Thursday, February 5, 2009

Centralized Processing Centre for Income Tax Returns to be set up at Bangalore

The Union Cabinet has approved the proposal of the Income-tax Department to establish a Centralized Processing Centre (CPC) at Bangalore for processing of all electronically filed returns in the country and the paper returns filed in Karnataka. The CPC will enable the Department to process the returns and issue refunds expeditiously. It will encourage more tax payers to resort to electronic filing of returns. The creation of the new center entails an estimated expenditure of Rs. 255.46 crores over a period of five years. 

The workflow in the CPC will be managed by departmental officers and staff who would be assisted by vendor supplied manpower. The Departmental Officers and Staff will be responsible for logistics, coordination, supervising operations and sovereign responsibilities. They will also be responsible for resolution of mismatches in the information contained in the tax return and the Departmental data base and redressal of public grievances. The vendor would be responsible for developing software for processing of Income-tax returns and tax accounting. He will also be responsible for collection of returns from income-tax offices, scanning data-entry and storage of IT returns. 

The process of selection of the vendor is in its final stages and the Income-tax Department expects to operationalize the Centre within the next four months. 

The data relating to processing of returns would reside at the Primary Data-Centre of the Income-tax Department which has recently been commissioned at New Delhi. The Income-tax Department will continue to exercise full control over taxpayers’ data so as to maintain privacy and security of tax payers’ data. The establishment of the CPC will enable the department to release high-skilled resources, presently deployed for processing of returns, for redeployment to pursue large scale cross verification of actionable information. 

Backgrounder 

The processing of tax returns is a low skilled voluminous activity. Further, the processing output is extremely slow since the business process is cross functionally designed. As a result, the pace of issue of refunds and follow up action on recovery of underpayments is slow. This imposes an extremely high burden on the exchequer in terms of payment of interest on delayed refunds and also results in taxpayer dissatisfaction. This also encourages interface with the taxpayer. The delay in the recovery of the underpayments also entails a relatively higher interest cost for the Government in as much as it has to resort to borrowings to finance its expenditure. Therefore, the outcome of this processing exercise is not commensurate with the resources used. However, the importance of processing of returns lies in the fact that it signifies the ability of the tax administration to swiftly deal with non-compliance. 

Thursday, January 29, 2009

Suggestions invited from employees of Income Tax regarding restructure

The Cadre Review Committee has invited suggestions from departmental stakeholders, including individual employees on various issues/areas of cadre review to make the consultations wide and inclusive.

Tuesday, January 27, 2009

Notification regarding immovable Property Return for the year 2008

1. Immovable Property Return for the year 2008 (as
on 1.1.2009) is required to be submitted by all the group 'A' and Group 'B' (GazettedlNon-
Gazetted) officers, in the prescribed proforma latest by 31st January, 2009.
2. The officers belonging to All India/Central group' A' Organised Service other than CSS
should send one copy of the return to their respective Cadre Authorities direct and another copy
to EO(PR) Section of this Department under intimation to the Vigilance Section.
3. The CSS officers of the rank of Under Secretary and above should send their return to
EO(PR) Section direct under intimation to this Section.
4. All the other officers should furnish their return to the Vigilance Section.
5. The return may be furnished latest by 31st January, 2009.

Friday, January 16, 2009

Indefinite Strike Dererred.

The indefinite strike of the Central Govt. Employees which was scheduled to commence on and from 20th Januar 2009 has been deferred.

CONFEDERATION OF CENTRAL GOVERNMENT

 EMPLOYEES AND WORKERS.

 

Manishinath Bhawan

 A-2/95 Rajouri Garden

New Delhi. 110 027.

Phone: 011 2510 5324

Mobile: 98110 48303

D-11/23

Dated: I5th January, 2009.

 

            The meeting of the National Executive of the Confederation was held at New Delhi today to review the preparation for an indefinite strike action scheduled to commence from 20th January, 2009.  The meeting heard the Secretaries of the affiliated Associations/Federations and Unions as also the secretaries of the Co-ordination Committees. The Comrades who were deputed to attend the State level Conventions also made their observations at the meeting. Most of the Speakers expressed the need for further time to reach out the membership in far flung areas.  The meeting came to the conclusion that more intensive mobilization and campaign programmes are needed to successfully carry out the strike action with full participation of the membership.  It was therefore decided not to commence the strike action from 20th January, 2009 but defer the same to a future date and carry out an intensified campaign amongst the mass of the employees.  All affiliates will advise their State leadership to visit all branches and hold meetings to explain the Charter of Demands, educate and mobilise their employees for the eventual strike action.  Campaign material circulated by the Confederation (CHQ) (available at its website:confederationhq.blogspot.com) will be translated into vernacular and circulate amongst the members.  The said campaign should be concluded by 15.02.2009. The National Executive will meet again in February to take further decision in the matter.

 

            The representatives of the Confederation were to meet the Hon'ble Prime Minister today in a delegation with Com.Basudeb Acharya, MP to seek his intervention in bringing about a settlement of the Charter of Demands .  This meeting could not take place due to the preoccupation of the Hon'ble Prime Minister.  The meeting is likely to take place on 22ndJanuary, 2009.

 

            The copy of the letter addressed to the Cabinet Secretary to convey the decision of the National Executive is enclosed.

            With greetings

Yours fraternally,

 

K.K.N.Kutty.

Secretary General


CONFEDERATION OF CENTRAL GOVERNMENT

 EMPLOYEES AND WORKERS.

 

Manishinath Bhawan  A-2/95 Rajouri Garden

New Delhi. 110 027.

Phone: 011 2510 5324

Mobile: 98110 48303

No.D-11/09

Dated: I5th January, 2009.

 

 

To

 

The Cabinet Secretary,

Govt. of India,

Prime Minister's Office,

New Delhi.

 

Dear Sir,

 

                                    Sub: Notice for indefinite strike dated 20-01-2009

 

            We solicit your kind reference to our notice of even No. dated 02-01-2009         intimating you of our decision to go on indefinite strike with effect from 20-01-2009 onwards.  The National Executive of the Confederation, which met today have directed me to inform you that the proposed strike action, which is to commence from 20th Jan, 2009 has been deferred for the time being until the next meeting of the National Executive, which is scheduled to be held in February, 2009.

 

            Thanking you,

 

 

Yours fraternally,

 

 

K.K.N.Kutty

Secretary General


 

Monday, January 5, 2009

5 golden rules of tax planning

Just as rules are important for good living, so also there are some golden rules of tax planning. The five simple yet effective rules of tax planning are:

  1. Spread the taxable income among various members in your family;
  2. Take full advantage of tax exemptions available under the law;
  3. Take full advantage of permissible tax deductions and rebates available on stipulated tax-saving investments;
  4. Make optimum use of tax-exempted incomes; and
  5. Simple tax planning is smart tax planning.

Understood and used properly these rules will help you achieve handsome tax savings.

Rule 1: Spread your income among your family members

The first step in tax saving is to adopt the concept of divide and rule. The simple rule is that each family member must have his or her independent source of income so as to legally become an independent taxpayer under the provisions of the income tax law.

In case the entire income of a family belongs to just one member, the tax liability is much higher than when the same income is spread among different members of the family.

Now, under the income tax law it is not possible to arbitrarily divide one's income among different members of the family -- and then pay lower tax in the names of different family members. However, this goal can be achieved by intelligent use of the facility of gifts and settlements.

Gifts you receive are not your income

Generally, any gift you receive from various members of your family and specified relatives is not considered your income but a capital receipt. Thus, no income tax is payable on gifts received from relatives -- and also gifts received from parties other than relatives up to a sum of Rs. 50,000 and at the time of marriage up to any amount.

The first rule of tax planning requires that one develops income tax files for oneself, one's spouse, one's major children, the Hindu Undivided family, and for all other major relatives in the family, including one's parents. The development of different files of major family members can be achieved through the process of gifts and settlement.

No income tax on your inheritance

No income tax is payable on any amount received or inherited by you, whether in the form of movable assets or immovable assets, consequent to the demise of your friend or relative. Moreover, there is no upper limit to this exemption.

Hence, whenever you receive either bank fixed deposit, shares or immovable property consequent to the demise of a person, you don't have to pay any income tax at all on the value of all inherited assets.

The simple rule is that the asset so inherited by you is not your income; it is a capital receipt. Hence you are not liable to pay any income tax on the money and assets you inherit.

Rule 2: Take full advantage of all tax exemptions

The second step of tax planning lies in claiming all the exemptions and deductions which are permissible under the income tax law.

A list of most such exemptions and deductions is contained in Section 10 of the Income Tax Act. This list has to be optimised depending on your facts and circumstances.

If you and your family members are not claiming the optimum benefit of exemptions and deductions, then it is time to focus on investment planning in the group so that every family member gets full benefit of all permitted tax exemptions.

Rule 3: Take full advantage of tax deductions

Then, too, various tax deductions are available under the income tax law. One should try to avail of the benefit of these deductions for each and every member of the family.

The various investment options that offer tax rebates should be reviewed keeping in mind various aspects like the age factor, etc. A check-list should be prepared of the various deductions permissible under the income tax law.

Check whether each and every tax paying family member is claiming these. If special care is taken of this aspect, then it is legally possible to save a lot of income tax.

It is suggested that a chart be prepared of tax, deductions and exemptions for every family member for purposes of overall tax planning of the family.

It would be worthwhile if a group tax chart is prepared containing details relating to income tax, tax deductions, net taxable income, tax deducted at source, rebate of tax, and, finally, the net amount of income tax paid in the case of each family member.

With the help of this one simple chart, you can achieve substantial tax planning as it will show up those who have not made optimum use of tax deductions.

Rule 4: Exempted incomes

There are innumerable incomes under the income tax law which are exempted from the purview of tax. These incomes are known as exempted incomes.

For example, interest income from tax-free bonds as also any income from agriculture are some items of exempted incomes. There are other exempted incomes also which are discussed in this book.

Proper planning of your investments in a way so as to generate tax-exempt incomes is another golden rule of tax planning.

Rule 5: Don't overdo it; keep tax planning simple

Easy, simple, hassle-free should be the objectives of your tax planning approach.

The message which we want to bring to you is that you should adopt tax planning but never overdo it; just remember and follow the golden rules outlined above. These will help you achieve your tax-saving mission without going overboard.

It is possible to save tax perfectly legally provided you plan your affairs along the rules described above. This would also help you avoid all worries and tension as all your incomes, assets and investments would be duly accounted for from the taxation point of view.

[Excerpt from How to Save Income Tax through Tax Planning (FY 2008-09) by R N Lakhotia & Subhash Lakhotia, India's top taxation experts. Published by Vision Books.]

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