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Get set to crusade against unlawful adjustment of grossly erroneous tax demands against your rightful tax refunds!

               For the first time in the history of Indian tax administration, an All India Workshop is being organised for ‘Rectification & Reconciliation of Arrear Demands’ by the Centralized Processing Centre (CPC) at Bangalore, on 28th August, 2012. Justifying the need for the workshop, CPC has admitted vide its letter dated 21/08/2012 that nearly Rs.4,800 crores worth of tax refunds have been adjusted against disputed demands on the basis of the data uploaded by the assessing officers and there was an urgent need to rectify and reconcile the said arrear demand.

             Infact, there has been a huge hue and cry amongst taxpayers at large on this issue and taxpayers are very sore and highly agitated with grossly erroneous demands of earlier assessment years wrongly shown as outstanding against them and uploaded on the CPC portal, as a result of which their legitimate tax refunds have been gobbled down by the computerized system. This problem in the recent past assumed such an alarming proportion that the Central Board of Direct Taxes (CBDT) had to issue Circular No.4, dated 20/06/2012 to urgently take necessary corrective measures. (more…)


You just can’t afford to miss setting up your HUF if you are looking for some valuable tax saving!

               As per Hindu Law, a Hindu Undivided Family (HUF) is a family consisting of all lineal male descendants of a common ancestor and includes their wives and unmarried daughters. Under the Direct Tax Laws in our country, a Hindu Undivided Family (HUF) has been granted the status of an independent tax entity. Thus, an HUF has assumed a useful role in personal tax planning.


               No doubt, it is true that to constitute an HUF, there should be atleast two members and there cannot be an HUF consisting of a single member, male or female. However, the myth or misconception, that there must be atleast two male members in the family to constitute an HUF as a taxable unit, needs to be dispelled.

              The Gauhati High Court in the case of ‘CIT vs. Arvind Jhunjhunwalla & Sons’ 223 ITR 45 (Gau.) has held that an HUF gets constituted immediately upon the marriage of an individual. The High Court categorically rejected the contention of the Income-tax Department that until there was the birth of a son in the family, the income of the HUF would be liable to be assessed in the individual case of the Karta. Similarly, the Madras High Court Full Bench in the case of ‘CIT vs. M. Balasubramanian’ 182 ITR 117(Mad.) and the Punjab High Court in the case of ‘CIT vs. Ghanshyamdas Mukim’ 118 ITR 930(P&H) have held that where the donor or testator has given a gift or property under a Will with the clear intention that it would belong to an HUF, the income arising from such property would be liable to be taxed in the hands of the HUF. (more…)


After its initial tenure of 15 years, a PPF account can be renewed indefinitely in blocks of 5 years!

Today ‘Tax Clues’ deals with some interesting readers’ queries on Public Provident Fund (PPF).

Query: I understand that a PPF account is initially opened for a period of 15 years and it can be renewed in blocks of 5 years each. How many times can one renew such blocks of 5 years? Some people say only twice, some say indefinitely. What is the correct position? Whether it is advisable for an investor to close his PPF account after 15 years and open a fresh account or keep on renewing the same in such blocks of 5 years?

Reply: As per Rule 9(3) of the PPF Scheme, a PPF account is required to be initially maintained for a period of 15 years from the end of the year in which the initial subscription is made. The subscriber can then choose to close his account at the expiry of 15 years and withdraw the entire balance standing to his credit. (more…)


CBDT circular directs disallowance of such expenses for pharma businesses & taxing the same as income of doctors!

     This time it is the medical profession and the pharma & allied health sector business that have been targeted by the Taxman. The Central Board of Direct Taxes (CBDT) has, vide its recent Circular No. 5/2012 dated 1-8-2012, directed all Assessing Officers to disallow expenses incurred by such businesses in the nature of providing freebies to medical professionals. Officers have also been asked to treat the value of such freebies enjoyed by the Doctors as their taxable income.

     In the above context, the Board has noted that some pharmaceutical and allied health sector industries are providing freebies to medical practitioners and their professional associations in violation of the regulations issued by Medical Council of India, which is the regulatory body constituted under the Medical Council Act, 1956. The Council, in exercise of its statutory powers, had amended the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 and under its Notification dated 10-12-2009 imposed a prohibition on medical practitioners and their professional associations from taking any gift, travel facility, hospitality, cash or monetary grant from the pharmaceutical and allied health care industry or their sales people or representatives. (more…)

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