Fides Advisory Services Private Limited

Fides Advisory Services Private Limited Fides offers - Tax Advisory Services to Individuals & Corporates At Fides Advisory we help you enjoy life.

We offer a broad range of services to Individuals (HNI) and Corporate by providing a high level of personal attention using our ability to put today's decisions in the context of their future impact. Our comprehensive and flexible financial services, backed by innovative technology, are designed to simplify and organize your family affairs. In order to do this, we provide expert strategies to preserve your wealth and define & sustain your values.

05/08/2014

As per section 54 or section 54F of the Income-tax Act exemption is available to a tax payer when he sells his property and invests the money in buying another residential property. The law is silent about the place or the area where this property can be purchased. Hence, taking advantage of this provision a large number of Indians were selling their property in India and through proper banking channels making the investment in Real Estate in London, USA and other countries of the world. Now an amendment has been brought which says that the exemption either under section 54 or section 54F will be available only if the investment is made in one residential house situated in India. Hence, it is now very crystal clear that if you sell some property in India, you cannot buy another residential property outside India to save your taxes.

14/02/2014

Smart Ways to Manage Your Home Loan Interest Burden

Hopes of a minor fall in interest rates,especially on home loans,were dashed last week after the RBI hiked its key rates in its policy review.Home loan borrowers,especially those crushed by a heavy EMI,have been looking at the RBI for some solace for a while now.Generally,borrowers can do very little other than prepaying a part of the loan (if they have surplus cash) to reduce the interest burden or increasing the EMI (if they can afford it) to reduce the tenure and therefore,the overall interest paid.However,some experts believe home loan seekers and existing borrowers looking to switch lenders can consider experimenting with some out-of-the-ordinary home loan schemes.Such loans,which are linked to an overdraft facility,are offered by SBI,HSBC and Standard Chartered, among others. Citibank offers a home loan scheme that is a combination of a simple term loan and a credit line facility.However,most people are unaware of the existence of these schemes, as they are not promoted heavily.Such schemes can prove to be very useful,but the borrower needs to understand the products workings carefully before going ahead, says Vipul Patel,director of mortgage advisory firm Home Loan Advisors. Unlike regular home loans which are standard offerings,features of these products vary with each bank.The only thing that is common among them is the home loan is linked to an overdraft facility.Any surplus money (apart from EMI) you deposit into the account will reduce the principal outstanding (only for the purpose of calculating interest),thus reducing your interest outgo.You can also withdraw the surplus amount parked in the account,if required,though you may have to pay the applicable transaction charges per withdrawal. Again,it depends on the banks policy.The deposits into the account actually offset the interest payable for that many number of days and,as a result,reduces the loan tenure as also the interest paid over the term of loan.This is more tax-effective as interest saved (savings) is not taxable,while income is, says Patel.That is,if you were to invest the amount in fixed deposits,the interest earned would be taxable.If used efficiently,it can reduce both your loans tenure and the interest paid.While it may sound like a win-win deal,there is a flipside to these products.Most importantly,they charge at least 0.25% more than a regular home loan. For instance,HSBCs Smart Homes rate is 0.25% higher than its regular home loan.Moreover,some banks also levy an annual fee of up to 1% of outstanding balance or loan amount,which is quite substantial. You need to carry out a cost-benefit analysis to ascertain whether a simple part pre-payment is better than depositing surpluses, says VN Kulkarni,chief credit counsellor,Abhay Credit Counselling Centre. Instead,it might be wiser to go for banks that charge an interest rate as low as 9.5%,he reasons.Simply put,you will benefit from these products,primarily if you direct all your savings into this account and are confident of parking a surplus.That means,it is not going to help if you are stretched for paying the basic EMI itself.

Economic Times, New Delhi, 04-02-2014

14/02/2014

Not Filing IT Returns can Lead to Prosecution

If you haven't filed your income-tax returns within the statutory deadline or within the time period available after the I-T department issues a notice, it could result in prosecution. In case of a firm or a company, it is the persons responsible for the day-to-day conduct of the business—such as partners or directors—who could face prosecution.

This was upheld by the Supreme Court in its order last week. The SC has also held that in case prosecution proceedings are initiated, taxpayers have to prove the circumstances which prevented them from filing the I-T returns. Which means that the burden is on the taxpayer to prove that the failure to furnish the I-T returns was not wilful.

In addition to penal interest, the I-T Act also provides for prosecution—rigorous imprisonment of three months to seven years and a fine.
Prosecution proceedings can be initiated when the I-T return is not filed by the statutory due date or within the time permitted by the tax authority in the notice sent requiring filing of such returns.

Section 276CC of the I-T Act enables such prosecution proceedings to be carried out. However, provisos to this section provide for some relief in certain instances.

A taxpayer can file the I-T returns by the end of the fiscal year in which the return is required to be filed and still not attract prosecution proceedings. For instance, the due date of filing returns for a salaried employee is July 31. In respect of income earned during fiscal 2012-13 (April 1, 2012 up to March 31, 2013) salaried employees had to file their I-T returns by July 31, 2013. However, even if the returns are filed by March 31, 2014, prosecution proceedings will not be attracted.

Similarly, no prosecution proceedings are initiated if the tax payable after prepaid taxes (advance tax and tax deducted at source) does not exceed Rs 3,000.

"However, such relief from prosecution is not available in case of a failure to file I-T returns in response to a notice sent by the tax authorities," explains Tarun Gulati, partner, PDS legal, law firm specializing in tax litigation.

"As there is no protection available against prosecution, even if substantial taxes have been paid either as advance taxes or tax deducted at source, notices from the tax department calling for filing of I-T returns must be attended to promptly. Partners and directors of business entities who are in charge of day-to-day operations must also ensure due diligence in this regard, else they too could be prosecuted," he adds.

In this case, a Chennai-based partnership firm, Sasi Enterprises, failed to file I-T returns for two years—for fiscal years 1990-91 and 1991-92. The firm also did not act upon the notices sent by the tax department. Consequently, the tax department, in the absence of a tax return or financial information, carried out a 'best judgment' assessment and raised tax demands.

The firm appealed against the demand and the matter was pending. In parallel, partners filed belated individual I-T returns. In these individual returns, it was mentioned that the accounts of the firm were not finalized and, hence, no returns of the firm had been filed.

The SC dismissed the argument that no prosecution could be initiated against the partners of the firm on the ground that the appeal was pending and the assessment was not completed. The apex court also held that the firm was independently required to file its I-T returns and dismissed the contention that a declaration made in the individual returns of the partners stating reasons for not filing the firm's return would ensure protection against criminal proceeding.

The SC directed the criminal court to complete trial against the firm and its partners within four months.

Times of India, New delhi, 10-02-2014

13/02/2014

While Taking a Home Loan Don’t Allow Bank to Choose your Insurance Policy

Whenever you take a home loan, the lending bank insists on an insurance policy to cover risks to your home. And before you know it, the bank would have deducted the premium amount from your account.

In most cases, the bank neither discusses the various insurance options available to you nor looks at what is best suited to your needs. You, as the policy holder, does not even get to choose or understand the policy conditions, what it covers and does not cover. The choice of the insurer and the policy will mostly depend on the insurance company with which the bank has a tie-up.

These are practices inimical to consumer interest and both the banking and the insurance regulators should stop them. And consumers on their part, would do well to insist on choosing the insurance company and the policy that suits their interest best. There are for example, policies that cover only the building, but with an additional amount, cover the appliances too. Similarly, home loan insurances ensure that in the event of the death of the borrower, the remaining loan amount is paid by the insurance company. Some insurance policies also cover disability or illness of the borrower and it should be the prerogative of the consumer to choose what is best suited to her or him.

A letter from a reader explains best, the kind of problems that consumers can face with a wrong policy chosen by the bank. Isha’s husband, working as Vice-President in a multinational company had taken a home loan of ` 35 lakh. Then suddenly he contracted viral pneumonia and passed away at the age of 46.

Isha’s hopes of the insurance taking care of the huge loan burden were soon dashed — she was told that the cause of death was an illness falling outside the nine major illnesses covered under the policy!

An order of the apex consumer court decided on February 7, 2014, highlights another associated problem. Dr Ajay Singh Bhambri and his wife had taken a home loan, for which the bank insisted on an insurance policy covering the outstanding loan amount in the event of the death of either of the borrowers.

Once the policy was signed and the amount deducted from their account towards the first premium, the couple assumed that the bank had the policy.

Just 12 days after signing the policy, Vandana Bhambri suddenly died of heart attack.

When her husband made the claim, he was told that the policy had not even come into existence because of some pending medical examination.

The apex consumer court too upheld the decision of the insurer, on the basis of a Supreme court order, in which the apex court had held that merely filing the proposal form and paying the premium did not create a binding contract (FA NO 881 of 2013).

What is unfortunate in this case is that the insurance company had taken advantage of its own inefficiency, resulting in delays in issuing the policy. The IRDA Regulation on the Protection of the Policy Holders’ interests ( PPHI), clearly states that “proposals shall be processed by the insurer with speed and efficiency and all decisions thereof shall be communicated by it in writing within a reasonable period not exceeding 15 days from receipt of proposals by the insurer”.

Besides, the very fact that the consumers were unaware of the process of completion of the contract or the requirement of medical examinations for the policy that was handed to them, also indicates a violation of this Regulation, which requires that the insurer gives all relevant information to the consumer.

So if you are going for a home loan insurance, look at the options yourself, understand the policy conditions and make an informed choice.
Do not allow the bank to choose your policy.

Hindustan Times, New Delhi, 09-02-2014

31/01/2014

New PAN Allotment Norms put on Hold

Few days after announcing a new procedure for allotting permanent account numbers (PAN), the Central Board of Direct Taxes (CBDT) today put the decision on hold without providing any reason for the same.

According to a statement issued by the CBDT, “It has decided to keep in abeyance the decision to change the procedure for PAN allotment till further orders ... In the meantime the old procedure of PAN application and allotment shall continue.”

An official said that the decision comes in wake of stiff opposition from assessees and various other quarters following the earlier announcement of changing the allotment procedure from February 3.

Tax experts had criticised the move, saying that there were practical challenges in implementing the new norms, which would make it more difficult to obtain PAN, especially for foreigners.

According to the earlier announcement, applicants for PAN had to produce original documents related to identification, address and date of birth.

“Every PAN applicant has to submit self-attested copies of proof of identity, proof of address (PoA) and date of birth (DoB) documents and also produce original documents of such PoA/DoB documents, for verification at the counter of PAN facilitation centres,” the CBDT had said.

Currently there is also no need to carry along original documents at the time of submitting the application.

Business Line, New Delhi, 31-01-2014

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