SEBI Mandates Rs/Share Dividend Declaration

In a good move, the Securities and Exchange Board of India, SEBI, has asked listed companies to declare dividends on a per share basis rather than on a percentage basis.

In order to bring about uniformity in the manner of declaring dividend among listed companies, Sebi has made it mandatory for companies to declare their dividend on a per share basis only. This means that irrespective of the face value of the share, the company will have to mention the dividend on an absolute basis.

For instance, a company having shares of face value Rs 2, and declaring a dividend of Rs 2, will have to say that it has declared a dividend of Rs 2 per share and not a dividend of 100%.

This is meant to bring more clarity to an average investor who sometimes gets caught up in the jugglery of percentages and values when companies declare dividends. Thus, it will bring uniformity in the declaration of dividends by listed companies.

The move will clear the confusion among share holders whether the dividend declared was a percentage of the face value or the market price. It also becomes relevant when companies reduce the face value of shares over a period of time, which some investors might not be able to track.

Also, the calculation of actual returns in terms of Rupees becomes much easier, when the dividend information is available on a per share basis. Share holders will just have to multiply the number of shares they own by the dividend per share amount that the company declares. And for the mathematically inclined, they can just go ahead and calculate the dividend percentage if they want.

The change will be with immediate effect.

How to check employer/financial institution have deposited your TDS?

Most of the new age companies deduct income tax before giving salary to the employees (Tax Deduction at Source or TDS). TDS is also done by banks and other financial institutions for returns on fixed deposits, short term gains on equities etc. How do you check whether the tax deducted from you through TDS have been paid to the exchequer by your company or the financial institution?

Tax Information Network (TIN) of Income Tax department, Government of India facilitates a PAN holder to view annual tax statement (Form 26AS) online.

It’s very straight forward involving few simple steps

1. You have to register your PAN number online
2. Get it verified by TIN
3. Start checking tax credit online

The verification can be done by either going to the nearest TIN-Facilitation Centre or asking them to visit your address. There is a small fee for the one time authorization. Rs 15 + service tax if the PAN holder visits the TIN-Facilitation Centre in person or Rs. 100 + service tax if the PAN holder opts for the TIN employee to visit him and do the verification.

What is Core Banking?

Core Banking System or Core Banking Solution is a term that we hear very often these days. For IT and Banking folks, this term doesn’t need any explanation but for those who want to know a bit, here’s a brief overview of what it means.

Core banking is a general term used to describe the services provided by a group of networked bank branches. Bank customers may access their funds and other simple transactions from any of the member branch offices.

Previously a bank’s core operations such as keeping a ledger of various transactions, maintaining customer information, interest calculation of loans and deposits, adjustments to accounts on withdrawal and deposits of funds etc. were done manually. With the advent of ICT (Information & Communications Technology), efforts were done to automate various banking processes using software applications so as to make them simple, efficient, effortless and cost effective. Thus, the platform where ICT is used to perform the core operations of a bank, like those mentioned above, is known as Core Banking System.

In Core Banking System, software applications record transactions, maintain customer information, calculate interest on loans and deposits etc. The data, instead of huge ledgers, are stored in backend databases in digital form. Now, the same software can be installed in various branches of a bank and can be interconnected through the internet or telephone lines to form a core banking network of the bank. The advantage, a customer can operate on his account from any branch of the bank and if the bank owns Internet Banking or ATM facilities, then the customer can operate on his account from virtually anywhere.

Thus, Core Banking System has radically changed the way in which banks function. The greatest advantage of having a Core Bank System is that new features and functionalities can be easily added to the system that customers will have a whole lot of services that they can use. Electronic funds transfer between banks, online trading in the stock markets etc. are examples of this, which were unheard of in banks pre Core Banking System era.

Core Banking solutions are banking applications on a platform enabling a phased, strategic approach that lets people improve operations, reduce costs, and prepare for growth. Implementing a modular, component-based enterprise solution ensures strong integration with your existing technologies. An overall service-oriented-architecture (SOA) helps banks reduce the risk that can result from multiple data entries and out-of-date information, increase management approval, and avoid the potential disruption to business caused by replacing entire systems.

Tips for Filling Income Tax Return

Under Indian Income Tax Act, 1961 filing of income tax returns is compulsory if your total taxable income before allowing any deductions under section 80 exceeds the basic exemption limit. Thus it is our duty and responsibility to pay our taxes honestly and file the returns diligently. Here are some useful tips for hassle free filing of tax returns.

Taxes, after all, are dues that we pay for the privileges of membership in an organized society”– Franklin D. Roosevelt

1. Remember due dates

In case of individuals due date is 31st July. But if the accounts of the individual are to be audited or if he is a working partner in a firm whose accounts are to be audited, the return can be filed by September 30.

If you don’t file your return before the prescribed date, following consequences arise:

a) In case taxes already paid and return filed before the end of the assessment year (i.e., 31st March), nothing to be worried about.

b) In case taxes also not paid by due date, then simple interest @ 1% per month is levied u/s 234A.

c) If you file the return after the end of the assessment year (i.e., after 31st March), then a penalty of Rs 5,000 may be imposed upon you.

Furthermore, in all the above cases, you lose the benefit to carry forward your losses (business losses and capital losses), if any. Also, you cannot revise the return in future because belated return cannot be revised.

2. Organize your papers

Get hold of all the relevant information and documents (including Form 16, rent receipts, evidence of all the tax saving investments, loan certificate in case of house loan, saving account statements, copy of mutual funds and share investments and credit card statements) and put them in a separate file.

You will require them for detailed tax calculations and also for mentioning the details of exempted income and specified high value transactions in the return. These documents can also help you in future to substantiate the income and exemptions/deductions claimed, in case the return is picked up for scrutiny assessment.

3. Deposit self assessment tax, if any

Before you start filling up the form, make a detailed computation of all your taxable income and calculate your tax liability. In case any taxes are due for payment, deposit the money in an authorized bank along with self-assessment challan (Challan No. ITNS 280). Alternatively, pay through internet banking. You have to quote the receipt number of challan in your return.

4. Always fill the correct ITR form

Out of the eight forms, only first four are relevant for individuals and HUFs

ITR1 Individuals having only salary and interest income

ITR2 Individuals and HUFs having income from any source except business or profession

ITR3 Individuals and HUFs who are partners in a firm but who do not have their own proprietary business or profession

ITR4 Individuals and HUFs who have their own proprietary business or profession.

It is quite possible that ITR1 is applicable to you because you are having taxable income only from salary and interest. But please carefully note that, if you have any exempt income other than agriculture and interest income (in addition to taxable salary and interest income) you cannot file ITR1. In that case, go for ITR2.

Please also note that in case clubbing provisions are applicable to you (for example clubbing of spouse/minor child income with your income), then also you will have to file ITR2 instead of ITR1.

5. Show Exempted Income

It is binding upon you to show the exempted income also, if asked for in ITR form, or else your return can be treated as defective. For example, schedule EI of ITR2 specifically asks you to mention your exempt income like interest, dividends, long term capital gains etc.

6. Mention details of specified transactions

Don’t forget to furnish details of following high-value transactions in ITR:

a) Cash deposits of Rs 10 lakh or more in the savings account

b) Credit card payments exceeding Rs 2 lakh

c) Investments of over Rs 2 lakh in mutual funds

d) Investments of over Rs 5 lakh in bonds or debentures (other than RBI bonds)

e) Investments of over Rs 5 lakh in RBI Bonds

f) Investments of over Rs 1 lakh in shares

g) Purchase or sale of immovable property valued at Rs 30 lakh or more

Although it has not been specified, you should consider the aggregate payments/investments for the above mentioned limits (e.g., credit card limit of Rs 2 lakh is not be taken for a individual card, but all the cards put together) because it’s always better to err on the side of caution.

7. Show other income
Ensure that you show all your taxable income.

No doubt, it is very difficult to keep track of interest credited in your savings account deposit, but disclosing it is mandatory, even though the amount may be small.

Besides, also don’t forget to consider your other incomes like interest on FDs, interest on NSCs, notional rental income of your second home (even if, it is not let out), capital gains etc.

8. Don’t attach any annexure

No documents – including challans, TDS certificates, proof of tax-saving investments, computation sheets – are to be attached.

However, don’t throw them away. Keep all the supporting documents in your income tax file along with the return copy and acknowledgement slip for future reference.

9. Take help of TRPs

If you face difficulty in filling up the forms yourself, you can take the help of certified tax return preparers (TRPs) by paying a nominal fee. But remember that they are not authorized to give tax saving advice. Alternatively, you can approach tax advisors/consultants.

10. Sign the ITR

Finally, you have to sign the return yourself. In case you have gone abroad, than any other person having power of attorney from you can sign it on your behalf.

But, before signing re-check and ensure that the form is filled in completely and correctly – in particular, your personal details, the PAN, bank account details (in case of refund).

11. Get it xeroxed before submitting

Earlier, ITR was used to be filled in duplicate so that one copy was returned to the taxpayer after fixing the acknowledgement stamp. Now, as there is separate acknowledgement sheet, you need to ensure - before submitting the return - that you keep a photostat copy for your records.

12. E-filing

At present, e-filing is optional for individuals. Go for it only if you have got the digital signatures, which avoids paper work and visit to the ITO. Otherwise, it is better to follow the conventional route of manually filling up the form and submitting it physically to the ITO because e-filling without digital signatures is not much different from filing returns offline.

Finally, it is not only your obligation to file return of income under tax laws, but it is also required for obtaining various loans, overseas travel visas etc.

To conclude, as the old saying goes, “Prevention is better than cure,” it is better to pay taxes and file return properly so that you don’t face any problem at a later stage, in case your return is selected for scrutiny.

How To File Income Tax Online

I had always wanted to file my income tax returns but the plethora of paperwork always discouraged me. Finding an agent who could stand in long queues at the income tax office – of course, for a fee – to file my returns was also not me.

But then friends also scared me saying not filing tax returns will put me in banks' bad books as and when I'd apply for a home loan. That was a real shocker for I am planning to buy a house and I need to put this tax record straight.

Not that I don't pay my taxes. It's only that I don't file my tax returns (Remember paying taxes and filing returns is not the same thing). Our company's accounts department very religiously deducts tax at source – which they fondly call TDS and which also finds a mention on my salary slip. It's only that that I hate paperwork. Online banking, online news, online mutual fund investments is what I love. Internet, it seems, has made (or will make) an entire generation lazy. But then if I can also file my income tax returns online I am not complaining at all.

Welcome to the e-AGE. You can file your income tax returns online... J

Income Tax Department of India facilitates a tax payer to file his Income Tax returns online through their website. It is an easy process and following are the steps involved according to IT department website:

1. Select appropriate type of Return Form from the website (ITR-1/ITR-2/ITR-3/ITR-4)
2. Download and install Return Preparation Software for the selected Return Form
3. Fill return offline and generate XML file
4. Register and create a user id (PAN) and password at the website
5. Login and click on relevant form on left panel and select "Submit Return"
6. Browse to select XML file and click on "Upload" button
7. On successful upload acknowledgement details would be displayed. Click on "Print" to generate printout of acknowledgement/ITR-V Form
8. Incase the return is digitally signed; on generation of "Acknowledgement" the Return Filing process gets completed. You may take a printout of the Acknowledgement for your record
9. Incase the return is not digitally signed, on successful uploading of e-Return, the ITR-V Form would be generated which needs to be printed by the tax payers. This is an acknowledgement cum verification form. The tax payer has to fill-up the verification part and verify the same. A duly verified ITR-V form should be submitted with the local Income Tax Office within 15 days of filing electronically. This completes the Return filing process for non-digitally signed Returns

Here is the link to IT Department's eFiling website.