payroll-compliance-feb-2017

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Union Budget 2017 - Highlights

Feb 1st – New Delhi – Parliament House – 11 AM to 2 PM

As most of you would’ve followed – The biggest event in India’s economic calendar just concluded and we wished to share some of its most prominent highlights with you.

The Hon’ble Finance Minister of India, Mr Arun Jaitley, presented the fourth budget of Prime Minister Narendra Modi’s term to the Parliament House on the 1st of February, 2017. During the session, he highlighted some of the most notable accomplishments of India in 2016.

Some of them are mentioned below:

  1. Foreign Direct Investment (FDI) saw a 36% increase despite the 5% fall in global FDI flow. As of January 2017, the FOREX reserve of India stands at $361 Billion.
  2. India becomes the sixth largest manufacturing country in the world (India was earlier ranked ninth in the world)
  3. Currently, India is considered to be the fastest growing economy.
  4. The major reforms undertaken by government in 2016 were: GST and Demonetization.
  5. There have been 36% increase in FDI flow; forex reserves at $361 billion in January.
This year’s Union Budget had 3 unique changes:
  1. As opposed to the usual time period the Union Budget has so far been presented (usually during the last day of February), this time it was released on 1st day of February, 2017. This is in order to give the government sufficient time to pass the bill on both Houses of the Parliament and all the schemes proposed are to be implemented by the 1st of April, 2017.
  2. This time, the Railway Budget and Union budget have been clubbed together in one budget preposition.
  3. The main agenda for Union Budget 2017 is to – Transform, Energize and Clean (TEC) India. The major approach while preparing the Union Budget this time has been to spend more on rural areas, infrastructure and poverty alleviation with fiscal prudence.
The Union Budget 2017 was divided in 10 themes: 1. Farmers 5. Poor 8. Digitalization 2. Rural  6. Financial sector 9. Public Services 3. Youth  7. Infrastructure 10. Fiscal Management 4. Tax Administration     Key Statements delivered by the Hon’ble Finance Minister:
  1. There is an anticipation of transition from an informal to a formal economy.
  2. The government is now seen as a trusted custodian of public money and the sluggish growth has been replaced by robust growth of economy. According to the International Monetary Fund (IMF), India is set to be one of the fastest growing economies in the world.
  3. The priority of the government will be on energizing the youth to reap the of growth by focusing on creating more jobs for the youth of the nation.
  4. India stands out as a bright spot in world economic stage as India's account deficit declined from about 1% of GDP last year to 0.3% of GDP in the first half of 2016-17
  5. A massive war has been waged against black money. However, the effects of demonetization are not expected to spell over to 2018.
  6. India’s macro-economic stability continuous to be the foundation of economic success.
Prominent proposals under the various themes: Farmers:

Total allocation for rural, agricultural and allied sectors for 2017-18 is Rs. 1,87,223 Crores, which is 24% higher than last year.

Infra:

Allocation for infrastructure stands at a record Rs. 3,96,135 Crores.

Poor:
  1. The government targets to bring 1 crore households out of poverty by 2019.
  2. The country is well on the way to achieve 100% rural electrification by March 2018.
Education:

The government has proposed to set up two new ‘All India Institute of Medical Sciences (AIIMS)’ in Jharkhand and Gujarat.

Corporate Tax:

With regards to corporate tax, the government of India has proposed a change in taxation for small firms with turnover up to Rs. 50 Crores, who now only need to pay 25% as tax-applicable from the 1st of April, 2017, instead of 30% that’s currently applicable.

Railway:
  1. For the rail tickets booked through IRCTC, service tax would be withdrawn.
  2. Over 3500 kilometers of railway lines are proposed to be put up.
  3. Over 500 railway stations are expected to be made differently abled-friendly by providing lifts and escalators.
  4. A new metro rail policy is expected be announced and this is consequently also expected to open up new jobs for our youth.
  5. The commencement of SMS based clean my coach service.
Political Parties:

Henceforth, political parties are only allowed accept a maximum of Rs. 2,000 (from any one source) as donation. The earlier the limit was Rs. 20,000. These parties will be entitled to receive donations by cheque or through digital means from donors.

Individual Tax:
  1. Income tax rate is proposed to be reduced from 10% to 5% for the tax slab of Rs. 2.5 Lacs to Rs. 5 Lacs.
  2. Tax rebate under section 87A has been proposed to be amended as: Citizens earning less than Rs. 3.5 Lacs will get a rebate of Rs. 2,500 from their tax liability.
  3. A surcharge of 10% has been proposed for those whose annual income is between Rs. 50 Lacs to Rs. 1 Crore. Whereas, the 15% surcharge on incomes above Rs. 1 Crore continues to apply.
  4. Long-term capital gain on immovable assets are henceforth proposed to be calculated based on 2 years (earlier the limit was 3 years).
  5. A simple one page return form has been proposed for people with annual income of Rs. 5 Lacs other than business income.
  6. The proposal on individual taxes also states that people filing Income Tax Returns for the first time will not come under government scrutiny.
  7. To ensure people file their income tax return on time, there is a proposal to levy penalty on delayed returns. The penalty would range from Rs. 1,000 to Rs. 10,000 depending on the income showed in the return.
  8. There is a proposal to introduce a new provision under Income Tax Act, wherein any ‘Individual’ or ‘Hindu Undivided Family’ (HUF) (other than those whose books of account are required to be audited) making payment of rent for the amount exceeding Rs. 50,000 per month must deduct tax at source at 5%. The tax deducted through the year must be deposited only once in a financial year through a challan-cum-statement. In such cases, the deductor shall not be required to obtain Tax Account Number (TAN) or file any separate TDS return for this purpose.
  9. In case of ‘let out’ house property, it is proposed to restrict ‘set off’ of losses from house property, against income under any other head during the current year, up to Rs.2 Lacs only. The excess loss which is not ‘set off’ would be allowed to be carried forward for ‘set off’ against house property income alone for eight subsequent assessment years.
  10. In order to provide parity between an individual who is an employee and an individual who is self-employed, it is proposed to provide that the self-employed individual shall be eligible for deduction up to 20% of his/her gross total income, in respect of contributions made to National Pension Scheme (NPS).
The Central Board of Direct Taxes (CBDT) rectifies TDS circular mistakes

The TDS circular on salary was released dated on 2nd January 2017. The circular reportedly had corrections which were later rectified by the CBDT.

Click Here for further details.

Provident fund payment allowed from any private bank

The Ministry of Labour and Employment has amended the payment scheme for remittance of PF. Previously, only 58 scheduled banks were only allowed to make online remittances for PF contributions. However, now, the contribution towards PF can be made by employers through private sector banks as well as the previous scheduled banks.

Employees’ Provident Fund Organization (EPFO) launches Enrolment Campaign, 2017

The Employees’ Provident Fund Organization (EPFO) launches Enrolment Campaign, 2017 which would be initiated between 1st of January, 2017 and shall conclude its operations on the 31st of March, 2017.

Every employer that has not complied with the provisions of the Provident Fund Scheme; in relation to membership of employees and contribution there to to the Fund (for the period beginning from the 1st of April, 2009 to the 31st of December, 2016), shall furnish a declaration in such Form as prescribed by the Central Provident Fund Commissioner providing the details and reasons for their non-compliance.

The employer shall (within fifteen days from the date of furnishing the declaration) remit the employer’s and employee’s contribution.

Note: The employer is not required to pay the employee’s contribution if the same has not been deducted from the wages of the employee.

After making all the payments, the employer must file a return in such form as may be specified by the Central Provident Fund Commissioner, to the Regional Provident Fund Commissioner.

If an employer fails to remit the contribution, interest and damages payable, the declaration sent by the employer shall be deemed to have not been made by such employer. They consequently would be liable to pay damage charges as applicable under this scheme.

The EPFO launched this scheme with the purpose increasing coverage and extension of under the Act. Thus the member’s contribution is waived under Employees’ Enrolment Campaign, 2017 for the period beginning the 1st of April, 2009 to the 31st of December, 2016.

The damages charges for default are as below: Period of default Rate of damages (1) (2) Between 1st day of April, 2009 to 31st day of December, 2016 One rupee per annum

Click here for further details.

AADHAR mandatory for Employee Pension Scheme (EPS)

The government of India has made obtaining an Aadhaar number mandatory for members of the Employees’ Pension Scheme, 1995 to avail the of the scheme and subsidy.

The subsidy, equivalent to 1.16 % of the employee’s salary up to Rs. 15,000, paid by the Centre towards the EPS, will no longer be credited till the Aadhaar number is disclosed with the PF authorities.

In order to continue availing pensions and retain their membership, employee members and pensioners of the Employees’ Pension Scheme (EPS) are hereby required to furnish proof of possession of the Aadhaar number or undergo Aadhaar authentication as per the procedure laid down by the EPFO for better and hassle free identification through Aadhaar.

A member or a pensioner who is not enrolled for Aadhaar was initially required to make an application for Aadhaar enrolment by 31st January, 2017. However, in case one hasn’t, we are awaiting further instructions which, once received, will be published in the subsequent newsletters.

The Central government will provide pension subsidy under the scheme only after the following documents are produced. This includes the identity certificate issued by the employer and a copy of the request made for Aadhaar enrolment.

  1. Voter’s ID Card
  2. Passport
  3. PAN Card
  4. Driving License
  5. Certificate of Identity Approved by a Gazetted Officer
Refund policy initiated by EPFO for erroneous or wrong payment

There have been many instances highlighted by the Provident Fund Officer as well as employers wherein there have been incorrect or double or erroneous deduction of provident fund contribution and consequently the employer had paid excess amount of PF as per Temporary Return Reference Number (TRRN). The EPFO has appointed competent authority to look into the raised issues and verify these claims. Once verified and validated, the EPFO will reportedly release refund cheques in the name of the employers.

EPFO introduces Email ID’s to handle queries

The new Unified Portals has been launched by EPFO for PF members, employers and field offices, and can be accessed through www.epfindia.gov.in.

To handle the queries pertaining to the new portal, a dedicated control room has been formed. Mentioned below are the dedicated email ids to resolve the queries of the portal users and employers.

  1. For Employers: employerfeedback@epfindia.gov.in
  2. For Employees: employeefeedback@epfindia.gov.in
  3. For EPFO Officials/Field Offices: fofeedback@epfindia.gov.in
New design of PAN card with effect from 1st January, 2017

With effect from 1st January, 2017, PAN cards are being printed as per the new design specifications approved by Income Tax Department (ITD).

New features:

  • (i) A Quick Response (QR) code containing the details of the PAN applicant is printed on PAN card for enabling swift verification of the PAN card
  • (ii) Legends have been incorporated for particulars Name, Father’s Name, and Date of Birth fields.
  • (iii) Placement of PAN & signature within the PAN card has also been changed.

 

Maharashtra Contract Labour Act increases applicability to 50 employees

In Maharashtra, Contract Labour (Regulation and Abolition) Act, 1970 has so far been applicable to all companies employing 20 or more contract labourers. This limit has now been increased to 50 employees for the state of Maharashtra.

Aadhaar payment app launched

The government of India is encouraging the use of plastic money for payment instead of currency to have transparency and prevent tax evasions. The government also launched an ‘Aadhaar Payment App' in order to increase the accessibility aspects of the payment process.

To enable and use the application, an individual needs to install the application in their smartphones, feed their Aadhaar number into the application and select the bank through which the transaction will take place. After this, the biometric scan will work as a password for the transaction to be authenticated.

 

Compliance Calendar for the month of February, 2017 Due date Nature of transaction Existing rules Mode Professional Tax - States - Remittances 10th February 17 Andhra Pradesh & Madhya Pradesh State-wise regulations By Challan 15th February 17 Gujarat Gujarat PT regulations By Challan 20th February 17 Karnataka Karnataka PT regulations By Challan & Online 21st February 17 West Bengal West Bengal PT regulations By Challan 28th February 17 Assam & Orissa State-wise regulations By Challan 28th February 17 Maharashtra Maharashtra PT regulations Online PF Central 15th February 17 Remittance of Contribution EPF & MP Act, 1952 Online ESI Central 21st February 17 Remittance of Contribution (Main code and Sub codes) ESIC Act, 1948 Online TDS 7th February 17 TDS Payment Income Tax Act, 1961 Online Labour Welfare Fund Remittances 15th February 17 Kerala State wise regulations By Challan
HR Payroll Compliance 66+ Years of experience 111 Countries 630,000 Global clients 39 million Active users on the cloud Sources: Government Notifications, Circulars, Press releases.

 

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