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HUF Creation Deed

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[To be executed on Rs. 100 Stamp Paper in UP]

HUF Creation Deed

DECLARATION OF GIFT MADE BY _____ _____ ____ ____TO THE HINDU UNDIVIDED FAMILY OF ____ _____ ____ ___ ___

I, ____ ____ ______, residing at___ __ ___ __ __ __ ____ ___, do hereby declare and affirm as under:

  1. That out of natural love and affection borne by me towards the Hindu Undivided Family of_______ _____ _______ _______ ____, I have made a gift of Rs.___ ___ (Rupees ___ _____ ____ __only) as per the following details:

2. By Cheque No.__ ___ ___, dated __ ___ __ ___, drawn on Bank _____ __ ___ ___ ___ ____, _ _ ____ __ __ __ ___ Branch, in favour of ___ ___ ___ ____ ____ ____ ___ HUF.

3. The above Gift has been duly accepted by ____ ___ ___ ___ ____ ___ ___, as Karta of his Hindu Undivided Family and has been duly acknowledged hereunder.

  1. This Declaration of Gift is made to record the fact that I have made this Gift in favour of the Donee as above, who now has the absolute right, title and interest in the gifted on said amount.
    Date: ___________, 200__ ____ ___ ___ ____ _____

 (Signature of the Donor)
ACKNOWLEDGEMENT OF GIFT

I, ________________________, hereby acknowledge having received the above gift made to my Hindu Undivided Family by _________________________.

Date: ___________, 200__ ___________________

(Signature of the Donee as Karta of his HUF)

RBI/2013-14/452 Merchanting Trade Transactions

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Date: Jan 17, 2014

RBI/2013-14/452
A.P. (DIR Series) Circular No.95

January 17, 2014

To

All Category – I Authorised Dealer Banks

Merchanting Trade Transactions

Madam / Sir,

Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular Nos.106 & 4 dated June 19, 2003 and July 19, 2003 respectively, containing directions relating to merchanting or intermediary trade transactions. In the light of the recommendations of the Technical Committee on Services/Facilities to Exporters (Chairman: Shri G. Padmanabhan) to further liberalise and simplify the procedure, the existing guidelines for merchanting or intermediary trade transactions have been reviewed. Accordingly in supersession of the existing guidelines, the revised guidelines will come into effect immediately.

2. While handling merchant trade transactions or intermediary trade transactions, AD Category – I bank may keep the following guidelines in view:

i.            Goods involved in the merchanting or intermediary trade transactions would be the ones that are permitted for exports / imports under the prevailing Foreign Trade Policy (FTP) of India, at the time of entering into the contract and all the rules, regulations and directions applicable to exports (except Export Declaration Form) and imports (except Bill of Entry) are complied with for the export leg and import leg respectively;

ii.            Both the legs of a merchanting or intermediary trade transaction are routed through the same AD bank. The bank should verify the documents like invoice, packing list, transport documents and insurance documents and satisfy itself about the genuiness of the trade.

iii.            The entire merchanting or intermediary trade transactions should be completed within an overall period of nine months and there should not be any outlay of foreign exchange beyond four months.

iv.            The commencement of merchanting or intermediary trade would be the date of shipment / export leg receipt or import leg payment, whichever is first. The completion date would be the date of shipment / export leg receipt or import leg payment, whichever is the last;

v.            Short-term credit either by way of suppliers’ credit or buyers’ credit will be available for merchanting or intermediary trade transactions including the discounting of export leg LC by an AD bank, as in the case of import transactions

vi.            AD bank should ensure one-to-one matching in case of each merchanting or intermediary trade transaction and report defaults in any leg by the traders to the concerned Regional Office of RBI on half yearly basis in the format as annexed. The deadline for submission of the report would be 15 calendar days after the close of each half year. In case of repeated defaults i.e. three cases or more in a year, ADs should restrain the traders from entering into any further transaction in merchanting or intermediary trade and consider recommending caution listing of the trader, to the Reserve Bank of India;

3. The merchanting traders have to be genuine traders of goods and not mere financial intermediaries. Confirmed orders have to be received by them from the overseas buyers. Authorised Dealer should satisfy itself about the capabilities of the merchanting trader to perform the obligations under the order. The transactions should result in reasonable profits to the merchanting trader.

4. The inward remittance from the overseas buyer should preferably be received first and the outward remittance to the overseas supplier will be made subsequently. Alternatively, an irrevocable Letter of Credit (LC) should be opened by the buyer in favour of the merchant. On the strength of such LC the merchant in turn may open a LC in favour of the overseas supplier. The terms of payment under both the LCs should be such that payment for import LC is required to be made after receipt of payment under export LC. The export LC should be issued in the name of original merchanting trader in India and import LC should be favouring the original supplier. In case export leg payment is received in advance, AD banks need not insist on opening of export LC.

5. In case advance against the export leg is received by the merchanting trader, the advance payment may be held in a separate deposit / current account in foreign currency or Indian Rupees. The amount required for import leg should be earmarked till the payment of import and should not be made available to the merchanting trader for use, other than for import payment or short-term deployment of fund limited to the import payable, with the same AD for the intervening period. If advance for the import leg is demanded by the overseas seller, the same should be paid against bank guarantee from an international bank of repute;

6. Reporting for merchanting or intermediary trade for compilation of R-return should be done on gross basis, against the undernoted codes :

Trade

Purpose Code under FETERS

Description
Export P0108 Goods sold under merchanting /receipt against export leg of merchanting trade
Import S0108 Goods acquired under merchanting /payment against import leg of merchanting trade

7. AD Category-I banks may bring the contents of this circular to the notice of their constituents concerned and note the guidelines for strict compliance.

8. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(C. D. Srinivasan)
Chief General Manager

Third party payments for export / import transactions

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RBI/2013-14/364
A. P. (DIR Series) Circular No.70
November 8 , 2013
To
All Category-I Authorised Dealer Banks
Madam / Sir,.

Third party payments for export / import transactions

Attention of Authorized Dealer Category – I banks is invited to various provisions of FEMA Notification No. 14 dated May 3, 2000 dealing with the manner of receipt & payment for trade transactions. Normally payment for exports has to be received from the overseas buyer named in the Export Declaration Form (EDF) by the exporter and the payment shall be received in a currency appropriate to the place of final destination as mentioned in the EDF irrespective of the country of residence of the buyer. Similarly, the payments for the import should be made to the original overseas seller of the goods and the AD should ensure that the importer furnishes evidence of import, such as, Exchange Control copy of the Bill of Entry to satisfy itself that goods equivalent to the value of remittance have been imported.
2. With a view to further liberalising the procedure relating to payments for exports/imports and taking into account evolving international trade practices, it has been decided as under:
i. EXPORT TRANSACTIONS
AD banks may allow payments for export of goods / software to be received from a third party (a party other than the buyer) subject to conditions as under:
a. Firm irrevocable order backed by a tripartite agreement should be in place;
b. Third party payment should come from a Financial Action Task Force (FATF) compliant country and through the banking channel only;
c. The exporter should declare the third party remittance in the Export Declaration Form;
d. It would be responsibility of the Exporter to realize and repatriate the export proceeds from such third party named in the EDF;
e. Reporting of outstandings, if any, in the XOS would continue to be shown against the name of the exporter. However, instead of the name of the overseas buyer from where the proceeds have to be realised, the name of the declared third party should appear in the XOS; and
f. In case of shipments being made to a country in Group II of Restricted Cover Countries, (e.g. Sudan, Somalia, etc.), payments for the same may be received from an Open Cover Country.
Note: Restricted cover Group II country is country which experiences chronic political and economic problems as well as balance of payment difficulties.
ii. IMPORT TRANSACTIONS
AD banks are allowed to make payments to a third party for import of goods, subject to conditions as under:
a. Firm irrevocable purchase order / tripartite agreement should be in place;
b. Third party payment should be made to a Financial Action Task Force (FATF) compliant country and through the banking channel only;
c. The Invoice should contain a narration that the related payment has to be made to the (named) third party;
d. Bill of Entry should mention the name of the shipper as also the narration that the related payment has to be made to the (named) third party;
e. Importer should comply with the related extant instructions relating to imports including those on advance payment being made for import of goods; and
f. The amount of an import transaction eligible for third party payment should not exceed USD 100,000. This limit will be revised as and when considered expedient.
3. These instructions will come into force with immediate effect.
4. AD Category – I banks may bring the contents of this Circular to the notice of their constituents concerned.
5. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,
(C.D Srinivasan)
Chief General Manager

No TDS on Service Tax Component if Shown seperately

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CBDT CIRCULAR NO. 1/2014 [DATED 13-1-2014]
TDS under Chapter XVII-B of the Income-tax Act, 1961 on service tax component comprised in the payments made to residents – clarification regarding
The Board had issued a Circular No.4/2008 dated 28-04-2008 wherein it was clarified that tax is to be deducted at source under section 194-I of the Income-tax Act, 1961 (hereafter referred to as ‘the Act’), on the amount of rent paid/payable without including the service tax component. Representations/letters has been received seeking clarification whether such principle can be extended to other provisions of the Act also.
Attention of CBDT has also been drawn to the judgement of the Hon’ble Rajasthan High Court dated 1-7-2013, in the case of CIT (TDS) Jaipur v. Rajasthan Urban Infrastructure (Income-tax Appeal No.235, 222, 238 and 239/2011), holding that if as per the terms of the agreement between the payer and the payee, the amount of service tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service tax component u/s 194J of the Act.
The matter has been examined afresh. In exercise of the powers conferred under section 119 of the Act, the Board has decided that wherever in terms of the agreement/contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component.

NHAI public issue of tax-free bonds to open on Wednesday

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NEW DELHI, JAN 14, 2014: THE National Highways Authority of India (NHAI) has announced the public issue of tax free, secured redeemable, non convertible bonds in the nature of debentures of the face value of Rs. 1,000 each (“Bonds”), for an amount of Rs. 1,00,000 lakhs with an option to retain oversubscription up to Rs. 2,69,840 lakhs aggregating to a total of Rs. 3,69,840 lakhs. The proposed Bonds have been rated “CRISIL AAA/Stable” by CRISIL; CARE “AAA” by CARE and “BWR AAA with Stable Outlook” by Brickwork. The issue opens on January 15, 2014 and closes on February 5, 2014 with an option of early closure. The Bonds are proposed to be listed on BSE Limited and National Stock Exchange of India Limited.
The Bonds are offered with two different Series, i.e. with tenor of 10 years and 15 years. The coupon rate for Individual and HUF investors applying for an amount up to Rs. 10 lakhs shall be 8.52% and 8.75% for the Bonds with tenor of 10 years and 15 years, respectively. For all other investors, the coupon rate shall be 8.27% and 8.50%, respectively. As Bonds carry tax benefits under section 10(15) (iv) (h) of the Income Tax Act, 1961, as amended, the income earned by way of interest on these Bonds is fully exempt from Income Tax and shall not form part of Total Income.
The minimum application size is 5 Bonds (Rs. 5,000) individually or collectively across both Series of Bonds and in multiples of 1 Bond (Rs. 1,000) thereafter. The investors can download the application form for the Issue from the websites of the Lead Managers at www.edelweissfin.com, www.akcapindia.com, www.axiscapital.co.in andwww.icicisecurities.com and the websites of the stock exchanges at www.bseindia.com and www.nseindia.com.
The Allotment shall be made on first come first serve basis determined on the basis of date of upload of Applications on the electronic Application platform of the stock exchanges. The Allotment of the Bonds shall be in dematerialized form as well as physical form. However, trading in Bonds shall be compulsorily in dematerialised form.

A History Of New Year

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A move from March to January
The celebration of the new year on January 1st is a relatively new phenomenon. The earliest recording of a new year celebration is believed to have been in Mesopotamia, c. 2000 B.C. and was celebrated around the time of the vernal equinox, in mid-March. A variety of other dates tied to the seasons were also used by various ancient cultures. The Egyptians, Phoenicians, and Persians began their new year with the fall equinox, and the Greeks celebrated it on the winter solstice.

Early Roman Calendar: March 1st Rings in the New Year
The early Roman calendar designated March 1 as the new year. The calendar had just ten months, beginning with March. That the new year once began with the month of March is still reflected in some of the names of the months. September through December, our ninth through twelfth months, were originally positioned as the seventh through tenth months (septem is Latin for “seven,” octo is “eight,” novem is “nine,” and decem is “ten.” January Joins the Calendar

The first time the new year was celebrated on January 1st was in Rome in 153 B.C. (In fact, the month of January did not even exist until around 700 B.C., when the second king of Rome, Numa Pontilius, added the months of January and February.) The new year was moved from March to January because that was the beginning of the civil year, the month that the two newly elected Roman consuls—the highest officials in the Roman republic—began their one-year tenure. But this new year date was not always strictly and widely observed, and the new year was still sometimes celebrated on March 1.

Julian Calendar: January 1st Officially Instituted as the New Year In 46 B.C. Julius Caesar introduced a new, solar-based calendar that was a vast improvement on the ancient Roman calendar, which was a lunar system that had become wildly inaccurate over the years. The Julian calendar decreed that the new year would occur with January 1, and within the Roman world, January 1 became the consistently observed start of the new year.

Middle Ages: January 1st Abolished In medieval Europe, however, the celebrations accompanying the new year were considered pagan and unchristian like, and in 567 the Council of Tours abolished January 1 as the beginning of the year. At various times and in various places throughout medieval Christian Europe, the new year was celebrated on Dec. 25, the birth of Jesus; March 1; March 25, the Feast of the Annunciation; and Easter.

Gregorian Calendar: January 1st Restored In 1582, the Gregorian calendar reform restored January 1 as new year’s day. Although most Catholic countries adopted the Gregorian calendar almost immediately, it was only gradually adopted among Protestant countries. The British, for example, did not adopt the reformed calendar until 1752. Until then, the British Empire —and their American colonies— still celebrated the new year in March.

Borrowing and Lending in Rupees – Investments by persons resident outside India in the tax free, secured, redeemable, non-convertible bonds

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Date: Dec 24, 2013
Borrowing and Lending in Rupees – Investments by persons resident outside India in the tax free, secured, redeemable, non-convertible bonds
RBI/2013-14/416
A.P. (DIR Series) Circular No.81

December 24, 2013

To
All Authorised Dealer Category – I Banks

Madam / Dear Sir

Borrowing and Lending in Rupees – Investments by persons resident outside India in the tax free, secured, redeemable, non-convertible bonds

Attention of Authorized Dealer Category – I (AD Category – I) banks is invited to the Regulation No. 6 (2) of Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations, 2000 (Notification No. FEMA 4/2000-RB dated May 03, 2000) which imposes restrictions on person resident in India who have borrowed in Rupees from a person resident outside India to the effect that such borrowed funds cannot be used for any investment, whether by way of capital or otherwise, in any company or partnership firm or proprietorship concern or any entity, whether incorporated or not, or for relending.

2. On a review, it has been decided to permit such resident entities / companies in India, authorised by the Government of India, to issue tax-free, secured, redeemable, non-convertible bonds in Rupees to persons resident outside India to use such borrowed funds for the following purposes:

(a) for on lending / re-lending to the infrastructure sector; and

(b) for keeping in fixed deposits with banks in India pending utilization by them for permissible end-uses.

3. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers.

4. Reserve Bank has since amended the subject Regulations accordingly through the Foreign Exchange Management (Borrowing and Lending in Rupees) (Amendment) Regulations, 2013 which have been notified vide Notification No. FEMA.287/2013-RB dated September 17, 2013, vide G.S.R. No. 645(E) dated September 20, 2013, read with Corrigendum dated October 24, 2013 vide G.S.R.No.741(E) dated November 19, 2013.

5. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Rudra Narayan Kar)
Chief General Manager-In-Charge

National Savings Securities

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Date: Dec 19, 2013
Inflation Indexed National Savings Securities- Cumulative, 2013
RBI 2013-14/411
DGBA.CDD.No. 3688/13.01.999/2013-2014

December 19, 2013

The Chairman & Managing Director
Head Office (Government Accounts Department)
State Bank of India & Associate Banks
All Nationalised Banks
ICICI Bank Ltd., HDFC Bank Ltd, Axis Bank Ltd., and
Stock Holding Corporation of India Ltd (SHCIL).

Dear Sir/Madam,

Inflation Indexed National Savings Securities- Cumulative, 2013

It has been decided by the Government of India, as per their Notification F.No. 4(16) W&M/2012 dated December 19, 2013, to issue Inflation Indexed National Savings Securities- Cumulative, 2013 (“the Bonds”) with effect from December 23, 2013 to December 31, 2013. The Government of India reserves the right to close the issue earlier than December 31, 2013. The terms and condition of the issue of the Bonds shall be as follows:

2. Eligibility for Investment

The Bonds may be held by:-

i) an individual, not being a Non-Resident Indian-

  1. in his or her individual capacity, or
  2. in individual capacity on joint basis, or
  3. in individual capacity on anyone or survivor basis, or
  4. on behalf of a minor as father/mother/legal guardian.

ii) a Hindu Undivided Family (HUF)

iii) (a) ‘Charitable Institution’ to mean a Company registered under Section 25 of the Indian Companies Act 1956, or

(b) an institution which has obtained a Certificate of Registration as a charitable institution in accordance with a law in force; or

(c) any institution which has obtained a certificate from Income Tax Authority for the purposes of Section 80G of the Income Tax Act, 1961.

iv) ‘University’ means a university established or incorporated by a Central, State or Provincial Act, and includes an institution declared under section 3 of the University Grants Commission Act, 1956 (3 of 1956), to be a university for the purposes of that Act.

3. Limit of Investment

Minimum limit for investment in the bonds is `5,000/- and maximum limit for investment is `5,00,000/- per applicant per annum.

4. Tax Treatment

Income Tax: Interest on the Bonds will be taxable under the Income-Tax Act, 1961 as applicable according to the relevant tax status of the bonds holder.

5. Issue Price

i) The Bonds will be issued at par, i.e. at 100.00 per cent.

ii) The Bonds will be issued for a minimum amount of `5,000/- (face value) and in multiples thereof. Accordingly, the issue price will be `5,000/- for every `5,000/-(Nominal).

6. Subscription

Subscription to the Bonds will be in the form of Cash/Drafts/Cheques/online through internet banking. Cheques or drafts should be drawn in favour of the bank (Receiving Office), specified in paragraph 10 below and payable at the place where the applications are tendered.

7. Date of Issue

The date of issue of the Bonds in the form of Bonds Ledger Account will be opened (issued) from the date of receipt of funds/realisation of draft/cheque.

8. Form

i) The Bonds will be issued only in the form of Bonds Ledger Account and may be held at the credit of the holder in an account called Bonds Ledger Account (BLA).

ii) The Bonds will be issued in the form of Bonds Ledger Account and held with Reserve Bank of India. A certificate of holding as specified in ‘Form I’ (attached) will be issued to the holder of Bonds in Bonds Ledger Account.

9.Applications

i) Applications for the Bonds may be made in the application format attached or in any other form as near as thereto stating clearly the amount and the full name and address of the applicant.

ii) Applications should be accompanied by the necessary payment in the form of cash/drafts/cheques/online through internet banking as indicated in paragraph 6 above.

Note:- The authorised banks are responsible to ensure compliance with the applicable KYC norms. The application form and the requisite documentation are to be retained by the authorised banks for record and future reference.

10. Receiving Offices

Applications for the Bonds in the form of Bonds Ledger Account will be received at:

(a) Branches of State Bank of India, Associate Banks, Nationalised Banks, three private sector banks (i.e. HDFC Bank Ltd., ICICI Bank Ltd., AXIS Bank Ltd.) and SHCIL during their working hours.

(b) Any other bank or number of branches of the banks and SHCIL where the applications will be received as specified by the Reserve Bank of India in this behalf from time to time.

11. Nomination

  1. A sole holder or a sole surviving holder of a Bond(s), being an individual, may nominate in the Form annexed to this notification or as near thereto as may be, one or more persons who shall be entitled to the Bonds and the payment thereon in the event of his/her death.
  2. Where any amount is payable to two or more nominees and either or any of them dies before such payment becomes due, the title to the Bonds shall rest in the surviving nominee or nominees and the amount being due thereon shall be paid accordingly. In the event of the nominee or nominees predeceasing the holder, the holder may make a fresh nomination.
  3. No nomination shall be made in respect of the Bonds issued in the name of a minor.
  4. A nomination made by a holder of Bonds may be varied by a fresh nomination as near thereto as may be, or may be cancelled by giving notice in writing to the Receiving Office in the Form annexed to the notification.
  5. Every nomination and every cancellation or variation shall be registered at the Reserve Bank of India through the authorised bank and shall be effective from the date of such registration.
  6. If the nominee is a minor, the holder of Bonds may appoint any person to receive the Bonds/amount due in the event of his/her death during the minority of the nominee.

12. Transferability

The Bonds in the form of Bonds Ledger Account shall be transferable to nominee(s) on death of holder (only individual/s).

13. Interest

The Bonds will bear interest at the rate of 1.5% (fixed rate) per annum + inflation rate calculated with respect to final combined Consumer Price Index [(CPI) Base; 2010 = 100]. Final combined CPI will be used with a lag of three months to calculate incremental inflation rate (i.e. final combined CPI for September would be used as reference CPI for all days of December). Interest will be compounded with half-yearly rests and will be payable on maturity along with the principal.

14. Advances/Tradability against Bonds

The Bonds shall not be tradable in the secondary market. The Bonds shall be eligible as collateral for loan from banks, Financial Institutions and Non-Banking Financial Company (NBFC). The lien to that effect will be marked in the depository (RBI) by the authorised banks.

15. Repayment

  1. The Bonds shall be repayable on the expiration of 10 (ten) years from the date of issue. The investor will be advised by the authorised bank one month before maturity regarding the ensuing maturity of Bonds advising them to provide a Letter of Acquaintance, confirming the NEFT/NECS account details, etc. to the authorised bank. If everything is in order, the investor will be paid within maximum five days of the maturity.
  2. Early repayment/redemption before the maturity date is allowed after one year of holding from the date of issue for senior citizens, i.e. 65 and above years of age and for all others, after 3 (three) years of holding, subject to the penalty charges at the rate of 50% of the last coupon payable. Early redemption to be allowed only on coupon date.

16. Handling charges

Handling charges at the rate of `1.00 (Rupee one only) per `100.00 will be paid to the authorised banks on the subscription received by them from investors.

Yours faithfully,

(Sangeeta Lalwani)
General Manager
Encls.: As above.

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Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances – Credit Card Accounts

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RBI vide its notification no.DBOD.No.BP.BC.78/21.04.048/2013-14 dated December 20, 2013, has clarified the norm for bringing the credit card dues under NPA. It reads ou as below:

Date: Dec 20, 2013
Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances – Credit Card Accounts
RBI/2013-14/414
DBOD.No.BP.BC.78/21.04.048/2013-14

December 20, 2013

The Chairman and Managing Director/
Chief Executive Officer of
All Scheduled Commercial Banks

Dear Sir,

Prudential Norms on Income Recognition, Asset Classification and
Provisioning pertaining to Advances – Credit Card Accounts

Please refer to paragraph 2.1 of the Master Circular dated July 01, 2013 on Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances, wherein definitions of non-performing assets (NPAs) have been indicated.

2. In credit card accounts, the amount spent is billed to the card users through a monthly statement with a definite due date for repayment. Banks give an option to the card users to pay either the full amount or a fraction of it, i.e., minimum amount due, on the due date and roll-over the balance amount to the subsequent months’ billing cycle.

3. It has come to our notice that there are divergent practices being followed by banks with regard to asset classification status of credit card accounts if minimum amount due is not paid on the specified due date. While some banks reckon the due date specified in the statement for payment of minimum amount due to determine the over-due status, some banks reckon the subsequent billing date to determine the over-due status of the minimum amount due. In order to bring in consistency and induce transparency, it is advised that a credit card account will be treated as non-performing asset if the minimum amount due, as mentioned in the statement, is not paid fully within 90 days from the next statement date. The gap between two statements should not be more than a month.

4. Banks should follow this uniform method of determining over-due status for credit card accounts while reporting to credit information companies and for the purpose of levying of penal charges, viz. late payment charges, etc., if any.

Yours faithfully,

(Chandan Sinha)
Principal Chief General Manager

Clubbing of Income

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Income from other persons included in  Assessee’s Total Income

Normally an assessee is taxed in respect of his own income only, but U/s 60 to 64 of the Act an assessee may be taxed in respect of income which legally belongs to someone else. Inclusion of an income of one person in the income of another person is known as “clubbing of Income”.

The following Incomes or assets are clubbed:-

0 Transfer of an income without transfer of assets (Sec. 60):-

1- Such income is to be clubbed in the income of transferor;

2- it is immaterial whether transfer is revocable or irrevocable and whether it is made before the commencement of this Act or after commencement of this Act.

3- Example:- Mr. A, owns 1,000, 12% debentures of Rs. 100/- each in x ltd. . Interest on such debenture of Rs. 12000/- is transferred by Mr. A to Mr. B, his friend, without transferring theownership of the debentures. Rs. 12000/- being debenture interest as received by B will be clubbed in the hands of Mr. A U/s 60.

0 Income arising from revocable transfer of assets (Sec. 61)

1- Is to be clubbed in the total income of transferor;

2- As per Sec.63 transfer is deemed to be revocable, Where the ownership can be taken back

3- The clubbing provision will operate even if only part of income of the transferred asset had been applied for the benefit of the transferor. Once the transfer is revocable, the entire income from the transferred asset is includible in the total income of the transferor.

4- Exception where clubbing provisions are not attracted even in case of revocable transfer (Sec. 62) by the transferor;

a- Transfer is not revocable during the life time of the beneficiary or the transferee provided that transferor derives no direct or indirect benefit from such income.

b- Transfer made before April 1st years.

0 Clubbing of Income arising to spouse :-

• Remuneration of spouse[Sec.64(1)(ii)]:-

a- The taxpayer is an individual;

b- He/she has a substantial interest in the concern;

c- Spouse of the taxpayer is employed in the above mentioned concern;

d- Spouse is employed in the concern without any technical and professional knowledge or

e- Where both husband and wife have substantial interest in the concern, such income will experience. Income to be clubbed in the hands of individual is limited to salary, commission, fees, or any other form of remuneration received by the spouse, directly or indirectly, whether in cash or kind, from a concern in which individual has a substantial interest. be clubbed in the hands of spouse whose total income, excluding such income is higher.

f- Where such income is clubbed in the total income of either spouse, income arising succeeding year shall not be clubbed in the total income of the other spouse unless Assessing Officer is satisfied, if it is necessary to do so.

Substantial Interest:-

a- If an individual beneficially holds (individually or along with his relatives) 20% or more of equity shares in a Company at any time during the previous year.

b- If individual entitled to 20% profit in a concern (individually or along with his relatives at any time during the previous year.

The term relative means husband, wife, brother or sister or any lineal ascendant or descendant of that individual.

• Transfer of an income earning Assets, other than a House Property to spouse, without adequate consideration[Sec. 64(1)(iv):-

1- there is a transfer of an asset (other than House Property), directly or indirectly, from one spouse to other, any income arising to the transferee from the transferred assets either shall be included in the total income of transferor.

2- In case of transfer of House Property, without adequate consideration, the transferor shall be deemed to be the owner of house property and its annual value shall be taxed in his hands.

3- Income from accretion of transferred assets is not to be clubbed with the income of the transferor.

4- Where transferred Assets are invested by the transferee in the business, proportionate income arising from such investment is to be clubbed in the total income of the transferor. Where investment is in the nature of capital contribution, proportionate interest on capital will be clubbed with the income of the transferor. Such proportion is to be clubbed in the income of transferor.

5- Income earned by investing such income is not to be clubbed with the income of the transferor.

a- Natural love and affection do not constitute adequate consideration;

b- Assets are transferred before marriage;

c- Assets are transferred in connection with an agreement to live apart;

d- On the date of accrual of income, transferee is not the Spouse of the transferor;

e- If property is acquired by Spouse out of pin money.

• Transfer of an asset for the benefit of spouse [Sec.64(1)(vii):-

All income arising directly or indirectly to any persons or association of persons, from the asset transferred, directly or indirectly, without adequate consideration is includible in the income of the transferor to the extent such income is used by the transferee for the immediate or deferred benefit of the transferor’s spouse.

• Transfer of an income earning asset by the Assessee to any person for the benefit of son’s wife[Sec. 64(1)(viii):-

All income arising directly or indirectly to any persons or association of persons, from the asset transferred, directly or indirectly, without adequate consideration is includible in the income of the transferor to the extent such income is used by the transferee for the immediate or deferred benefit of son’s wife.

0 Clubbing of minor’s income [Sec. 64(1A) :-

The income of a minor child shall be clubbed in the income of that parent, whose income other than minor child’s income is higher. if the marriage of parents does not subsist (in case of divorce or separation of parents or in case of death of either of the parents), then income of minor child shall be clubbed with the income of that parent who maintains the child. However, an income of a minor child shall not be clubbed in the following two situations (exceptions):-

a- An income earned by that minor child by way of doing any manual work or by way of doing

b- Any income of minor child suffering from a disability of a nature specified in section 80U of If a minor child acquires an asset, out of such non clubbable income and earns any income out of that asset, then such income shall be clubbed in the hands of either of his/her parents in the way discussed above for example:- if minor child is TV serial artist earns Rs. 10 lacs, which is not clubbed in the hands of parents as it is earned by that minor child by way of applying skill, talent etc. of his/ her own but 12% debentures are acquired by that minor child out of those Rs. 10 Lacs, then interest on such debenture is liable to be clubbed, as debenture interest is not earned out of applying skill or talent, knowledge or experience of that minor child.

Exemption U/s 10(32) upto a maximum of Rs. 1500/- per annum per minor child, shall be available to that parent in whose hands the income of minor child is being clubbed. The minor child shall include adopted child as well as a step child, but not an illegal child or a child resulting out of illegal marriage.

0 Transfer of as asset by a member of an HUF to HUF [Sec.64(2)]:-

When an income earning asset belonging to any member of Hindu undivided Family, is transferred by that member to HUF, whether directly or indirectly, without adequate consideration, then income generated out of that asset will be clubbed in the hands of that member of the family.

0 Income includes loss also.

0 All deductions under Chpater VIA (U/s 80C to 80U) shall be available on Gross Total Income computed after clubbing all the clubbable incomes.

0 Liability of person in respect of income included in the income of another person [Sec. 65]:-

Sec. 61 to 64 provide for clubbing of income of one person in the hands of other person in circumstances specified therein. However, service of notice of demand (in respect of tax on such income) may be made upon the person to whom such asset is transferred (i.e. the transferee). In such case transferee is liable to pay that portion of tax levied on the transferor of which is attributable to the income so clubbed.

0 In case of cross transfer:-

In case of cross transfer also, the income from the assets transferred would be assessed in the hands of the deemed transferor if the transfers are so intimately connected as to form part of single transaction, and each transaction constitutes consideration for the other by being mutual or otherwise.

For example:- A making gift of Rs. 50000/- to the wife of his brother Mr B for purchase of a house by her and simultaneously gift by B to A’s minor son of shares in a foreign Company worth Rs. 50000/- owned by him), in the instant case transfer have been made by A and B to persons who are not their spouse or minor child so as to circumvent the provisions of this section, showing that such transfer constituted consideration for each other. an activity involving application of skill, talent, specialized knowledge or experience or the Income Tax Act.

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