PAN made compulsory : Section 206AA

SUMMARISED BY : MR. ABHISHEK VAISHYA, FINANCE & TAX CONSULTANT, NEW DELHI CONTACT:+91-9873665699(DEL), +91-9415332864(GKP)  E-mail: abhishek.vaishya@icai.org PAN made compulsory for TDS eligible payments   Finance Act (2) of 2009 makes PAN compulsory in case of TDS eligible payments. Failing to that, Deductor will be making TDS at a higher rate!! Relyon was one of the first to report this proposal, where finance ministry was with an opinion of charging at 30%. But now, as a relief, the decision has been taken to charge such payments at 20% rate of TDS. This has been made by introducing a new section 206AA into the Income Tax Act. As per this new section, Any Deductor making a TDS eligible Payment to a Party, who has not provided PAN, should make TDS at a higher rate. For such case, the rate of TDS should be determined at higher of below conditions: TDS rate prescribed in the Act Rate of Tax in force At 20% The first condition states about the rate of Tax prescribed through Section 193 to 196. The second condition deals with Salaries (Section 192), where the tax should be calculated at Normal rates for Individuals. The third is a flat rate of 20%. Deductor has to determine the Tax amount for all the 3 conditions and apply the higher tax amount among these 3. PAN at the time of Payment The sources confirm that, this criteria has to be checked During the Payment and not falling under future assurances, TDS has to be determined. If an Employee / Party receive a payment that is eligible for TDS, and assures Deductor of giving the PAN in short while, then such case has to be considered for higher rate determination. PAN in all the correspondences To meet with the compliance and to ease the Deductor in collecting PAN, section 206AA makes it compulsory to quote PAN on all correspondences between Deductor and Deductee. The sources confirm that, PAN has to be quoted in bills, vouchers, Salary Slips, Letters (other than statutory which does not come under Income Tax), etc which is either issued by Deductee to Deductor or vice versa. It is said that, this condition applies only to the cases where Deductees (Party / Employee) payment in the financial year is exceeding or expected to exceed the threshold of TDS. This condition in the act is expected to help the Deductor in collecting the PAN easily. Providing a False PAN also covered The new section states that, the below cases has to be considered for Higher rate of TDS. PAN not given by the Deductee. Deductee has given a PAN, which is structurally invalid. Deductee has given a PAN, which is not in Department database. Deductee has given a PAN, which belong to some other assessee However, department is yet to give the clear information on, how a Deductor can verify the PAN provided, before making the payment!! Applicable to Salaries too The new introduced section 206AA, clearly states, TDS eligible payments covered under Chapter XVII-B, needs compulsory Valid PAN, failing to which, TDS should be made at higher rate. Chapter XVII - B (Chapter 17B) of Income Tax Act covers all Payments including Salaries. So, Salaries are not excluded by Section 206AA. Also for Non Resident Payments  Section 206AA applies for the payments being made to Non Residents. In those cases, foreign residents should take an Indian PAN and provide it, before the payment is being made by the Party. Form 15H and Form 15G In case of certain payments (Eg: Interest), where party was allowed to declare on Form 15G / 15H for non-deduction of tax, earlier many were not used to provide PAN. But, newly introduced section, makes such payments, if eligible for TDS, to compulsory quote the PAN. This means in such case where PAN is not-available/invalid, TDS has to be charged at higher rate, not ZERO irrespective of Form 15G / 15H. Assessing Officer Certificate u/s 197 If a Deductee proves under certain circumstances and Assessing officer is satisfied by the justification, assessing officer can issue a certificate u/s 197 for a TDS at lower rate or at ZERO rate. The Section 206AA, makes it compulsory to assessing officer for collecting valid PAN, before issuing such certificates. That means, Assessing officer will not provide certificate for lower/non deduction u/s 197, if applicant Deductee fails to provide his/her valid PAN. Not Applicable for TCS For the other part of prepaid taxes, that is TCS, new section 206AA is not applicable. This section covers only the payments under Chapter 17B of Income Tax Act. TCS falls under Chapter 17BB. So any Tax collected through TCS provision, does not makes sense of higher rate determination for PAN deficiency. Effective from April 2010 Even though lot discussed, the new section will be applicable only for the payments made on or after April 01, 2010. Till then, normal rates / prescribed rates would be applicable even in case, PAN is not available / invalid. The copy of new section 206AA is provided for reference. Section 206AA. Notwithstanding anything contained in any other provisions of this Act, any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB (hereafter referred to as deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax (hereafter referred to as deductor), failing which tax shall be deducted at the higher of the following rates, namely: at the rate specified in the relevant provision of this Act; or at the rate or rates in force; or at the rate of twenty per cent. No declaration under sub-section (1) or sub-section (1A) or sub-section (1C) of section 197A shall be valid unless the person furnishes his Permanent Account Number in such declaration. In case any declaration becomes invalid under sub-section (2), the deductor shall deduct the tax at source in accordance with the provisions of sub-section (1). No certificate under section 197 shall be granted unless the application made under that section contains the Permanent Account Number of the applicant. The deductee shall furnish his Permanent Account Number to the deductor and both shall indicate the same in all the correspondence, bills, vouchers and other documents which are sent to each other. Where the Permanent Account Number provided to the deductor is invalid or does not belong to the deductee, it shall be deemed that the deductee has not furnished his Permanent Account Number to the deductor and the provisions of sub-section (1) shall apply accordingly. SUMMARISED BY : MR. ABHISHEK VAISHYA, FINANCE & TAX CONSULTANT NEW DELHI CONTACT: +91-9873665699(DEL), +91-9415332864(GKP)  E-mail: abhishek.vaishya@icai.org, abhishek@mcit.org www.abhishekvaishya.blogspot.com

VERY SHORT, MOST EFFECTIVE AND HOW TRUE.

30 second Speech by Bryan Dyson (CEO of Coca Cola)

 

 

"Imagine life as a game in which you are juggling some 
five balls in the air. You name them - Work, Family, Health, Friends and 
Spirit and you're keeping all of these in the Air.

 

You will soon understand that work is a rubber ball. If you 
drop it, it will bounce back.

 

But the other four Balls - Family, Health, Friends and 
Spirit - are made of glass. If you drop one of these; they 
will be irrevocably scuffed, marked, nicked, damaged or even 
shattered. They will never be the same. You must understand 
that and strive for it."

 

WORK EFFICIENTLY DURING OFFICE HOURS AND 
LEAVE ON TIME. GIVE THE REQUIRED TIME TO YOUR FAMILY, 
FRIENDS & HAVE PROPER REST.

 

"VALUE HAS A VALUE ONLY IF ITS VALUE IS VALUED"

BUSINESS MANTRA

*Have Breakfast… or…Be Breakfast!*

 An interesting management article from Dr.YLR Moorthi.

/Dr. Y. L. R. Moorthi is a professor at the Indian Institute of

Management Bangalore. He is an M.Tech from Indian Institute of

Technology, Madras and a post graduate in management from IIM, Bangalore./

 **Have Breakfast… or…Be Breakfast!**

Who sells the largest number of cameras in India?

Your guess is likely to be Sony, Canon or Nikon. Answer is none of the

above. The winner is Nokia whose main line of business in India is not

cameras but cell phones.

Reason being cameras bundled with cellphones are outselling stand alone

cameras. Now, what prevents the cellphone from replacing the camera

outright? Nothing at all. One can only hope the Sony's and Canons are

taking note.

Try this. Who is the biggest in music business in India? You think it is

HMV Sa-Re-Ga-Ma? Sorry. The answer is Airtel. By selling caller tunes

(that play for 30 seconds) Airtel makes more than what music companies

make by selling music albums (that run for hours).

Incidentally Airtel is not in music business. It is the mobile service

provider with the largest subscriber base in India. That sort of

competitor is difficult to detect, even more difficult to beat (by the

time you have identified him he has already gone past you). But if you

imagine that Nokia and Bharti (Airtel's parent) are breathing easy you

can't be farther from truth.

Nokia confessed that they all but missed the Smartphone bus. They admit

that Apple's I phone and Google's Android can make life difficult in

future. But you never thought Google was a mobile company, did you? If

these illustrations mean anything, there is a bigger game unfolding. It

is not so much about mobile or music or camera or emails?

The "Mahabharata" (the great Indian epic battle) is about "what is

tomorrow's personal digital device"? Will it be a souped up mobile or a

palmtop with a telephone? All these are little wars that add up to that

big battle. Hiding behind all these wars is a gem of a question – "who

is my competitor?"

Once in a while, to intrigue my students I toss a question at them. It

says "What Apple did to Sony, Sony did to Kodak, explain?" The smart

ones get the answer almost immediately. Sony defined its market as audio

(music from the walkman). They never expected an IT company like Apple

to encroach into their audio domain. Come to think of it, is it really

surprising? Apple as a computer maker has both audio and video

capabilities. So what made Sony think he won't compete on pure audio?

"Elementary Watson". So also Kodak defined its business as film cameras,

Sony defines its businesses as "digital."

In digital camera the two markets perfectly meshed. Kodak was torn

between going digital and sacrificing money on camera film or staying

with films and getting left behind in digital technology. Left undecided

it lost in both. It had to. It did not ask the question "who is my

competitor for tomorrow?" The same was true for IBM whose mainframe

revenue prevented it from seeing the PC. The same was true of Bill Gates

who declared "internet is a fad!" and then turned around to bundle the

browser with windows to bury Netscape. The point is not who is today's

competitor. Today's competitor is obvious. Tomorrow's is not.

 In 2008, who was the toughest competitor to British Airways in India?

 Singapore airlines? Better still, Indian airlines? Maybe, but there are

better answers. There are competitors that can hurt all these airlines

and others not mentioned. The answer is videoconferencing and

telepresence services of HP and Cisco. Travel dropped due to recession.

Senior IT executives in India and abroad were compelled by their head

quarters to use videoconferencing to shrink travel budget. So much so,

that the mad scramble for American visas from Indian techies was nowhere

in sight in 2008. (India has a quota of something like 65,000 visas to

the U.S. They were going a-begging. Blame it on recession!). So far so

good. But to think that the airlines will be back in business post

recession is something I would not bet on. In short term yes. In long

term a resounding no. Remember, if there is one place where Newton's law

of gravity is applicable besides physics it is in electronic hardware.

Between 1977 and 1991 the prices of the now dead VCR (parent of Blue-Ray

disc player) crashed to one-third of its original level in India. PC's

price dropped from hundreds of thousands of rupees to tens of thousands.

If this trend repeats then telepresence prices will also crash. Imagine

the fate of airlines then. As it is not many are making money. Then it

will surely be RIP!

India has two passions. Films and cricket. The two markets were

distinctly different. So were the icons. The cricket gods were Sachin

and Sehwag. The filmi gods were the Khans (Aamir Khan, Shah Rukh Khan

and the other Khans who followed suit). That was, when cricket was

fundamentally test cricket or at best 50 over cricket. Then came IPL and

the two markets collapsed into one. IPL brought cricket down to 20

overs. Suddenly an IPL match was reduced to the length of a 3 hour

movie. Cricket became film's competitor. On the eve of IPL matches movie

halls ran empty. Desperate multiplex owners requisitioned the rights for

screening IPL matches at movie halls to hang on to the audience. If IPL

were to become the mainstay of cricket, as it is likely to be, films

have to sequence their releases so as not clash with IPL matches. As far

as the audience is concerned both are what in India are called 3 hour

"tamasha" (entertainment). Cricket season might push films out of the

market.

Look at the products that vanished from India in the last 20 years. When

did you last see a black and white movie? When did you last use a

fountain pen? When did you last type on a typewriter? The answer for all

the above is "I don't remember!" For some time there was a mild

substitute for the typewriter called electronic typewriter that had

limited memory. Then came the computer and mowed them all. Today most

technologically challenged guys like me use the computer as an upgraded

typewriter. Typewriters per se are nowhere to be seen.

One last illustration. 20 years back what were Indians using to wake

them up in the morning? The answer is "alarm clock." The alarm clock was

a monster made of mechanical springs. It had to be physically keyed

every day to keep it running. It made so much noise by way of alarm,

that it woke you up and the rest of the colony. Then came quartz clocks

which were sleeker. They were much more gentle though still quaintly

called "alarms." What do we use today for waking up in the morning?

Cellphone! An entire industry of clocks disappeared without warning

thanks to cell phones. Big watch companies like Titan were the losers.

You never know in which bush your competitor is hiding!

On a lighter vein, who are the competitors for authors? Joke spewing

machines? (Steve Wozniak, the co-founder of Apple, himself a Pole,

tagged a Polish joke telling machine to a telephone much to the mirth of

Silicon Valley). Or will the competition be story telling robots? Future

is scary! The boss of an IT company once said something interesting

about the animal called competition. He said "Have breakfast …or…. be

breakfast"! That sums it up rather neatly.

/—Dr. Y. L. R. Moorthi is a professor at the Indian Institute of

Management Bangalore. He is an M.Tech from Indian Institute of

Technology, Madras and a post graduate in management from IIM, Bangalore./

The VIRGO  Aug 23 - Sept. 22

Modest, Shy, Meticulous, Reliable, Practical, Diligent, Intelligent and Analytical

Fussy, A Worrier, Overcritical, Harsh, Perfectionist and Conservative

Instinctively responsive to the needs of others, Virgos readily adapt to different people and changing circumstances by finding ways to make themselves useful. They do not have a desire to be in the spotlight. However, they can be very successful at promoting those who are. Virgos are meticulous, practical perfectionists. They abhor sloppiness and disorganization. They are sometimes seen as being far too picky. However, when you want a job done right the first time get a Virgo to do it. Some Virgos are not above using an inability to achieve perfection as the excuse for their own idleness and unproductiveness, but this is out of character with their true nature. Virgos have an inner drive to serve others, which must be met for them to be happy. They love to apply their analytical skills to solving the problems of others. They are generally perceived to be quite witty and entertaining, if a tad too critical. Because Virgos are worriers, they are prone to hypochondria. Virgos love material possessions and find it hard to accept anything that is not of the very best quality available.

The Virgo In Love: Virgo is particular, practical and realistic rather than romantic. Virgos are slow-burning fuses in the art of lovemaking. Once properly ignited, situations can lead to an explosion of white heat that takes quite a while to cool down. They are, however, very fastidious and critical of the personal habits of others, which can be a big turn-off and prevent them from achieving a fulfilling relationship, or even participating at all in the messy business of involvement. They are unwilling to discuss their innermost feelings with anyone save a very trusted confidante or lover. Anyone who wishes to get to know them deeply must be prepared to persevere, in which case they will prove a lifelong friend and ally or lover. Once Virgos have committed themselves to a lover, anyone showing interest in their lover is likely to spark a bout of jealousy. Overall, Virgos are devoted and readily willing to serve their mates.

Famous Virgos Include: Lauren Bacall, Michael Jackson, D. H. Lawrence, Queen Elizabeth I, Sophia Loren, Sean Connery, Lily Tomlin, Raquel Welch, Grandma Moses, Tolstoy, H. L. Mencken, John Coltrane, Pavlov, Warren Buffett and Liliuokalani

Ideal Jobs Include: Virgos are well-suited to be chemists, doctors, investigators, nutritionists, veterinarians, managers and entrepreneurs.

Lucky Numbers: 6, 15, 24, 33, 42, 51

Planet: Mercury

Star Stone: Sardonyx

Element: Earth

Most Compatible With: Capricorn, Taurus or Virgo

Virgos have an inner drive to serve others, which must be met for them to be happy. They love to apply their analytical skills to solving the problems of others. They are generally perceived to be quite witty and entertaining, if a tad too critical. Because Virgos are worriers, they are prone to hypochondria. Virgos love material possessions and find it hard to accept anything that is not of the very best quality available.
The Virgo In Love:
Virgo is particular, practical and realistic rather than romantic. Virgos are slow-burning fuses in the art of lovemaking. Once properly ignited, situations can lead to an explosion of white heat that takes quite a while to cool down. They are, however, very fastidious and critical of the personal habits of others, which can be a big turn-off and prevent them from achieving a fulfilling relationship, or even participating at all in the messy business of involvement.

They are unwilling to discuss their innermost feelings with anyone save a very trusted confidante or lover. Anyone who wishes to get to know them deeply must be prepared to persevere, in which case they will prove a lifelong friend and ally or lover. Once Virgos have committed themselves to a lover, anyone showing interest in their lover is likely to spark a bout of jealousy. Overall, Virgos are devoted and readily willing to serve their mates.
Famous Virgos Include:
Lauren Bacall, Michael Jackson, D. H. Lawrence, Queen Elizabeth I, Sophia Loren, Sean Connery, Lily Tomlin, Raquel Welch, Grandma Moses, Tolstoy, H. L. Mencken, John Coltrane, Pavlov, Warren Buffett and Liliuokalani
Ideal Jobs Include:
Virgos are well-suited to be chemists, doctors, investigators, nutritionists, veterinarians, managers and entrepreneurs.
Lucky Numbers:
6, 15, 24, 33, 42, 51
Planet: Mercury
Star Stone: Sardonyx
Element: Earth
Most Compatible With: Capricorn, Taurus or Virgo

Why No Country Fights Israel and China

Sent from Nokia E71 on Vodafone

*Well I think its better to surrender to Israel army*

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*Military Power - **China** *
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...WHO THE HELL WANTS TO FIGHT WITH THEM...???
*Better surrender...!!!!! **J*