the portfolio investment
scheme, accordance with the schedule 2 of
FEMA’s regulation 5 (2).
(ba) ‘Overall limit’ is 49 (fourty nine) %, for
the foreign investments, for ‘all types’ of
the companies (in India) with prior approval
of the Central Govt.
(bb) ‘Overall limit’ is 24 (twenty four) %, for
the ‘listed CICs’ (in India) ‘only’ under,
‘portfolio investment scheme’.
(bc) ‘Overall limit’, is 10 (ten) %, for the
‘single FII’/entity (in India), for direct ‘and/or’
indirect (both).
(bd) ‘Mandatory reporting’, to the RBI, for
the acquisition exceeding 1 (one) %.
(be) ‘No representation’ on the board of
directors of the CICs, by the FIIs investors.
(IV) *As per Press note no.1 (2008), dated
12.03.2008.
02 Guidelines, for the ‘foreign investments’,
in the ‘commodity exchanges’.
(I) ‘Definitions’ :-
association’, under the provisions of the
forward contracts (regulation) Act, 1952, ‘to
provide’ platform, for trading in the ‘forward
contracts, in the commodities.
 (b) ‘Recognized association’ is an ‘excluding’ area utilized, for the ‘common
association, to whom recognition has been facilities’, where ‘plots are on the
granted by the Central govt. [*Section 6 of the developed land’.
forward contracts (regulation) Act, 1952]. (cb) ‘Floor area’ ‘including area utilized,
(c) ‘Association’ is a ‘body of the for the common facilities, where there are
individuals’ constituted, for the purpose of ‘built up space’. (cc) ‘Net area’ and ‘floor
‘regulating’ and ‘controlling’, of the area’ are ‘excluding’ the area utilized, for
business of sales/purchases of goods and the ‘common facilities, where are
derivatives (both). ‘combination of the both’.
(d) ‘Forward contract’, is a contract, for (d) Industrial activity includes :- (da)
the ‘delivery of goods’, which is ‘not a Manufacturing (db) Electricity (dc) Gas and
ready delivery contract’. water supply (dd) Post and
(e) ‘Commodity derivatives’ are contracts, telecommunication (de) Software
for the ‘goods’ ‘ither’ forward contracts publishing (df) Consultancy and supply
‘or’ ‘contract for the differences’. However (dg) Data processing (dh) Data base
does ‘not includes’ ‘contract for the activities and distribution of electronic
securities’. content(di)Other computer related
(II) Policy, for the FDIs in the ‘commodity activities (dj) Research and experimental
exchange’ :- development on the natural sciences and
(a) FDIs (in India) are governed, by schedule engineering(dk) Business and management
1 of regulation 5 (1) of the FEMA consultancy activities and Architectural
(Transfer/issue of security, by a non-resident) (dl) Engineering and other technical
regulation, 2000 activities.
(b) Foreign investments, by the (registered) (II) Policy, for the FDIs in the ‘industrial
FIIs (Foreign Institutional Investors) are parks’ :-
governed, under the portfolio investment * 100 (one hundred) % FDIs are permitted,
scheme, accordance with schedule 2 of the under the ‘automatic route’, for ‘setting
FEMA regulation 5 (2). up’ and ‘establishing of the industrial
(ba) ‘Overall limit’ is 49 (fourty nine) %, for parks’, subject to the certain conditions
the foreign investments, for ‘all types’ of i.e. (a) ‘Minimum’ should be 10 (ten) units
the companies (in India) with prior approval ‘and’ (also) ‘no single’ unit should be
of the Central Govt. occupying ‘more than’ 50 (fifty) % of the
(bb) Investments by the (registered) FIIs :- ‘allocable area’.
(bba) 23 (twenty three) % under the portfolio (b) ‘Minimum’ should be 66 (sixty six) % of
investments scheme and the total allocable area for the industrial
(bbb) 26 (twenty six) % under the FDIs activities.
scheme. (III) *As per Press note no. 3 (2008), dated
(c) FIIs’s purchases are permitted, through 12.03.2008.
‘secondary market’ ‘only’ (not through 04 Guidelines, for the FDIs in the ‘civil
primary market).(d) ‘Overall limit’ is 5 (five) %, aviation sector’.
for the ‘single’ FII/entity/person acting on
(I) Definitions :-
the behalf of FII/entity.
(a) ‘Airport’ includes :- (aa) ‘Landing’ and
(III) *As per Press note no. 2 (2008) dated ‘taking off’ area, for the air crafts. (ab)
12.03.2008. Aircraft maintenance and passenger
03 Guidelines, for the ‘FDIs’ in the ‘industrial facilities. (ac) Aerodrome [*As per section 2 (2)
parks’. of the Aircraft Act, 1934].
(I) Definitions :- (b) ‘Air transport services’ includes :-
(a) ‘Industrial park’ is a project, where (ba) Services, for the transport ‘by air’ of
quality infrastructure facilities are the persons, mails and other things, for any
available, in the form of :- kind of remuneration, for a ‘single flight’
(aa) Developed ‘and/or’ (ab) Built up space, ‘or’ ‘series of the flights’.
for the purpose of ‘industrial activity’ (only). (II) Policy, for the FDIs in the ‘civil aviation
(b) ‘Infrastructure facilities’ includes :- sector’ :-
(ba) Roads (including approach roads) (bb) Water (a) For Airports :- (aa) 100 (one hundred) %
supply (bc) Sewerage (bd) Common effluent FDIs’ , for the ‘green field projects’, under
treatment facility (be) Telecom network the ‘automatic route’. (ab) 100 (one hundred) %
(bf) Generation and distribution of the FDIs, for the ‘existing projects, under
power (bg) Air conditioning. (c) ‘Allocable ‘prior approval route’, where FDIs are
area’ includes :- (ca) ‘Net area’ ‘exceeding’ 74 (seventy four) %.
10 SAI CIRCULARS JUNE-2008
 (b) For Air Transport services :-(ba) 49
(fourty nine) % FDIs, for the (baa) ‘Scheduled’
Air Transport service and (bab) ‘Domestic
scheduled’ passenger airlines ‘and’ (also)
100 (one hundred) % ‘investments are permit-
ted, for the NRIs’ under the ‘automatic
route’. (bb) 74 (seventy four) % FDIs’, for the
(bba) ‘Non scheduled’ Air transport service
and (bbb) ‘Non scheduled’ airlines,
chartered airlines and cargo airlines ‘and’
(also) 100 (one hundred)% ‘inves- tments
are permitted, for the NRIs’ under the
‘automatic route’. (bc) 100 (one hundred) %
FDIs’ , for the (bca) Helicopter services
(bcb)Seaplane services, under the
‘automatic route’. (c) Other services :-
(ca) 74 (seventy four) % ‘FDIs’, for the ‘ground
handling services’ ‘and’ (also) 100 (one
hundred) % ‘investments are permitted for
the NRIs’, under the ‘automatic route’. (cb)
‘100 (one hundred) % FDIs’,for the (cba)
Maintenance and repair organizations
(cbb) ‘Flying training’ institutes (cbc)
‘Technical training’ institutions, under the
‘automatic route’.
(III) *As per Press note no. 4 (2008), dated
12.03.2008.
05 Guidelines, for the FDIs in the ‘petroleum
and natural gas sector’.
(I) Policy, for the FDIs in the ‘petroleum &
natural gas sector’ :-
(a) 100 (one hundred) % FDIs, for the (aa)
*Finance Act (Budget) 2008 (Part-IInd)
(A) Post Finance Bill (Budget) 2008 Amendments
*Amendments, have been made in the
Finance bill (budget) 2008, ‘after announcing
the initial budget proposals’, (on 29th Feb,
2008 by the Finance Minister).
01 New Insertion *Section 10 (26AAB)
‘Exemption of Income tax, on the, incomes’
of ‘APMC’ (Agricultural produce market
committees) and ‘SAMB’ (State agricultural
marketing boards) have been allowed (permitted).
(I) ‘Exemption’ (abovementioned) is available,
to the ‘APMC’ and ‘SAMB’, which are
constituted, for the purpose of ‘regulating
the marketing of agricultural produces’ (only).
‘Exemptions’ *Section 10A and 10B
02
is available ‘upto 31.03.2010’, ‘for the
newly’established undertakings, in the FTZ
(Free trade zone) etc. and ‘for the newly’ estab-
lishhed as ‘100% EOUs’ (Export oriented undertakings).
03 ‘Exemption’ *Section 11 (4A) is (also)
available, to the ‘chambers of commerce’
(i.e. PHD, CII, FICCI etc.) Who are ‘actually’
rendering services, to their members, under
the head ‘advancement of any other object of
11 SAI CIRCULARS JUNE-2008
‘Exploration’ (ab) Petroleum product
‘marketing’ (ac) Petroleum product
‘pipelines’ (ad) Natural gas/LNG ‘pipelines’
(ae) Petroleum ‘refining’ in the ‘private
sector’, under the ‘automatic route’.
(b) 49 (fourty nine) % FDIs, for the ‘petroleum
refining’ in the ‘public sector’ (through PSU)
under the ‘prior approval route’ (of FIPB).
(II) *As per Press note no. 5 (2008) dated
12.03.2008.
06 Guidelines, for the FDIs in the ‘Mining of
Titanium bearing minerals’ and ‘ores’.
(I) Policy, for the FDIs in the ‘mining’ and
‘mineral separation’ of the ‘titanium
bearing minerals and ore’ :- (a) 100 % FDIs
are permitted, with prior approval of the
govt., in its ‘value addition’ and
‘integrated activities’ ‘and’ (also) subject to
the sectorial regulations and mines and
minerals Development and Regulation Act,
1957. (b) ‘Value addition facility’, are to be
set up ‘in India’ (only) ‘and’ (also) alongwith
transfer of the technology. (c) ‘Disposal of
the tailing’ during ‘mineral separation’ shall
be carried out, in accordance with the
regulations framed by the atomic energy
(Radiation protection) rules, 2004.
(II) ‘No FDIs’ are permitted in ‘mining’ of
the ‘prescribed substances’ [*As per
Notification no. S.O. 61 (E) 18.1.2006, issued by the
deptt. of atomic energy].
(III) *As per Press note no. 6 (2008), dated 12.03.2008.
general public utility’. It is a ‘clarrificatory
in nature’, for the removing of doubts.
04 ‘No disallowance of the expenditures’,
*Section 40 (a) (ia) , where TDS have been
deposited, ‘before due date of filing of the
return of income’ *Section 139 (1)
(I) ‘Now time period’ (Ay. 2008-2009), for the
depositing of TDS is 6 (six) months, (i.e.
commencing from 1st April, 2008 and ending on 30th Sep.2008).
(II) ‘Abovementioned relief’ is available to
the payments/provisions, for the
expenditures incurred/provided, during/for
the month /year as ending on ‘31st March
only’. Henceforth ‘no relief’ is available,
against the payments, for the expenditures
which have (already) been incurred, ‘upto Feb’.
(III) *Applicable from the assessment year
2005-2006 (year ending on 31.03.2005)
05 ‘Deduction’ *Section 80-IB (9)
is available ‘upto 31.03.2012’, for the
‘commencing’ of the ‘commercial produc-
tion’ under the head ‘refining of the mineral oil’.
 Seeking registration
Filing returns (manually & electronically)
e-payment of Tax as now mandatory under DVAT Act.
Procurement of all kinds of forms from the VAT Deptt.
Maintenance and filing of Statutory records under VAT
Timely compliance, Audit, Assessment, Refunds under VAT

Auditing of Accounts under Income Tax Act

Filing of Income Tax Returns (manually & electronically)
e-payments of Taxes as now mandatory under Income Tax
Act.
Filling of e-TDS returns
Obtaining Permanent Account Number(PAN)
Service Tax matter upto defacing including registration &
filling of return
Choosing tax saving like, NSE, PPF, ICICI, IDBI Bonds etc.
Formation of Trust or Societies
Registration of Partnership Firm
Copyright, Trademarks & Patents
You give us your Problems And
We give you Solutions

E – Mail: theaccountants.b@gmail.com
 (B) TAX DEDUCTED AT SOURCE (TDS)
[FOR THE FINANCIAL YEAR ENDING ON 31.3.2009- ASSESSMENT YEAR 2009-2010]
S. Under the head (Section) Zero TDS Individuals (1) Domestic (1)
No on Payments (includes HUFs, Companies and
Upto RS. BOIs and AOPs) Firms
Regular Rates
1 Salary *Section –192 1,50,000 [applicable to the -N/A-
individuals] (2)
Interest [On Securities) (Resident [only]] 2,500 10.30%
2 20.60%
*Section – 193
3 Deemed’ Dividend [Resident ‘only’] 2,500 20.60%
20.60%
*Section – 194 read with 2(22)
Interest [‘other than’ on Securities] 5,000(7) 10.30%
4 20.60%
*Section – 194(A)
Winning from Lottery and Cross Puzzle 5,000 30.90%
5 30.90%
*Section – 194(B)
6 Winning from Horse Race *Section - 194(BB) 2,500 30.90% 30.90%
Payment to Contractor 20,000 (6) 2.06%
7 2.06%
*Section -194 C
7A Payment to Sub-Contractor and for 20,000 (6) 1.03% 1.03%
Advertisement Contract
8 Insurance Commission 5,000 10.30% 20.60%
*Section - 194 D
9 Non-Resident Sports Man or Sports NIL 10.30% - N/A -
Association *Section-194 E
10 NSS *Section - 194 EE 2,500 20.60% -N/A-
11 Equity Linked Saving Scheme NIL 20.60% - N/A -
[(ELSS)] *Section - 194 F
12 Commission and Brokerage (On Sale of 1,000 10.30% 10.30%
Lottery Tickets [only]) *Section-194 G
13 Commissions and Brokerage [‘Other than’ on 2,500 10.30% 10.30%
sale of Lottery Tickets) *Section-194H
14 Rent *Section - 194-I 1,20,000 15.45% - N/A-
(i) Rent to Individual and HUF
(ii) Rent to Other (Non-Individual and non-HUF) 1,20,000 20.60% 20.60%
(iii) Rent for Hiring of Plant and Machin ery
[to Individual/Huf and company/ firm]. 1,20,000 10.30% 10.30%
15 Fees for Professional or Technical Services 20,000 10.30% 10.30%
*Section–194J
16 Compensation on Compulsory Acquisition of 1, 00,000 10.30% 10.30%
Immovable Property *Section – 194 LA
17 Payments to Non Resident and Non- NIL 30.90% 51.50%
Domestic Company [There are different (Maximum) (Maximum)
‘Specific Rates’ applicable, which are also
lower than maximum rates] *Section – 195
18 Units Held by Offshore Fund *Section – 196B NIL 10.30% 10.30%
19 Incomes from Foreign Currency Bonds NIL 10.30% 10.30%
*Section – 196C
20 Incomes of Foreign Institutional Investors NIL 20.60% 20.60%
(FIIs) from Securities *Section – 196D [‘not’ [10.30% For short [10.30% For short
being dividend, short-term/Long-term capital gains]. term capital gain term capital gain
[section 111 (A)]

12 SAI CIRCULARS JUNE-2008

 Notes
01 (a) ‘Additional’ Surcharge is applicable Quarterly Return (statement) for the Payments to
@ 10% , on the Gross payments ‘Likely’ to Non-Resident (Section 194E, 195, 196B & 196C) are
exceed Rs.(10) Lacs, to the Individuals/Hufs to be filed by (i)14th July (ii) 14th Oct. (iii)14th
and Rs. One (1) Crore to the Domestic
Jan and (iv) 14th April.
(Indian) companies/firms (b) Surcharge is
05 Return of TDS, for the ‘last quarter’
applicable @2.5% , on the Gross payments
(i.e. ending on 31.03.2009) shall be filed, on or
‘likely’ to exceed, Rs. One (1) crore to the
‘non-domestic companies’ (foreign companies). before 15th April 2009 (Exception for filing on
or before 15th June 2009 is allowed, where
02 T.D.S, on the Incomes under the head Salary
amount credited (only) for the preparing of
shall be deducted, as tax Payable on the
Annual accounts).
‘Taxable Salary’ (in the hands of individual Employee). 06 yPayments, Per Contract and (also) further in
03 TDS ‘credited’ (provision), as on 31st aggregate (to the same Contractor) are ‘not to
March, for the preparing of Annual accounts exceed’ Rs. Fifty (50) Thousands, in a
is permitted, to deposit by 3oth May (60 Financial Year (ending on 31.03.2009).
Days)’.
07 Limit, for the zero Rates of TDS is rupees
04 Quarterly Returns (statements) for the
Ten (10) thousands, for the banks and
Payments to the ‘Resident’ are to be filed by
co-operative societies, who are primarily
(i) 15th July (ii) 15th Oct. (iii) 15th Jan. and engaged in the banking business.
(iv) 15th June (forMarch Quarter only), and
(C) WithHolding Tax (WHT)
01 (I) Withholding tax rates (WHT), are (only) The rates of WHT:- (a) @10% on the rental of
applicable to those countries, where India has equipment and services provided ‘alongwith’
double taxation avoidance treaty (DTAT). In most of know-how and technical services.
cases ‘both’ countries (states) have ‘right to tax’. (b) In the ‘other cases’ (except abovementioned) For
(II) Rates of WHT (in India) for the incomes, ‘First’ five (5) years of the agreement:-
under the heads (a) Dividend (‘other than’ covered (ba) @15% where ‘payer’ is govt/specified org-
under section 115-O) (b) Interest (c) Royalty (d) anisation (bb) @20% where ‘payers’ are ‘other
Fees for technical services:- entities’. (c) For ‘subsequent’ five (5) years of
Country Divi Inter Roya Fees for the agreement:-
dend est lty Technical
(%) (%) (%) Services * @15%, where ‘payers’ are govt./specified
(%) organisation and (also) ‘others entities’ (both).
Australia 15 15 *1* *1* *(2) Incomes under the head dividend/interest
Canada 15/254 152 10-20 10-20 /fees/royalties ‘earned by’ the govts and speci-
China 10 102 10 10 fied institutions (i.e. RBI etc) are (also) exempted
Germany 10 102 15-203 15-203
France 10 10 10 10 from Income tax in the ‘country of source’.
Italy 15/204 152 20 20 *(3) (a) @15%-20% (as case may be), for the
Japan 10 10 10 10 years between 1997-2007. (b) @15% , for the
Korea 15/204 10/152 15 15
Malaysia 10 10 10 10 ‘subsequent years’.
Mauritius 5/154 202 15 15 (c) @10% , for the royalty/rent on equipment.
Nepal 10/204 10/152 15 15
Netherlands 10 102 10-20 10-20 *(4) (a) @15% , where ‘minimum 10% shares’
Newzealand 15 102 10 10 of the company ‘paying dividend’ are ‘held by’
Philippines 15/204 10/152 15 15 the entity ‘receiving dividend’ (b) @15/20/25% (as
Poland 15 152 22.5 22.5
Saudi Arabia 5 10 10 10
case may be) for ‘other entities’ (except
Singapore 10/154 10/152 10 10 abovementioned).
South Africa 10 102 10 10 *(5) Royalties and fees for the technical services,
Spain 15 152 *5* *5* are taxable in the ‘country of source’
Sweden 10 102 10 10
Swiss 10 106 10 10 (a) @10% on the royalty/rent, ‘for the use of’
Thailand 15/204 10/202 15 15 industrial/commercial/scientific ‘equipments’.
UAE 5/154 5/12.52 10 10 (b) @20% on ‘other royalties’ (except abovemen-
UK 15 10/152 *1* *1* tioned) and fees for the technical services.
USA 15/204 10/152 *1* *1*
* (6) @10% , on the interest, where
* (1) Royalties and fees for the technical ‘minimum 20% shares’ of the company ‘paying
services are taxable in the ‘country of interest’ are ‘held by’ the entity ‘receiving
source’. interest’.
13 SAI CIRCULARS JUNE-2008
 (D) Significant Amendments, for the Agricultural and Charitable
incomes *Section 10 &11
01 Income earned, from the ‘saplings’ and
‘seedlings’, ‘grown in a nurshery’ (‘without’
using land) is ‘also’ treated as ‘agricultural
income’ *Section 2 (1A)
Henceforth the (abovementioned), ‘agricultural
income is exempted’, from the eligibility of
Income tax liability *Section 10 (1)
(I) Applicable for the year ending on
31.03.2009 (A.Y. 2009-2010) accordingly
commencing from 01.04.2008. Henceforth
incomes, from the sales of ‘plants’ and ‘seeds’,
grown by developing and maintaining a in
‘small nursery’ in your ‘backyard/balcony/
roof’ etc. are exempted, from the liability of
Income tax. These (abovementioned) are treated
as ‘agricultural’ activities ‘not as business’
activities.
(II) Existing provisions, for the agricultural
purpose:-
*Agricultural income, which has been derived,
‘by using land’, for the agricultural purpose
and such ‘land is (also) located in India’.
However agricultural income is ‘partially
taxable’ by way of considering, for the rate
purpose (only) for the ‘taxpayers’, who have
‘non-agricultural’, which is (also) liable to tax’.
(III) Existing provisions, for the ‘saplings’ and
‘seedlings’, grown in a nurshery :-
(a) ‘Basic operation’ should ‘be on land’
(b) ‘Subsequent operation’ may ‘be in
nurshery’
(c) Conclusion :-
‘No agricultural income’, where is ‘no basic
operation on land’.
(IV) Amended provisions, for the ‘saplings’ and
‘seedlings’, grown in a nurshery :-
‘Basic operation’ and the ‘subsequent
operation’ (both) ‘may be’ ‘in nurshery’, for
treating the ‘agricultural income’, and
accordingly (also) ‘exempted income’.
(V) ‘Now’ ‘exempted agricultural income’ is
available to the assessee, who have (a) ‘No
agricultural land’ ‘and’ (also) (b) ‘No
conventional farming activities’.
02 ‘No exemption’, for the ‘commercial/business
activities’ *Section 11(4A) under the head
‘for the charitable purpose’ *Section 2(15).
(I) Existing provisions :- * ‘Charitable purpose’
includes:-
(a) ‘Relief to poor’, ‘education’, ‘medical
relief’
14 SAI CIRCULARS JUNE-2008
‘and’ (also) the ‘advancement of any other
object’ of the ‘general public utility’.
(b) ‘Advancement of any other object’ of
‘general public utility includes :-
Carrying of any ‘independent activity’ in the
nature of (ba) Trade or (bb) Commerce or
(bc) Business or (bd) Any activity of rendering,
any service ‘in relation to’ any (bda) Trade or
(bdb) Commerce or (bdc) Business, ‘for a
consideration’. However profits of the
‘independent acvitity’ should be utilised for
the chartibale purpose (only).
(c) Consideration includes :-
(ca) Cess (cb) Fees or (cc) Any other
consideration
(d) ‘Application’ (utilisation) with in the year
and (also) ‘retention’, for the next five (5)
assessment years, out of the funds earned
from the (abovementioned) activities.
(II) Amended provisions :-
*‘Advancement of any other object of general
public utility’ ‘not includes’ :-
* Any ‘independent activity’, ‘in the nature
of’ (a) Trade or (b) Commerce or (c) Business
or (d) Any activity of rendering of any service
‘in relation to any’ (da) Trade or (db)
Commerce or (dc) Business.
(III) ‘No amendment’ in ‘Section 11 (4A)’
*Existing provisions :-
Exemption *Section 11 (4A) is available,
where
(a) Business is ‘incidental to the attainment
of the main objectives’ of the trust or
institution (as case may be) ‘and’ (also).
(b) ‘Separate books of accounts’ for business
and non-business acitivities are to be
maintained, by the trust or institution (as case
may be).
(IV) Conclusion :-
(a) ‘Exemption’ *Section 11 (4A) is
available where business/service is
‘incidental activity’ to the main object’ of
the trust/institution (as case may be) ‘and’ (also)
where ‘separate books of accounts’ are
maintained’, i.e. incomes from the ‘sale of
books’, on yoga, by the trust/institution (as
case may be) who has main object/activity of
the ‘free yoga classes’.
(b) ‘No exemption’ *Section 11 (4A) is
available, where business/service is ‘not
incidental activity’, but it is ‘independent
activity’.
 (E) ‘Neutralising effect’ of the ‘Courts’s Judgements’, against the
Income tax deptt., ‘Retrospectively’.
01 Computation of the business income
Chapter-IV.
(I) *As per decided case of M/s KANDLA PORT
TRUST Vs. Asstt. CIT, decided in 2007,
decided by the ITAT at Rajkot.
(II) ‘Definition of WDV’ [Written down value]
*Section 43 (6) (b).
(a) Amended provisions :-
*‘Actual cost’ (to the assessee) - (minus)
amount ‘attributable to the revaluation’
(if any) + (plus) depreciation ‘actually allowed’
on revaluation (if any) - (minus) depreciation
‘actually provided’ (by assessee) which is ‘now’
deemed, as depreciation ‘actually allowed’,
where assessee was ‘not required to compute’
his total income (for the purpose of Income tax Act)
in any previous year/preceeding to previous
years.
(b) *Applicable from the assessment year
2003-04.
02 Minimum Alternate Tax (MAT)
Chapter XII-B
(I) (a) *As per decided case of Asstt. CIT Vs.
M/s BALARAMPUR CHINNI MILLS LTD,
decided in 2007, decided by the ITAT at
Kolkata. ‘and’
(b) *As per decided case of depty. CIT Vs. M/s
DHANLAKSHMI PAPERS MILLS LTD, decided
in 2007, decided by the ITAT at Chennai.
(II) ‘New insertion’ *Section 115JB
[Explanation 1 to the sub clause (h)].
(a) *Amended:- MAT is ‘now’ leviable, on the
amount of Dividend Distribution Tax (DDT) and
‘deferred tax’ [if debited to P & L A/c].
(b) *Applicable from the AY. 2001-02.
03 Procedure for the Assessments (Chapter-XIV)
(I) *As per decided case of Dr. SHASHI KANT
GARG Vs. CIT decided in 2006, decided by the
High court at Allahabad.
(II) (a) Notice’ *Section 148 is ‘not’
(mandatory) required, ‘to be issued by’ joint
commissioner/commissioner/chief commiss -
ioner (as case may be), ‘himself’ for the escaped
income/tax assessments *Section 151 (2).
Henceforth ‘AO’ is ‘now’ permitted, to issue
(abovementioned) notice, and (also) satisfing the
‘requirement of satisfaction’ of the
(abovementioned) commissioner.
,*Applicable from the 01.10.1998.
Deduction at the source [TDS] Chapter-XVII
04 (I) *As per decided case of M/s HINDUSTAN
COCA COLA BEVERAGE (P) LTD, decided in
15 SAI CIRCULARS JUNE-2008
2007, decided by the Supreme court of India
at New Delhi.
(II) ‘Deemed assessee in the default, for ‘not
deducting of the TDS’ *Section 201
(a) Amended provisons :-
‘Deemed assessee in default’, where assessee
‘fail to deposit’ TDS (Irrespective of the fact TDS
has been deducted or ‘not deducted’). Henceforth
assessee is still ‘deemed in default’, even if
‘not deducted the TDS’ (clarrified accordance
with the legislative intent).
(b) *Applicable from the 1st June, 2002.
05 Penalties Imposable Chapter-XXI
(I) *As per decided case of M/s NAINUMAL
HETCHAND Vs. CIT, decided in 2007,
decided by the High court at New Delhi.
(II) Penalties, for failure to furnish the
returns/comply with the notices/ conceal-
ment of the incomes etc. *Section 271 (1)
* ‘New insertion’ *Section 271 (1B)
(a) Amended provisions :-
‘Deemed satisfaction’, for the ‘initiation of
penalty’ proceeding, where ‘order of the
assessment/reassessment’ is ‘itself contain-
ing direction’, for the initiation of penalty.
(b) *Applicable from the 1st April, 1989.
06 Miscellaneous Chapter-XXIII
(I) *As per decided case of ITO Vs. Dr.
ANAND CHABRA, decided in 2007, decided
by the High court at Jodhpur.
(II) ‘Presumption on book of the accounts’,
documents, money, bullion, jwellery and
valuable articles/things *Section 292C
‘Part-1st’ :-
(a) ‘Existing provisions :-
‘Presumed’ abovementioned ‘books of
accounts etc’, are belonging to the assessee,
where such (abovementioned) books etc, are
found in the possession/control of the
assessee, during the ‘search and seizure’
(only) *Section 132.
(b) Amended provisions :-
‘Presumption’ (abovementioned) is applicable,
during the ‘survey’ (also).
*Section 133A
(c) *Applicable from the 1st June 2002.
‘Part-IInd’ :- (a)Amended rovisions:-
‘Presumption’ (abovementioned) is applicable
on the ‘books etc’ delivered, to the requisi-
tioning officer (also) *Section 132A
(b) *Applicable from the 1st October, 1975.
 * Non-Residents (In India)
(A) Definitions *Section 2
01 Non-Resident *Section 2 (30) hundred eighty two (182) days.
(I) A person, who is ‘not a resident’ (in India). ‘and’ (also)

(II) A person, who is (also) ‘not a ordinarily (b) ‘Maximum stay’ (in India), should be
resident’ (in India) *Section 6 (6) three hundreds sixty five (365) days, ‘in the
preceeding’ four (4) years, ‘alongwith’
(III) An individual *Section 6 (1) ‘maximum stay’ (in India) should be of sixty
(a) ‘Maximum stay’ should be one
(in India), (60) days, in the respective previous year.

(B) Taxability of the incomes *Section 5,6 and 9

01 Scope of the ‘taxable incomes’ *Section 5 at the time of its ‘actual receipts’ or
(I) For resident (in India) :- ‘deemed to receipts’, by the assessee (in
(a) ‘All’ (100%) incomes, derived from ‘whatever India) [(*As per explanation-2 of the section 5(1) &
5(2)].
sources’, are liable to Income tax ‘in India’,
where (a) Received ‘or’ deemed to be received
02 Resident ‘In India’ *Section 6
‘in India’, ‘by the assessee’ himself or ‘by other
person’, on behalf of the assessee. (I) An individual [*Section 6(1)]
(b) Accures/arises ‘or’ deemed to be (a) ‘Minimum stay’ (in India), should be one
accures/arises, to the assessee ‘in India’. hundred eighty two (182) days. ‘or’
(c) Accures/arises, to the assessee ‘outside (b) ‘Minimum stay’ (in India), should be three
India’. hundreds sixty five (365) days, ‘in
preceeding’ four (4) years, ‘alongwith’
(II) For ‘not-ordinary resident’ (in India) ‘minimum stay’ (in India) of sixty (60) days,
in the respective previous year. ‘However
*Section 6 (6)
minimum stay’ (in India) should be of one
(a) ‘All’ (100%) incomes, accures/arises ‘outside
hundred eighty two (182) days, where a
India’ are ‘not liable’ to Income tax ‘In India’.
‘citizen of India’, is ‘leaving’ India, ‘for’ (c)
(b) ‘If Abovementioned’ incomes accures/arises
‘Employment’ (outside India) ‘or’ (d) Crew
‘outside India’, from a business/profession, as
member of ship ‘or’ (e) Citizen of India ‘or’
‘controlled from India’, are (only) ‘liable to
POI (Person of India Origin).
Income tax’ ‘in India’.
(II) HUF and AOPs
(Hindu undivided family)
(III) For non-resident (in India).
*Section 6 (2)
[Association of the persons]
‘All’ (100%) incomes, derived from ‘whatever
sources’, are liable to Income tax ‘in India’, (a) ‘Resident ‘in India’, where management
where (a) Received ‘or’ deemed ‘in India’, by and control of its affairs are ‘situated in
the non-resident (assessee) ‘himself’ or ‘by other India’.
person, on behalf of the non-resident (assessee) (b) ‘Non-resident ‘in India’, where manage-
(b) Accures/arises ‘or’ deemed to be ment and control of its affairs are ‘situated
accures/arises, to the non-resident (assessee) ‘in outside India’.
India’.
(III) Company *Section 6 (3)
(IV) ‘Incomes received, ‘outside India’, to (a) ‘Resident ‘in India’, where its Indian
the non-resident/not-ordinary resident (Domestic) company (incorporated in India).
(assessee) shall ‘not deemed to be received in (b) ‘Non-resident ‘in India’, where
India’, where such incomes, have been management and control of its affairs are
‘merely’ taken, in the Balance sheet, pre- ‘situated outside India’.
pared ‘in India’ [*As per explanation-1 of
section 5(1) & 5(2)]. (IV) ‘Not-ordinarily resident’ (in India)
*Section 6(6)
(V) ‘No double taxability’ of the incomes ‘in An Individual *Section 6(6) (a)
India’, which have ‘first offered’, for the (a) ‘Minimum’ nine (9) years ‘out of’ ten (10)
Income tax (in India) ‘on account of’ the preceeding years, the assessee should
accured/arisen or deemed to have maintained, as ‘non-resident’ status (in
accured/arisen (in India) and ‘second’ India). ‘or’

16 SAI CIRCULARS JUNE-2008

 (b) ‘Maximum stay’ (in India), should be seven
hundreds twenty nine (729) days, ‘in the
preceeding seven (7) years.
03 Incomes deemed to accure/arise (in India)
*Section 9
(I) ‘All’ (100%) incomes are deemed to
accure/arise ‘in India’, where ‘earned from’
(a) ‘Directly/indirectly’ ‘or’ ‘through/from’ any
‘business connection in India’
(b) ‘Any asset’ ‘or’ source of income ‘in India’.
(c) ‘Capital asset’, as situated ‘in India’
(II) ‘Proportionate’ (not 100%) incomes are
deemed to accure/arise (in India), where ‘partial
operations’ are being carried out ‘in India’.
(III) ‘No deemed to accure’/arise (in India) where
operations of the ‘Non-Residents’ are
‘restricted to purchases’ (only) for the purpose
of the ‘exports from India’.
(IV) ‘No deemed to accure’/arise (in India) where
operations of the ‘Non-Residents’ are
‘restricted to collection of news and views’
(only) for the purpose of the ‘transmissions’ to
‘outside India’.
(V) ‘No deemed to accure’/arise (in India) where
operations of the ‘Non-Residents’ are
‘restricted to shooting of any cinematograph
film’ (only). for the purpose of ‘telecasting’ to
‘outside India’.
(VI) Incomes, under the head ‘salaries’, earned
(in India) for the service rendered (in India) and
(also) for the rest/leave period [included ‘preceded’
and suceeded period (both)] are (also) liable to
Income tax (in India).
(VII) Incomes, under the head ‘salaries’, ‘paid
by govt’. of India’ ‘to’ the citizen (of India) for
the services rendered ‘outside India’ are (also)
liable to Income tax (in India).
(VIII) Incomes, under the head ‘dividend’, ‘paid
by Indian (domestic) company’, to ‘outside India’
are (also) liable to Income tax (in India).
(IX) Incomes, under the head ‘interest’, ‘paid
by’ the (a) ‘Govt’. ‘or’ (b) ‘Resident’ (of India),
[‘except for’ the purpose of business/profession, carried
‘outside India’ ‘or’ for the purpose of earning any
income ‘outside India’] ‘or’ (c) ‘Non-resident’ (in
India), for the purpose of ‘business/profession’
‘carried in India’, are (also) liable to Income tax
(in India).
(X) Incomes, under the head ‘royalty’, ‘paid by’
the (a) ‘Govt’. ‘or’ (b) ‘Resident’ (in India)
[‘except for’ the purpose of business / profession
carried ‘outside India’ ‘or’ for the purpose of earning
any income ‘outside India’] ‘or’
17 SAI CIRCULARS JUNE-2008
(c) ‘Non-resident’ (in India), for the purpose
of ‘business/profession’ ‘carried in India’,
are (also) liable to Income tax (in India).
(XI) ‘No royalty payment’, is liable to
Income tax (in India) where (a) Royalty is
consisting of ‘lump-sum payment’
(consideration) for imparting of information,
data, documenta- tion, drawing, secret
formula, process, trade mark etc. ‘outside
India’ ‘and’ (also) (b) Royalty (abovementioned)
should be in pursuance of an agreement
made ‘before 01.04.1976’ and (c)
Agreement (abovementioned) has (also)
been approved by the ‘Central govt.’ (d) All
(abovementioned) three (3) conditions are to be
satisfied ‘together’.
(XII) ‘Royalty includes’ :- ‘Lum-sum
payment’ (consideration) ‘royalty excludes’ :-
Payment (consideration) which are (also) as
liable to Income tax (in India) under the head
‘capital gains’ *Section 45 to 55A ‘for transfer
of’ the information, data, documentation,
drawing, secret formula, process,
trademark etc.
(XIII) Incomes under the head ‘fees for the
technical services’, ‘paid by’ the (a) ‘Govt’
‘or’ (b) ‘Resident’ (in India) [‘except for’ the
purpose of business/profession, carried on ‘outside
India’ ‘or’ for the purpose of earning any income
‘outside India’] ‘or’ (c) ‘Non-resident’ (in India),
for the purpose of ‘business/profession’
‘carried in India’ are (also) liable to Income
tax (in India).
(XIV) ‘No fees payment’, for the technical
services’, is liable to Income tax (in India)
where
(a) Fees for the technical services are in
pursuance of an agreement made ‘before
01.04.1976’ ‘and’ (also) (b) Agreement
(abovementioned) has been approved by the
‘Central govt’. (c) All (abovementioned) two (2)
conditions are to be satisfied ‘together’.
(XV) Certain incomes shall ‘be included in’
the total incomes of the non-resident (in
India) ‘irrespective of fact’ the non-resident
(in India) ‘has a residence’ ‘or’ ‘place of
business’ or ‘business connection’ (in India)
‘or not’, where incomes are deemed to
accure/arise ‘in India’, under the followings
heads:-
(a) ‘Interest’ *Section 9 (1) (v)
(b) ‘Royalty’ *Section 9 (1) (vi)
(c) ‘Fees for the technical services’
*Section 9 (1) (vii)
 (C) Exempted Incomes
01 ‘Exempted incomes’, under the head interest,
on ‘certain’ saving certificates *Section 10 (4B)
(I) Saving certificates, should have been issued
‘before 01.06.2002’, by the Central govt (only).
(II) Saving certificates, should have been
subscribed in ‘convertible foreign exchange’,
‘and’ (also) ‘remitted directly from the ‘outside
India’. Accordance with FERA, 1973.
(III) ‘Abovementioned’ exemption is available to
the NRIs (only).
02 ‘Exempted receipts’, under the head travel
concession/assistance, received from the
employer (Central govt.) *Section 10 (5)
(I) For, proceeding ‘on leave’ to any place
‘in India’.
(II) For, proceeding to any place , ‘after
retirement/termination, ‘in India’.
(III) ‘No exemption’, on the amount ‘exceeding
the actual expenditure’.
03 ‘Exempted incomes’, earned/deemed earned
‘accordance with the agreement’ made
between ‘govt. of India’ and ‘govt. of a foreign
state’ *Section 10 (6B)
(I) Agreement should have been made ‘before
01.06.2002’.
(D) Special provisions, for the computing incomes, for the
‘Certain business’ *Section 44B and Section 44DA
01 Computation of incomes, from the business of
‘shipping’ *Section 44B
(I) ‘No provisions’ of section 28 to 43A are
applicable, on the shipping business conducted
(in India), by the non-residents.
(II) @7.5% (seven and a half percent) of the
‘aggregate’ of amount ‘actually/deemed’ paid/
payable, ‘for carriage of’ (a) Passengers (b)
Live stocks (c) Mails (d) Goods shipped, from
any port ‘in India’ and ‘outside India’ (both).
(III) ‘Aggregate of amounts [paid ‘in India’ ‘and/or’
‘outside India’ (both)] includes’ :-
‘All kinds’ of amount ‘directly paid/payable to
the non-resident ‘or’ ‘indirectly’ paid/payable
to any ‘other person’ on behalf of the non-
resident, ‘for carriage of’ the certain things
(abovementioned) ‘and’ (also)
(a) Demurrage charge
(b) Holding charge
(c) Any charge of similiar in nature.
18 SAI CIRCULARS JUNE-2008
*Section 10
(II) ‘No exemption’, under the head (a)
Salary (b) Royalty (c) Fees for the technical
services.
04 ‘Exempted incomes’ out of the funds
available ‘accordance with the agreement’
made between ‘international organisation’
and ‘govt of a foreign state’ *Section 10
(8A) & 8B
(I) Received ‘in India’, as remuneration/fee
in connection with the technical
assistance programme/project of the
‘international organisation’.
(II) Technical ‘assistance programme’/
project should have been approved by the
Central govt.
05 ‘Exempted incomes’, of the ‘family
members’ of Non-Resident, ‘accompanying
in India’, for the projects of ‘approved
International organisation’
*Section 10 (9)
* ‘No Income tax’ is leviable ‘in India’, on
the incomes, accures/arises ‘outside
India’, belonging to the family members
(only) ‘and’ (also) Income tax/security tax
has (already) been paid to the govt. (of the
foreign state).
(IV) @7.5% (abovementioned) is chargeable to
Income tax (in India) under the head
‘profits and gains of business or
profession’. However ‘no deductions’ are
allowable
*Section 30 to 37 Henceforth incomes
(abovementioned) are chargeable, on the
‘presumptive taxation basis’.
Computation of incomes, from the business
02
of ‘exploration’ *Section 44 BB
(I) ‘No provisions’ of section 28 to 43A are
applicable, on the exploration business,
conducted (in India) by the non-residents.
(II) @10% (ten) of the ‘aggregate’ of amount
‘actually / deemed’ paid / payable, for
exploration of (a) Gases (b) Oils (c) Minerals
(d) Minerals oils
(III) ‘Aggregate of amounts includes’ :-
‘All kinds’ of amounts ‘directly’ paid/
payable to the non-resident ‘or’ ‘indirectly’
paid/payable to any ‘other person’
 on behalf of the non-resident, for the supplying
of plant and machinery, on rent/hire basis.
*‘Plant and machinery includes’:-
(a) Ship (b) Aircraft (c) Vehicle (d) Drilling
unit (e) Scientific apparatus and equipment.
*‘Mineral oils includes’ :-
(a) ‘Petroleum’ and (b) ‘natural gas’ etc.
(IV) @10% (abovementioned) is chargeable to
Income tax (in India) under the head
‘profits and gains of business or profession’.
However ‘no deductions’ are allowable
*Section 30 to 37. Henceforth incomes
(abovementioned) are chargeable, on the
‘presumptive taxation basis’.
(V) Assessee has (also) ‘option to claim’ profits,
‘lower than 10%’ (abovementioned) ‘by
maintaining prescribed books’ of accounts and
required documents *Section 44AA and to get
his ‘accounts audit’ and to ‘furnish the
required report’ *Section 44AB The Assessing
officer (A.O) shall have (also) ‘option to assess’
the total incomes/losses *Section 143 (3)/147
03 Computation of incomes, from the business of
‘operation of aircraft’ *Section 44 BBA
(I) ‘No provisions of section 28 to 43A are
applicable, on the business of ‘operation of air-
craft’, by the non-residents.
(II) @5% (five) of the ‘aggregate’ of amount
‘actually/deemed’ paid/payable, ‘for carriage
of’ (a) Passengers (b) Live stocks (c) Mails
(d) Goods (from any place ‘in India’).
(III) Aggregate of amounts [paid ‘in India’ and/or
‘directly’ paid/payable to the
‘outside India’ (both)]
non-resident, ‘or’ ‘indirectly’ paid/payable to
any ‘other person’, on behalf of the
non-resident, ‘for carriage of’ the certain things
(abovementioned).
(IV) @5% (abovementioned) is chargeable
Income tax (in India) under the head
(E) Special Provisions, for the ‘Foreign head
office’s Expenditures *Section 44C
01 ‘No deductions’ *Section 44C are(III) 5% (five) of the ‘average adjusted total
allowable, as ‘head office’s expenditures’. ‘In
excess of’ the ceiling :-
(I) 5% (five) of the ‘adjusted total incomes’ ‘or’ (a) ‘1/3’ rd of the adjusted total incomes of
(II) ‘Actual expenditures’, attributed to the
permanent establishment (in India) ‘whichever is
lower’.
19 SAI CIRCULARS JUNE-2008
‘profits and gains of business or
profession’. However ‘no deductions’ are
allowable
*Section 30 to 37 Henceforth incomes
(abovementioned) are chargeable, on the
‘presumptive taxation basis’.
Computation of incomes, from the
royalties, for the technical services, of the
non-residents, against the agreements
executed ‘after 31st day of March 2003’
*Section 44DA
(I) Non-resident, who is ‘carring’ on
business (in India) ‘through’ a permanent
establishment (PE) ‘or’ ‘perform’
professional service from a ‘fixed place’ of
profession (in India) ‘or’ royalties/fees for
technical services paid/payable, for the
rights/properties/contracts which are
connected with the (abovementioned)
permanent establishment/fixed place of
profession (as case may be) are chargeable to
Income tax (in India), under the head ‘profits
and gains of business or profession’, in
pursuance of an agreement executed ‘after
31st day of March 2003’.
(II) ‘No deductions’ *Section 30 to 37 are
allowable, for the expenditures, which are
‘not wholly and exclusively’ (100%)
incurred, for the purpose of (abovementioned)
permanent establishment/fixed place of
profession (in India).
(III) ‘No deductions’ *Section 30 to 37 are
allowable, for the amount paid to its head
office/ other offices situated ‘outside India’.
However ‘reimbursement of actual
expenses’ are (always) allowable for such
offices.
(IV) Non-resident is (mandatory) required ‘to
maintain’ prescribed books of accounts
*Section 44AA and ‘to get accounts
audit’
to *Section 44 AB and ‘to furnish report’
alongwith return of the income *Section 139
incomes’, where there are (also) ‘losses’.
* ‘Average adjusted total incomes’ :-
immediate preceeding three (3) years ‘or’
(b) ‘1/2’ of the adjusted total incomes of
immediate preceeding two (2) years, where
the non-resident is (only) assessable for two
(2) years.
 (c) ‘Full’ (100%) of the adjusted total incomes
of immediate preceeding one (1) year, where
the non-resident is (only) asseable for one (1)
year.
(IV) ‘Adjusted total incomes’ ‘excluding’ :-
*Total incomes computed, in accordance with
the provisions of Income tax Act 1961, but
‘without’ deducting :-
(a) ‘Allowances’ *Sections 32 (2)/32A/ 33/33A
(b) ‘Deductions’ *Sections 36 (1) (ix).
(c) ‘Carry forward losses’ *Sections 72 (1)/73
(2)/74(1)/74 (3)/74A
(d) ‘Deductions’ *Sections 80A to 80VV
Chapter VI-A
(V) Head office’s expenditures are ‘including’:-
(a) ‘All’ executive and general administrative
(F) Capital gains
01 Transactions, which are ‘not regarded as
transfer’ *Section 47 (viia)
* ‘No capital gains’ are liable to Income tax,
(G) Special Provisions, for the ‘Overridng Effect of the tax Treaties’
*Section 90
01 (I) ‘Central govt.’ (of India) may enter into an
agreement with the ‘foreign govt.’ :-
(a) ‘For granting of the relief’, where Income
tax has (already) been ‘paid in the both
countries’ (‘India’ and ‘other contracting country’).
(b) ‘For avoidance of the double taxation’, in
the both countries (abovementioned).
(c) ‘For exchange of the informations’, for the
prevention of evasion/avoidance of Income tax
and ‘for the investigations’ of (abovementioned)
case of such evasion/avoidance of Income tax.
(d) ‘For the recovery of Income tax’.
(II) Assessee shall have ‘right to choose’ the
provisions, which are more beneficial,
(H) Special Provisions, for the ‘Tax Relief’, Where is ‘No DTAA’
*Section 9
01 (I) ‘Partial relief’ (in India) to the certain foreign
incomes, by way of allowing ‘tax rebate’.
However (abovementioned) ‘tax rebate’ shall
be ‘lower’ between ‘average tax rates’ ‘outside
India’ and average tax rates ‘in India’.
(II) Mandatory conditions, for availing of the
(abovementioned) ‘tax rebate’ :-
(a) Assessee should be ‘resident of India’ (during
the respective previous year).
(b) Incomes should have been accured ‘outside
20 SAI CIRCULARS JUNE-2008
expenses, incurred in the office situated
‘outside India’.
(b) Rents, rates, taxes, repairs and
insurances of the premises used, for the
office situated ‘outside India’.
(c) Salary, wages with pension, fees, bonus,
commission, gratuity, perquisites, or
profit in lieu of salary, paid to any
employee, for managing the affairs of the
office situated ‘outside India’.
(d) Travelling expenses incurred, by any
employee, for managing the affairs of the
office situated ‘outside India’.
(e) All other expenses, relating to executive
and general administrative, for the
purposes of office situated ‘outside India’.
*Section 47
where ‘transfer’ of any bond or GDR
[Global depository receipts] *Section 115 AC (1)
‘made outside India’, by a non-resident to
another non-resident.
between prevailing Income tax provisions
(in his country) and accordance with the
(abovementioned) agreement *Section 90(2)
(III) ‘Foreign companies’ are ‘not permitted
to adopt’ the rate of Income tax, as
applicable to the Indian (domestic)
companies i.e. 30%, instead of 40%/50%
(as case may be) being ‘more beneficial’ to the
assessee (foreign company).
(IV) Central govt. (of India) will issue a
‘separate notification, for the terms’,
which are ‘not de- fined’, in the Income tax
Act, 1961 ‘and/or’ in the (abovementioned)
agreement *Section 90(3)
India’, (during the respective previous year).
(c) Taxes should have been ‘paid outside
India’, (during the respective previous year).
(d) All (abovementioned) 3 (three) conditions are
to be satisfied ‘together’ [(cumulatively).
(III) ‘No set offs of the losses’ of one foreign
country, against the incomes of another
foreign country are permitted (in India)
(* As per decided case of CIT Vs. BOMBAY BURMAH
TRADING Co. LTD, decided by the highcourt at
Bombay].
 (I) Avoidance of the Income tax, by a transaction, resulting in
transfer of Income to the Non-Resident *Section 93
01 (I) Income tax (in India) is leviable, in the hands of the Income tax Act, 1961’.
of transferror’, on the incomes arises out of (III) ‘Transferror is not liable’, for the
assets, transfered (alone or in conjuction with Income tax, where transferror is satisfying
associated operations) to the Non-Resident.
to the Assessing officer (AO) for (a) ‘No
(II) Income tax is (also) leviable, in the hands of avoidance of the Income tax’.
transferror’ in the (abovementioned) case, where (b) Transfer was the ‘bonafide commercial
assets were transfered ‘before the transaction’.
commencement
(J) ‘General’ and ‘special’ rates of the tax *Section 115A
* General Rates *
01 ‘General’ rates of tax (for the A.Y. 2009-2010):- rupees ten (10) lacs for the resident and
(I) Income tax * non-resident (both).
(a) @10 (ten) % , on the incomes ‘between’ (III) *Education cess*
rupees 1,50,001 to 3,00,000. @3 (three) % , ‘on the amount of Income
(b) @20 (twenty) % , on the incomes ‘between’ tax’ (including of surcharge).
rupees 3,00,001 to 5,00,000. (IV) *Capital gains*
(c) @30 (thirty) % , on the incomes ‘above’ (a) @15 (fifteen) % , (10% upto Ay. 2008-
rupees 500,001 09, i.e. year ending on 31.03.2008) on the
(II) *Surcharge* amount of ‘short term capital gains’
@10 (ten) % , ‘surcharge’, ‘on the amount, of *Section 111A
Income tax’, where total income is exceeding (b) @20 (twenty) % , on the amount of ‘long
term capital gains’ *Section 112
*Special Rates, for the ‘Certain Non-Business incomes’ *Section 115A
01 * @20 (twenty) % , on the incomes under investments in ‘bonds/GDRs’ (Global
the heads (a) Dividend (b) Royalty and purchased in the ‘foreign
depository receipts)
(c) Fees for the technical services currency’ *Section 115AC
* Section 115A *Incomes includes:- (a) Interest on bonds
(a) Dividend [‘except’ referred in *Section 115-O , (b) Dividend [‘except’ as reffered in] *Section
where DDT (Dividend distribution tax) has (already) been 115-O (c) ‘No deduction’ is permitted, for
paid].
any expenditure/allowance *Section 28 to 44C
(b) Interest income, received on the lended
and 57 (d) ‘No deduction’ is permitted,
money/debt in the ‘foreign currency’.
under Chapter VI-A *Section 80A to 80VV (e) ‘No
(c) Income on the investments, made in
(mandatory) filing’ of Income tax return
domestic (Indian) mutual funds/UTI, lended in
*Section 139 (1) where proper TDS has
the ‘foreign currency’. (d) ‘No deduction’ is
(already) been deducted, under Chapter
permitted, for any expenditure/allowance
*Section 28 to 44C and 57
XVII-B *Section 192 to 206 B
(e) ‘No deduction’ is permitted, under Chapter 04 @10 (ten) %/20 (twenty) %/30 (thirty) % , on
VI-A *Section 80A to 80VV the incomes, under the head:- ‘Income’ and
(f) ‘No (mandatory) filing’ of Income tax ‘capital gain’ on the investments in
return *Section 139 (1) where proper TDS has securities (i.e. shares etc) by the FIIs [Foreign
(already) been deducted, under Chapter XVII-B institutional investors] * Section 115AD
*Section 192 to 206B (I) @10 (ten) % , on the LTCG (Long term capital
gains).
02 @10 (ten) % , on the incomes, under the
(II) @20 (twenty) % , on the ‘incomes (i.e.
heads (a) ‘Income’, on the units (purchased in dividend, ‘except’ as reffered in section 115-O).
the ‘foreign currency’) (b) ‘Capital gain’ on the (III) @30 (thirty) % , on the STCG (Short term
units [purchased in the ‘foreign currency’] * Section capital gains).
115AB (a) ‘No deduction’ is permitted, for any (IV) ‘No deduction’ is permitted, for any
expenditure/allowance *Section 28 to 44C expenditure/allowance *Section 28 to 44C and 57
and 57 (1) (b) ‘No deduction’ is permitted, (V) ‘No deduction’ is permitted, under
under chapter VI-A *Section 80A to 80VV chapter-VI-A *Section 80A to 80VV
03 @10 (ten) % , on the income, under the head (VI) ‘No indexation’ benefit is permitted, for
‘Income’ and ‘capital gain’, on the the computing of ‘cost of acquisition’
*Section 48
21 SAI CIRCULARS JUNE-2008
 *Special Rates, for the Sportsman or Sports Association
*Section 115 BBA
01 (I) @10 (ten) % , on the incomes under the
heads :-
(a) Fees, for the participation in any ‘game
and/or sport’.
[‘Except’ lotteries, cross word puzzles, races, card game
and other of any sort of betting of any form or nature
whatsoever] *Section 115BB
(b) Receipts (incomes), from the advertisements
(c) Receipts (Incomes), from the articles on any
game/sport (in India) in any newspaper,
magazine, journal.
(K) Special provisions, for the Non-Resident Indians
01 * Definitions *Section 115C
(I) ‘Covnertible foreign exchanges’ :-
Which are ‘treated’, by the RBI, for the purpose
of the foreign Exchange Regulation Act, 1973
and any other rule made, for the same.
(II) ‘Foreign exchange assets’ :-
Which are ‘acquired/purchased’, by any person
(including non-resident), in the ‘convertible foreign
exchanges’.
(III) ‘Investment incomes’ :-
Which are derived’ [Except reffered in Section 115-O]
from a ‘foreign exchange’ assets’.
(IV) ‘Long term capital gains’ :-
Which are liable to Income tax, under the head
‘capital gains’ and (also) which are ‘not short
term capital gains’, relating to the ‘capital
assets’, being the foreign exchange assets.
(V) ‘Non-resident Indians’ (NRIs) :-
Who are ‘ither’ Indian citizen ‘or’ POIs (Persons
of Indian origin) but who are definitely (100%)
non-residents ‘in India’.
(VI) ‘Specified assets’ :-
(a) ‘Shares’, in an Indian (domestic) company
(b) ‘Debenture’, in an Indian (domestic)
company, ‘but not in the private limited
company’.
(c) ‘Deposits’, in an Indian (domestic) company,
‘but not in the private limited company’.
(d) ‘Securities’, issued by the Central govt.
(e) ‘Other assets’, as specified and notified, by
the Central govt.
02 Special provisions, for the computation of
total incomes of the Non-Resident Indians
(NRIs) ‘only’ *Section 115D
(I) ‘No deduction’, for the expenditures/
allowances are permitted, for the purpose of
computing ‘investment incomes, of the NRIs
‘only’.
(II) ‘No deductions, are permitted, under
Chapter-VIA *Section 80A to 80VV
(III) ‘No indexation benefits’, are permitted,
under the head capital gains *Section 48
22 SAI CIRCULARS JUNE-2008
(II) ‘No deduction’ is permitted, for any
expenditure/allowance in computing the
(abovementioned) incomes.
(III) ‘No mandatory’ filing of the return of
the incomes *Section 139 (1) where
(a) ‘No other incomes’, ‘except
abovementioned’ and (also)
(b) TDS has (already) been properly deducted
* Chapter XVII-B
*Section 115C to 115-I
03 Tax on the investment incomes and long
term capital gains, for the Non-Resident
Indians (NRIs) ‘only’ *Section 115E
(I) @20 (twenty) % , on the (a) Investment
incomes and (also) (b) ‘Long term’ capital
gains, on the ‘non-specified assets’.
(II) @10 (ten) %, on the ‘long term’ capital
gains, on the ‘specified assets’.
04 Special provisions, for the ‘long-term’
capital gains, on the transfer of ‘foreign
exchange assets’, for the Non-Resident
Indians (NRIs) ‘only’ *Section 115F
(I) ‘No capital gain tax’ *Section 45
where whole (100%) net consideration is
invested, with in 6 (six) months, in any
‘specified asset’ ‘or’ in any ‘savings
certificate’ *Section 10 (4B)
(II) ‘Proportionate capital gains tax’,
*Section 45 where partial (not 100%) net
consideration is invested, with in 6 (six)
months in ‘abovementioned’ ‘specified
assets’/saving certificates.
(III) 10/20/30% , (as case may be), where
‘abovementioned’ investments have been
withdrawn, ‘before’ completing 3 (three)
years.
05 Special provisions, for ‘not filling’ of
the return of incomes, for the NRIs (only)
*Section 115G
(I) Where the NRIs are liable to Income tax,
for the (aa) Investment incomes, ‘or’ (ab)
Long term capital gains ‘or’ (ac) Both ‘and’
(also)
(II) TDS has (already) been deducted,
accordance with chapter XVII-B *Section 192 to
206B
06 Special provisions, for the NRIs (only), by
becoming resident (in India) from Non-
Resident (in India) *Section 115H
(I) Assessee (abovementioned) is permitted, to
take benefits, as available in chapter-XII-A,by
furnishing a declaration to the Assessing officer
(AO) *Section 115C (f) (ii) to (v)
 (II) Assessee (abovementioned) is permitted, to
take benefits, ‘till’ the ‘original’ ‘foreign
exchange assets’ are ‘not transferred/sold’.
07 ‘Option’, for ‘not opting’, the benefits
of Chapter XII-A, for the NRIs (only)
*Section 115-I
(L) Special Provisions, for the Shipping Business, being carried by
a Non-Resident
01 (I) ‘7.5%’ (seven and a half percent) of the
‘aggregate’ of amount ‘actually / deemed’
paid/ payable, ‘for carriage of’ the (a)
Passengers (b) Live stocks (c) Mails (d) Goods
shipped, from any port situated ‘in India’.
(II) ‘Aggregate’ of amounts [paid ‘in India’
‘and/or’ ‘outside India’ (both)] includes :-
‘All kinds’ of amount ‘directly paid/payable to
the non-Resident ‘or’ ‘indirectly’ paid/payable to
any ‘other person’ on behalf of the non-
Resident, ‘for carriage of’ the certain things
(abovementioned) ‘and’ (also).
(M) Special Provisions, for the Recovery of Tax, from the Assets of
the Non-Resident
01 (I) Two (2) ways of ‘collection’ and ‘recovery of
tax’, are available from the non-resident
assessee :-
(a) ‘Collection’, by way of deduction at source
*Section 192 to 206B, Chapter XVII-B
(b) ‘Recovery’, from the assets, situated ‘in
India’ (only), belonging to the ‘non-resident’.
INSTRUCTIONSS
01 Management of Sai Circulars and it’s advisors,
board of editors, other associates and
consultants, ‘do not accept any personal and
collective responsibility’, for their views
expressed on different subjects. All ‘views are
their personal opinions’, on the subject
matters. Therefore (abovementioned) management
and persons are ‘not to be held responsible’,
for execution of your ‘all’ actions, deeds and acts,
‘based on their personal opninions’.
02 Readers are hereby advised to ‘send your
subscriptions’ as per prescribed rates (Excluding
taxes, if any applicable). ‘In absence’ of above,
‘further dispatches of our magazine (Sai
Circulars) are to be stopped’ ‘without further
individual intimation’ (Persons who have already
paid, are requested to ignore it).
03 We are officially ‘permitting’ to forward,
‘photostat’ copies of our sai circulars, to
23 SAI CIRCULARS JUNE-2008
(I) NRIs (only) are permitted, ‘to chose’,
not to take benefits of the Chapter-XII-A.
(II) NRIs (abovementioned) shall be liable
to Income tax, accordance with the
other provisions of the Act (other than the
special provisions of Chapter-XII-A)
*Section 172
(a) Demurrage charge
(b) Holding charge
(c) Any charge of the similiar in nature.
(III) ‘No port clearance’ shall be granted to
the ship, by the collector of Customs, where
‘ither’ (a) Tax has ‘not’ been paid ‘or’ (b)
Satisfactory arrangement has ‘not’ been
made, for the making of tax payment.
(IV) Master of the ship shall prepare and
furnish, return of the full (100%) amount
paid/payable, to the owner/charterer of the
ship.
*Section 173
(II) Liability of the ‘representatives assessee’
*Section 161 (1) and ‘recovery’, from the
assets situated ‘in India’ (only) belonging to
the ‘representative assessee’ is (also)
available ‘in addition’ to the (abovementioned)
‘collection’ and, ‘recovery mode’ is available
as, ‘directly from the non-resident’
*Section 173
your friends and business associates, but are
‘not permitting to copy of our title,
letterhead’s particulars, pattern and
language’, our management is to ‘take legal
actions against it’ (accordingly).
We are (also) ‘replying of yours further
04
Questions’, ‘charges are deends on the
matters and quantums’ involves in each
question.
Payments of the aforesaid services are to
05
be made, by sending a demand draft/
cheque (Local only)/direct deposit of
cash/cheque in HDFC bank account
number 1442000010804 maintained with
East Patel nagar, New Delhi- 110008 in
favour of M/s Sai Circulars, and to be
dispatched ‘in advance’ at 9/14 East Patel
Nagar (‘Near hotel Jaypee and opp. Hotel amarpali’)
New Delhi -110008.
 Send Subscription, for
further details on the R.N.I. No.DELENG/2005/15556
matter
Postal Reg. No. DL (C)-14/1058/08-2010
(SRT Nagar, Jhandewalan Post Office, New Delhi- 110055)
SUBSCRIPTION FORM
EDITOR,
M/S SAI CIRCULARS,
9/14, EAST PATEL NAGAR,
(NEAR JAYPEE HOTEL),
NEW DELHI – 110008
I/WE WISH TO SUBSCRIBE FOR THE SAI CIRCULARS (A MONTHLY MAGAZINE ON UPDATION OF INDIAN TAX PROVISIONS).
MY/OUR PARTICULARS:-
(I) NAMES (OF THE DEGINATED PERSONS) …..……………………………..…..……………………………………….
(II) DEGINATIONS (INCLUDING QUALIFICATIONS) ………………………………………………………………………..
(III) NAME OF ORGANISATION: …….……………..……………………………………………………………………
(IV) ADDRESS (INCLUDING PIN CODE) ………………………………..………………….........…………………………..
(V) PH.: (O)……………………/………………......./..…………………. (R) …………………… (M)...…..….…………
(VI) E-MAIL ADDRESS : ……………………................................................................................................
(VII) PREFERRED TAX LAWS : (A) INCOME TAX ACT (B) SERVICE TAX ACT
(C) CENTRAL EXCISE ACT (D) CUSTOMS ACT (E) FEMA AND RBI ACT
(F) COMPANIES ACT (G) SEBI ACT (H) CNETRAL SALES TAX ACT
(I) FCRA
I AM /WE ARE ENCLOSING HEREWITH A DEMAND DRAFT / CHEQUE (LOCAL ONLY) NO…………………
DATED……………….OF RS.……..……………DRAWN ON (NAME AND ADDRESS OF BANK) …………………........
………………………………. /DIRECT DEPOSIT OF CASH/CHEQUE NO……………………… IN HDFC BANK
ACCOUNT NUMBER 1442000010804 MAINTAINED WITH EAST PATEL NAGAR, NEW DELHI - 110008.

DATE:
PLACE : (NAME & SIGNATURE)
Categories of subscriptions for the Magazine
Category Rates (Rs.) Periods Remarks
A. 2,700/-* Per Year Effective Cost @ Rs.2700/- Per Year **
B. 7,200/-* Per Block of Three Years Effective Cost @ Rs.2400/- Per Year **
C. 10,500/-* Per Block of Five Years Effective Cost @ Rs.2100/- Per Year **

Categories Advertisement for the magazine

Category Descriptions Rate (Per Incertion)
Full Page Half Page Quarter Page
A. Back Page Out side 50,000 30,000 20,000
B. Back Page Inside 25,000 15,000 10,000
C. Front Page Inside 50,000 30,000 20,000
D. Middle Page 10,000 6,000 4,000
E. Strips 1,000 (Per Page)
F. E-mails 50,000 30,000 20,000
” Excluding Taxes (IF ANY APPLICABLE)
”” Including free ‘Monthly Updated’ Compact Disc (CD) on latest one year’s Circulars,
Notifications, Instructions, Press Releases, Decisions by Courts/ Tribunals and
Pronouncements by Authority for Advance Rullings (AARs) on Indian Tax Provisions and
on our Magazines.
Printed, Published by SUMAN AGARWAL and owned by M/S SAICONE HOSPITALITY (P) LTD.
Printed at JAIN GLAZERS, 9479-80 GALI NO.11, MULTANI DHANDA, PAHAR GANJ, NEW DELHI-110055
Ph.: 011-51598384 and published from 9/14 EAST PATEL NAGAR (Near JayPee Hotel),
NEW DELHI – 110008 Phone: 011-25769111 FAX: 011-25753888/25752757/9312275519
E-mail: saicirculars@saicirculars.com Web Sites: www.saicirculars.com
EDITOR: SUMAN AGARWAL
SAI CIRCULARS-JUNE-2008