10 POINTS YOU MUST KNOW ABOUT PORTFOLIO MANAGEMENT SERVICES (PMS) IN INDIA

10 POINTS YOU MUST KNOW ABOUT PORTFOLIO MANAGEMENT SERVICES (PMS) IN INDIA

          Most of the people in India know about investing in securities market directly or through Mutual Funds. Here is a brief about how one can invest in securities market through PMS.

1. A portfolio manager is a body corporate who, pursuant to a contract or arrangement with a client, advises or directs or undertakes on behalf of the client, the management of a portfolio of securities or the funds of the client.

2. PMS provides freedom of personal choice for investment in particular securities/sectors but in mutual fund once choice is made for a particular fund, investor cannot instruct mutual fund house manager to invest money in specific securities/sectors.

3. For registration as a portfolio manager, an applicant is required to pay a non-refundable application fee of Rs.1 lakh, have a minimum networth of Rs. 2 crores, pay Rs. 10 lakhs as registration fees at the time of grant of certificate of registration by SEBI and pay Rs. 5 lakhs to SEBI after every three years as renewal fees.

4. SEBI (Portfolio Managers) Regulations, 1993 provides for the regulation of PMS in India. The services of a Portfolio Manager are governed by the agreement between the portfolio manager and the investor. The agreement should cover the minimum details as specified in the SEBI Portfolio Manager Regulations. However, additional requirements can be specified by the Portfolio Manager in the agreement with the client. Hence, an investor is advised to read the agreement carefully before signing it.

5. The regulations provide that the portfolio manager shall charge a fee as per the agreement with the client for rendering portfolio management services. The fee so charged may be a fixed amount or a return based fee or a combination of both. The portfolio manager shall take specific prior permission from the client for charging such fees for each activity for which service is rendered by the portfolio manager directly or indirectly (where such service is outsourced).

6. The portfolio manager is required to accept minimum Rs. 5 lakhs or securities having a minimum worth of Rs. 5 lakhs from the client while opening the account for the purpose of rendering portfolio management service to the client.

7. Portfolio manager can only invest and not borrow on behalf of his clients.

8. Investors can log on to the website of SEBI www.sebi.gov.in for information on SEBI regulations and circulars pertaining to portfolio managers. Addresses of the registered portfolio managers are also available on the website.

9. Investors would find in the Disclosure Document the name, address and telephone number of the investor relation officer of the portfolio manager who attends to the investor queries and complaints. The grievance redressal and dispute mechanism is also mentioned in the Disclosure Document. Investors can approach SEBI for redressal of their complaints. On receipt of complaints, SEBI takes up the matter with the concerned portfolio manager and follows up with them.

10. Investors may send their complaints to:

Office of Investor Assistance and Education,

Securities and Exchange Board of India,

SEBI Bhavan

Plot No. C4-A, ‘G’ Block,

Bandra-Kurla Complex, Bandra (E),

Mumbai - 400 051.

CA. Brijesh Baranwal

Practicing Chartered Accountant
Mumbai

Note:

1. The above write up is only for awareness purpose and should not be considered as expert opinion.

2. Please feel free to share with your friends and everyone without any copy right issues.

Service Tax on Rent

Service Tax on Rent

In a recent judgment, Home Solutions Retails (I) Ltd. Vs. UOI & Others, delivered on 23.09.2011, the Hon'ble Delhi High Court has overruled an earlier judgment of it's division bench and decided that the service tax on rent of immovable properties for business or commerce purposes is intra vires the Constitution of India.

The Hon’ble High Court has validated the retrospective amendment as to imposition of service tax in such cases.

So, the effect of the judgment seems to be that from 1st June 2007 service providers of renting of immovable property exceeding Rs. 10 Lacs p.a. need to register under service tax act, collect service tax @ 10.3%, deposit the same and file returns.

Brijesh Baranwal

Practicing Chartered Accountant

Note:

1. The above write up is only for awareness purpose and should not be considered as expert opinion.

2. Please feel free to share with your friends and everyone without any copy right issues.

PROVISIONS REGARDING PAN (PERMANENT ACCOUNT NUMBER) IN INDIA

PROVISIONS REGARDING PAN (PERMANENT ACCOUNT NUMBER) IN INDIA

1. The Permanent Account Number is allotted by the Income Tax Department. No person can have more than one PAN.
2. PAN is required for following transactions.

• for filing Income Tax returns etc.,
• sale or purchase of any immovable property valued at five lakh rupees or more,
• sale or purchase of a motor vehicle,
• a time deposit, exceeding fifty thousand rupees, with a bank,
• a deposit, exceeding fifty thousand rupees, in any account with Post Office,
• a contract of a value exceeding one lakh rupees for sale or purchase of securities,
• opening a bank account or a demat account,
• making an application for installation of a telephone connection (including a cellular telephone connection),
• payment in cash for purchase of bank drafts or pay orders or banker’s cheques for an amount aggregating fifty thousand rupees or more during any one day,
• deposit in cash aggregating fifty thousand rupees or more with a bank during any one day,
• payment in cash in connection with travel to any foreign country of an amount exceeding twenty-five thousand rupees at any one time,
• payment to hotels and restaurants against their bills for an amount exceeding twenty-five thousand rupees at any one time,
• where professional fee/other payment is to be received after deduction of TDS, otherwise TDS rate or 20% whichever is higher shall be applicable

3.     The following persons need to obtain PAN compulsorily:

• If one’s total income during any financial year exceeds the basic exemption limit under Income Tax Act or the total sales or gross receipt of business are likely to exceeded Rs. 5 lacs in any previous year and persons intending to make any transaction given in point no.2.

4. PAN enables the Income Tax Department to link all transactions of the “person” with the department. These transactions include tax payments, TDS/TCS credits, returns of income/wealth/gift/FBT, specified transactions, correspondence, and so on. PAN, thus, acts as an identifier for the “person” with the tax department.
5. If a person fails to comply with the requirements relating to PAN, he may be liable to penalty of Rs.10, 000/- for each failure or default.
6. And last but not the least, The Assessing Officer may allot PAN to any person on his own also.

Brijesh Baranwal

Practicing Chartered Accountant
Mumbai

Note:

1. The above write up is only for awareness purpose and should not be considered as expert opinion.

2. Please feel free to share with your friends and everyone without any copy right issues.

REQUIREMENT OF PAN NO. FOR CO-OPERATIVE SOCIETIES

REQUIREMENT OF PAN NO. FOR CO-OPERATIVE SOCIETIES

It is a perception that income of Co–operative Societies is not chargeable to tax and therefore many societies do not bother to take PAN No. & file Income Tax returns. This is a wrong perception since though certain types of income of CHS are exempt there are other incomes which are chargeable to Tax.

Some incomes of a Co–operative Society like rent from non members, interest on investments in some cases etc. are taxable.

The societies are taxed as per the following slab:

Income upto   Rs 10000                                     10 %

Income upto   Rs 20000                                     20 %

Above 20000/-                                                  30 %

The income tax as arrived above has to be increased by 3 % of tax payable towards Education Cess and Higher education Cess.

So in my view a Co–operative Society should take PAN No. and file Income Tax Return regularly after claiming permitted deductions. In cases where no taxable income is there, filing tax return is advised so as to prove exemption of income, whatsoever.

Brijesh Baranwal

Practicing Chartered Accountant

Note:

1. The above write up is only for awareness purpose and should not be considered as expert opinion.

2. Please feel free to share with your friends and everyone without any copy right issues.

12 POINTS TO KNOW FOR NRIS/TO BE NRIs

12 POINTS TO KNOW FOR NRIS/TO BE NRIs

1.      NRIs whose taxable Indian Income exceeds basic exemption limit or who have earned short-term or long-term capital gains from sale of any investments or assets are liable to file income tax return in India, even if the gains are less than the basic exemption limit.

2.      Exception: If taxable income consisted only of investment income (interest) and/or capital gains income and if tax has been deducted at source from such income, there is no need to file tax return.

3.      But please remember, for claiming refund of excess TDS, filing tax return is compulsory.

4.      Types of bank accounts for NRIs: NRE, NRO and FCNR.

5.      Funds in NRE savings accounts are held in convertible rupees - principle and interest are fully repatriable. Interest is fully exempt from tax in India.

6.      Funds in NRO savings account are held in India, in Indian rupees. The NRO account can be funded through NRI income in India. Only the interest in an NRO account is repatriable. Interest income on this account is liable for Indian income taxes.

7.      Funds in FCNR Deposits are maintained in foreign currency and are fully repatriable, including the interest. All interest earned is fully exempt from tax in India. Foreign currency deposit is available in major currencies.

8.      Any person, after becoming an NRI is required to inform the change in his residential status to the: a) banks where he has savings or term deposits,
                      b) companies where he has shareholdings and
                      c) MFs whose units he holds.

9.      It is advisable to give a Power of Attorney or Letter of Authority to someone of your choice for ease of operations of the bank accounts and investments.

10.  After becoming NRI-One can continue holding investments in mutual funds, further invest in mutual funds even through SIP route, keep insurance policies taken earlier in force and pay further premiums, keep active one’s PPF A/c. and invest further as well,

11.  Transactions in equity shares can also be done, although on delivery basis only, through one designated bank branch,

12.  One can buy immovable property other than agricultural land or farmhouses in India without any permission of RBI.

Brijesh Baranwal

Practicing Chartered Accountant
Mumbai

Note:

1. The above write up is only for awareness purpose and professional opinion may be required depending upon facts of particular case.

2. Please feel free to share with your friends and everyone without any copy right issues.

RECEIPTS AND PAYMENTS ACCOUNT FOR SCHOOLS/ EDUCATIONAL INSTITUTIONS

RECEIPTS AND PAYMENTS ACCOUNT FOR SCHOOLS/ EDUCATIONAL INSTITUTIONS

Schools/Educational Institutions generally maintain cash book to record cash transactions on day to day basis. But at the end of the year they prepare a summary of cash transactions based on the cash-book. This summary is prepared in the form of an account. It is called Receipts and Payments account. All cash receipts and payments are recorded in this account whether these belong to current year or next year or previous year. All receipts and payments are recorded in this account whether these are of revenue nature or capital nature. As it is an account so it has the debit side and the credit side. All receipts are recorded on its debit side while all payments are shown on the credit side. This account begins with opening cash or/and bank balance. Closing balance of this account is cash in hand and or cash at bank/overdraft. Items in this account are recorded under suitable heads.

Following are the main features of Receipts and Payments Account:

1. It is prepared at the end of the year taking items from the cash book.

2. It is the summary of all cash transactions of a year put under various heads.

3. It records all cash transactions which occurred during the year concerned irrespective of the period they relate to i.e. previous/current/next year.

4. It records cash transactions both of revenue nature and capital nature.

5. Like any other account it begins with opening balance and ends with closing balance.

NEED FOR PREPARING RECEIPTS AND PAYMENTS ACCOUNT

As some of the transactions of a school are for cash, the Receipts and Payments Account shows these items at one place.

As it is in a summary form, it gives an idea of large number of transactions at a glance. It contains accounting information under various heads. So it gives information item wise for the accounting year.

It shows the closing cash or/and bank balance, this cash/Bank balance is taken to the Balance Sheet.

The Receipts and Payments Account serves the purpose of trial balance and becomes the basis of preparing financial statements i.e. Income and Expenditure Account and Balance sheet for the organisation.

Very small schools prepare only Receipts and Payments Account.

As the name itself suggests, Receipts and Payments Account is an account which has two sides, the debit side and the credit side. All receipts are written on the debit side and payments on the credit side. It has a definite format which is given below:

Dr.                                                                                                     Cr.

Particulars	Amount (in Rs.)	Particulars	Amount (in Rs.)
Balance b/d:    Cash    Bank Fess Entrance Fees Admission Fees Tution Fees ….. ….. ….. Donations Legacies Subscriptions Sale of books etc. Sale of uniform etc. Sale of assets Interest on Investments Miscellaneous receipts Sale of old periodicals etc. Total		Salary Transport Purchase of assets Purchase of books etc. Printing and stationary Repairs and renewals Rent and taxes Investments Honorarium Telephone charges Balance c/d:     Cash     Bank

Brijesh Baranwal

Practicing Chartered Accountant
Mumbai

Note:

1. The above write up is only for awareness purpose and should not be considered as expert opinion.

2. Please feel free to share with your friends and everyone without any copy right issues.

NO INCOME TAX FILING REQUIRED FOR SALARY UPTO 5 LACS

NO INCOME TAX FILING REQUIRED FOR SALARY UPTO 5 LACS

As per the notification no. 9/2012, filing of Income Tax Return is not required if the total income of a person consists only of salary income up to Rs. 5 lacs and interest on savings bank account upto Rs. 10,000/-

Some other conditions as given below should also be fulfilled for the above benefit;

1. The person has provided his PAN No. and interest income to his employer and the employer has deducted TDS and deposited the same to the government,

2. Form 16 has been received from the employer with details like PAN, income, TDS deducted and deposited etc.,

3. The person has received salary from only one employer for the year and no claim of refund is due.

Brijesh Baranwal

Practicing Chartered Accountant

Note:

1. The above write up is only for awareness purpose and should not be considered as expert opinion.

2. Please feel free to share with your friends and everyone without any copy right issues.