Is employer bound to issue Form 16 to every employees ?

Form 16 is the prescribed form for tax deducted at source from salary by an employer. There is confusion regarding the issue of TDS certificate in case where salary is not taxable. Tushar Singh of New Delhi asks  “in my last company my income was not taxable. Am i eligible for form 16 from my last company.Please tell me the way of getting a form 16 as i need it to apply for car loan ” .

This issue was already explained earlier in posting Can Employer Decline To Issue Form 16? .

Confusion arises among employees regarding Form 16 is on following grounds :

  • That they think Form 16 is a salary certificate.
  • That income tax Return can not be filed in absence of Form 16

Both the aforesaid “general impression about Form 16? are wrong. Form 16 is the prescribed form for issue of certificate of deduction of tax at source from an employee. employer can decline to issue Form 16 in case there is no deduction of tax at source.It is clear from a bare reading of section 203 of the I T Act and the relevant rule 31 of IT Rule.

Solution to your problem

The loan creditor bank is just want to check the fact about your earning capacity. Go and talk to your employer company , if they issue Form 16 , its okay , otherwise you request to issue a Salary Certificate which will prove how much salary was received by you from them.

No service tax on reinsurance commission-CBEC issues Circular !

Great relief to insurance companies indeed .The Central Board of Excise and Customs (CBEC) has issues circular to clarify that service tax cannot be levied on the reinsurance commission . The reason , as per circular is that an insurance company does not provide any service to a reinsurance company. Read the circular Circular No. 120(a)/2/2010-ST

F.No.332/29/2009-TRU

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

(Tax Research Unit)

*****

Room No. 147-A, North Block,

New Delhi-110001 dated the 16th April, 2010.

To

Director General of Service Tax, Mumbai

Director General of Central Excise Intelligence, Delhi

Chief Commissioner of Central Excise (All)

Chief Commissioner of Customs and Central Excise (All)

Commissioner of Service Tax (All)

Madam/Sir,

Subject: Service tax on re-insurance commission – regarding

In terms of Section 101A (Part IV-A) of the Insurance Act, 1938, every insurer dealing in insurance business is required to re-insure a specified percentage of sum assured with another insurance company.

2.         The insurance company pays premium to the reinsuring company for this service.  However, a part of such premium is deducted and kept by the insurance company for meeting the administrative expenditure.   In other words, the insurance company and the re-insurance company jointly bear the expenses for running the insurance/reinsurance business.  This shared expense is commonly known as ‘commission’ though strictly it is not in the nature of a commission.   It may be pertinent to mention that the customer/beneficiary deals only with the insurance company and may not even be aware of the role of re-insurer and the backroom operations between the insurance company and the reinsurer.

3.         As per the provision of the Finance Act, 1994, insurance as well as reinsurance are subject to service tax.   The Board has received representations that notices have been issued demanding service tax on the amounts deducted by the insurance company (in other words paid by the reinsurance company) on the ground that it is the consideration for the insurance company providing business auxiliary service (BAS) to the re-insuring company.  The notices alleged that the insurance companies are promoting the business of re-insurers thereby providing them the BAS.

4.         The issue has been examined.   As explained in para 2 above, the arrangement between the insurance company and the reinsurer is only sharing of expenses and there is no service provided by the insurance company to the re-insurer for a consideration.   Since the policy holder may not even be aware of the operations of the re-insurer, it cannot be said that the payment made by the re-insurer to the insurance company is for its business promotion or a service on behalf of the re-insuring company (i.e. Business Auxiliary Service).  In fact, it is the reinsurer which provides insurance service to the insurance company.   As both the insurance company and reinsurer pay service tax on the entire amount of premium charged by them, the question of charging service tax under any other taxable service does not arise.

5.         The Board desires that all pending cases on this subject may be decided keeping in view the above clarification.

Yours faithfully,

(Gautam Bhattacharya)

Joint Secretary (TRU-II)

Tel: 23093027

Cement, steel prices push up construction cost: CIDC

NEW DELHI: Rise in prices of cement and steel inflated the construction cost by around 5 per cent in January-March 2010 compared to the same period last year, the Construction Industry Development Council (CIDC) has said.
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Can A.O Ask For Accounts From Salaried Employees During Scrutiny ?

I am a salaried employee. I had received a notice for assessment last year in 2009. Then hearing of the assessment case was adjourned sine die. It was revived again in March, 2010, and in first hearing itself AO asked for statement of affairs including capital account and credit card statements for last 3 years. I am only wondering

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When Are You Liable to Pay Advance Tax?

Paying advance income tax: I am 57 years old housewife and my total earnings from Bank FD’s for FY 2009-2010 will be approx Rs 388600 and i will be making an investment of Rs 100000 under ELSS. Need to know, how do i pay income tax on my interest income. Should i pay this at the time of IT

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Motor Insurance Made Simple on Five Points !

What are types of Motor Insurance covers?

There are mainly two types of motor insurance-

  1. Comprehensive insurance
  2. Third Party Insurance.
While the Comprehensive insurance covers you against any loss or damage causing by Natural Calamities which includes fire, explosion, self ignition or lightning,earthquake (fire and shock damage),flood, typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorm, and frost etc Third Party insurance  covers only  damage or loss to the third party in terms of injury or damage caused to the property. You can also opt for Add on Covers by paying extra premium  against damage to the Electrical / Electronic fittings not part of standard equipment of the vehicle such as stereos, fans, air-conditioners etc,damage to the CNG/LPG Fuel Kit System etc

What are types of discounts you get from Insurance company?

Generally there are three types of discounts given . These are
i. Voluntary Excess discounts?
Voluntary excess discount  is given  if you accept to bear a certain amount of loss from each claim. Which means if your claim amount is Rs 40,000. You choose to bear the first Rs 10,000 of your claim. This becomes your voluntary deductible. The claim will now be worth only Rs 30,000.
ii. No Claim Bonus ?
The insurance company grants a discount in the premium during policy renewal called a No Claims Bonus if you do not make any claim .The discounts on premium is as under

  1. first year  20 per cent;
  2. For two consecutive years, the bonus is 25 per cent;
  3. For three consecutive years, it’s 35 per cent;
  4. for four consecutive years, 45 per cent, and
  5. for five consecutive years, the bonus is 50 per cent.

iii. special discounts available for handicapped people?
If vehicle is modified for use by handicapped people , 50 % discount  is given  on Own Damage premium . The discount is also available for institutions exclusively engaged in the service of the handicapped.

Can I cancel my motor insurance and get a refund during the policy period?

Yes,  in following conditions
your vehicle has been insured elsewhere, or
the registration certificate for your vehicle has been legally cancelled by the Regional Transport Office (RTO).
Only the balance of the premium amount will be refunded to you.
The refund is possible only if there has been no claim during the policy period. The insurance company will also retain a minimum premium for the time the policy was in force.

What is the renewal period for  motor insurance policy ?

Yes, you can renew your policy online, provided it is renewed between the period starting two months before expiry and six days after expiry of the previous policy.

Whether place of registration of vehicle affect premium amount?

Yes,the Indian Motor Tariff Act categorizes cities into specific zones and premium depends on the city of registration, irrespective of the place where it is used or where the insurance is renewed. .

Zone A: Ahmedabad , Bangalore, Chennai, Hyderabad, Kolkata , Mumbai  New Delhi  and Pune
Zone B: Rest of India

How Can I Get Income Tax Ombudsman Address ?

Central government , among many , new initiative to interact and better service to ordinary tax payers , have created the posts of ombudsman in some cities -New Delhi,Mumbai, Chennai, Kolkata, Bangalore, Hyderabad,Ahmedabad, Pune, Kanpur, Chandigarh, Bhopal and Kochi.etc……having wide territorial jurisdiction. The ombudsman are independent authority created to settle grievance of the taxpayers. He

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