ICAI KYC NORMS

December, 12th 2016

ANNOUNCEMENT OF KYC NORMS

All the members of Institute of Chartered Accountants of India (ICAI), who are in

practice, are hereby informed that the Council has formulated the Know Your Client

(KYC) norms at it's 356th Meeting held on 29th, 30th June and 1st July, 2016.

KNOW YOUR CLIENT (KYC) NORMS
The financial services industry globally is required to obtain information of their clients
and comply with KYC norms. Keeping in mind the highest standards of Chartered Accountancy profession in India, the Council of ICAI thought it necessary to issue such norms to be observed by the members of the profession who are in practice. In light of this background, the Council of ICAI approved the following KYC Norms which are mandatory in nature and shall apply in all assignments pertaining to attest functions.

INDIVIDUAL/ PROPRIETOR	GENERAL INFORMATION	ENGAGEMENT INFORMATION	REGULATORY INFORMATION
	NAME	TYPE OF ENGAGEMENT INFORMATION
	PAN/ADHAR
	BUSINESS DESCRIPTION
	COPY OF LAST AUDITED FINANCIAL STATEMENT
CORPORATE ENTITY	GENERAL INFORMATION	ENGAGEMENT INFORMATION	REGULATORY INFORMATION
	NAME & ADRESS OF ENTITY	TYPE OF ENGAGEMENT INFORMATION	COMPANY PAN NO
	BUSINESS DESCRIPTION		COMPANY IDENTIFICAITON NO
	COPY OF LAST AUDITED FINANCIAL STATEMENT		DIRECTOR'S NAME & ADDRESS
	NAME OF PARENT COMPANY IN CASE OF SUBSIDARY		DIRECTOR'S IDENTIFICATION NO
NON -CORPORATE ENTITY	GENERAL INFORMATION	ENGAGEMENT INFORMATION	REGULATORY INFORMATION
	NAME & ADRESS OF ENTITY BUSINESS DESCRIPTION COPY OF LAST AUDITED FINANCIAL STATEMENT NAME OF PARENT COMPANY IN CASE OF SUBSIDARY	TYPE OF ENGAGEMENT INFORMATION	FIRMS PAN NO PARTNER'S NAME & ADDRESS PARTNER'S PAN /ADHAR/DPIN NO

LTCG FOR NRI

Section - 112, Income-tax Act, 1961

 [Tax on long-term capital gains.

112. (1) Where the total income of an assessee includes any income, arising from the transfer of a long-term capital asset, which is chargeable under the head "Capital gains", the tax payable by the assessee on the total income shall be the aggregate of,—

(a) in the case of an individual or a Hindu undivided family, [being a resident,]—

(i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been his total income ; and

(ii) the amount of income-tax calculated on such long-term capital gains at the rate of twenty per cent :

Provided that where the total income as reduced by such long-term capital gains is below the maximum amount which is not chargeable to income-tax, then, such long-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax and the tax on the balance of such long-term capital gains shall be computed at the rate of twenty per cent ;

                                                                                                                      

(b) in the case of a non-resident (not being a company) or a foreign company,—

(i) the amount of income-tax payable on the total income as reduced by the amount of such long-term capital gains, had the total income as so reduced been its total income ; and

[(ii) the amount of income-tax calculated on long-term capital gains [except where such gain arises from transfer of capital asset referred to in sub-clause (iii)] at the rate of twenty per cent; and

(iii) the amount of income-tax on long-term capital gains arising from the transfer of a capital asset, being unlisted securities, calculated at the rate of ten per cent on the capital gains in respect of such asset as computed without giving effect to the first and second proviso to section 48;]]

Conclusion

Resident Indian and Resident HUF can adjust LTCG against the basic exemption limit.

A Non-Resident Individual or Non-Resident HUF cannot adjust LTCG against the basic exemption limit. Therefore, in the case of NRI even if the taxable income is NIL and he has booked long term capital gain against the capital asset. NRI has to pay LTCG tax at the rate depending on the asset class.

EPF withdrawal amount: Taxation

• If a salaried employee opts for withdrawal after continuous service of five years or above, there will be no TDS deduction on the amount.
• It is important to note that if withdrawal is made before the completion of five years of continuous service, the amount withdrawn will be taxable.
• According to new EPF rules announced by the finance minister in budget for financial year 2015-16, EPF withdrawal (taxable) will attract TDS deduction at the rate of 10% (in cases of registered PAN) or up to a maximum of 30% (in cases of unregistered PAN). However, no TDS will be deducted if the withdrawal amount is under Rs.30,000.
• It is important to note that an individual can submit form 15G during the time of withdrawal if his or her income is less than the basic exemption limit even after the addition of the provident fund withdrawal amount. If a subscriber does not submit his or her PAN, TDS will be deducted at 34% on his or her withdrawn amount. If salaried persons want to avoid TDS, they can submit form no. 15H (senior citizens) or 15G for amount up to Rs.3 lakh and Rs.2.5 lakh respectively (both the said forms are declaration forms which can be used by employees whose income is less than the taxable amount).
• It is important to note that there will be no TDS deduction in cases of transfer of a provident fund account and termination of an employment contract as a result of failing health (employee), cessation/discontinuation of a business venture (employer) or any other cause which may not be in the domain of an employee.

​

Poonam Jain

Chartered Accountant

​Email: poonam.ca.jain@gmail.com

TDS RATE CHART FY 2016-17 AY 2017-18

TDS RATE CHART FY 2016-17 AY 2017-18 (%)
Sec	Nature of Payment	Cut off (Rs.)	Indi/HUF	Others
192	Salaries	-	Avg rates	NA
192A	Premature withdrawal from EPF	30000 (50000)	10	NA
193	Interest on securities	10000	10
194	Dividends	2500	10
194A	Interest Banks/Other	10000/5000	10
194B	Winning from Lotteries	10000	30
194BB	Winnings from Horse Race	5000 (10000)	30
194C	Contractor-Single/Yearly	30K/75K(1Lakh)	1	2
	Transporter(44AE) Declaration with PAN	As above	-	-
194D	Insurance Commission	20000 (15000)	10(5 %)
194DA	Life insurance policy	100000	2 (1%)
194EE	NSS	2500	20 (10%)	NA
194G	Commission /Lottery	1000(15000)	10(5%)
194H	Commission / Brokerage	5000 (15000)	10(5%)
194I	Rent Land  and  Building F&F	180000	10
194I	Rent-Plant/Machinery/equipment	180000	2
194IA	Immovable property	50 Lakh	1
194J	Professional Fees	30000	10
194LA	Immovable Property	2 Lakh (2.5 Lakh)	10

Entries in Red color are applicable wef 01.06.2016

Depreciation – Section 32

• There are two conditions for claiming depreciation 
• There should be asset in the block 
• There should be a value(wdv) in the block 
• No depreciation can be claimed on the sale of depreciable asset irrespective of the date of Sale
• Section 50 for computation of capital gains in case of depreciable assets Notwithstanding anything contained in clause (42A) of section 2, where the capital asset is an asset forming part of a block of assets in respect of which depreciation has been allowed under this Act or under the Indian Income-tax Act, 1922 (11 of1922), the provisions of section 48 and section 49 shall be subject to the following modifications :- 
•  where the full value of the consideration received or accruing as a result of the transfer of the asset together with the full value of such consideration received or accruing as a result of the transfer of any other capital asset falling within the block of the assets during the previous year, exceeds the aggregate of the following amounts, namely:-
•  a. Expenditure incurred wholly and exclusively in connection with such transfer or transfers; 
• b. The written down value of the block of assets at the beginning of the previous year; and 
• c. The actual cost of any asset falling within the block of assets acquired during the previous year, such excess shall be deemed to be the capital gains arising from the transfer of short-term capital assets;
• Where any block of assets ceases to exist as such, for the reason that all the assets in that block are transferred during the previous year, the cost of acquisition of the block of assets shall be the written down value of the block of assets at the beginning of the previous year, as increased by the actual cost of any asset falling within that block of assets, acquired by the assessee during the previous year and the income received or accruing as a result of such transfer or transfers shall be deemed to be the capital gains arising from the transfer of short-term capital assets.

GIFT BY HUF TO ITS MEMBERS

GIFT BY HUF TO ITS MEMBERS

Receipts by members from H.U.F:- any sum received by an assessee in his capacity as a member of a H.U.F is exempt from tax to avoid double taxation as H.U.F is also assessable separately on its income in its own capacity. The sum should be received in the capacity as a member of an H.U.F. I the recipient is not a member of the H.U.F., he cannot claim the exemption. The sum should be received either out of the income of the H.U.F or out of the income of imputable estate owned by the H.U.F under section 10(2).

The ownership of impartible estate through belongs to the joint family but the income there from belongs solely and absolutely to the holder of the estate. The holder of the estate is assessable as an individual in respect of the estate income. The senior most male member succeeds to the impartible estate by law of primogeniture but the junior male members may have the right to maintenance out of the income from the impartible estate. Hence the exemption has been provided if any sum is received by the member of HUF out of the income from impartible estate.

Position of member in HUF:- only those members of the HUF can claim exemption who can either claim a share of partition or who are entitled to maintenance under Hindu law and thus have an interest in the joint income of the HUF[Kadar narian singh vs. CIT(1938) 6 ITR 157.

Conversion of separate property into HUF property cannot be exempt: - where a member of the HUF coverts his separate property into HUF property after 31 December 1969 without adequate consideration, the income of such property is included in the total income of such member under section 64(2) of income tax act. No exemption can be claimed for such income.