Summary of Important Amendments by FA 2015 in Chapter VI-A(Deductions from Total Income)

Section 80 JJAA – A Promising North Star

The Finance act, 2015 by widening the scope of Section 80JJAA has offered a fillip to employment generation in the manufacturing sector. It has effectively reduced the labour cost across manufacturing industries. The provisions of section 80JJAA are discussed in this article.

Eligible assessees:

Previously, the deduction was available only to company assessees. But with the amendment made by Finance Act 2015, it is available to all assesses deriving profits from the business of manufacturing of goods in a factory.

    ·     It is noteworthy that the assessee should be engaged in the business of manufacture of goods.

Quantum of deduction:

The assessee can claim a deduction of 30% of the additional wages paid to new regular

Workmen employed during the previous year.

•             Additional wages means the wages paid to newly employed workmen in excess of 50 workmen. For E.g., if there is an organisation with 75 workmen as on 01.04.2015, it hires another 110 workmen on 01.05.2015, the wages paid to the new 60 workmen (110 additionally hired workmen -50 workmen) will only qualify for deduction. Prior to the Finance act 2015, the threshold was 100 workmen. By lowering limit to 50 workmen the state has increased the social security avenues for labours by increasing employment opportunities.
•             Only wages paid to regular workmen employed are considered for the computation of deduction.

Conditions for claiming deduction:

•           The assessee should not have acquired the factory by way of transfer or as a result of any business reorganization. Previously, only acquisitions by transfer or hiving off or amalgamation were included as restrictions for deduction. Now after the amendment by Finance Act 2015, the ambit of the restriction has been widened to include any business reorganisation.
•           In case of an existing organisation, the workmen additionally employed during the previous year should account for at least 10% of the number of workmen as at the last day of the preceding previous year. In other words, there should be an increase of at least 10% in the strength of the workmen compared to the preceding financial year.
•           The assessee should furnish with the return of income, a report in Form no. 10DA duly certified by a Chartered Accountant.

Period of deduction:

The deduction is available for a period of three assessment years including the assessment year relevant to the previous year in which such employment is provided.

Summary of Important Amendments by FA 2015 in Chapter IV-E(Capital Gains)

MAT on FII – The Commotion and conciliation

In the budget for the FY 2015-16, finance minister Arun jaitely came up with an amendment in section 115JB of the Income tax act, 1961. The proposed amendment to section 115JB, provided that capital gains arising to the foreign companies from the sale of securities shall not be considered for the purpose of calculation of book profit for MAT calculation with effect from 01.04.2016.  Following this, the Income tax authorities in April 2015, started issuing show cause notices to many Foreign Institutional Investors asking them to give reason as to why MAT should not be levied on the capital gains made by the FII-s in the period prior to 01.04.2016. This move of the Indian income tax authorities came as crippling blow for the FII-s, as this would result in the heavy outflow of funds to the FII-s. The total amount of tax demanded amounted to the tune of Rs. 602.83 Crores. After the sub-prime crisis of 2008 in the US, India was a net receiver of foreign funds. Particularly, every year after 2008 witnessed larger capital inflows into India by the FII-s and FPI-s than the years preceding 2008. This behavior of the foreign funds demonstrates the growing confidence of global investors on India post the sub-prime crisis the followed up recession across the world (FPI/FII Investment Details: Financial Year). But the flurry of tax notices came as a dent on the investor’s confidence.

In the late April of 2015, CBDT issued a circular that the FII-s and FPI-s from countries with whom, India has entered into Double taxation avoidance agreement (DTAA) can claim the benefit of the treaty to exempt capital gains from taxation. This provided a respite to a section of investors, who belonged to those nations with whom India has entered into DTAA to exempt capital gains. To this category belong nations such as Mauritius, Singapore. But the DTAA with countries like US and UK were devoid of a clause, which would exempt the citizens of those countries from taxing capital gains that arise in India. Interestingly, many major players belong to this group of nations. This meant a potential threat of FII-s and FPI-s pulling out of the country. If they pull out, the loss to India in terms of foreign exchange outflows and the resulting depreciation of INR would be heavy.

In the wake of growing criticisms against the sudden slapping of notices on FII-s, the government constituted a committee headed by Justice A.P. Shah with CA.Girish Ahuja and Ashok lahiri, former finance secretary as the members. The committee made a detailed analysis of this legislative provision and the path it has travelled since its incorporation in the Income tax act in the year 1996. The committee highlighted the perpetuating confusion in the matter of applicability of MAT. It cited the shifting stances taken by various authorities on this issue.

“While the Delhi Bench of the ITAT in Bank of Toyko-Mitsubishi UFJ Ltd47 was clear that MAT provisions do not apply to foreign companies per se, the AAR in Timken48 and Praxair Pacific Ltd.49 held that MAT provisions only apply to foreign companies with a place of business or PE in India. Conversely, two years later, the AAR in Castleton50and ZD51took the opposite view to rule that MAT provisions applied to all companies, including foreign companies, regardless of whether they had established a place of business/PE in India, or the applicability of provisions of the Companies Act, 1956.”

The committee recommended that MAT shall not be made applicable to FII-s and FPI-s citing several grounds such as:

• In the absence of any computational mechanism for the computation of book profits of FII-s or FPI-s, the charging provision of Section 115(1) fails.

•  Any sudden change in interpretation of tax laws resulting in tax liability would trigger off the investors to exit the fund causing damage to the fund. Thus tax certainty is essential premise that must be offered in the investing destination.

• In all the born years of MAT, it has never been levied on FII-s or FPI-s

• Internationally, none of the other BRIC countries levy MAT

•  Some of the OECD countries levy MAT. But MAT is levied on foreign countries, only when it has a physical presence in that country.

Taking cognizance of the recommendations of the A.P.Shah committee report, the government instructed the income tax authorities to close the pending the cases against the FII-s and FPI-s. On December 23, 2015, CBDT vide its letter announced that the Finance bill, 2016, will incorporate the provisions of non-applicability of MAT to FII-s, FPI-s and also the Foreign companies.

Works Cited

FPI/FII Investment Details: Financial Year. (n.d.). Retrieved from https://www.fpi.nsdl.co.in: https://www.fpi.nsdl.co.in/web/Reports/Yearwise.aspx?RptType=5.

                                                                                                                                                                                                

Macro to copy the sum of selected cells on selection

Object of the Macro : To get copied to the clipboard, the sum of the cells selected in a worksheet so that it can pasted directly without having to sum the numbers in the cell, copy the sum and then paste.

Macro:  

Sub CopySum()

Dim xOb As New DataObject

xOb.Clear

xOb.SetText Application.WorksheetFunction.Sum(Application.ActiveWindow.RangeSelection)

xOb.PutInClipboard

End Sub

If the macro throws a compile error that the "User-defined type not defined", here's the way-out

Open References in Word VBA

Click on Browse

Pick up this file and click Open

C:\WINDOWS\SYSTEM\FM20.DLL 

Courtesy: https://answers.microsoft.com/en-us/msoffice/forum/all/mystery-compile-error-user-defined-type-not/b0c07a65-9f0c-43f1-a181-12c95db0ac8d

Summary of Important Amendments by FA 2015 in Chapter IV-D (PGBP)

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