Online I- T returns will need email, mobile number
JOYDEEP GHOSH
Mumbai, 5 July
The Central Board of Direct Taxes ( CBDT) has made mobile number and email address mandatory for filing income- tax returns in a move that is expected to improve efficiency and add an extra layer of security. This comes a few weeks ahead of this year July 31 return filing deadline.
"A valid email ID and mobile number has to be registered/ updated on the e- filing website of the Income Tax Department so that direct communication with taxpayer can be possible," the CBDT said in a release issued late yesterday.
A one- time password will be sent to the email address and mobile phone to be entered by the taxpayer after logging into his account for authentication. The password will be valid for 24 hours.
"Since one email address or mobile number cannot be used for more than 10 accounts, this shall pose a problem for consultants or for people who file tax returns for various family members," said Ashish Gupta, partner at tax and audit consultancy KPMG India.
Tax consultants feel the 24hour password limits the scope for a person to communicate it to the individual or consultant filing his tax return. Also, taxpayers who do not have an Indian mobile number may face problems in authenticating their accounts.
Chartered accounts usually give their email addresses and mobile numbers for all their clients. " As a result, they are allowed make changes in their clients' details as and when required. Such a situation can be both used and misused," said an income tax expert. He added email addresses could be created but consultants and chartered accountants might now prefer to provide the mobile numbers of their clients.
The income tax department has urged taxpayers to complete the validation process at the earliest for smooth filing of returns.
Additional security through OTP; use of one number/ email for only 10 accounts possible THE NEW PROPOSAL
Action: One mobile number or email id can be used for 10 accounts as primary contact Benefit: This will help file returns of family members who may/ may not have a personal e- mail id Action: Emails and SMSes from I- T Department may be included in the safe list or white list Benefit: Communication from the department will not end up in spam or get rejected Action: One- time password will be sent to cell and email Benefit: Will alert the income- tax assessee if there are any changes being made to the account
High life cover alone is not enough
YOUR MONEY
>ARVIND RAO
Many of us probably have life insurance of ₹ 1 crore, thanks to cheap term plans available today. But merely having a huge life cover is not enough to protect your family members from all liabilities and financial responsibilities. In case of your death, they will have to prioritise how to spend the insurance money. For instance, paying off the home loan of ₹ 75 lakh is important. So is setting aside ₹ 30 lakh for your childs higher studies and making provision for future expenses.
In case of the untimely death of the breadwinner of the family finances are not the top priority for the family members. However, if not tracked, it is very likely that the family uses up a major chunk the money received from the insurance company without even realising it and is still staring at a long list of payables. Estimating life insurance cover for an individual is a daunting task. A financial advisor can provide an estimate of the insurance coverage the family would require after going through the expenses - current and future. But, in case of the principal breadwinner's death, it is unlikely that the advisor will track whether the coverage has been sufficient to cover all the responsibilities and liabilities of the family.
In the event of the death of the earning member, there are some steps a family can take to keep track of and manage the insurance money for a sound future. Strictly speaking, the ideal pattern for the money utilisation depends on which life- stage the family belongs to at the time of their breadwinner's death. These are general steps and will vary in each actual situation.
Make a list of known liabilities
It is important to first clear off the liabilities outstanding for the individual to avoid any legal hassles for the family. A general list of liabilities will include home loans, personal loans, credit cards, etc.
However, if the deceased happens to be a businessman, the family also has to manage the commercial liabilities. The gravity of the problem is highest in case where the deceased ran his/ her business as a proprietorship firm or was a partner in a partnership firm, as in such cases the business owner has unlimited liabilities and the legal heirs are also liable for their outstanding.
inventory for the unfulfilled family responsibilities. The family should make a realistic estimate of the money required to fund these responsibilities and the time horizon for the same. For families without a financial plan, this event should trigger the need to get their goal- sheets done which helps them quantify their responsibilities and make an adequate provision for the same. In case of an inadequate insurance cover, families would do well to downsize some of their goals based on the corpus available. For instance, the foreign education could be substituted with a degree at a premier Indian institute.
Meeting the standard of living
A good portion of the corpus should make way for meeting the family's day- to- day expenses. The capital retention approach here works best with the family aspiring to live off only the income generated rather than dipping into the corpus money. Indeed the family may need to compromise on this aspect in case of under- insurance by the deceased. Inflation could play spoil- sport for the family and will be a major challenge to be constantly reviewed and addressed.
Investment style
The investment pattern in such kind of a life- situation will be much similar to the post- retirement scenario. The family has to focus on the ' Safety- LiquidityYield' factors while looking to invest the corpus. No element of risk is warranted even if the goal is long- term and has around 10- 15 years to maturity.
Trusted advisor to work with
All of the above decisions are not easy as they deal with finance and afamily can look to work closely with an advisor who can help make objective decisions. Informed decisions hold the key for the family and an independent opinion will add tremendous objectivity to their decisions.
The author is a Chartered Accountant
INSURANCE
1. A Poison Pill is a form of _____________. A. Industrial Action B. Takeover Defense C. Buy- back scheme. D. Insider Trading.
2. A White Knight usually _____________.
A. Comes to the aid of the existing management in the case of a takeover B. Aids the raider in a takeover attempt.
C. Finances both sides in a takeover battle. D. None of the above 3. Equity Stripping is a term commonly used w. r. t. ______ A. Mortgages B. Dividends . C. Buybacks D. Private Equity 4. In mutual fund parlance, Alpha refers to a situation where the risk- adjusted return of a scheme exceeds _____________.
A. The risk free return B. The Peer- set return C. Its own historical return D. Its benchmark 5. Rupay is __________ A. A Credit Card B. A Debit Card C. Both A and B D. An alternative currency .
Financial literacy
The quiz master is Head - Marketing, PPFAS Mutual Fund Send your queries and feedback at yourmoney@ bsmail. in
Solutions
1. B.. With a poison pill, the target company attempts to make its stock less attractive to the acquirer.
There are two types of poison pills : FlipIn and Flip Over.
2.
A. It refers to a friendly acquirer of a target firm in a hostile takeover attempt by another firm. The intention of the acquisition is to circumvent the takeover of the object of interest by a third, unfriendly entity, 3.
A. Here an investor buys the property from a homeowner facing foreclosure and agrees to lease the home to the homeowner who may remain in the home as a tenant.
4.
D. The excess riskadjusted return of the fund relative to the return of the benchmark index is a funds alpha.
5.
C. It is an Indian domestic card scheme launched by the National Payments Corporation of India ( NPCI). It competes with MasterCard and Visa in India
BS TUTORIAL
Jayant Pai
Prioritise how to utilise insurance money to pay off liabilities and invest for future use
Rank Priority Documents to be tracked
1Business- related liabilities, especially in case Latestavailable balance sheet of proprietorship firms orpartnership firms of the firm 2Personal loans, home loans Outstanding balance statement from the lending institution 3Credit cards Latest statements 4Children's education, marriage Financial plans drawn for orany other special needs the family 5Living expenses Monthly budget for family, after providing for the individual's death
UTILISATION PATTERN FOR LIFE INSURANCE
In the Budget session of the Rajasthan Assembly starting next week, the Vasundhara Raje- led government in Rajasthan will table amendments to certain labour- related Acts. If passed by the House and approved by the President, employers in Rajasthan will have the right to retrench up to 300 workers without seeking the permission of the government, up from 100 currently. There will also be a three- year limit within which to raise disputes, the percentage of workers needed to register a union will be increased from 15 per cent to 30 per cent and the provisions of the Contract Labour Act will be applicable only to companies with more than 50 workers, as opposed to 20 at present.
Simultaneously, the Union government has also proposed changes to four labourrelated laws — Minimum Wages Act, Child Labour ( Prohibition & Regulation) Act, Factories Act and Labour Laws ( Exemption from Furnishing Returns and Maintaining Registers) Act — and has invited comments about the amendments. This includes standardising minimum wages nationally and doing away with a rule that prohibits women from working in factories at night.
These proposals have, understandably, elicited tremendous interest from industry and other stakeholders, mainly because successive governments have fought shy of undertaking any reforms to labour laws, even when the adjectives most often used to describe these laws are " archaic" and " complex".
The initiatives are in keeping with the Bharatiya Janata Party's 2014 election manifesto promise of " promoting a harmonious relationship between labour and the industry, with both playing an important contributory role in economic growth and development". The party would, the manifesto said, " bring together all stakeholders to review our labour laws which are outdated, complicated and even contradictory".
The recognition of the need to strike a balance between the interests of labour and industry, often perceived as contradictory, was echoed by Union Labour Minister Narendra
Singh Tomar in an interview to Business Standard last week. " If a state goes ahead with amendments apropos to their local, economic, political and social conditions, then it is a healthy practice… Our effort at the Centre would be to strike a balance between business and labour communities. We will consider the proposed amendments ( from Rajasthan) when we receive them," he said.
Raje herself has said that imparting skills to local workers was imperative to enhance employability in the state. " There is a need to create 1.5 million jobs for the youth in our state and the need to take steps in that direction but nothing is possible without developing skills," Raje told Business Standardon Thursday after meeting Tomar to discuss the labour reforms.
India's labour laws have often enough been cited as one of the factors holding back growth, particularly in manufacturing. " The primary criticism usually is that the labour laws have not kept up with the changing profile of the employee as well as the pay scales and working environment in the country," says Nohid Nooreyezdan, senior partner at law firm AZB & Partners. " While it is understandable that laws are required to ensure ( the security of) the workmen who are unable to negotiate their service conditions, they currently are very wide in their coverage and even provide protection to employees who are highly qualified and highly paid and do not necessarily need protection from termination and change in service conditions, given their ability to negotiate their terms of contract." Rigid labour laws have had serious implications for industry. Many sectors that see seasonal swings in sale need flexibility — the workforce can be increased when the demand goes up and reduced when it goes down. In the absence of such flexibility, many sectors like automobiles employ contract workers in large numbers. The rule says that such workers can only be used for non- core work, but this is openly flouted. ( The definition of what is core and what isn't is anyway open to interpretation.) This also helps these factories save on costs because contract workers are inexpensive, and the company does not have to pay for their social security. This foments resentment amongst contract workers.
It is worth remembering that contract workers were at the centre of the unrest at Maruti Suzuki's Manesar plant in which one senior executive died in 2012. This inability to trim or expand the workforce has wreaked havoc in labour- intensive sectors like readymade garments. It is cited as the main reason why Bangladesh, which offers full labour flexibility, has gained in the international market at the cost of India.
The sheer number of laws is another source of frustration for businesses. There are over 40 central laws and over 200 state laws. Since employment is a subject in the concurrent list, this effectively means that each state is able to set its own threshold in terms of leave entitlements and notice periods. " It's ludicrously difficult for a company sited in multiple locations to arrive at a uniform set of employment terms for all employees across India — any such document will be non- compliant with some state enactment or the other," points out Siddhartha George, partner at Bangalorebased law firm Poovayya Associates.
Advocating the need for a complete overhaul in labour laws in India, Toyota Kirloskar Motor Vice- Chairman Shekar Vishwanathan echoes this view. " Why can't we have one consolidated labour law, one definition that governs the various provisions?" he asks.
Vishwanathan seeks to dispel the notion that industry is clamouring for reforms because it wants to hire and fire employees at will. " We will have invested a lot of time, money and effort to bring those workers to a certain level and we wouldn't want to let them go, except under extreme situations," he stresses.
What industry is seeking is the ability to lay off employees under exceptional circumstances, such as prolonged periods of power outage that would threaten the financial viability of the unit or if the company is not able to generate demand for its products, he adds.
But while agreeing that there is a need to review the laws, unions are protesting against the reforms proposed by Rajasthan. K Padmanabhan, president of the Centre of Indian Trade Unions, associated with the Communist Party of India ( Marxist), is critical of the reforms, and terms them a "cover- up". " We have fully opposed the amendments. What does the word ' reform' mean? Labour laws are enacted to safeguard the interest of the workers and the fact is that workers' powers are very limited compared to that of the employers," says Padmanabhan.
Unions also complain that the Rajasthan government has acted unilaterally.
"We were told that tripartite consultations would be held but we weren't consulted," says BN Rai, general secretary of the Bharatiya Mazdoor Sangh. " This is not the practice that needs to be adopted by states." Industry chambers, though, have welcomed the initiative. "These are much- needed reforms in labour laws, especially in the three most critical Acts and will go along way in providing a major relief to industry, especially the small scale industry," says Chandrajit Banerjee, director general, Confederation of Indian Industry ( CII). " These are very much in line with CII's recommendations to the new government and we hope the ambit of such reforms will be expanded in the near future." To ensure that workers are protected in a country like India with huge income disparities, while at the same time paying heed to industry's need for reform, Nooreyezdan of law firm AZB suggests one way would be to ensure that only employees who really need some protection should be protected. " Employee salaries could be a factor in determining this. Further, the laws could be simplified in terms of the procedural aspects, which would make it simpler for businesses but need not necessarily impact the rights of the employees," he says.
These reforms, though, would hardly be a magic bullet to kickstart growth. For one, as various analysts have pointed out, less than 10 per cent of India's workforce is part of the organised sector. " To escape stringent laws, entrepreneurs keep the scale of their operation small —India's average factory employs 75 people, compared to 191 in China," Tushar Poddar, chief India economist at Goldman Sachs, wrote in a column earlier this year. " They employ largely contractual workers — the labour force has a labour aristocracy that is heavily unionised and protected, consisting of 7 per cent of workers, while 93 per cent of them are informal, with employers having little incentive to invest in their skills or provide insurance." As it stands, the changes proposed by the Raje government are not exactly revolutionary.
"The law isn't actually changing; just its area of application is being reduced," says Poovayya's George. " While I don't doubt these moves will come as a relief for business, I don't think they could accurately be described as game- changers." However, in a country where any attempt to change labour- related laws is considered anathema, it is small wonder that even these small steps are being hailed by businesses as something akin to the beginning of anew dawn.
Rigid labour laws have had serious implications for industry, which now hopes that Rajasthan's initial steps for change will be replicated in other states, say Indulekha Aravind and Somesh Jha
Workers at a television assembly unit
The inability to trim or expand the workforce has wreaked havoc in labour- intensive sectors like readymade garments.
In contrast, Bangladesh offers full labour flexibility and has gained in the international market at India's cost
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