Residential status of Individuals

Under section 6(1), an individual is said to be resident in India in any previous year, if he
satisfies any one of the following conditions:
(i) He has been in India during the previous year for a total period of 182 days or more,
or
(ii) He has been in India during the 4 years immediately preceding the previous year for
a total period of 365 days or more and has been in India for at least 60 days in the
previous year.
If the individual satisfies any one of the conditions mentioned above, he is a resident. If
both the above conditions are not satisfied, the individual is a non-resident.
Note:
(a) The term “stay in India” includes stay in the territorial waters of India (i.e. 12 nautical
miles into the sea from the Indian coastline). Even the stay in a ship or boat moored
in the territorial waters of India would be sufficient to make the individual resident in
India.
(b) It is not necessary that the period of stay must be continuous or active nor is it
essential that the stay should be at the usual place of residence, business or
employment of the individual.
(c) For the purpose of counting the number of days stayed in India, both the date of
departure as well as the date of arrival are considered to be in India.
(d) The residence of an individual for income-tax purpose has nothing to do with
citizenship, place of birth or domicile. An individual can, therefore, be resident in
more countries than one even though he can have only one domicile.
Exceptions:
The following categories of individuals will be treated as residents only if the period of
their stay during the relevant previous year amounts to 182 days. In other words even if
such persons were in India for 365 days during the 4 preceding years and 60 days in the
relevant previous year, they will not be treated as resident.
(1) Indian citizens, who leave India in any previous year as a member of the crew of an
Indian ship or for purposes of employment outside India, or
(2) Indian citizen or person of Indian origin* engaged outside India in an employment orany previous year
* A person is said to be of Indian origin if he or either of his parents or either of his
grandparents were born in undivided India.
Not-ordinarily resident - Only individuals and HUF can be resident but not ordinarily
resident in India. All other classes of assessees can be either a resident or non-resident.
A not-ordinarily resident person is one who satisfies any one of the conditions specified
under section 6(6).
(i) If such individual has been non-resident in India in any 9 out of the 10 previous years
preceding the relevant previous year, or
(ii) If such individual has during the 7 previous years preceding the relevant previous
year been in India for a period of 729 days or less.
Note: In simpler terms, an individual is said to be a resident and ordinarily resident
if he satisfies both the following conditions:
(i) He is a resident in any 2 out of the last 10 years preceding the relevant
previous year, and
(ii) His total stay in India in the last 7 years preceding the relevant previous year is
730 days or more.
If the individual satisfies both the conditions mentioned above, he is a resident and
ordinarily resident but if only one or none of the conditions are satisfied, the
individual is a resident but not ordinarily resident.

HISTORICAL BACKGROUND OF VALUE ADDED TAX

Ever since 1954, when the tax on value added was introduced in France it has spread to a
large number of countries. This tax was proposed for the first time by Dr. Wilhelm Von
Siemens for Germany in 1919 as an improved turnover tax. In 1921, VAT was suggested
by Professor Thomas S. Adams for the United States of America who recommended
"sales-tax with a credit or refund for taxes paid by the producer or dealer (as purchaser)
on goods bought for resale or for necessary use in the production of goods for sales."
VAT was also recommended by the Shoup Mission for the reconstruction of the Japanese
Economy in 1949. However, the tax was not introduced by any country till 1953. France
led the way in 1954 by adopting a VAT that covered the industrial sector alone and the tax
was limited up to the wholesale level. The tax was limited to the boundaries of France
until the fifties.
VAT has, however, been spreading rapidly since the sixties. The Ivory Coast followed
France by adopting VAT in 1960. The tax was introduced by Senegal in 1961 and by
Brazil and Denmark in 1967. The tax has gathered further momentum as it was made a
standard form of sales-tax required for the countries of the European Union (then
European Economic Community). In 1968, France extended VAT to the retail level while
the Federal Republic of Germany introduced it in its tax system. The Netherlands and
Sweden imposed this tax in 1969 while Luxembourg adopted it in 1970, Belgium in 1971,
Ireland in 1972, and Italy, the United Kingdom, and Austria in 1973. Of the other members
of the European Union, Portugal and Spain introduced VAT in 1986, Greece in 1987, while
this tax was adopted by Finland in 1994. Many other European countries have adopted
VAT. Similarly, many countries in the North and South America, Africa and Oceania have
introduced VAT.
VAT has been spreading in the Asian region as well. The Republic of Vietnam adopted
VAT briefly in 1973. (VAT was abolished soon but it was reintroduced in 1999 in Vietnam.)
South Korea introduced VAT in 1977, China in 1984, Indonesia in 1985, Taiwan in 1986,
Philippines in 1988, Japan in 1989, Thailand in 1992, and Singapore in 1994 while
Mongolia has been implementing this tax since 1998.
In the South Asian Association for Regional Cooperation (SMRC) region, VAT has been
considered in great depth in India. In 1986, India introduced VAT in a different way under
the name of Modified Value Added Tax (MODVAT). Unlike the VAT system of other
countries, the Indian MODVAT system was designed to cover manufacturing of goods by
giving credit of excise duty paid on inputs. The scope of MODVAT has been extended
over the years and has since been renamed as Central Value Added Tax (CENVAT),
which covers services also.
Pakistan adopted VAT in 1990, Bangladesh in 1991, and Nepal in 1997 while Sri Lanka
introduced VAT in 1998.
As VAT is less distortive and more revenue-productive, it has been spreading all over the
world. As on today, about 130 countries have adopted the same.

How to Confirm If Your TDS was deposited by Deductor?

Thanks to online initiative taken by the government, now anyone whose tax has been deducted at source can VIEW if the tax deducted is deposited with the government . Do you want to view? This facility is being provided by NSDL through which Tax information network initiative is being implemented. Following is the excerpts of the "how to " given on NSDL website . Follow these steps and , you will be able to view tax deduction made in your case.This is important because many a time , tax is deducted by the deductor , but not deposited to the government in time. this leads to dis allowance of tax credit and further lose of interest etc. So here are the excerpts:TIN facilitates a PAN holder to view its Annual Tax Statement (Form 26AS) online. Form 26AS contains
details of tax deducted/collected on behalf of the taxpayer by deductors/collectors
advance tax/self assessment tax/regular assessment tax, etc. deposited by the taxpayers (PAN holders)
Steps for viewing Tax Credit
1. Online Registration of PAN by PAN holder
2. Verification of identity and authorisation by TIN-Facilitation Centre
3. View Tax Credit
Registration & authorisation is a one-time activity. This can happen in two ways:
a) PAN holder can personally visit any TIN-FC of its choice and get his PAN request authorised; or,
b) PAN holder can request any TIN-FC to visit him at an address specified by him and get his PAN authorised.
Registration FeeThere is no charge for viewing the Tax Credit online, however, the TIN-FC may charge for authorization of PAN as follows:
a) TIN-FC will charge Rs.17 (i.e. Rs.15 + service tax) for authorisation of PAN registration request, when the PAN holder personally visits the TIN-FC.
b) TIN-FC will charge Rs.110 (i.e. Rs.100 + service tax) for authorisation of PAN registration request in those cases where the PAN holder opts for the TIN-FC to visit him.

service tax on advertisement introduce on 1st nov 1996

ADVERTISING AGENCY SERVICES
Effective date: 1st November 1996.
Definitions:
“Advertisement” includes any notice, circular, label, wrapper, document, hoarding or any
other audio or visual representation made by means of light, sound, smoke or gas.
“Advertising agency” means any person engaged in providing any service connected
with the making, preparation, display or exhibition of advertisement and includes an
advertising consultant.
Scope of taxable service shall include any service provided or to be provided to a client,
by an advertising agency in relation to advertisement, in any manner.

♦ Activity of printing and publishing Telephone Directories, Yellow Pages or Business
Directories does not attract service tax since such activity is essentially of printing
readymade advertisement from the advertisers and publishing the same in the
directory which are similar to the activities carried out by newspapers or periodicals.
However, any activity relating to making or preparation of an advertisement, such as
designing, visualising, conceptualising, etc., will be liable to service tax.
♦ When the term ‘canvassing’ includes service of 'space selling' which merely involves
contacting potential advertisers and persuading them to give advertisement to a
particular newspaper/periodical/magazine, it would not be subject to service tax
because it does not entail any further activity relating to making and preparation of
the advertisement namely, drafting of the text etc. These tasks are left either to the
advertiser or to newspaper/periodical/magazine.
♦ The term 'canvassing' would fall within the phrase 'any service provided in any
manner connected to making preparing, displaying and exhibiting' and would be a
taxable service when it involves a space selling agency approaching a customer,
receiving the texts of the advertisement (including photographs, monograms etc. of
the customs), estimating the space that such advertisement would occupy in the
newspaper/periodical/magazine, negotiating the price, informing the general layout of
the advertisement that would finally appear in such newspaper etc.
♦ Cinema theatres cannot be treated as advertisement agencies as they project
advertisement only on behest of advertising agencies.

history of introduction of Gratuity act in india

this scheme was introduced in those establishments only where the employers
were so kind and generous to the workers or there was an agreement between the employers
and the workers. This scheme was confined to the particular establishments and even within
those establishments, to certain categories of staff. There was no general legislation for the
payment of Gratuity to all industrial workers. In due course of time, it was felt the workers

should get gratuity as a right in return of their long dedicated services to the industry.
Industrial Tribunals and Supreme Courts dealt with the disputes on the subject and their
awards and decisions brought the revolutionary changes in Social Security Legislations in
Indian industrial sector.
In the case of Delhi Cloth and General Mills Co. Ltd. Vs their workers (1968) 36 FJR 247.
Supreme Court held that the object of providing a gratuity scheme is to provide a retiring
benefit to the workman who have rendered long and unblemished service to the employer and
thereby contributed to the prosperity of the employer.
In the Working Journalists (Conditions of Service) & Miscellaneous Provisions Act, 1955, the
provision to pay the gratuity to the working journalists was made. After few years, the
Government of Kerala enacted the Kerala Industrial Employees Payment of Gratuity Act, 1970
making gratuity a statutory right of the employees. West Bengal Government enacted the
West Bengal Employees Payment of Gratuity Act, 1971 relating to the subject. The other
states were also thinking to legislate such enactments. Thus, it was felt that there should be
an uniform central legislation for the whole country instead of state legislations for each and
every separate states. The whole matter was discussed in the Labour Ministers’ Conference
held 24th and the August 1971 and thereafter in the Indian Labour Conference held on 22nd
and 23rd Oct., 1971 it was agreed that the central legislation on the payment of gratuity should
be undertaken. Accordingly, the payments of Gratuity Act, 1972 was enacted, largely based
on the West Bengal legislation, which was come into force on 16th September, 1972.

happiness mantra

1. if you want happiness for an hour take a nap.
2. if you want happiness for a day go for picnic.
3. if you want happiness for a week go for vacation.
4. if you want happiness for a month , get married.
5. if you want happiness for a year inhert wealth.
6. if you want happiness for life time love what you do.

GUIDELINES FOR MANAGING ETHICS IN THE WORKPLACE

The focus on core values and sound ethics, the hallmark of ethical management, is being
recognized as an important way to ensure the long-term effectiveness of governance
structures and procedures, and avoid the need for whistle- blowing. Employers who
understands the importance of workplace ethics, provide their workforce with an effective
framework and guiding principles to identify and address ethical issues as they arise.
(1) Codes of Conduct and Ethics : A code of ethics specifies the ethical rules of operation in

an organization. Codes of conduct specify actions in the workplace and codes of ethics
are general guides to decisions about those actions, Examples of topics typically
addressed by codes of conduct include: preferred style of dress, avoiding illegal drugs,
following instructions of superiors, being reliable and prompt, maintaining confidentiality,
not accepting personal gifts and so on Codes are insufficient if intended only to ensure
that policies are legal. All staff must see the ethics program being driven by top
management.
(2) Establish Open Communication : Instead of just creating and distributing an ethics policy,
it is important that take the time to explain the reasons for the policy and review the
guidelines and conduct formal or informal training to further sensitise employees to
potential ethical issues. Many of the ethical problems arising in a business are not clearcut,
but involve "grey areas," where the proper course of action may be ambiguous and
uncertain. It is necessary to create a work environment where employees understand
that it is acceptable to have an ethical dilemma, and give workers the resources to help
resolve such situations.
(3) Make ethics decisions in groups, and make these decisions public. This usually produces
better quality decisions by including diverse interests and perspectives, and increases
the credibility of the decision process and outcome by reducing suspicion of unfair bias.
(4) Integrate ethics management with other management practices. When developing the
values statement during strategic planning, include ethical values preferred in the
workplace. When developing personnel policies, reflect on what ethical values you'd like
to be most prominent in the organization's culture and then design policies to produce
these behaviours.
(5) Use of cross-functional teams when developing and implementing the ethics
management program. It’s vital that the organization’s employees feel a sense of
participation and ownership in the program if they are to adhere to its ethical values.
Therefore, include employees in developing and operating the program.
(6) Appointing an ombudsperson: The ombudsperson is responsible to help coordinate
development of the policies and procedures to institutionalise moral values in the
workplace. This establishes a point of contact where employees can go to ask questions
in confidence about the work situations they confront and seek advice.
(7) Creating an atmosphere of trust is also critical in encouraging employees to report ethical
violations they observe This function might best be provided by an outside consultant,
e.g., lawyer, clergyperson, counsellor etc. Or, provide a “tip” box in which personnel can
report suspected unethical activities, and do so safely on an anonymous basis.
(8) Regularly update policies and procedures to produce behaviours preferred from the code

of conduct, job descriptions, performance appraisal forms, management-by-objectives
expectations, standard forms, checklists, budget report formats, and other relevant
control instruments to ensure conformance to the code of conduct. There are numerous
examples of how organizations manage values through use of policies and procedures.
For example, we are most familiar with the value of social responsibility. To instil
behaviours aligned with this value, organizations often institute policies such as recycling
waste, donating to charities or paying employees to participate in community events. In
another example, a high value on responsiveness to customers might be implemented by
instituting policies to return phone calls or to repair defective equipment within a certain
period of time.
(9) Include a grievance policy for employees to use to resolve disagreements with
supervisors and staff.
(10) Set an example from the top: Executives and managers not only need to endorse strict
standards of conduct, but should also ensure that they follow it themselves. They must
stress to employees that dishonest or unethical conduct will not be tolerated, and that
they are expected to report any wrongdoing they encounter; showing through actions as
well as words that the company relies on, rather than discriminates against, those who
come forward concerning ethical breaches.

NEED FOR A TAX ON SERVICES

In any Welfare State, it is the prime responsibility of the Government to fulfill the increasing
developmental needs of the country and its people by way of public expenditure. India, being
a developing economy, has been striving to fulfill the obligations of a Welfare State with its
limited resources. The Government's primary sources of revenue are direct and indirect taxes.
Central excise duty on the goods manufactured/produced in India and customs duties on
imported goods constitute the two major sources of indirect taxes in India. However, revenue
receipts from customs & excise have been declining due to World Trade Commitments and
rationalization of commodity duties.


On the other hand, service sector has been growing phenomenally all over the world, though it
may vary in degree and magnitude among the various countries. The growing importance of
this sector can be gauged from the ever increasing contribution made by the service sector to
GDP, thereby pushing back the contribution of traditional contributors like agriculture and
manufacturing sectors. India is also not an exception to this changed phenomenon. In 2002,
the service sector accounted for 49.2% of GDP while agriculture accounted for 25% and
industry 25.8% of GDP. Continued growth in GDP accompanied by higher rate of growth in
service sector promises new and wider avenues of taxation to the Government.