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Service Tax & Income Tax Consultants Bangalore, Accounting Services, Audit Firm in India.

Service Tax & Income Tax Consultants Bangalore, Accounting Services, Audit Firm in India.

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Notification No.10/2014 dated 10-02-2014


ANNEXURE

PROTOCOL AMENDING THE CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL GAINS

The Government of the Republic of India and the Government of the United Kingdom of Great Britain and Northern Ireland,

Desiring to amend the Convention between the Government of the Republic of India and the Government of the United Kingdom of Great Britain and Northern Ireland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains signed at New Delhi on 25 January 1993 (hereinafter referred to as “the Convention”),

Have agreed as follows:

ARTICLE I

Sub-paragraph (f) of paragraph 1 of Article 3 shall be deleted and replaced by the following:

“(f) the term “person” includes an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States;”

ARTICLE II

Paragraph 2 of Article 3 shall be deleted. Paragraph 3 shall not be renumbered.

ARTICLE III

Paragraph 1 of Article 4 (Fiscal domicile) shall be deleted and replaced by the following:

“1.

  For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of incorporation, or any other criterion of a similar nature, provided, however, that:

 

(a)

  this term does not include any person who is liable to tax in that State in respect only of income from sources in that State; and

(b)

  in the case of income derived or paid by a partnership, estate, or trust, this term applies only to the extent that the income derived by such partnership, estate, or trust is subject to tax in that State as the income of a resident, either in its hands or in the hands of its partners or beneficiaries “

ARTICLE IV

Article 11 (Dividends) of the Convention shall be deleted and replaced by the following:

“ARTICLE 11

Dividends

1.

  Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

2.

  However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:

 

(a)

  15 per cent of the gross amount of the dividends where those dividends are paid out of income (including gains) derived directly or indirectly from immovable property within the meaning of Article 6 by an investment vehicle which distributes most of this income annually and whose income from such immovable property is exempted from tax;

(b)

  10 per cent of the gross amount of the dividends, in all other cases.

 

    The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of these limitations. The provisions of this paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

3.

  The term “dividends” as used in this Article means income from shares, or other rights, not being debt-claims, participating in profits, as well as any other item which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

4.

  The provisions of paragraphs 1 and 2 of this Article shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 (Business profits) or Article 15 (Independent personal services), as may be the case, shall apply.

5.

  Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in that other State.

6.

  No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares or other rights in respect of which the dividend is paid to take advantage of this Article by means of that creation or assignment.”

ARTICLE V

Article 25 (Partnerships) of the Convention shall be deleted and the subsequent articles shall not be renumbered.

ARTICLE VI

Article 28 (Exchange of information) of the Convention shall be deleted and replaced by the following Article:

“ARTICLE 28

Exchange of information

1.

  The competent authorities of the Contracting States shall exchange such information (including documents or certified copies of the documents) as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws of the Contracting States concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Convention. The exchange of information is not restricted by Articles 1 and 2 of this Convention.

2.

  Any information received under paragraph 1 of this Article by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to, the taxes referred to in paragraph 1 of this Article, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorises such use.

3.

  In no case shall the provisions of paragraphs 1 and 2 of this Article be construed so as to impose on a Contracting State the obligation:

 

(a)

  to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b)

  to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

(c)

  to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy.

 

4.

  If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 of this Article but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

5.

  In no case shall the provisions of paragraph 3 of this Article be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.”

ARTICLE VII

A new Article 28A (Tax Examination Abroad) will be inserted after Article 28 (Exchange of Information) as follows:

“ARTICLE 28A

Tax Examinations Abroad

1.

  At the request of the competent authority of a Contracting State (the “requesting State”), the competent authority of the other Contracting State (the “requested State”) may allow representatives of the competent authority of the requesting State to enter its territory to interview individuals and examine records with the prior written consent of the persons concerned. The competent authority of the requesting State shall notify the competent authority of the requested State of the time and place of the meeting with the individuals concerned.

2.

  At the request of the competent authority of the requesting State, the competent authority of the requested State may allow representatives of the competent authority of the requesting State to be present at the appropriate part of a tax examination in the territory of the requested State.

3.

  If the request referred to in paragraph 2 of this Article is acceded to, the competent authority of the requested State conducting the examination shall, as soon as possible, notify the competent authority of the requesting State about the time and place of the examination, the authority or official designated to carry out the examination and the procedures and conditions required by the requested State for the conduct of the examination. All decisions with respect to the conduct of the tax examination shall be made by the requested State conducting the examination.”

ARTICLE VIII

A new Article 28B (Assistance in the Collection of Taxes) will be inserted after new Article 28A (inserted by Article VII of this Amending Protocol) as follows:

“ARTICLE 28B

Assistance in the Collection of Taxes

1.

  The Contracting States shall lend assistance to each other in the collection of revenue claims in respect of taxes covered by the Convention. This assistance is not restricted by Article 1. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.

2.

  The term “revenue claim” as used in this Article means an amount owed in respect of taxes covered by this Convention, insofar as the taxation thereunder is not contrary to this Agreement or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount.

3.

  When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.

4.

  When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned State or is owed by a person who has a right to prevent its collection.

5.

  When a Contracting State may, under its law, take interim measures of conservancy by freezing of assets before a revenue claim is raised against a person, the competent authority of the other Contracting State, if requested by the competent authority of the first mentioned State, shall take measures for freezing the assets of that person in that Contracting State in accordance with the provisions of its law.

6.

  Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.

7.

  Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall not be brought before the courts or administrative bodies of the other Contracting State.

8.

  Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be:

 

(a)

  in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or

(b)

  in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection the competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first-mentioned State shall either suspend or withdraw its request.

 

9.

  In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation;

 

(a)

  to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b)

  to carry out measures which would be contrary to public policy;

(c)

  to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;

(d)

  to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State.”

ARTICLE IX

A new Article 28C shall be inserted after new Article 28B (inserted by Article VIII of this Amending Protocol) as follows:

“ARTICLE 28C

Limitation of Benefits

1.

  Benefits of this Convention shall not be available to a resident of a Contracting State, or with respect to any transaction undertaken by such a resident, if the main purpose or one of the main purposes of the creation or existence of such a resident or of the transaction undertaken by him, was to obtain benefits under this Convention.

2.

  Where by reason of this Article a resident of a Contracting State is denied the benefits of this Convention in the other Contracting State, the competent authority of that other Contracting State shall notify the competent authority of the first-mentioned Contracting State.”

ARTICLE X

1.

  Each of the Contracting States shall notify the other, through diplomatic channels, of the completion of the procedures required by its law for the bringing into force of this Protocol. This Protocol shall enter into force on the date of the later of these notifications and shall thereupon have effect:

 

(a)

  in both States in the case of taxes withheld at source, in respect of amounts paid on or after the date this Protocol enters into force,

(b)

  in India, in respect of taxes levied for fiscal years beginning on or after the date this Protocol enters into force;

(c)

  in the United Kingdom:

 

(i)

  in respect of income tax and capital gains tax, for any year of assessment beginning on or after 6th April in the calendar year next following that in which this Protocol enters into force;

(ii)

  in respect of corporation tax, for any financial year beginning on or after 1st April in the calendar year next following that in which this Protocol enters into force;

(iii)

  in respect of petroleum revenue tax, for any chargeable period beginning on or after 1st January in the calendar year next following that in which this Protocol enters into force.

 

2.

  Notwithstanding the provisions of paragraph 1 of this Article, the provisions of Articles VI, VII & VIII of this Protocol shall apply in respect of any matter referred to in these Articles even if such matters pre-date the entry into force of this Protocol or the effective date of any of its provisions.

In witness whereof the undersigned, duly authorised thereto by their respective Governments, have signed this Protocol

Done on this 30th day of October 2012, in London on two original copies each in the English and Hindi languages, both texts being equally authentic. In case of divergence between the two texts, the English text shall be the operative one.

[F.NO.505/3/1986-FTD-I]

 

P. Chidambaram may extend excise relief, but won’t cut rates : 10-02-2014


The interim budget for 2014-15 is likely to extend some state and sector-specific indirect tax breaks although tax rate changes are unlikely to happen. Finance minister P Chidambaram is also likely to present his perspective on the future course of reforms in both direct and indirect taxes if the UPA voted is back to power, in an answer to BJP’s promise of a simpler tax regime.

Persons privy to government’s budget discussions said most of the indirect tax changes recommended by the Parthasarathi Shome panel has already been announced in the last three months without waiting for the interim budget and hence major tax changes are unlikely in the budget.

However, certain end-use specific exemptions in service tax could be expected. While the tax rate presently at 12% is unlikely to be changed, services rendered to certain infrastructure businesses could get relief.

The government is also considering an extension of the excise duty exemption in hill states such as Himachal Pradesh and Jammu and Kashmir by either five years or until the GST comes into force.

The excise duty exemption available to hill states expires in May 2014. Excise duty is now levied at 12%. In the vote-on-account to be presented in Parliament on February 17, rate changes on the direct tax front (personal income-tax and corporation tax) are virtually ruled out.

These changes require Parliament approval and with elections around the corner, it is a matter of propriety that such matters are left to be decided by next Lok Sabha.

While excise or service tax rate change at this juncture may not be in keeping with the GST plan, the minister might also refrain from introducing any fresh exemptions as such a move would not be in conformity with the principle of uniform rates and harmonised structure embraced by the policymakers.

Indicating his disapproval of major cuts in tax rates, Chidambaram had recently attributed the tough fiscal deficit situation to the fiscal stimulus given during the crisis years of 2008-09 and 2009-10, which brought down country’s tax GDP ratio to 9.7% in 2009-10 from 11.9%

In 2007-08.

With the curbing of the country’s current account deficit, likely at less than $50 billion or 2.5% of GDP, down from $ 88.2 billion or 4.8% last fiscal, the jewellery industry could expect removal of the non-tariff restrictions on gold imports and a partial rollback of the import duty on gold bars from the current 10%.

With total revenue receipts just about 60% of the budgeted Rs 10.5 lakh crore and expenditure at 70% of the budgeted Rs 16.6 lakh crore up to December, the government is relying on savings in various schemes, telecom spectrum auction eceipts and the mandatory fiscal discipline in the last quarter to limit the fiscal deficit to a level a tad lower than the budgeted 4.8% of the GDP.

The finance ministry had last week said it has lowered its planned borrowings for the current fiscal by Rs 15,000 crore in view of the better liquidity position. As per Chidambaram’s planned mid-course correction, fiscal deficit would be brought down to 4.2% of GDP for fiscal 2015, and then to 3.6% and eventually to 3% by fiscal 2017.

Chidambaram said last week that the ministry would continue to take steps until the end of the term of the government as has been done in the last few weeks. He had imposed a 5% export duty on iron ore pellets earlier this month to help the domestic steel industry.

Observers also anticipate a couplet or two from Chidambaram’s favourite poet Saint Tiruvalluvar, possibly on work half done, in his budget speech on February 17.

Source : The Financial Express

Rupee gains 18 paise against dollar in early trade : 10-02-2014


The rupee strengthened by 18 paise to 62.10 against the US dollar in early trade today at the Interbank Foreign Exchange market on increased selling of the American currency by exporters.

Forex dealers said a higher opening in the domestic equity market also supported the rupee.

The rupee had gained 9 paise to close at 62.28 against the dollar on Friday.

Meanwhile, the benchmark BSE Sensex rose 42.66 points, or 0.21 per cent, to 20,419.22 in early trade today.

Source : PTI

How to set off the service tax : 10-02-2014


 If you use the services of vendors and service providers, you may find that the money you pay them includes service tax. When they invoice you for their services, they recover from you the service tax that they have to pay. The tax laws allow a setting off so that credit is available for payments already made to ensure that costs do not rise due to the tax component.


Tax credit: Whenever you prepare invoices in which service tax has been included, you get a service tax credit. This amount is deemed to be the service tax that you have already paid.

Setting off: When you file your service tax, you compute the due tax and deduct the total amount you have already paid your vendors as service tax. Then, pay only the balance.

Documentation: To claim a set-off and pay a lower service tax, you should have records of all the invoices. Ensure that those who have billed you are registered and have invoices. Ensure that those who have billed you are registered and have invoiced you specifically for service tax.

Verification: The proof of payments, which include service tax, should be maintained for audit and reconciliation with invoices. Your invoices to clients represent your service tax dues, while your vendors’ invoices represent your service tax credits.

Points to note

* Service tax and education cess are treated as separate items and the setting off applies separately for each of these heads.

* If any part of the service is not subject to service tax, it should be invoiced separately, both by you and your vendors.

(Content courtesy: Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre and Arti Bhargava.)

Source : The Economic Times

04/2014 dated 10-02-2014


Non-Filing of ITR-V in returns with refund claims-relaxation of time- limit for filing ITR-V and processing of such returns -regarding. – Circular – Dated 10-2-2014 – Income Tax

F. No. 225/198/2013-ITA.II

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

CIRCULAR NO. 04/2014

Dated : February 10, 2014

Subject – Non-Filing of ITR-V in returns with refund claims-relaxation of time- limit for filing ITR-V and processing of such returns -regarding.

Several instances of grievances have come to the notice of the Board stating that a large number of returns-of-income for Assessment Year (‘AY’) 2009-2010, which were electronically filed without a digital signature in accordance with procedure laid down under the Income-tax Act, 1961(‘Act’), were not processed as such returns became non-est in law in view of Circular No. 3 of 2009 of CBD1 dated 21.05.09. Paragraphs 9 and 10 of the said Circular laid down that ITR-V had to be furnished to the (Centralised Processing Centre (‘CPC’), Bengaluru by post within 30 days from the date of transmitting the data electronically and in case, ITR-V was furnished after the stipulated period or not furnished, it was deemed that such a return was never furnished. It was claimed by some of the taxpayers that despite sending ITR-V through post to CPC within prescribed time-frame, the same probably could not reach CPC and thus such returns became non-est. Since ITR-V was required to be sent through (ordinary) post at a ‘post box’ address, there were no despatch receipts with the concerned senders in support of their claim of having furnished ITR-V to CPC within prescribed time limit.

2. Subsequently CBDT extended the time-limit for filing ITR-V (relating to Income-tax returns filed electronically without digital signature for AY 2009-2010) upto 31..12.2010 or 120 days from the date of filing, whichever was later. It also permitted sending of ITR-V either by ordinary or speed post to the CPC. However, for the AY 2009-10, some cases were still reported where return was declared non-est due to non-receipt of ITR-V by CPC even within such extended time-frame and consequently the refund so arising continue to remain held up.

3. Likewise, for AY’s 2070-11, and 2011-12, though relaxation of time for furnishingITR-V was granted by Director General of Income Tax (systems), it has been noticed that a large number of such electronically filed returns still remain pending with Income-tax Department for want of receipt of valid ITR-V Certificate at CPC.

4. The matter has been examined. In order to mitigate the grievances of the taxpayers pertaining to non-receipt of tax refunds, Central Board of Direct Taxes, in exercise of powers under section 119(2)(a) of the Act, hereby further relaxes and extends the date for filing ITR-V Form for Assessment years 2009-10, 2010-11 and 2011-12 till 31.03.2014 for returns e-Filed with refund claims within the time allowed under section 139 of the Act The taxpayer concerned may send a duly signed copy of ITR-V to the CPC by this date by Speed post In such cases, central Board of Direct Taxes also relaxes the time-frame of issuing the intimation as provided in second proviso to sub section (1) of section 143 of the Act and directs that such returns shall be processed within a period of six months from end of the month in which ITR-V is received and the intimation of processing of such returns shall be sent to the assessee concerned as per laid down procedure.

5. Provision of sub-section (2) of section 244A of the Act would apply while determining the interest on such refunds.

6. The taxpayer concerned may ascertain whether ITR-V has been received in the CPC, Bengaluru or not by logging on the website of Income-tax Department – http:/incometaxefiling.gov.in/e-Filing/Services/ITR-V Receipt Status.html by entering PAN No. and Assessment year or e-Filing Acknowledgement Number. Alternatively’ status of ITR-V could also be ascertained at the above website under ‘Click to view Returns/Forms’ after logging in with registered e-Filing account. In case ITR-V has not been received within the prescribed time’ status will not be displayed and further steps would be required to be taken as mentioned above.

7. Hindi version to follow.

(Rohit Garg)

Deputy Secretary to the Govt. of India

Rupee strengthens to 62.29 in early trade : 07-02-2014


The rupee was trading marginally weak by 3 paise at 62.40 against the dollar at 2.57 p.m. local time on mild dollar buying by importers.

The rupee appreciated by 8 paise to 62.29 in early trade at the Interbank Foreign Exchange today on increased dollar selling by exporters and some banks amid sustained capital inflows.

A higher opening in the domestic equity market also supported the rupee, but the dollar’s strength against other currencies overseas ahead of US jobs data, capped the gains, forex dealers said.

The rupee had gained 20 paise to close at a two-week high of 62.37 yesterday on firm domestic equity market.

Source : PTI

You face legal action for not filing returns even after I-T notice : 07-02-2014


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, taxpayer 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 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.

Source : The Economic Times

Notification No.S.O. 378(E) dated 06-02-2014


Amendment in the Notification Number S.O. 2475 (E) dated 1st November, 2011. – S.O. 378(E) – Dated 6-2-2014 – Special Economic Zone

MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

NOTIFICATION

New Delhi, the 6th February, 2014

S.O. 378(E).—The Central Government, in exercise of the powers conferred by sub-section (1) read with sub-section (5) of Section 31 of the Special Economic Zones Act, 2005 (28 of 2005), hereby makes the following amendment in the notification of the Ministry of Commerce and Industry, Department of Commerce, number S.O. 2475 (E) dated 1st November, 2011 for inclusion of new members in Kandla SEZ Authority, namely :—

In the said notification, the entries at Sl No. 5 & 6 which reads as under :—

5.  Shri Vikas Jhunthra, Director, Missionpharma Logistics (India) Pvt. Ltd.

6.  Shri R. Kannan, Director, Vijay Tanks & Vessels Ltd.

shall be substituted by:

5.  Mr. Chetan Shantilal Parekh, Director, M/s Oswal Extrusion Ltd.

6.  Mr. Pankaj Mittal, COO/Director, M/s Motherson Sumi Systems Ltd.

[F. No. A.20/1/2006-SEZ]

RAJEEV ARORA, Jt. Secy.

Doubtful if Parliament will pass any legislation this session: Chidambaram : 06-02-2014


Finance Minister P Chidambaram today said it was doubtful whether any key legislation, except for the vote-on-account, will be passed in the current session of Parliament which began today.

“If Parliament does not meet to pass laws, and beginning today you will see Parliament will meet, but I doubt whether it will pass any law.

“We have to go through the ritual of attending Parliament everyday and come back empty handed,” he said.

Chidambaram was addressing the students of Shri Ram College of Commerce (SRCC) at its business conclave.

Later talking to reporters, he said the Finance Bill, Vote-on-Account and Appropriation Bill will be passed.

“…but if it is passed without debate or discussion, I won’t be happy. I want it to pass with discussion and debate,” the Finance Minister said.

The Government has listed several Bills which it seeks to pass during the session which will ends on February 21.

Besides the interim budget, the Government wants to pass the Telangana Bill as well as some anti-corruption legislations.

Meanwhile, terming the possible disruptions of Parliamentary proceedings over the Telangana issue as “hiccups”, Prime Minister Manmohan Singh told reporters outside Parliament House that he hoped all sections will have the wisdom to set aside “prejudices” to ensure harmonious working of the session.

Cut in CNG, PNG prices

Responding to a query on cut in prices of CNG and PNG ahead of the general elections, Chidambaram said that the Government has not given any sops, but has only rationalised some prices.

“Government has not given any sops. Just because you guys call it a sop, it does not become a sop. Government has rationalised some prices, that is a decision taken by oil market companies,” he said.

The Government has decided to cut CNG prices by about ₹15 per kg and cooking gas piped to kitchens by about ₹5 per cubic meter.

The Finance Miniser also assured that the red line for fiscal deficit drawn by him 18 months ago will not be breached.

“… have no doubt in your mind… The fiscal deficit will be contained at 4.8 per or below (of the GDP in 2013-14),” he said.

Chidambaram also said that when he lays down office, he will leave a more stable economy than what it was two years ago.

Stressing that India has the potential to grow at 8-9 per cent for next 20-30 years owing to its demographic advantages and resources, he said anything that comes in the way of growth must be opposed.

India’s economic growth estimate for the fiscal 2012-13 has been revised downward to 4.5 per cent, a decade low, from an earlier projection of 5 per cent. In the current fiscal too, the Reserve Bank expects the GDP growth to be below 5 per cent.

Source : Business Line

Rupee up 14 paise against dollar in early trade : 06-02-2014


The rupee today appreciated by 14 paise to 62.43 against the US dollar in early trade at the Interbank Foreign Exchange market on increased selling of the American currency by exporters.

Forex dealers said a higher opening in the domestic equity market also supported the rupee.

The domestic currency had lost 4 paise to close at 62.57 against the dollar in yesterday’s trade.

Meanwhile, the benchmark BSE Sensex rose by 54.07 points, or 0.27 per cent, to 20,315.10  in early trade today.

Source : The Economic Times

Rupee up 16 paise vs dollar in early trade : 05-02-2014


The rupee today gained 16 paise to 62.37 against the dollar in early trade at the Interbank Foreign Exchange on increased selling of the US currency by exporters and banks.

Forex dealers said strengthening of other currencies against the dollar overseas and a higher opening in the domestic equity market also supported the local currency.

The rupee had gained three paise to end at 62.53 yesterday on late dollar selling by exporters and some banks.

Meanwhile, the benchmark BSE Sensex rose by 42.89 points, or 0.21 per cent, to 20,254.82 in early trade today .

Source : The Economic Times

Notification No.No. 1/37/EM/2012 – G.S.R. 112(E) dated 05-02-2014


CORRIGENDUM – Notification No. FEMA. 277/2013-RB dated 8th May 2013. – No. 1/37/EM/2012 – G.S.R. 112(E) – Dated 5-2-2014 – Foreign Exchange Management

RESERVE BANK OF INDIA

(Foreign Exchange Department)

(CENTRAL OFFICE)

CORRIGENDUM

Mumbai, the 5th February, 2014

G.S.R. 112(E).—In the Notification No. FEMA. 277/2013-RB dated 8th May 2013 of the Reserve Bank of India, Foreign Exchange Department, Central Office, published in the Gazette of Government of India, Extraordinary –Part II, Section 3, Sub-Section (i) vide G.S.R. No.516(E) dated 30.07.2013,

In para 4, for the following :

“In Regulation 15, after sub-regulation (iii), the following sub-regulation (iv) shall be added and the same shall be deemed to have been added with effect from March 28, 2012:

“(iv) Where the law of the host country does not mandatorily require auditing of the books of accounts of JV/WOS, the Annual Performance Report (APR) as referred to under sub-regulation (iii) may be submitted by the Indian party based on the un-audited annual accounts of the JV/WOS provided:

a. The Statutory Auditors of the Indian party certify that ‘The un-audited annual accounts of the JV/WOS reflect the true and fair picture of the affairs of the JV/WOS’ and

b. That the un-audited annual accounts of the JV/WOS has been adopted and ratified by the Board of the Indian party.”

the following shall be substituted :

“In Regulation 15, after sub-regulation (iv), the following sub-regulation (v) shall be added and the same shall be deemed to have been added with effect from March 28, 2012:

(v) Where the law of the host country does not mandatorily require auditing of the books of accounts of JV/WOS, the Annual Performance Report (APR) as referred to under sub-regulation (iii) above, may be submitted by the Indian party based on the un-audited annual accounts of the JV/WOS provided:

a. The Statutory Auditors of the Indian party certify that ‘The un-audited annual accounts of the JV/WOS reflect the true and fair picture of the affairs of the JV/WOS’ and

b. That the un-audited annual accounts of the JV/WOS has been adopted and ratified by the Board of the Indian party.”

[No. 1/37/EM/2012]

C. D. SRINIVASAN, Chief General Manager

‘Service tax, excise duty may change’ : 04-02-2014


Union Finance Minister P. Chidambaram said here on Monday that he could propose changes to the rates for service tax and excise duties in the interim budget, which will be tabled in Parliament on February 17.

A Vote-on-Account allows a government to seek Parliament’s approval for withdrawals from the Consolidated Fund of India to pay for expenditures in the run-up to the general election.

He said he would prefer a debate on it, but ruled out the possibility of key reforms legislation getting passed. The pending Bills that Mr. Chidambaram said now seem unlikely to be taken up are the Direct Tax Code, the Constitutional Amendment Bill for the Goods and Services Tax, and the Insurance Bill.

 Source : The Hindu

Will GST really prove to be a panacea for all ills in indirect tax system? – 04-02-2014


Taxindiaonlinelogo-jpgFEBRUARY 04, 2014

By S Sivakumar, Advocate

MUCH of us would like to believe that the GST is the one panacea for all the ills that afflict the Central and State indirect tax systems. At least, the lack of GST is being cited as one major reason for justifying the double taxation involving levy of both VAT and Service tax in respect of many transactions. The fact remains that the substantive and the procedural laws related to Central indirect taxes like Central excise and Service tax and the State VAT law remain very different posing serious challenges to the introduction of GST.

For writing this piece, I have gone by the statutory provisions contained in the Karnataka Value Added Tax Act, 2003. I am sure, most other States have similar provisions and consequently this piece would be relevant even in respect of the VAT laws of the other States.

Let’s take the penalty related provisions. Most of the practitioners who deal with the Central indirect taxes like Central excise and Service tax spend considerable time on concepts involving mens rea on issues concerning imposition of penalty. In fact, both the direct tax laws and the indirect tax laws have provisions requiring the Department to prove mens reafor imposition of penalty for violation of the statutory provisions. Even under the Income Tax Act, we have the much famed Section 271(1)(c) which accepts lack of mens rea as a sustainable defence against the Department’s attempts to levy penalties. Under the KVAT law, we have no such provisions. The imposition of penalty @ 10% of the short levy of VAT is mandatory under Section 72 of the KVAT Act, 2003, as the Legislature has used the words ‘shall’. Hence, the concept of ‘mens rea‘ being a condition precedent for imposition of penalty does not exist under the VAT law. It would be interesting to see how this issue gets resolved under the GST regime. Of course, assessees would be better off paying 10% as penalty rather than risk paying penalty of up to 200% of the tax amount involved and subjecting themselves to the whims and fancies of adjudicating and lower appellate authorities.

Let’s take the manner in which appellate proceedings are handled under the VAT law. Unlike the Central indirect tax administration, the Joint Commissioner of Commercial Taxes, who is the first appellate authority under the KVAT law, works under the administrative jurisdiction of the Commissioner of Commercial Taxes of the State, who is the superior authority. More importantly, under Section 62(6) of the KVAT Act, 2003, the Joint Commissioner is empowered even to enhance the tax levies, on an appellate proceeding. Thus, assuming that an assessee, being aggrieved by the order of the Deputy Commissioner being the re-assessing authority of the VAT levy to the tune of, let’s say, Rs 50 lakhs, goes on appeal to the Joint Commissioner, the said Joint Commissioner hearing the appeal could enhance the VAT levy, to let’s say, Rs 100 lakhs, after following the due procedure of issuing a proposition notice and hearing the hapless appellant. Of course, the appellant in this case (and in most cases) would have been much better off by just accepting his fate and not going on appeal. Most of TIOL readers might find it difficult to believe that a provision empowering an Appellate Authority to enhance the VAT levy in an appellate proceeding by taking up issues that are not in appeal, could exist in the VAT law. In effect, the Appellate Authority could become an assessing authority. And, to top it all… the appellate order passed by the Joint Commissioner can be revised or set aside by the Additional Commissioner or the Commissioner of Commercial Taxes, under Section 64 of the KVAT Act, 2003. Does this look like a horror story for the TIOL reader?

One of the oft-repeated words in the Central indirect tax administration is the ‘show cause notice’. People like me could perhaps be repeating the word SCN several times during the course of a working day. I have no doubt that invocation of Lord Shiva‘s name for an equal number of times would guarantee me moksha (salvation). Be that as it may … the concept of SCN based proceedings is largely absent under the VAT law. A so-called ‘Endorsement’ or a ‘Proposition Notice’ is issued to the assessee asking for responses to be submitted in 7 days’ time. The concept of 30 days’ being given to respond to a notice is absent under the VAT law. In most cases, the Re-assessing officer would travel much beyond the issues raised in the SCN, to the detriment of the hapless assessee and pass orders levying VAT that could match the sales turnover of the assessee.

The law related to pre-deposit is also substantively different under the VAT law. In Karnataka, there is a compulsory pre-deposit of 30% (which was reduced from 50% last year) of the tax confirmed including the penalty, for obtaining a stay. There is also a requirement for the balance 70% of the amount to be deposited in the form of a guarantee. Compare this draconian requirement with the system that we have, in respect of Central indirect tax administration, wherein, in many cases, the requirement of pre-deposit is mandatory. Due to the requirement of the pre-deposit, many assessees who have good cases to defend before the higher judicial forums find it ‘commercially wiser’ to complete cases at the adjudication level itself. To a large extent, very unfortunately, the principles of ‘natural justice’ are largely absent under the State VAT law.

Yet another area in respect of which there is a huge difference in the substantive law is limitation. The concept of normal period and extended period of limitation are absent under the VAT law. Under Section 40 the KVAT Act, 2003, with effect from 1-4-2012 assessments can be re-opened up to a period of 5 years even when all the facts are known to the Commercial Taxes Department.

The list of significant differences between the Central law and the VAT law can go on and on … the fact remains that the VAT law has largely remained regressive over the years and it is highly unlikely that the States would want to let go of the unlimited powers that its officers enjoy, under the VAT law.

When the VAT regime was introduced in 2005 it was assured that except for some small changes in the procedural law, the substantive VAT law would be similar across the States. Even the fundamental requirement of having uniform peak VAT rates has not been achieved. In Karnataka, we have a peak VAT rate of 14.5% while many other States are continuing with the original peak rate of 12.5%.

Before concluding …

It is not as if that the VAT law only has regressive and highly obnoxious provisions. The VAT law scores in respect of input tax credit, with a near perfect seamless system, with credit being available on most inputs except for a small list of goods like cars & stationery on which credit is denied. The provisions related to refund of unutilized input tax credit are also taxpayer friendly. Compare this with the CENVAT Credit Rules, 2004 which has seen unprecedented litigation due to unclear and ever changing provisions and an extremely unfriendly and perverse Central indirect tax administration which has been the assigned the responsibility of implementing these rules. Of course, there is not much to talk about the VAT related bureaucracy either and consequently there is an absolute comparability between the Central laws and the VAT law.

Over the last 8 or 9 years since it was introduced, the VAT law has attained a lot of certainty inasmuch as litigation has drastically come down over the last few years. One reason for this is that the State Governments have largely stuck to the initial version of the VAT law that was introduced in 2005. Compare this with the Service tax law which has been changing every now and then leading to huge uncertainties.

It would remain to be seen if the GST would address these huge difference in the substantive law, as they exist between the Central indirect tax laws and the State VAT laws. The attempt should be to incorporate the taxpayer friendly and fair provisions that exist under the two laws, while drafting the GST law.One does hope that the GST law would not incorporate the worst features of the Central indirect tax laws and the VAT law, to the detriment of the tax payer.

Is this too much that a tax payer can ask for?

(DISCLAIMER : The views expressed are strictly of the author and Taxindiaonline.com doesn’t necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site. )

100 dated 04-02-2014


Third party payments for export / import transactions – Circular – Dated 4-2-2014 – FEMA

 

RBI/2013-14/479

A.P. (DIR Series) Circular No. 100

February 4, 2014

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 A. P. (DIR Series) Circular No.70 dated November 8, 2013, in terms of which they have been permitted to allow third party payments for export of goods & software / import of goods subject to the conditions stated therein.

2. In view of the difficulties faced by exporters / importers in meeting the condition “firm irrevocable order backed by a tripartite agreement should be in place” specified in the abovementioned Circular, it has been decided that this requirement may not be insisted upon in case where documentary evidence for circumstances leading to third party payments / name of the third party being mentioned in the irrevocable order/ invoice has been produced. This shall be subject to conditions as under:

(i) AD bank should be satisfied with the bona-fides of the transaction and export documents, such as, invoice / FIRC.

(ii) AD bank should consider the FATF statements while handling such transaction.

3. Further, with a view to liberalising the procedure, the limit of USD 100,000 eligible for third party payment for import of goods, stands withdrawn.

4. All other terms & conditions mentioned in the A. P. (DIR Series) Circular No.70 dated November 8, 2013 remain unchanged.

5. AD Category – I banks may bring the contents of this Circular to the notice of their constituents concerned.

6. The directions contained in this circular have been issued under sections 10(4) and11(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

 

Press Note No. 2 (2014 Series) dated 04-02-2014


Policy on foreign investment in the Insurance Sector- amendment of paragraph 6.2.17.7 of’ Circular 1 of 2013-Consolidated FDI Policy’ – FDI GUIDELINES – Dated 4-2-2014 – FEMA

Government of India

Ministry of Commerce & Industry

Department of Industrial Policy & Promotion

Press Note No. 2(2014 Series)

Subject: Policy on foreign investment in the Insurance Sector- amendment of paragraph 6.2.17.7 of’ Circular 1 of 2013-Consolidated FDI Policy’

1.0  Present Position:

1.1  As per paragraph 6.2.17.7 of the ‘Consolidated FD1 Policy, effective from 5 April, 2013′,FDI, up to 26%, under the automatic route, is permitted in the insurance sector subject to the following conditions:

(1) FDI in the Insurance sector, as prescribed in the Insurance Act, 1938, is allowed under the automatic route.

(2) This will be subject to the condition that Companies bringing in FDI shall obtainnecessary license from the Insurance Regulatory & Development Authority for undertaking insurance activities.

2.0  Revised Position:

2.1 Paragraph 6.2.17.7 of the ‘Consolidated FD1 Policy, effective from 5 April, 2013′,is replaced by the following:

S. No. Sector / Activity % of FDI Cap/ Equity Entry route
6.2.17.7 Insurance
6.2.17.7.1 (i) Insurance Company

(ii) Insurance Brokers

(iii) Third party Administrators

(iv)Surveyors and LossAssessors

26% (FDI + FII + NRI) Automatic
6.2.17.7.2 Other conditions
  (1) FDI in the Insurance sector, as prescribed in the Insurance Act, 1938, is allowed under the automatic route.

(2) This will be subject to the condition that Companies bringing in FDI shall obtainnecessary license from the Insurance Regulatory & Development Authority forundertaking insurance activities.

(3) The provisions of paragraphs 6.2.17.2.2(4)(i) (c) & (e), relating to `Banking -
Private   Sector’, shall be applicable in respect of bank promoted insurancecompanies.

(4) Indian Insurance Company is defined as a company:

(a) which is formed and registered under theCompanies Act, 1956;

(b) in which the aggregate holdings of equityshares by a foreign company either by itself or through its subsidiary companies or its nominees, do not exceed 26% paid-up equity capital of such Indian insurance company;

(c) whose sole purpose is to carry on life insurance business or re-insurance business.

(5) As per IRDA (Insurance Brokers) Regulations, 2002, “insurance broker” meansa person for the time-being licensed by the Authority under regulation 11, who forremuneration   arranges insurance contracts with insurance companies and/or reinsurance companies on behalf of his clients.

(6) As per IRDA (TPA – Health Services) Regulations, 2001, “TPA” means a Third Party Administrator who, for the time being, is licensed by the Authority, and is engaged, for a fee or remuneration, by whatever name called as may be specified in the agreement with an insurance company, for the provision of health services.

(7) Surveyors and Loss Assessors will be governed by the IRDA Insurance Surveyors and Loss Assessors (Licencing, Professional Requirements and Code of Conduct) Regulations, 2000.

 

3.0   The above decision will take immediate effect.

(Anjali Prasad)

Additional Secretary to the Government of India

D/o IPP File No.: No. 12/10/2011-FC.I dated: 04.02.2014

Copy forwarded to:

1. Press Information Officer, Press Information Bureau-for giving necessary publicity.

2. NIC in the Department of Industrial Policy and Promotion-for uploading the Press Note on DIPP’s website.

3. Reserve Bank of India, Mumbai- for incorporating the provision suitably in Foreign Exchange Management (Transfer or issue of any foreign security) Regulations, 2000and the relevant schedules thereof.

4. Hindi Division, DI PP for providing Hindi version.

 

101 dated 04-02-2014


Export of Goods and Services: Export Data Processing and Monitoring System (EDPMS) – Circular – Dated 4-2-2014 – FEMA

 

RBI/2013-14/481

A.P. (DIR Series) Circular No. 101

February 4, 2014

To

All Category – I Authorised Dealer Banks

Madam / Sir,

Export of Goods and Services: Export Data Processing and Monitoring System (EDPMS)

Attention of Authorised Dealers is invited to A. P. (DIR Series) Circular No. 12 dated September 9, 2000 in terms of which AD Category – I banks are required to furnish the various returns/statements relating to export of Goods/Services as given under Part C- Authorised Dealer obligation in the annexure of the said circular. The mode/manner of submission of return has been amended from time to time.

2. As of now, AD banks are submitting the various returns like XOS (export outstanding statements), ENC (Export Bills Negotiated / sent for collection) for acknowledgement of receipt of Export documents, Sch.3 to 6 (realization of export proceeds), EBW (write-off of export bills), ETX (extension of realization of export bills) relating to Export transaction under FEMA to RBI. These various returns are being managed on a different solo application or manually.

3. With a view to simplify the procedure for filling various returns and for better monitoring, a comprehensive IT- based system called EDPMS has been developed which will facilitate the banks to report all the above mentioned returns through a single platform. In the new system, the primary data on exports transactions including offsite software exports from all the sources viz. Customs/SEZ/STPI will flow to RBI secured server and then the same will be shared with the respective banks for follow up with the exporters. Subsequently, the document submission and realization data will be reported back by the AD banks to RBI through the same secured RBI server so as to update the RBI database on real time basis to facilitate quicker follow up/ data generation. The AD banks are required to download and upload the data on daily basis.

4. The system will also facilitate the Authorised Dealer to raise the Authorised Dealer (AD) transfer request in case of Export document submitted to the Authorised Dealers other than declared in the export document which will discontinue the paper based NOC issued by the AD banks. AD banks have to approve/disapprove the AD transfer request within 7 days from date of request.

5. The date of inception of the system along with user credentials and web link for accessing the system would be communicated to the AD banks shortly through e-mail. For user name and password, AD banks are advised to submit a fill-in form (format annexed) through E-mail on or before February 10, 2014. Clarification required, if any, may also be sent to the aforesaid email-id of Reserve Bank of India.

6. A cut-off date for shipping documents to be reported in the new system will be notified shortly which will be the commencement date of the new system. The entire shipping document should be reported in the new system after cut-off date and old shipping documents would continue to be reported in the old system till completion of the cycle. Both the old and new systems will run parallel to each other for some time before the old system is discontinued.

7. Authorised Dealers may bring the contents of this circular to the notice of their constituents concerned.

8. The directions contained in this circular have been issued under Section 10(4) andSection 11(1) of the 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

 

Notification No.03/2014 dated 03-02-2014


Regarding levy of service tax on services provided by an authorised person or sub-brokers to the member of a commodity exchange – 03/2014 – Dated 3-2-2014 – Service Tax

 

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY,

PART II, SECTION 3, SUB-SECTION (i)]

Government of India

Ministry of Finance

(Department of Revenue)

Notification No. 03/2014-Service Tax

New Delhi, 3rd February, 2014

G.S.R….(E).- Whereas, the Central Government is satisfied that a practice was generally prevalent regarding levy of service tax (including non-levy thereof), undersection 66 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as ‘the Finance Act’), on services provided by an authorised person or sub-broker to the member of a recognised association or a registered association, in relation to a forward contract, and that such services were liable to service tax under the Finance Act, which was not being levied according to the said practice during the period commencing from the 10th day of September 2004 and ending with the 30th day of June 2012;

Now, therefore, in exercise of the powers conferred by section 11C of the Central Excise Act, 1944 (1 of 1944), read with section 83 of the Finance Act, the Central Government hereby directs that the service tax payable on the services provided by an authorised person or sub-broker to the member of a recognised association or a registered association, in relation to a forward contract, shall not be required to be paid in respect of such taxable service on which the service tax was not being levied during the aforesaid period in accordance with the said practice.

[F. No. 354/131/2013 – TRU]

(Raj Kumar Digvijay)

Under Secretary to the Government of India

 

Drastic Changes In Services Export Certification Process – 03-02-2014


 

February 3, 2014

 

The Reserve Bank of India, vide Circular No. RBI/2013-14/254 A.P. (DIR Series)  No. 43 dated September 13, 2013 has made compulsory, certification by the prescribed authority, export transactions of any denomination. In effect, Reserve Bank of India has removed the exemption provided to exporters, in terms of the necessity to obtain certification of the softex forms for export transactions of value of up to US$ 25,000/-. The copy of the Circular dated September 13, 2013 can be accessed by clicking on the following link :

http://rbidocs.rbi.org.in/rdocs/notification/PDFs/254CIR130913.pdf

Under the earlier rules, services exporters were exempted from obtaining the certification from the STPI, in respect of transactions where the value is less that US$ 25,000- or its equivalent.  This rule was of tremendous help to small and medium sized exporters.

This is a huge negative news for exporters of services, who are not registered as STPI Units, with the Software Technology Parks of India, as each of their export invoices would now need to be attested by the Director of STPI, who is the nodal agency designated under the FEMA. Since the STPI levies charges on certification, the overall costs for non-STPI exporters would go up, apart from handling delays related to obtaining the certification from the STPI. This new development would also affect existing STPI units, as they would also be required to get their exports of less than US$ 25,000- certified by the STPI.

The new dispensation, in terms of which, all export transactions would now have to be certified by the STPI, has come into effect from October 1, 2013.

Following this, the Software Technology Parks of India, Bangalore has posted the following fee table in its website.

In terms of this new development, the distinction between STPI units and non-STPI units has virtually disappeared, in as much as, the service charges that are payable by non-STPI units is kept at comparable levels, as those payable by the STPI Units. Moreover, the non-STPI Units are also required to file periodical returns with the STPI.

 

As per this table, all services exporters even having a single transaction will have to get themselves with the STPI.

 

Revised Service Charges for Certification of Softex Forms/Bulk Softex

Statement of Non STP Units w.e.f. 01.01.2014

1. Non-STP units shall be registered with STPI by submitting simplified application form and nominal processing fee of Rs1000/- (One Thousand Only).

2. Non-STP units should also registered their export contracts (free of cost), once get registered with STPI for Softex Certification.

3. Service charges for Non-STP units will be determined on the basis of the value of the export (or on the basis of the value of the contract registered).

4. The Non-STP units will have to submit quarterly and annual reports to respective STPI Centers, once get registered with STPI for Softex Certification.

5. Revised Service Charges for Certification of Softex Forms/Bulk Softex Statement of Non STP Units w.e.f. 01.01.2014 are as below:

 

Annual Service Charges for Non-STP Units w.e.f. 01/01/2014

 

S/N      Export Turnover/Contract value for the year     Annual Service  Charges (INR)

1          Upto Rs.12.50 Lakhs                                                                                 4,000.00

2.         Above Rs.12.50 Lakhs – Rs.25 Lakhs                                            8,000.00

3.         Above Rs.25 Lakhs – Rs.50 Lakhs                                                 16,000.00

4.         Above Rs. 50 Lakhs – Rs. 3 Crore                                                    55,000.00

5.         Above Rs. 3 Crore – Rs. 10 Crore                                                     1,10,000.00

6.         Above Rs.10 Crore – Rs. 25 Crore                                                   2,25,000.00

7.         Above Rs.25 Crore – Rs. 50 Crore                                                  2,50,000.00

8.         Above Rs. 50 Crore – Rs. 100 Crore                                              3,50,000.00

9.         Above Rs. 100 Crore – Rs. 500 Crore                                           5,75,000.00

10.       Above 500 Crore – Rs. 1000 Crore                                               6,00,000.00

11.       Above Rs. 1000 Crore                                                                              6,50,000.00

 

 Our comments  :

These are highly obnoxious developments which would result in a lot of practical problems for services exporters. The system of obtaining invoice wise certification is no longer applicable.

 

 

 

 

 

 

 

P. Chidambaram seeks all-party support to resolve issues facing economy : 03-02-2014


A head of the last session of the current Parliament and planning to clear as many key reformbills as possible, Finance Minister P. Chidambaram today sought cooperation from all political parties and urged them to adopta bi-partisan approach to resolve the challenges facing the economy.

The last session of the current Lok Sahba begins on February 5 and the Finance Minister will present a vote-on-account on the 17th of the month, ahead of the general elections.

Though no full session is being held, he is planning to introduce several reform bills like the SEBI Amendment Bill in the two-week session as the past two sessions were near washout.

“It is my sincere hope that as we enter a period of bitter political rivalry (ahead of the hustings), we will remember that there must be a bi-partisan approach to the challenges the economy faces and to the steps that are to be taken to stabilise the economy,” P. Chidambaram said at the Golden Jubilee celebrations of UTI here this evening.

Citing the restructuring of UTI as one of the best examples of such a bipartisan approach, Chidambaram said, “While the first tentative steps (towards UTI recast) were taken by Yashwant Sinha, the then finance minister, the restructuring was midwifed by Jaswant Singh, the finance minister at that time. And when I took over as finance minister, I took it forward and completed the restructuring process.”

“It is a good example of despite changes in the government, the main actors and political rivalry, there is a deeper bipartisan consensus when it comes to taking crucial decisions affecting the economy,” he said.

About the implementation of FSLRC report, he said the non-legislative part of the recommendations should be implemented at the earliest.

“While it’s not possible to initiate and complete the legislative action that is required within the term of this government, we will begin work and then we hope that the legislative actions will be completed in calendar 2014,” Chidambaram said.

He, however, said that all the steps that have been recommended under the head of non-legislative actions, have been initiated by the finance ministry and will be rolled out

In the weeks and months ahead.

“It is my sincere appeal to all political parties, to all members of Parliament now and those who will be elected to next Parliament that we must complete legislative actions based on FSLRC recommendations in calendar year 2014 and we must have the major part of the Indian Financial Code in place in 2014,” he said.

He added that if the Congress retains power after the forthcoming polls, then the FSLRC suggestions will be implemented by the end of 2014.

“On behalf of my party I can assure the financial community that if we find the place in the government, we will complete major legislative actions to put in place an Indian Financial Code by the end of calendar 2014,” he said.

To celebrate 50 years of UTI, the minister dedicated 101 new UTI financial centres to serve the investors, post which UTI will have 251 financial centres across the country.

UTI AMC managing director Leo Puri said, “On this golden jubilee year, the thrust of UTI will be to devise appropriate strategies that will improve all aspects of its functioning. UTI will work with a genuine concern to create a favourable environment that will benefit investors, intermediaries and the industry.”

Addressing the session, Sebi chairman and the ex-UTI boss U K Sinha said, there is a need to revisit the ownership of UTI.

 Source : The Hindu

Notification No.03/2014 dated 03-02-2014


Seeks to amend notification No. 12/2012-Central Excise dated 17.03.2012 – 03/2014 – Dated 3-2-2014 – Central Excise – Tariff

 

[TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i)

OF THE GAZETTE OF INDIA, EXTRAORDINARY]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 03/2014-Central Excise

New Delhi, the 3rd February, 2014

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 12/2012-Central Excise, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 163(E), dated the 17th March, 2012, namely:-

In the said notification,

(A) in the Table,

(i)   after the serial number 94 and the entries relating thereto, the following serial number and entries shall be inserted, namely:-

“94A 28 Dicalcium phosphate (DCP) of animal feed grade   confirming to IS specification No. 5470:2002 Nil -”;

(ii)    after the serial number 205 and the entries relating thereto, the following serial number and entries shall be inserted, namely:-

“205A 7302 or 8530 Railway or tramway track construction material of iron and steel.Explanation.- For the purposes of this exemption, the value of the goods shall be the value of goods excluding the value of rails. 12% 49”;

(B)   in the ANNEXURE, after the condition number 48 and the entries relating thereto, the following shall be inserted, namely:-

“49 If manufactured out of rails on which duty of excise has been paid and no credit of duty paid on such rails has been taken under rule 3 or rule 13 of the Cenvat Credit Rules, 2004.”.

[F.No. 354/184/2013-TRU]

[F.No. 354/251/2013-TRU]

(Akshay Joshi)

Under Secretary to the Government of India

Note: The principal notification No. 12/2012-Central Excise, dated the 17th March, 2012, was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 163(E), dated the 17th March, 2012 and was last amended vide notification No. 32/2013-Central Excise, dated the 26th December, 2013, published vide number G.S.R. 795(E), dated the 26th December, 2013.

 

Rupee up nine paise against dollar in early trade : 03-02-2014


The rupee strengthened by 9 paise to 62.59 against the US dollar in early trade today at the Interbank Foreign Exchange market today on increased selling of the American currency by exporters.

Forex dealers said increased selling of the dollar by exporters supported the rupee but a lower opening in the domestic equity market and weakness in other currencies against the American currency overseas capped the gains.

The rupee had lost 12 paise to close at 62.68 on Friday weighed down by demand for the American currency from importers.

Meanwhile, the benchmark BSE Sensex fell by 90.36 points, or 0.44 per cent, to 20,423.49 in early trade today.

Source : The Economic Times

Diesel price hike expected, LPG cylinder rate cut a surprise in wake of quota being raised by gov : 01-02-2014


Diesel price was hiked by 50 paise per litre today, but there will be no change in petrol rates. The hike, effective midnight tonight, is excluding local sales tax or VAT. The actual increase will be higher and will vary from city to city.

However, the price of non-subsidised cooking gas (LPG) cylinder, which customers buy after consuming their quota of 12 subsidised cylinders, was cut by Rs 107 on easing international rates.

The price of diesel in Delhi will be hiked by 57 paise, including tax, to Rs 54.91 per litre, while it will cost Rs 63.23 a litre in Mumbai as against Rs 62.60 at present.

The diesel price hike is in line with the January 2013 decision of the government to raise rates by up to 50 paise per month till such time that the entire losses on the fuel are wiped out, and prices made market determined.

Announcing the price hike, Indian Oil Corp, the nation’s largest fuel retailer, said that even after the 13th price hike since last January, oil companies are incurring Rs 9.24 per litre loss on sale of the fuel.

Officials said there will be no change in petrol rates as current price of Rs 72.43 a litre in Delhi was almost in line with the cost.

The 14.2-kg cooking gas cylinder that consumers buy beyond their entitled 12 bottles at subsidised rates, will now cost Rs 1,134, down from Rs 1,241, in Delhi.

Non-domestic LPG rates were at the beginning of the year hiked by a steep Rs 220 per cylinder but have now been cut in line with softening of international oil rates.

IOC said losses on LPG have come down to Rs 656 per 14.2-kg cylinder from Rs 762.50.

Diesel price was last hiked by 50 paise on January 4. Since January 2013, diesel rates have risen by a cumulative Rs 7.76. “Even after the current increase, under recovery (loss) on retail diesel shall stand at Rs 7.40 per litre,” IOC said

in a statement.

Besides diesel, IOC was losing Rs 35.76 a litre on sale of kerosene through Public Distribution System (PDS) and Rs 656 on sale of 14.2-kg subsidised domestic LPG cylinder. “For the year 2013-14, the Corporation is expected to incur under-recovery (revenue loss) of around Rs 73,700 crore on sale of three sensitive products and industry (IOC plus Bharat Petroleum Corp and Hindustan Petroleum Corp) would incur around Rs 1,42,000 crore,” the statement added.

On diesel, it said, the government had on January 17, 2013 authorised oil marketing companies to increase the retail selling price within a small range every month.

“Accordingly, since then, retail diesel prices are being revised every month,” it said.

Source : PTI

Fiscal deficit in India creates mammoth challenge for FM P. Chidambaram in poll year : 01-02-2014


Fiscal deficit in India in the first three quarters inched closer to the budgeted target for the whole year, suggesting P. Chidambaram, Finance Minister of Asia’s third-largest economy, faces a challenge to meet the target.

The government is facing a shortfall in tax collections and revenue receipts from the sale of government shares in state-run companies as economic growth slows to less than 5 percent this fiscal year, from near double digits before the 2008 global crisis.

However, the subsidy bill – mainly for selling oil, fertiliser and food at cheaper rates – is likely to touch near 3 trillion rupees ($48 billion), against a budgeted target of 2.21 trillion rupees.

The fiscal deficit reached 5.16 trillion Indian rupees ($82 billion) during April-December, or 95.2 percent of the full-year target, compared with 78.8 percent a year earlier, government data showed on Friday.

Net tax receipts were at 5.18 trillion rupees in the first nine months of the current fiscal year to March 2014, while total expenditure was 11.64 trillion rupees.

Factory gate duties were down 6.9 percent at 1.02 trillion rupees during April-December from the year-earlier period, while customs tax receipts rose 4.3 percent to 1.24 trillion rupees – much lower than the 13.6 percent annual growth target.

Analysts and the central bank remain concerned about widening oil subsidies as the government has only partially increased diesel and cooking gas prices.

“(The government) needs to strive for a deft balance between fiscal consolidation and economic growth by focusing on quality of government spending,” the Reserve Bank of India said in its quarterly report earlier this week.

Finance Minister P. Chidambaram, who has committed not to cross the deficit target, finds it hard to either raise diesel and cooking fuel prices or cut the fertiliser subsidy, as the government faces a national election by May.

“The budget deficit had almost hit its full-year target by November and is unlikely to hold below the government’s target shortfall of 4.8 percent of GDP,” Moody’s Analytics said in a research note last week.

Officials say India’s deficit would be met by cutting funds for ministries like rural, urban development, defence and education as India

 Source : The Financial Express

Rupee strengthens to 62.37 in early trade : 31-01-2014


The rupee recovered by 19 paise to 62.37 against the US dollar in early trade at the Interbank Foreign Exchange market today on increased selling of the American currency by exporters.

Forex dealers said a higher opening in the domestic equity market also supported the rupee but the dollar’s strength against other currencies overseas, following better-than-forecast US growth figures, capped the gains.

The rupee had lost 15 paise against the dollar to end at 62.56 in the previous session in line with a sell-off in emerging markets, after the US Federal Reserve scaled back its stimulus programme.

The benchmark BSE Sensex rose 54.65 points or 0.26 per cent to 20,552.90 in early trade today.

Source : PTI

Indian rupee against US dollar: Will it test 68 levels again? : 31-01-2014


cording to Bank of America Merrill Lynch, investors favour the Indian rupee among the so-called ‘fragile five’ (Brazil, India, Indonesia, S Africa, Turkey) currencies. The rupee has depreciated relatively less than most BRICs and TIMS (Turkey, Indonesia, Mexico and South Africa) in this round of FX volatility. However, investors are worried that India remains vulnerable to a protracted emerging markets (EM) sell off. The rupee can test Rs 68/$ levels again in case the US Dollar appreciates to 1.20/euro levels.

rupee

The Indian rupee is staring at three headwinds:

* Maturity of forex swaps with oil firms of $7 billion in February-April. OMCs have already covered up to 50% of the oil swaps that come due in Feb-March

* Bank/corporate forex repayments of $4.8 billion in March.

* Withdrawal of gold import curbs after March with inventories running down.

Key events to determine rupee’s sway

According to Bank of America Merrill Lynch, investors favour the Indian rupee among the so-called ‘fragile five’ (Brazil, India, Indonesia, S Africa, Turkey) currencies. The rupee has depreciated relatively less than most BRICs and TIMS (Turkey, Indonesia, Mexico and South Africa) in this round of FX volatility. However, investors are worried that India remains vulnerable to a protracted emerging markets (EM) sell off. The rupee can test R 68/$ levels again in case the US Dollar appreciates to 1.20/euro levels.

Source : Financial Express

Notification No.D.6/35/2012 dated 30-01-2014


Policy to regulate functioning of Worn and Used clothing units in SEZs regarding. – D.6/35/2012 – Dated 30-1-2014 – Special Economic Zone

No. D.6/35/2012-SEZ

Government of India

Ministry of Commerce & Industry

Department of Commerce

(SEZ Division)

Udyog Bhawan, New Delhi – 110 107

Dated : 30th January, 2014

Subject : Policy to regulate functioning of Worn and Used clothing units in SEZs – regarding.

In partial modification of this Department’s letter dated 17th September, 2013 on the subject cited above, I am directed to say that the following words in Para 3(iv) of the said letter stands deleted :

“Further the sales to DTA of un-mutilated clothing on account of export surplus or export rejects will not exceed 15% of the physical export turnover of the unit.”

2. All Development Commissioners are directed to amend the LOA issued to worn and used clothing units in SEZs accordingly.

(Madhup Vyas)

Deputy Secretary to the Govt. of India

Tel. 2306 3294

e-mail : madhup.vays@nic.in

To

1.      Chief Secretaries of all States/UTs

2.      All Development Commissioners of SEZs

3.      Department of Revenue (CBDT/CBEC), Govt. of India

4.      Ministry of Textiles

5.      Ministry of Environment & Forests

6.      Director General, DGFT

7.      DG, EPCES

 

 

 

Notification No.02/2014 dated 30-01-2014


Seeks to amend notification No. 25/2012- Service Tax, dated the 20th June, 2012. – 02/2014 – Dated 30-1-2014 – Service Tax

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY,

PART II, SECTION 3, SUB-SECTION (i)]

Government of India

Ministry of Finance

(Department of Revenue)

Notification No. 02/2014 – Service Tax

New Delhi, 30th January, 2014

G.S.R….(E).­ In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.25/2012-Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide G.S.R. 467 (E), dated the 20th June, 2012, namely:-

In the said notification, in the paragraph 2, for clause (s), the following shall be substituted, namely:­­–

‘(s) “governmental authority” means an authority or a board or any other body;

(i) set up by an Act of Parliament or a State Legislature; or

(ii) established by Government, with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution;’.

[F. No. 354 /236/ 2013-TRU]

(Raj Kumar Digvijay)

Under Secretary to the Government of India

Note.- The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 25/2012 – Service Tax, dated 20th June, 2012, number G.S.R. 467 (E), dated the 20th June, 2012 and was last amended by notification No.01/2014- Service Tax, dated the 10th January, 2014 G.S.R. 15(E), dated the 10th January,2014.

 

 

Notification No.CBDT PRESS RELEASE dated 30-01-2014


SECTION 90 OF THE INCOME-TAX ACT, 1961 – DOUBLE TAXATION AGREEMENT – AGREEMENT FOR AVOIDANCE OF DOUBLE TAXATION AND PREVENTION OF FISCAL EVASION WITH FOREIGN COUNTRIES – FIJI – CBDT PRESS RELEASE – Dated 30-1-2014 – Income Tax

The Government of the Republic of India signed a Double Taxation Avoidance Agreement (DTAA) with the Government of Republic of Fiji for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income on 30th January, 2014. The Agreement was signed by Shri P. Chidambaram, Minister of Finance on behalf of the Government of India and by Mr. Aiyaz Sayed-Khaiyum, Attorney General and Minister of Justice, Anti-Corruption, Public Enterprises, Communications, Civil Aviation, Tourism, Industry and Trade, on behalf of the Government of Republic of Fiji.

The DTAA provides that business profits will be taxable in the source state if the activities of an enterprise constitute a permanent establishment in the source state. Profits derived by an enterprise from the operation of aircraft in international traffic shall be taxable in the country of place of effective management of the enterprise. Dividends, interest, royalty income and fees for technical or professional services will be taxed both in the country of residence and in the country of source. However, the maximum rate of tax to be charged in the country of source will not exceed the prescribed limit for such dividends, interest, royaltiesand fees for technical services. Capital gains from the sale of shares will be taxable in the country of source.

The Agreement further incorporates provisions for effective exchange of information and assistance in collection of taxes between tax authorities of the two countries including exchange of banking information and also incorporates anti-abuse provisions to ensure that the benefits of the Agreement are availed of only by the residents of the two countries and to prevent treaty abuse.

The Finance Minister Shri P. Chidambaram speaking on the occasion stated that the need for the DTAA between the countries was felt and negotiations were completed in 2011 and that the Agreement will provide tax stability to the residents of India and Fiji and facilitate mutual economic cooperation as well as stimulate the flow of investment, technology and services between India and Fiji.

Uniform tax rate for foreign portfolio investors : 30-01-2014


The new system will especially be beneficial for QFIs

In a major boost for overseas entities, the government has said that foreign portfolio investors (FPIs) will attract uniform tax rate across categories.

FPIs bring together all the three investment categories — foreign institutional investors (FIIs), their sub-accounts and qualified foreign investors (QFIs).

Besides, the tax rate for FPIs would be the same as that extended to FIIs. The new system would be especially beneficial for QFIs, who were subjected to higher tax rate earlier.

The Central Board of Direct Taxes has notified that the new class of investors, FPIs, would be treated as FIIs under the Income Tax Act, 1961.

With the notification, issued on January 22, FPIs would now be subject to the same tax treatment as is applicable to FIIs under the current tax regime. The move clears the air over taxation regime for FPIs, created with the aim of rationalising overseas investments in the domestic capital market.

Global consultancy EY said that QFIs would also become eligible to concessional tax rates in respect of, inter-alia, capital gains earned on off-market transactions in securities (such as buyback and open offers in equity shares).

The Securities and Exchange Board of India notified the FPI norms on January 7, replacing the regulations for FIIs.

Under the new norms, FPIs have been divided into three categories as per their risk profile and the KYC (Know Your Client) requirements, and other registration procedures would be much simpler for FPIs compared to the current practices.

Besides, the new class would be given a permanent registration, as against the current practice of granting approvals for one year or five years to the overseas entities seeking to invest in Indian markets.

Such registration would be permanent unless suspended or cancelled by SEBI or surrendered by the FPI.

Category I FPIs, classified as entities with lowest risk, would include foreign governments and government related foreign investors.

Category II would cover appropriately regulated broad based funds, appropriately regulated entities, broad-based funds whose investment manager is appropriately regulated, university funds and pension funds, among others. Those who are not eligible to be in the first and second set of classifications would be considered under Category III.

Source :

Rupee weakens to 62.90 in early trade : 30-01-2014


The rupee shed 49 paise to 62.90 per dollar in the opening trade against the previous close of 62.41 on the US Federal Reserve’s announcement of a further $10-billion reduction in its quantitative easing programme to $65 billion.

The further $10-billion stimulus reduction is in addition to the $10-billion cut announced earlier in December.

Abhishek Goenka, Founder and CEO of India Forex Advisors, said that the stimulus taper by the US Federal Reserve has affected all emerging market currencies.

The inter-bank call money rate, the rate at which banks borrow short-term money from each other, opened flat at 8.30 per cent. Yield on the benchmark 8.83 per cent government bond maturing in 2023 hardened to 8.79 per cent from the previous close of 8.77 per cent.

Source : Business Line

Rupee trading strong at 62.16 : 29-01-2014


The rupee was trading strong by 34 paise at 62.16 against the dollar at 11.38 a.m. local time.

The rupee strengthened by 23 paise to 62.27 per dollar in the opening trade against the previous close of 62.50 to a dollar after the Reserve Bank of India unexpectedly raised the interest rates to bring down consumer inflation.

The RBI hiked its repo rate, the interest rate at which it lends short-term funds to banks, by 0.25 per cent to 8 per cent.

According to a dealer with a public sector bank, the repo rate hike by RBI was a measure to keep the rupee volatility under check as higher rates can make the currency more attractive for foreign investors.

However, Abhishek Goenka, Founder and Chief Executive Officer of India Forex Advisors, said that the rupee is likely to turn weak amid the Federal Open Market Committee meet where the Federal Reserve is expected to taper the QE by $10 billion.

The inter-bank call money rate, the rate at which banks borrow short-term money from each other, opened flat at 8.30 per cent. Yield on the benchmark 8.83 per cent government bond maturing in 2023 softened to 8.73 per cent from the previous close of 8.74 per cent. Prices rose to ₹100.58 from ₹100.50.

Source : Business Line

99 dated 29-01-2014


Foreign investment in India by SEBI registered Long term investors in Government dated Securities – Circular – Dated 29-1-2014 – FEMA

RBI/2013-14/473

A.P. (DIR Series) Circular No. 99

January 29, 2014

To,

All Authorised Persons

Madam/ Sir,

Foreign investment in India by SEBI registered Long term investors in Government dated Securities

Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to Schedule 5 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 notified vide Notification No. FEMA.20/2000-RB dated May 3, 2000, as amended from time to time, in terms of which SEBI registered Foreign Institutional Investors (FIIs), SEBI registered Qualified Foreign Investors (QFIs) and long term investors registered with SEBI may purchase, on repatriation basis Government securities and non-convertible debentures (NCDs) / bonds issued by an Indian company subject to such terms and conditions as mentioned therein and limits as prescribed for the same by RBI and SEBI from time to time.

2. Attention of AD Category-I banks is also invited to A.P.(DIR Series) Circular No.111 dated June 12, 2013 in terms of which the present limit for investments by FIIs, QFIs and long term investors in Government securities stands at USD 30 billion, out of which a sub-limit of USD 5 billion is available for investment by long term investors in Government dated securities.

3. On a review, it has now been decided, in consultation with Government of India to enhance, with immediate effect, the existing sub-limit of USD 5 billion available to long term investors registered with SEBI – Sovereign Wealth Funds (SWFs), Multilateral Agencies, Pension/ Insurance/ Endowment Funds and Foreign Central Banks for investment in Government dated securities to USD 10 billion, within the total limit of USD 30 billion available for foreign investments in Government securities.

4. The operational guidelines in this regard will be issued by SEBI.

5. All other existing conditions for investment in Government securities remain unchanged.

6. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

7. The directions contained in this circular have been issued under sections 10(4) and11(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

Rupee trading weak at 63.12 : 28-01-2014


The rupee was trading slightly weak at 63.12 against the dollar at 11.18 a.m. local time.

The rupee opened flat at 63.09 per dollar against the previous close of 63.10 due to weakness in the dollar index.

On Monday, succumbing to a rout in emerging markets, the rupee had slipped past the 63-mark for the first time in ten weeks and closed 44 paise weaker at 63.10 versus the dollar amid fears that further stimulus tapering by the US central bank will hit the capital inflows.

The rupee has slumped by 129 paise or 2.09 per cent in three straight sessions. “The emerging markets currency sell-off is causing a contagion effect as investors pulled money from emerging markets and other assets viewed as risky, thereby pushing the rupee down,” Sugandha Sachdeva of Religare Securities said.

In addition to this, fears that the Federal Reserve might go ahead with withdrawing its monetary stimulus by another $10 billion added to the pressure, said Abhishek Goenka, CEO, India Forex Advisors.

In the bond market, yield on the benchmark 8.83 per cent government security, maturing in 2023, hardened to 8.76 per cent from the previous close of 8.74 per cent.

Source : Business Line

F.NO.199/03/2013-ITA.1 dated 28-01-2014


Exemption for rewards by Central Government or State Government to medal winners of Olympic Games or Common Wealth Games or Asain Games under clause (17A) of section 10 of the Income Tax Act 1961 (43 of 1961). – Order-Instruction – Dated 28-1-2014 – Income Tax

ORDER

DATED 28-1-2014

In pursuance of the powers conferred by sub-clause (ii) of clause (17A) of section 10of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby approves any payment made, whether in cash or in kind, as a reward by the Central Government or a State Government to the medal winners of the Olympic Games or Common Wealth Games or Asian Games with effect from the date of this order.

[F.NO.199/03/2013-ITA.1]

98 dated 27-01-2014


Exim Bank’s Line of Credit of USD 19.50 million to the Government of the Socialist Republic of Vietnam – Circular – Dated 27-1-2014 – FEMA

 

RBI/2013-2014/462

A.P. (DIR Series) Circular No. 98

January 27, 2014

To,

All Category – I Authorised Dealer banks

Madam/Sir,

Exim Bank’s Line of Credit of USD 19.50 million to the Government of the Socialist Republic of Vietnam

Export-Import Bank of India (Exim Bank) has entered into an Agreement dated July 11, 2013 with the Government of the Socialist Republic of Vietnam, for making available to the latter, a Line of Credit (LOC) of USD 19.50 million (USD Nineteen Million Five Hundred Thousand) for financing eligible goods, machinery, equipment, works and services including consultancy services from India for the purpose of financing two projects in Vietnam. The goods, machinery, equipment, works and services including consultancy services from India for exports under this Agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this Agreement. Out of the total credit by Exim Bank under this Agreement, the goods and services including consultancy services of the value of at least 75 per cent of the contract price shall be supplied by the seller from India and the remaining 25 percent goods and services (other than consultancy services) may be procured by the seller for the purpose of Eligible Contract from outside India.

2. The Credit Agreement under the LOC is effective from December 27, 2013 and the date of execution of Agreement is July 11, 2013. Under the LOC, the last date for opening of Letters of Credit and Disbursement will be 48 months from the scheduled completion date(s) of contract(s) in the case of project exports and 72 months (July 10, 2019) from the execution date of the Credit Agreement in the case of supply contracts.

3. Shipments under the LOC will have to be declared on GR / SDF Forms as per instructions issued by the Reserve Bank from time to time.

4. No agency commission is payable under the above LOC. However, if required, the exporter may use his own resources or utilize balances in his Exchange Earners’ Foreign Currency Account for payment of commission in free foreign exchange. Authorised Dealer Category- l (AD Category-l) banks may allow such remittance after realization of full payment of contract value subject to compliance with the prevailing instructions for payment of agency commission.

5. AD Category-I banks may bring the contents of this circular to the notice of their exporter constituents and advise them to obtain full details of the Line of Credit from the Exim Bank’s office at Centre One, Floor 21, World Trade Centre Complex, Cuffe Parade, Mumbai 400 005 or log on to www.eximbankindia.in.

6. The Directions contained in this circular have been issued under sections 10(4) and11(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

 

Rupee weakens to 62.84 in early trade : 27-01-2014


The rupee was trading weak by 6 paise at 62.74 against the dollar at 12.06 p.m. local time.

The rupee opened weak at 62.84 per dollar against Friday’s close of 62.68, hurt by strong month-end demand for the American currency from oil importers amid weakness in the domestic equity market.

However, according to dealers, dollar selling by state-run banks has limited the further weakening of the domestic unit.

In the bond market, yield on the benchmark 8.83 per cent government security, maturing in 2023, opened flat at 8.74 per cent from the previous close.

 Source : PTI

Now, identity proof needed to get PAN : 25-01-2014


Getting an income tax Permanent Account Number (PAN) is going to get more cumbersome from next month with the government mandating the submission of more documents besides, insisting on producing documents in original for verification.

Starting February 3, anyone applying for allotment of PAN will now have to submit a proof of identity, in addition to the earlier requirements of documents, showing your address and date of birth. The requirement for an identity proof has been included as PAN is used for other crucial documents such as a passport. Documents like voter ID card, driving licence can be used as identity proof.

In a statement, the finance ministry asked applicants to submit self-attested copies of the documents at the facilitation centres and also bring along the original documents, just as you do for your passport, which will be returned immediately after verification.

 Tax consultants said that the new process will put pressure on applicants. “I-T (income tax) department is asking for self-attested documents as well as original documents (for verification only), to be 100% sure about their veracity. But, this will make it more difficult to obtain PAN, particularly for foreigners. People may not be comfortable sharing original documents with consultants. There are practical challenges, which may unfold in the coming days and we hope for some more clarity on the same,” Amarpal Chadha, tax partner at consulting firm Ernst & Young, said.


Tax department officials, however, countered this by saying that for several other documents, similar requirements were in place and the system was working without hiccups.

The new norms will also extend to those seeking a change of address too. Several taxpayers were issued PAN cards over a decade ago and have since changed residence. The law also requires them to update their address, which will entail submitting fresh papers, while getting a new card with same number. Although the tax department uses the address in your return to issue refund orders, tax consultants said in some cases, such high-value purchases, notices were sent based on the address given in the PAN. “So, it helps to get your address updated,” said a tax consultant.

Source : The Economic Times

Customs, Excise & Service Tax Appellate Tribunal says it has no money to pay for postage : 25-01-2014


A tribunal that decides on revenues worth crores of rupees doesn’t have the money to pay for postage. The Mumbai office of the Customs, Excise and Service Tax Appellate Tribunal (Cestat) warned the Bombay Bar Association in a January 1 circular that “due to paucity of funds (the) postal department has stopped giving services to this office.”

This would be amusing if it weren’t for the annoyance that may be caused. “This office is not in a position to dispatch/deliver hearing, notice orders, letters, appeal memo etc. to the concerned parties/advocate/consultants,” Cestat said.

That will add to the burden of anyone fighting tax cases, said Pritam Mahure of Pune-based tax advisory firm Lawgical Consultants. “(For) assessees who are already caught in the web of litigation, this is another challenge which they have to face,” he said. “Now, assessees whose case is pending in Mumbai Tribunal have to either depute a person who will regularly visit the tribunal office to collect letters or orders every day or week.”

However, a department official said Cestat was still able to send letters by speed post, but not parcels. In any case, information will be available on the website. “We have just issued a precautionary notice so that the concerned departments and parties can keep track of their cases and cause list through the website,” the spokesperson said.

The reason for unpaid bills, while not a huge amount, is that funds haven’t been sent from headquarters. Many government departments face a similar challenge.

“Our monthly postal expenses are around 50,000 and it’s not paid since last three months. As and when we get the funds, the issue will be sorted out,” said the official cited above.

It’s not just postal expenses the tribunal is finding difficult to pay. “Most miscellaneous expenses such as office stationery and utility bills (electricity bills) are pending,” said the official.

A lawyer who regularly appears at Cestat said this could mean litigants may miss hearings or not get copies of orders. This could lead to deadlines being missed for filing appeals against ruling.

A senior official in the postal department said: “Even though both are central government departments, both work independently. The query is related to an individual client of the department and we are not allowed to reveal specifics.”

Source : PTI

Exchanging currency notes will be hassle-free, says RBI : 25-01-2014


The members of the public can exchange notes which were printed prior to 2005 at bank branches at their convenience, according to a Reserve Bank of India advisory issued on Friday.

The central bank said the rationale behind its move to withdraw banknotes printed prior to 2005 is to remove them from the market as they have fewer security features compared to banknotes printed after 2005.

The public can easily identify the notes to be withdrawn as the notes issued before 2005 do not have the year of printing on the reverse side.

The recall of banknotes comes in the backdrop of rising cases of counterfeit currency and the role of black money in stoking inflation in the economy.

Global practice

The RBI pointed out that it is standard international practice to withdraw old series notes.

Further, from July 1, 2014, members of public can exchange any number of these old series notes from the bank branches where they have their accounts.

However, to exchange more than 10 pieces of Rs 500 and Rs1000 notes, non-customers will have to furnish proof of identity and residence to the bank branch in which she/he wants to exchange the notes.

The RBI reiterated that the notes printed prior to 2005 will continue to be legal tender.

RBI assurance

“The RBI assures that it will continue to monitor and review the process of withdrawal of old series notes so that the public is not inconvenienced in any manner,” said a RBI statement.

Complete withdrawal

A couple of days ago, the RBI said that after March 31, 2014, it will completely withdraw from circulation all banknotes issued prior to 2005.

From April 1, 2014, the public will be required to approach banks for exchanging these notes.

The RBI statement said, “Banks will provide exchange facility for these notes until further communication.”

 Source : Business Line

Notification No.04/2014 dated 24-01-2014


Seeks to amend the Chewing Tobacco and Un-manufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty ) Rules, 2010 03/2014-CE(N.T.) – 04/2014 – Dated 24-1-2014 – Central Excise – Non Tariff

[(TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II,

SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No.   04/2014-Central Excise (N.T.)

New Delhi, dated 24th  January, 2014

G.S.R.  (E)- In exercise of the powers conferred by sub-sections (2) and (3) of section 3A of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following rules further to amend the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty ) Rules, 2010, namely:-

1. (1) These rules may be called the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) First Amendment Rules, 2014.

(2) They shall come into force on the date of their publication in the Official Gazette.

2.   In the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010, -

(i)   in rule 5, for the Table, the following shall be substituted, namely:-

“Table

Sl. No

Retail sale price

(per pouch)

Capacity of production per packing machine per month for chewing tobacco (including Filter Khaini) ,unmanufactured tobacco and jarda scented tobacco (number of pouches)

Without lime tube/ lime pouch

With lime tube/lime pouches

Filter Khaini

(1)

(2)

(3)

(4)

(5)

1.

Up to Re.1.00

3993600

3793920

2745600

2.

Exceeding Re. 1.00 but not exceeding   Rs. 1.50

3993600

3793920

2745600

3.

ExceedingRs. 1.50 but not exceeding   Rs. 2.00

3594240

3394560

2608320

4.

ExceedingRs.2.00but not exceeding Rs.3.00

3594240

3394560

2477904

5.

ExceedingRs.3.00but not exceeding Rs.4.00

3354624

3154944

2354009

6.

ExceedingRs.4.00but not exceeding Rs.5.00

3354624

3154944

2236308

7.

ExceedingRs.5.00but not exceeding Rs.6.00

3354624

3154944

2124493

8.

ExceedingRs.6.00but not exceeding Rs.7.00

3194880

2995200

2018268

9

ExceedingRs.7.00but not exceeding Rs.8.00

3194880

2995200

1917355

10

ExceedingRs.8.00but not exceeding Rs.9.00

3194880

2995200

1821487

11

ExceedingRs.9.00but not exceedingRs. 10.00

3194880

2995200

1730413

12

Exceeding Rs. 10.00but not exceedingRs. 15.00

3003187

2853028

1730413

13

Exceeding Rs. 15.00but not exceedingRs. 20.00

2822996

2681846

-

14

ExceedingRs. 20.00but not exceedingRs. 25.00

2653616

2520935

-

15

ExceedingRs. 25.00but not exceedingRs. 30.00

2494399

2369679

-

16

ExceedingRs. 30.00but not exceedingRs. 35.00

2344735

2227499

-

17

ExceedingRs. 35.00but not exceedingRs. 40.00

2204051

2093849

-

18

Exceeding Rs. 40.00but not exceedingRs. 45.00

2071808

1968218

-

19

ExceedingRs. 45.00but not exceedingRs. 50.00

1947500

1850125

-

20

Above Rs.50.00

1947500

1850125

-”

(ii) in rule 6, in sub-rule 3,for the third proviso, the following shall be substituted, namely:-

“Provided further that annual capacity of production for the period from the 24th day of January, 2014 to the 31st day of January, 2014 shall be calculated on pro-rata basis for the total number of days in the month of January, 2014 and the number of days remaining in the month starting from and including the 24th day of January, 2014.”

[F. No. 354/120/2011-TRU]

                                   (Raj Kumar Digvijay)

Under Secretary to the Government of India

Note.- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), dated the 27th February, 2010 vide notification No. 11/2010-Central Excise (N.T.), dated the 27th February, 2010, [ G.S.R.127 (E), dated the 27th February, 2010] and were last amended vide notification number 20/2012-CE (NT), dated the 19th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-Section (1), vide number G.S.R 226(E), dated 19th March, 2012.

 

Notification No.03/2014 dated 24-01-2014


Seeks to amend Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 03/2014-CE(N.T.) – 03/2014 – Dated 24-1-2014 – Central Excise – Non Tariff

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II,

SECTION 3, SUB-SECTION (i)]

Government of India

Ministry of Finance

Department of Revenue

Notification No. 03/2014–Central Excise (N.T.)

New Delhi, dated, 24th January, 2014

G.S.R (E). – In exercise of the powers conferred by sub-sections (2) and (3) of section 3A of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following rules further to amend the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008, namely :-

1. (1) These rules may be called the Pan Masala Packing Machines (Capacity   Determination   and Collection of Duty) First Amendment Rules, 2014.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008,-

(i)   in rule 5, for the TABLE, the following shall be substituted, namely:-

Table

Sl. No.

Retail sale price (per pouch)

 

Number of pouches per operating packing machine per month

1.

Up to Re. 1.00

6240000

2.

Exceeding Re. 1.00 but not exceeding Rs. 1.50

6240000

3.

Exceeding Rs. 1.50 but not exceedingRs. 2.00

5928000

4.

Exceeding Rs. 2.00 but not exceedingRs. 3.00

5928000

5.

Exceeding Rs. 3.00 but not exceedingRs. 4.00

5740800

6.

Exceeding Rs. 4.00 but not exceedingRs. 5.00

5740800

7.

Exceeding Rs. 5.00 but not exceedingRs. 6.00

5740800

8.

Above Rs. 6.00

5616000”

(ii)    in rule 6, in sub-rule 3, for the second proviso, the following proviso shall be substituted , namely:-

“Provided further that the annual capacity of production for the period from the 24thday of January, 2014 to the 31st day of January, 2014 shall be calculated on pro-rata basis for the total number of days in the month of January, 2014 and the number of days remaining in the month starting from and including the 24th day of January, 2014.”

(iii) in FORM – 2, in Sl.No.4, for item (iv),the following shall be substituted, namely:-

“(iv) Break-up of duty payment for apportionment between various duties is as per details below:-

Sr. No. Duty Duty ratio for pan masala Duty paid (Rs.) Duty ratio for pan masala containing tobacco Duty paid (Rs.)

(1)

(2)

(3)

(4)

(5)

(6)

1

The duty leviable under theCentral Excise Act, 1944

0.2842

0.7665

 

2

The additional duty of excise leviable undersection 85of theFinance Act, 2005

0.1421

0.0766

 

3

National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001

0.5446

0.1277

 

4

Education Cess leviable under section 91 of theFinance Act, 2004

0.0194

0.0194

 

5

Secondary and Higher Education Cess leviable undersection 136 of theFinance Act, 2007

0.0097

0.0097”

 

 [F No.354/120/2011-TRU]

(Raj Kumar Digvijay)

Under Secretary to the Government of India

Note.- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), dated the 1st July, 2008 vide notification No. 30/2008-Central Excise (N.T.), dated the 1st July, 2008, [ G.S.R.127 (E), dated the 1st July, 2008] and were last amended vide notification number 19/2012-CE (NT), dated the 19th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-Section (1), vide No. G.S.R 225(E) dated the 19th March, 2012.

 

Notification No.02/2014 dated 24-01-2014


Seeks to amend notification No. 16/2010-Central Excise, dated the 27.02. 2010 for change in rate of duty in Compound Levy Scheme applicable to chewing tobacco and unmanufactured tobacco – 02/2014 – Dated 24-1-2014 – Central Excise – Tariff

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY,

PART II, SECTION 3, SUB-SECTION (i)]

Government of India

Ministry of Finance

(Department of Revenue)

Notification No.02/2014 – Central Excise

New Delhi, the 24th January, 2014

G.S.R. (E). - In exercise of the powers conferred by sub-section (3) of section 3A of the Central Excise Act, 1944(1 of 1944), the Central Government hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 16/2010-Central Excise, dated the 27th February, 2010, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 118 (E), dated the 27th February, 2010, namely :-

In the said notification, for Table-1, and the proviso, and illustrations 1 and 2, the following shall be substituted, namely:-

“Table-1 

Sl. No.

Retail sale price (per pouch)

Rate of duty per packing machine per month

(Rs. in Lakhs)

   

Chewing Tobacco (other than filter khaini)

Unmanufactured Tobacco

Chewing tobacco commonly known as filter khaini

Without

lime tube/lime pouches

With

lime tube/lime pouches

Without

lime tube/lime pouches

With

lime tube/lime pouches

(1)

(2)

(3)

(4)

(5)

(6)

(7)

1.

Upto Re.1.00

14.07

13.36

10.03

9.53

9.67

2.

ExceedingRs. 1.00 but not exceeding   Rs. 1.50

21.10

20.05

15.05

14.30

14.51

3.

ExceedingRs. 1.50 but not exceeding   Rs. 2.00

25.32

23.92

18.06

17.06

18.38

4.

Exceeding Rs.2.00 but not exceeding Rs.3.00

37.98

35.87

27.09

25.58

26.19

5.

Exceeding Rs.3.00 but not exceeding Rs.4.00

47.27

44.45

33.71

31.70

33.17

6.

Exceeding Rs.4.00 but not exceeding Rs.5.00

59.08

55.57

42.14

39.63

39.39

7.

Exceeding Rs.5.00 but not exceeding Rs.6.00

70.90

66.68

50.56

47.55

44.90

8.

Exceeding Rs.6.00 but not exceeding Rs.7.00

112.54

105.51

80.26

75.24

49.77

9

Exceeding Rs.7.00 but not exceeding Rs.8.00

112.54

105.51

80.26

75.24

54.03

10

Exceeding Rs.8.00 but not exceeding Rs.9.00

112.54

105.51

80.26

75.24

57.75

11

Exceeding Rs.9.00 but not exceedingRs. 10.00

112.54

105.51

80.26

75.24

60.96

12

ExceedingRs. 10.00 but not exceedingRs. 15.00

158.69

150.75

113.17

107.51

60.96 + 6.10*(P-10)

13

ExceedingRs. 15.00 but not exceedingRs. 20.00

198.89

188.94

141.84

134.75

14

ExceedingRs. 20.00 but not exceedingRs. 25.00

233.69

222.01

166.66

158.33

15

ExceedingRs. 25.00 but not exceedingRs. 30.00

263.60

250.42

187.99

178.59

16

ExceedingRs. 30.00 but not exceedingRs. 35.00

289.08

274.63

206.16

195.85

17

ExceedingRs. 35.00 but not exceedingRs. 40.00

310.56

295.03

221.48

210.40

18

ExceedingRs. 40.00 but not exceedingRs. 45.00

328.42

312.00

234.21

222.50

19

ExceedingRs. 45.00 but not exceedingRs. 50.00

343.01

325.86

244.62

232.39

20

From Rs.50.00 onwards

 

343.01+ 6.86* (P-50)

325.86+ 6.52 * (P-50)

244.62+ 4.89 * (P-50)

232.39+ 4.65 * (P-50)

Where ‘P’ above represents RSP of the pouch for which duty rate is to be determined

Provided that for the purposes of entry in column number (7), against Sl.No.12, the existing entry in column number (2) shall be read as   ‘Rs. 10.01 and above’.

Illustration 1:- The rate of duty per packing machine per month for a chewing tobacco (other than filter khaini) pouch not containing lime tube and having retail sale price of Rs.55.00 (i.e. ‘P’) shall be = Rs. 343.01 + 6.86*(55-50) lakhs =   Rs. 377.31 lakhs.

Illustration 2:- The rate of duty per packing machine per month for a Filter Khaini pouch having retail sale price of Rs. 15.00 (i.e. ‘P’) shall be = Rs. 60.96 + 6.10*(15-10) lakhs = Rs.91.46 lakhs.”

[F. No. 354/120/2011-TRU]

(Raj Kumar Digvijay)

Under Secretary to the Government of India

Note: - The principal notification No. 16/2010-Central Excise, dated the 27th February, 2010 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)   vide number G.S.R. 118 (E), dated the 27th February, 2010 and was last amended vide notification No.14/2012-Central Excise dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R.165 (E), dated the 17th March, 2012.

Notification No.01/2014 dated 24-01-2014


Seeks to amend notification number 42/2008-Central Excise, dated the 01.07. 2008 for change in rate of duty in Compound Levy Scheme applicable to Pan masala and Pan masala containing Tobacco – 01/2014 – Dated 24-1-2014 – Central Excise – Tariff

 

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY,

PART II, SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 01/2014-Central Excise

New Delhi, the 24th January, 2014

G.S.R. (E). - In exercise of the powers conferred by sub-section (3) of section 3A of theCentral Excise Act, 1944(1 of 1944), the Central Government hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 42/2008-Central Excise, dated the 1st July, 2008, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 492(E), dated the 1st July, 2008, namely:-

In the said notification,

(i)   for Table-1 and the illustration, the following shall be substituted, namely:-

“Table-1

Sl. No.

Retail sale price (per pouch)

Rate of duty Per packing machine per month(Rs. in Lakhs)

Pan masala

Pan masala containing tobacco

(1)

(2)

(3)

(4)

1.

Up to Re. 1.00

14.76

24.42

2.

Exceeding Rs. 1.00 but not exceeding Rs. 1.50

22.14

36.64

3.

Exceeding Rs. 1.50 but not exceeding Rs. 2.00

28.04

46.40

4.

Exceeding Rs. 2.00 but not exceeding Rs. 3.00

42.06

69.61

5.

Exceeding Rs. 3.00 but not exceeding Rs. 4.00

54.31

89.88

6.

Exceeding Rs. 4.00 but not exceeding Rs. 5.00

67.88

112.35

7.

Exceeding Rs. 5.00 but not exceeding Rs. 6.00

81.46

134.82

8.

Above Rs. 6.00

81.46 + 13.28 * (P-6),

134.82 + 21.98 * (P-6),

Where ‘P’ above represents RSP of the pouch for which duty rate is to be determined

Illustration. – The rate of duty per packing machine per month for a Pan masala pouch having retail sale price of Rs. 8.00 (i.e. ’P’) shall be= Rs. 81.46 + 13.28 * (8-6) lakhs = Rs. 108.02 lakhs.”

(ii)   for the Table -2, the following shall be substituted, namely:-

“Table -2

Sr. No. Duty Duty ratio for pan masala Duty ratio for pan masala containing tobacco

(1)

(2)

(3)

(4)

1

The duty leviable under the Central Excise Act, 1944

0.2842

0.7665

2

The additional duty of excise leviable under section 85 of the Finance Act, 2005

0.1421

0.0766

3

National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001

0.5446

0.1277

4

Education Cess leviable under section 91 of the Finance Act, 2004

0.0194

0.0194

5

Secondary and Higher Education Cess leviable under section 136 of theFinance Act, 2007

0.0097

0.0097”.

 [F. No 354/120/2011-TRU]

[Raj Kumar Digvijay]

Under Secretary to the Government of India

Note: - The principal notification No. 42/2008-Central Excise, dated the 1st July, 2008 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R.492 (E), dated the 1st July, 2008 and last amended by notification No. 13/2012 Central Excise, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R.164 (E), dated the 17th March, 2012.

 

 

 

F. NO, OPAN/1/3/2003/PART dated 24-01-2014


CHANGE IN PROCEDURE FOR PAN ALLOTMENT – Circular – Dated 24-1-2014 – Income Tax

 

DATED 24-1-2014

1. The fee for processing a PAN application shall be Rs. 105 (inclusive of all taxes).

2. Subsequent to Notification S.O. No. 3794(E), dt. 23.12.2013, the procedure for PAN allotment process will undergo a change w.e.f. 03.02.2014.

2.1 From 03.02.2014 onwards, every PAN applicant has to submit self-attested copies of Proof of Indentify (POI), Proof of Address (POA) and Date of Birth (DOB) documents and also produce original documents of such POI/POA/DOB documents for verification at the counter of PAN facilitation centers. List of documents of POI/POA/DOB is given in the Instructions part of Form 49A/49AA.

2.2 The copies of Proof of Identity (POI), Proof of Address (POA) and Date of Birth (DOB) documents attached with PAN application form, will be verified vis-a-vis their original documents at the time of submission of PAN application at PAN facilitation Centres.

2.3 Original documents shall not be retained by the PAN Facilitation Centres and will be returned back to the applicant after verification.

LETTER F. NO, OPAN/1/3/2003/PART

980/04/2014-CX dated 24-01-2014


Divergent practices of assessment with respect to compounded levy scheme applicable for smokeless tobacco products – Regarding. – Dated 24-1-2014 – Central Excise

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

TAX RESEARCH UNIT

CIRCULAR NO. 980/04/2014-CX

NEW DELHI Dated: January 24, 2014

To

Chief Commissioners of Central Excise (All),

Chief Commissioners of Central Excise and Customs (All),

Director General, Directorate General of Central Excise Intelligence,

Commissioners of Central Excise (All),

Commissioners of Central Excise and Customs (All).

Subject: Divergent practices of assessment with respect to compounded levy scheme applicable for smokeless tobacco products – Regarding.

Representations have been received from trade and industry that the field formations are following divergent practice of assessment with respect to compounded levy scheme applicable for various tobacco products. Certain field formations have also sought clarification on the excise duty leviable under the said compounded levy scheme.

2. Under the compounded levy scheme, excise duty is chargeable with respect to deemed production based on the number of packing machines in the factory of the manufacturer. The issue raised is whether excise duty can be re-determined based on the speed of the packing machine and actual production thereof, which may be higher than the deemed production.

3. Presently, the mandatory compounded levy scheme is applicable to Pan Masala,Gutkha and chewing tobacco manufactured with the aid of packing machine & packed in pouches. The factor relevant to the production on which excise duty is leviable has been notified to be the number of packing machines in the factory of the manufacturer under the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 and the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 read with section 3A (2) and (3) of the Central Excise Act, 1944. The monthly deemed production per operating machine per month is prescribed based on the average speed of packing machines and average working hours of a factory. Excise duty is chargeable at the rates notified on the basis of Retail Sale Price (RSP) slabs on per machine basis (notification No.42/2008-CE dated 01.07.2008 and notification No.16/2010-CE, dated 27.02.2010 refer). In order to minimize the element of subjectivity and to ensure certainty and objectivity, the number of packing machines installed in the factory has been notified to be the only factor relevant to the production of the notified good sunder the said rules.

5. Accordingly, it is clarified that the duty payable under notification No.42/2008-CE dated 01.07.2008 and notification No.16/2010-CE, dated 27.02.2010 may be determined based on deemed production with respect to the number of operating packing machines in the factory during the month and the Retail Sale Price printed on the pouches and not on the basis of actual production by a unit.

6. Trade Notice/Public Notice may be issued to the field formations and taxpayers.

7. Difficulties faced, if any, in implementation of this Circular may be brought to the notice of the Board.

8. Hindi version follows.

F.No.354/120/2011-TRU

(Rajkumar Digvijay)

Under Secretary (TRU)

03/2014 dated 24-01-2014


FINANCE ACT, 2013 – EXPLANATORY NOTES TO THE PROVISIONS OF FINANCE ACT, 2013 – Circular – Dated 24-1-2014 – Income Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

CIRCULAR NO. 03/2014

Dated: 24th January 2014

 AMENDMENTS AT A GLANCE

Section/Schedule

Particulars/Paragraph number

  Finance Act, 2013
First Schedule Rate Structure, 3.1 – 3.4
Income-tax Act, 1961
2 Change in the definition of capital asset, 4.1-4.5
10 Change in the definition of keyman insurance policy, 5.1 – 5.5; exemption to income of investor Protection Fund of depositors, 6.1-6.3 ; pass through status to certain Alternative Investment Funds, 7.1 – 7.4; exemption of income received in India in Indian currency by a foreign company, 8.1 – 8.4; exemption to National Financial Holdings Company Limited, 9.1 – 9.3.
Insertion of new section 32AC Incentive for acquisition and installation of new plant or machinery by manufacturing company, 10.1-10.4.
36 Clarification for amount to be eligible for deduction as bad debts in case of banks, 11.1 – 11.8.
40 Disallowance of certain fee, charge, etc. in case of State Government Undertakings, 12.1 – 12.3.
Insertion of new section 43CA Computation of income under the head “profits and gains of business or profession” for transfer of immovable property in certain cases, 13.1 – 13.4.
56 Taxability of immovable property received for inadequate consideration, 14.1 – 14.4.
80C Raising of limit of percentage of eligible premium for life insurance policies of persons with disability or disease, 15.1 – 15.6.
80CCG Expanding the scope and deduction and its eligibility under the section, 16.1 – 16.5.
80D Deduction for contribution to Health Schemes similar to Central Government Health Scheme (CGHS), 17.1 -17.3.
Insertion of new section 80EE Deduction in respect of interest on loan sanctioned during financial year 2013-14 for acquiring residential house property, 18.1 – 18.4.
80G One hundred per cent deduction for donation to National Children’s Fund, 19.1- 19.4.
80GGB & 80GGC Contribution not to be in cash for deduction under section 80GGB & 80GGC, 20.1 – 20.3.
80-IA Extension of the sunset date under the section for the power sector, 21.1 – 21.3.
80JJAA Deduction for additional wages in certain cases, 22.1 – 22.6.
87 and Insertion of newsection 87A Rebate of 2000 for individuals having total income up to Rs. 5 lakh, 23.1 – 23.4.
90 and 90A Tax Residency Certificate, 24.1-24.5.
Omission of Chapter X-A relating to general Anti-Avoidance Rule and Insertion of new Chapter X-A, omission of section 144BA and insertion of new section 144BA, amendment of sections 144C, 153D, 245N, 245R, 246A, 253 and 295 General Anti Avoidance Rule (GAAR), 25.1-25.5.
115A Taxation of income by way of Royalty or fees for technical services, 26.1 – 26.4.
115BBD Lower rate of tax on dividends received from foreign companies, 27.1 – 27.3.
115-O Removal of the cascading effect of Dividend Distribution Tax (DDT), 28.1 – 28.5.
Insertion of new Chapter XII-DA Additional income-tax on distributed income by company for buy-back of unlisted shares, 29.1 – 29.4.
115R Rationalisation of tax on distributed income by the Mutual Funds, 30.1 – 30.5.
Insertion of new Chapter XII-EA Taxation of securitisation trusts, 31.1 – 31.4.
132B Application of seized assets, 32.1 – 32.3.
138 Replacement of terms “Foreign Exchange Regulation Act, 1947″ and Foreign Exchange Regulation Act, 1973″ with “Foreign Exchange Management Act, 1999″, 33.1 -33.4.
139 Return of income filed without payment of self-assessment tax to be treated as defective return, 34.1- 34.3.
142 Direction of special audit under sub-section (2A) of the section, 35.1 – 35.3.
153 and 153B Exclusion of time I computing the period of limitation for completion of assessments and reassessments, 36.1 – 36.6; time limit for completion of assessment or reassessment where reference is made to the transfer pricing officer, 37.1 – 37.6
37.1 – 37.6.  
167C and 179 Clarification of the phrase “tax due” for the purposes of recovery in certain cases, 38.1 – 38.3.
Insertion of new section 194-IA Tax Deduction at Source (TDS) on transfer of certain immovable properties (other than agricultural land), 39.1-39.6.
Insertion of new section 194LD, amendment of sections 115AD, 195 and 196D Income by way of interest on certain bonds and Government securities, 40.1 – 40.2.
204 Meaning of person “responsible for paying” under Chapter XVII, 41.1 – 41.4.
206AA Exemption from requirement of furnishing PAN under section 206AA to certain non-resident bond holder, 42.1 -42.3.
206C Removal of exemption from levy of Tax Collection at Source (TCS) to cash sale of any coin or any other article weighing 10 grams or less, 43.1 – 43.2.
252 Appointment of President of the Appellate Tribunal, 44.1 – 44.4.
Substitution of new section for section 271FA Penalty under section 271FA for non-filing of Annual Information Return, 45.1 – 45.5.
Fourth Schedule Extension of time for approval, 46.1 – 46.5.
Wealth-tax Act, 1957
2 Change in the definition of capital asset, ; exemption from wealth tax to agricultural land situated in urban area, 47.1 – 47.3.
Insertions of new sections 14A and 14B and amendment of section 46 Enabling provisions for facilitating electronic filing of annexure-less return of net wealth, 48.1 – 48.4.
Finance (No.2) Act, 2004
Section 98 of the Finance (No.2) Act, 2004 Rationalisation of securities transaction tax rates, 49.1 – 49.3.
Chapter VII, Finance Act, 2013
Chapter VII of the Finance Act, 2013 and amendment in sections 36 and 43 of the Income-tax Act, 1961 Commodities Transaction Tax, 50.1 – 50.6.2.

1. Introduction

1.1 The Finance Act, 2013 (hereafter referred to as the Act) as passed by the Parliament, received the assent of the President on the 10th day of May, 2013 and has been enacted as Act No. 17 of 2013. This circular explains the substance of the provisions of the Act relating to direct taxes.

2. Changes made by the Act

2.1 The Act has-

(i)

  specified the rates of income-tax for the assessment year 2013-14 and the rates of income-tax on the basis of which tax has to be deducted at source and advance tax has to be paid during financial year 2013-14.

(ii)

  amended sections 2,10, 36,40, 43, 56, 80C, 80CCG, 80D, 80G, 80GGB, 80GGC, 80-IA, 80JJAA, 87, 90, 90A, 115A, 115AD, 115BBD, 115-O, 115R, 132B, 138, 139, 142, 144C, 153, 153B, 153D, 167C, 179, 195, 196D, 204, 206AA, 206C, 245N, 245R, 246A, 252, 253, 271 FA, 295 in the Income-tax Act, 1961;

(iii)

  omitted Chapter X-A and Section 144BA of the Income tax Act, 1961;

(iv)

  inserted new sections 32AC, 43CA, 80EE, 87A, 194-IA and 194LD in the Income-tax Act, 1961;

(v)

  inserted Chapter X-A consisting of sections 95 – 102, Chapter XII-DA consisting of sections 115QA – 115QC and Chapter XII-EA consisting of sections 115TA – 115TC, section-144BA and section-194LD in the Income-tax Act, 1961;

(vi)

  amended rule 3 of Part A of the Fourth Schedule to the Income-tax Act, 1961;

(vii)

  amended sections 2 and 46 of the Wealth-tax Act, 1957;

(viii)

  inserted sections 14A and 14B in the Wealth-tax Act, 1957

(ix)

  amended section 98 of the Finance (No.2) Act, 2004;

(x)

  introduced Commodity Transaction Tax through Chapter VII.

3. Rate structure

3.1 Rates of income-tax in respect of incomes liable to tax for the assessment year 2013-14

3.1.1 In respect of income of all categories of assessees liable to tax for the assessment year 2013-14, the rates of income-tax have been specified in Part I of the First Schedule to the Act. These rates are the same as those laid down in Part III of the First Schedule to the Finance Act, 2012 for the purposes of computation of “advance tax”, deduction of tax at source from “Salaries” and charging of tax payable in certain cases during the financial year 2012-13.

The major features of the rates specified in the said Part I are as follows:

3.1.2 Individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person. –

Paragraph A of Part I of the First Schedule specifies the rates of income-tax in the case of every individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person (other than a co-operative society, firm, local authority and company) as under:-

Income chargeable to tax Rate of income-tax
Individual(other than senior and very Income senior citizen chargeable resident in India), to tax HUF, association of persons, body of individuals and artificial juridical person Individual, resident in India, who is of the age of sixty years or more but less than eighty years (senior citizen) Individual, resident in India, who is of the age of eighty years or more (very senior citizen)
Up to Rs.2,00,000

Nil

   
 Rs. 2,00,001 -Rs. 2,50,000 10%

NIL

NIL

 Rs. 2,50,001 -Rs. 5,00,000

10%

 
 Rs. 5,00,000.-Rs. 10,00,000

20%

20%

20%

Exceeding Rs.10,00,000

30%

30%

30%

In the case of every individual, Hindu undivided family, association of persons or body of individuals, no surcharge is levied.

The Education Cess on income-tax shall continue to be levied at the rate of two per cent on the amount of tax computed in all cases. For instance, if the income-tax computed is Rs. 1,00,000 then the education cess of two per cent is to be computed on Rs.1,00,000 which works out to Rs. 2,000. In addition, the amount of tax computed shall also be increased by an additional cess called Secondary and Higher Education Cess on income-tax at the rate of one per cent of such income-tax. Thus, where the amount of tax computed is Rs. 1,00,000, the Education Cess of two per cent is Rs. 2,000, the said Secondary and Higher Education Cess will be computed on Rs. 1,00,000 which works out to be Rs. 1,000. The total cess in this case will amount to Rs. 3,000 (i.e., Rs. 2,000 + Rs. 1,000). No marginal relief shall be available in respect of such Cess.

3.1.3 Co-Operative Societies –

In the case of every co-operative society, the rates of income-tax have been specified in Paragraph B of Part I of the First Schedule to the Act. The rates are as follows:-

Income chargeable to tax

Rate

Up to Rs. 10,000

10%

 Rs. 10,001 -Rs. 20,000

20%

Exceeding Rs. 20,000

30%

No surcharge shall be levied.

Education Cess on income-tax and Secondary and Higher Education Cess on income-tax shall be levied at the rate of two per cent and one per cent respectively of the amount of tax computed.

3.1.4 Firms –

In the case of every firm, the rate of income-tax of thirty per cent has been specified in Paragraph C of Part I of the First Schedule to the Act. No surcharge shall be levied in the case of a firm.

Education Cess on Income-tax shall continue to be levied at the rate of two per cent on the amount of tax computed. In addition, such amount of tax shall be further increased by an additional surcharge called Secondary and Higher Education Cess on income-tax computed at the rate of one per cent on the amount of tax, in all cases.

3.1.5 Local Authorities –In the case of every local authority, the rate of income-tax has been specified at thirty per cent in Paragraph D of Part I of the First Schedule to the Act. No surcharge shall be levied. However, Education Cess, and Secondary and Higher Education Cess on income-tax shall be levied at the rate of two per cent and one per cent respectively of the amount of tax computed.

3.1.6 Companies –

In the case of a company, the rate of income-tax has been specified in Paragraph E of Part I of the First Schedule to the Act.

In case of a domestic company, the rate of income-tax is thirty per cent of the total income. The tax computed shall be enhanced by a surcharge of five per cent of such income tax only where the domestic company has total income exceeding one crore rupees.

In the case of a company other than a domestic company, royalties received from Government or Indian concern under an approved agreement made after 31-3-1961, but before 1-4-1976 shall be taxed at fifty per cent. Similarly, in the case of fees for technical services received by such company from Government or Indian concern under an approved agreement made after 29-2-1964, but before 1-4-1976, shall be taxed at fifty per cent. On the balance of the total income of such company, the tax rate shall be forty per cent. The tax computed shall be enhanced by a surcharge of two per cent only in the cases where such company has total income exceeding one crore rupees.

However, marginal relief shall be allowed in the case of every company to ensure that the additional amount of income-tax payable, including surcharge, on the excess of income over one crore rupees is limited to the amount by which the income is more than one crore rupees. Also, in the case of every company having total income chargeable to tax under section 115JB of the Income-tax Act, 1961 and where such income exceeds one crore rupees, marginal relief shall be provided.

Education Cess on income-tax shall continue to be levied at the rate of two per cent on the amount of tax computed, inclusive of surcharge in the case of every company. Also, such amount of tax and surcharge shall be further increased by an additional surcharge called Secondary and Higher Education Cess on income-tax at the rate of one per cent of the amount of tax computed, inclusive of surcharge. No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess.

3.2 Rates for deduction of income-tax at source from certain incomes during the financial year 2013-14.

3.2 1 In every case in which tax is to be deducted at the rates in force under the provisions of sections 193, 194, 194A, 194B, 194BB, 194D and 195 of the Income-tax Act, the rates for deduction of income-tax at source during the financial year 2013-14 have been specified in Part II of the First Schedule to the Act. The rates for deduction of income-tax at source during the financial year 2013 -14 will continue to be the same as those specified in Part II of the First Schedule to the Finance Act, 2012 except that in case of certain payments made to a non-resident (other than a company) or a foreign company, in the nature of income by way of royalty or fees for technical services, the rate shall be twenty-five percent. of such income instead of ten percent.

3.2 2 Surcharge –

The tax deducted at source in the following cases shall be increased by a surcharge for purposes of the Union indicated below:-

(i)

  In case of every non-resident person not being a company, the rate of surcharge is ten percent of tax where the income or aggregate of such income paid or likely to be paid and subject to the deduction exceeds one crore rupees.

(ii)

  In case of payments made to foreign companies, the rate of surcharge is two per cent of such income tax where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees but does not exceed ten crore rupees. In case where such income or the aggregate of such incomes paid or likely to be paid to a foreign company and subject to the deduction exceeds ten crore rupees, the rate of surcharge is five percent.

(iii)

  No surcharge on tax deducted at source shall be levied in the case of an individual, Hindu undivided family, association of persons, body of individuals, artificial juridical person, co-operative society, local authority, firm being a resident or a domestic company.

3.2.3 Education Cess –

Education Cess on income-tax shall continue to be levied for the purposes of the Union at the rate of two per cent of income-tax and surcharge, if any, in the cases of persons not resident in India including companies other than domestic company. For instance, if income tax on a foreign company is Rs. 1, 20,00,000 and the surcharge at the rate of two per cent. is Rs. 2,40,000, then the education cess of two per cent is to be computed on Rs. 1,22,40,000 which works out to Rs. 2,44,800.

In addition, the amount of tax deducted and surcharge shall be further increased by an additional surcharge called Secondary and Higher Education Cess on income-tax at the rate of one per cent in all such cases. Thus in the earlier illustration, where the amount of tax deducted is Rs. 1,20,00,000, the surcharge is Rs. 2,40,000, , the said Secondary and Higher Education Cess will be computed at the rate of one percent on Rs.1,22,40,000 which works out to be Rs. 1,22,400. The total cess in this case will, therefore, amount to Rs. 3,67,200 (i.e., Rs. 2,44,800 + Rs. 1,22,400).

3.3 Rates for deduction of income-tax at source from “Salaries”, computation of “advance tax” and charging of income-tax in special cases during the financial year 2013-14.

3.3.1 The rates for deducting income-tax at source from Salaries and computing advance tax during the financial year 2013-14 have been specified in Part III of the First Schedule to the Act. These rates are also applicable for charging income-tax during the financial year 2013-14 on current incomes in cases where accelerated assessments have to be made, e.g., provisional assessment of shipping profits arising in India to non-residents, assessment of persons leaving India for good during that financial year, assessment of persons who are likely to transfer property to avoid tax, assessment of bodies formed for short duration, etc. The rates are as follows:-

3.3.2 Individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person –

Paragraph A of Part III of the First Schedule specifies the rates of income-tax in the case of every individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person (other than a co-operative society, firm, local authority and company). The basic exemption limit, the rates of tax and slabs of income for various categories remain the same as in financial year 2012-13. The rates of tax during the financial year 2013-14 are as follows:-

Income chargeable to tax

Rate of income- tax

Individual (other than senior and very senior citizen resident in India), HUF, association of persons, body of individuals and artificial juridical person. Individual, resident in India who is of the age of sixty years or more but less than eighty years. (senior citizen) Individual resident in India, who is of the age of eighty years or more. (very senior citizen)
Up to Rs. 2 ,00,000

Nil

 

 Rs. 2,00,001 -Rs. 2,50,000

10%

Nil

Nil

 Rs. 2,50,001 -Rs. 5,00,000

10%

 
 Rs. 5,00,001 -Rs. 10,00,000

20%

20%

20%

Exceeding Rs.10,00,000

30%

30%

30%

The amount of income-tax so computed shall be increased by a surcharge at the rate of ten percent. of such income-tax in case of a person having a total income exceeding one crore rupees.

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

The Education Cess on income-tax shall continue to be levied at the rate of two per cent on the amount of tax computed inclusive of surcharge. In addition, the amount of tax computed shall be further increased by an additional surcharge called Secondary and Higher Education Cess on income-tax at the rate of one per cent of such income-tax inclusive of surcharge. No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess.

3.3.3 Co-operative Societies

In the case of every co-operative society, the rates of income-tax have been specified in Paragraph B of Part III of the First Schedule to the Act. The rates are as follows-

Income chargeable to tax

Rate

Up to Rs. 10,000

10%

 Rs. 10,001 -Rs. 20,000

20%

Exceeding Rs. 20,000

30%

The amount of income-tax so computed shall be increased by a surcharge at the rate of ten percent. of such income-tax in case of a co-operative society having a total income exceeding one crore rupees.

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

Education Cess on income-tax and Secondary and Higher Education Cess on income-tax shall be levied at the rate of two per cent and one per cent respectively of the amount of income-tax computed inclusive of surcharge. No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess.

3.3.4 Firms –

In the case of every firm, the rate of income-tax of thirty per cent has been specified in Paragraph C of Part III of the First Schedule to the Act.

The amount of income-tax so computed shall be increased by a surcharge at the rate of ten percent. of such income-tax in case of a firm having a total income exceeding one crore rupees.

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

The Education Cess on income-tax shall continue to be levied at the rate of two per cent on the amount of tax computed inclusive of surcharge. In addition, the amount of tax computed shall be further increased by an additional surcharge called Secondary and Higher Education Cess on income-tax at the rate of one per cent of such income-tax inclusive of surcharge. No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess.

3.3.5 Local Authorities-

In the case of every local authority, the rate of income-tax has been specified at thirty per cent in Paragraph D of Part III of the First Schedule to the Act.

The amount of income-tax so computed shall be increased by a surcharge at the rate of ten percent. of such income-tax in case of a local authority having a total income exceeding one crore rupees.

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

Education Cess on Income-tax and Secondary and Higher Education Cess on income-tax shall be levied at the rate of two per cent and one per cent respectively of the amount of income tax and surcharge. No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess.

3.3.6 Companies-

In the case of a company, the rate of income-tax has been specified in Paragraph E of Part III of the First Schedule to the Act.

In case of a domestic company, the rate of income-tax is thirty per cent of the total income. The tax computed shall be enhanced by a surcharge of five per cent where such domestic company has total income exceeding one crore rupees but not exceeding ten crore rupees. Surcharge at the rate of ten per cent shall be levied if the total income of the company exceeds ten crore rupees.

In the case of a company other than a domestic company, royalties received from Government or Indian concern under an approved agreement made after 31-3-1961, but before 1-4-1976 shall be taxed at fifty per cent. Similarly, in the case of fees for technical services received by such company from Government or Indian concern under an approved agreement made after 29-2-1964 but before 1-4-1976, shall be taxed at fifty per cent. On the balance of the total income of such company, the tax rate shall be forty per cent. The tax computed shall be enhanced by a surcharge of two per cent only where such company has total income exceeding one crore rupees but does not exceed ten crore rupees. Surcharge at the rate of five per cent shall be levied if the total income of the company other than domestic company exceeds ten crore rupees.

However, marginal relief shall be allowed in the case of every company to ensure that (i) the additional amount of income-tax payable, including surcharge, on the excess of income over one crore rupees is limited to the amount by which the income is more than one crore rupees, (ii) the total amount payable as income-tax and surcharge on total income exceeding ten crore rupees shall not exceed the total amount payable as income-tax and surcharge on a total income of ten crore rupees, by more than the amount of income that exceeds ten crore rupees.

Education Cess on Income-tax and Secondary and Higher Education Cess on income-tax shall be levied at the rate of two per cent and one per cent respectively of the amount of income-tax computed including surcharge. No marginal relief shall be available in respect of Education Cess and Secondary and Higher Education Cess.

3.4 Surcharge on Additional Income-tax Where additional income-tax has to be paid under section 115-O or section 115-QA or sub-section (2) of section 115R or section 115TA of the Income-tax Act, that is to say, on distribution of dividend by domestic companies or distribution of income by a company on buy-back of shares from shareholders or on distribution of income by a mutual fund to its unit holders or on distribution of income by a securitization trust to its investors, the additional tax so payable shall be increased by a surcharge of ten percent of such tax.

4. Amendment in the definition of Capital Asset

4.1 The provisions contained in clause (14) of section 2 of the Income-tax Act, 1961, before amendment by the Act, define the term “capital asset” as property of any kind held by an assessee, whether or not connected with his business or profession. Certain categories of properties including agricultural land have been excluded from this definition. Sub-clause (iii) of clause (14) of section 2 provides that (a) agricultural land situated in any area within the jurisdiction of a municipality or cantonment board having population of not less than ten thousand according to last preceding census, or (b) agricultural land situated in any area within such distance not exceeding eight kilometers from the local limits of any municipality or cantonment board as notified by the Central Government having regard to the extent and scope of urbanization and other relevant factors, forms part of capital asset.

4.2 Item (b) of sub-clause (iii) of clause (14) of section 2 has been amended so as to provide that the land situated in any area within the distance, measured aerially (shortest aerial distance), (I) not being more than two kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or (II) not being more than six kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh, shall form part of capital asset.

4.3 The expression “population” has also been defined to mean population according to the last preceding census of which the relevant figures have been published before the first day of the previous year.

4.4 Similar amendments are also carried out in clause (IA) of section 2 of the Income-tax Act, 1961 relating to the definition of “agricultural income” and in respect of the definition of “urban land” in the Wealth-tax Act, 1957.

4.5 Applicability - These amendments take effect from 1st April, 2014 and accordingly, apply in relation to Assessment year 2014-15 and subsequent assessment years.

5. Keyman insurance policy

5.1 The provisions of clause (10D) of section 10 of the Income-tax Act, 1961 before amendment by the Act, inter alia, exempt any sum received under a life insurance policy other than a keyman insurance policy. Explanation 1 to the said clause (10D) defines a keyman insurance policy to mean a life insurance policy taken by a person on the life of another person who is or was the employee of the first-mentioned person or is or was connected in any manner whatsoever with the business of the first-mentioned person.

5.2 It has been noticed that the policies taken as keyman insurance policy are being assigned to the keyman before its maturity. The keyman pays the remaining premium on the policy and claims the entire sum received under such policy as exempt on the ground that the policy is no longer a keyman insurance policy.

5.3 The exemption under section 10(10D) is claimed for policies which were originally keyman insurance policies but during the term these were assigned to some other person. The Courts have also noticed this loophole in law.

5.4 With a view to plug the loophole and check such practices to avoid payment of taxes, the provisions of clause (10D) of section 10 of the Income-tax Act, 1961 have been amended to provide that a keyman insurance policy which has been assigned to any person during its term, with or without consideration, shall continue to be treated as a keyman insurance policy and consequently would not be eligible for any exemption under section 10(10D) of the Income-tax Act.

5.5 Applicability: - The amendment will take effect from 1st April, 2014 and will, accordingly, apply in relation to assessment year 2014-15 and subsequent assessments years.

6. Exemption to income of Investor Protection Fund of depositories

6.1 Under the provisions of SEBI (Depositories and Participants) Regulations, 1996, as amended in 2012, the depositories are mandatorily required to set up an Investor Protection Fund. Section 10(23EA) of the Income-tax Act, 1961 provides that income by way of contributions from a recognised stock exchange received by an Investor Protection Fund set up by the recognised stock exchange shall be exempt from taxation .

6.2 On similar lines, a new clause (23ED) has been inserted in section 10 of the Income-tax Act, 1961 wherein it has been provided that income, by way of contribution from a depository, of the Investor Protection Fund set up by the depository in accordance with the regulations prescribed by SEBI will not be included while computing the total income subject to same conditions as are applicable in respect of exemption to an Investor Protection Fund set up by recognised stock exchanges. However, where any amount standing to the credit of the fund and not charged to income-tax during any previous year is shared wholly or partly with a depository, the amount so shared shall be deemed to be the income of the previous year in which such amount is shared.

6.3 Applicability: – This amendment takes effect from 1st April, 2014 and will, accordingly, apply in relation to assessment year 2014-15 and subsequent assessment years.

7. Pass through Status to certain Alternative Investment Funds

7.1 Section 10(23FB) of the Income-tax Act, 1961 before its amendment by the Act, provided that any income of a Venture Capital Company (VCC) or Venture Capital Fund (VCF) from investment in a Venture Capital Undertaking (VCU) shall be exempt from taxation. Section 115U of the Income-tax Act, 1961 provides that income accruing or arising or received by a person out of investment made in a VCC or VCF shall be taxable in the same manner as if the person had made direct investment in the VCU.

7.2 These sections provide a pass through status (i.e. income is taxable in the hands of investors instead of VCF/VCC) only to the funds which satisfy the investment and other conditions as are provided in SEBI (Venture Capital Fund) Regulations, 1996. Further the pass through status is available only in respect of income which arises to the fund from investment in VCU, being a company which satisfies the conditions provided in SEBI (Venture Capital Fund) Regulations, 1996.

7.3 The SEBI (Alternative Investment Funds) Regulations, 2012 (AIF regulations) have replaced the SEBI (Venture Capital Fund) Regulations, 1996 (VCF regulations) from 21st May, 2012. In order to provide pass through status to similar venture capital funds which are registered under new regulations and subject to same conditions of investment restrictions in the context of investment in a venture capital undertaking, section 10(23FB) has been amended to provide that–

(i)

  the existing VCFs and VCCs (i.e. which have been registered before 21/05/2012) and are regulated by the VCF regulations, as they stood before repeal by AIF regulations, would continue to avail pass through status as currently available.

(ii)

  in the context of AIF regulations, the Venture Capital Company shall be defined as a company and Venture capital fund shall be defined as a fund set up as a trust, which has been granted a certificate of registration as Venture Capital Fund being a sub-category of Category I Alternative Investment Fund and satisfies the following conditions:-

 

(a)

  at least two-thirds of its investible funds are invested in unlisted equity shares or equity linked instruments of venture capital undertaking.

(b)

  no investment has been made by such AIFs in a VCU which is an associate company.

(c)

  units of a trust set up as AIF or shares of a company set up as AIF, are not listed on a recognised stock exchange.

 

(iii)

  in the context of AIF regulations, the Venture Capital Undertaking shall be defined in the manner as defined in the Alternative Investment Funds Regulations.

7.4 Applicability: – This amendment has been made effective retrospectively from 1st April, 2013 and will, accordingly, apply in relation to assessment year 2013-14 and subsequent assessment years.

8. Exemption of income received in India in Indian currency by a foreign company

8.1 Clause (48) of section 10 of the Income-tax Act, 1961 was introduced by the Finance Act, 2012 with effect from 01.04.2012. This clause provides exemption to a foreign company in respect of any income received by it in India in Indian currency on account of sale of crude oil to any person in India.

8.2 The above clause was introduced in national interest so that payment can be made in Indian currency to foreign companies for import of crude oil. Similar facility is required in relation to certain other goods and services.

8.3 Accordingly, clause (48) of section 10 of the Income-tax Act, 1961 has been amended to provide that income received in India in Indian currency by a foreign company on account of sale of goods or rendering of services, as may be notified by the Central Government, to any person in India shall also be exempt subject to the existing conditions mentioned in the said clause.

8.4 Applicability : – This amendment takes effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

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9. Exemption to National Financial Holdings Company Limited

9.1 The Specified Undertaking of Unit Trust of India (SUUTI) was created vide the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 as the successor of Unit Trust of India (UTI). Exemption from Income-tax was available to SUUTI in respect of its income up to 31st March, 2014. SUUTI has been succeeded by a new company wholly owned by the Central Government. It has been incorporated on 7th June, 2012 as National Financial Holdings Company Limited (NFHCL).

9.2 In order to provide the exemption on the lines of SUUTI to NFHCL, clause (49) has been inserted in section 10 of the Income-tax Act, 1961 to grant exemption to NFHCL in respect of income accruing, arising or received on or before 31.03.2014.

9.3 Applicability: – This amendment has been made effective retrospectively from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-14 and assessment year 2014-15.

10. Incentive for acquisition and installation of new plant or machinery by manufacturing company

10.1 In order to encourage substantial investment in plant or machinery, a new section 32AC has been inserted in the Income-tax Act to provide that where an assessee, being a company,—

(a)

  is engaged in the business of manufacture of an article or thing; and

(b)

  invests a sum of more than Rs. 100 crore in new assets (plant or machinery) during the period beginning from 1st April, 2013 and ending on 31st March, 2015, then, the assessee shall be allowed—

 

(i)

  for assessment year 2014-15, a deduction of 15 percent of aggregate amount of actual cost of new assets acquired and installed during the financial year 2013-14, if the cost of such assets exceeds Rs. 100 crore;

(ii)

  for assessment year 2015-16, a deduction of 15 percent of aggregate amount of actual cost of new assets, acquired and installed during the period beginning on 1st April, 2013 and ending on 31st March, 2015, as reduced by the deduction allowed, if any, for assessment year 2014-15.

10.2 The phrase “new asset” has been defined as new plant or machinery but does not include -

(i)

  any plant or machinery which before its installation by the assessee was used either within or outside India by any other person;

(ii)

  any plant or machinery installed in any office premises or any residential accommodation, including accommodation in the nature of a guest house;

(iii)

  any office appliances including computers or computer software;

(iv)

  any vehicle;

(v)

  ship or aircraft; or

(vi)

  any plant or machinery, the whole of the actual cost of which is allowed as deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head “Profits and gains of business or profession” of any previous year.

10.3 Further, the suitable safeguards have been provided to restrict the transfer of the plant or machinery for a period of 5 years. However, this restriction shall not apply in a case of amalgamation or demerger but shall continue to apply to the amalgamated company or resulting company, as the case may be.

10.4 Applicability: This amendment takes effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

11. Clarification for amount to be eligible for deduction as bad debts in case of banks

11.1 Under the provisions of section 36(1)(viia) of the Income-tax Act, before amendment by the Act, in computing the business income of certain banks and financial institutions, deduction is allowable in respect of any provision for bad and doubtful debts made by such entities subject to certain limits specified therein. The limit specified under section 36(1)(viia)(a) of the Income-tax Act restricts the claim of deduction for provision for bad and doubtful debts for certain banks (not incorporated outside India) and certain cooperative banks to 7.5 percent of gross total income (before deduction under this clause) of such banks and 10 percent of the aggregate average advance made by the rural branches of such banks. This limit is 5 percent of gross total income (before deduction under this clause) under sections 36(1)(viia)(b) and 36(1)(viia)(c) for a bank incorporated outside India and certain financial institutions.

11.2 Provisions of clause (vii) of sub-section (1) of section 36 of the Income-tax Act provides for deduction for bad debt actually written off as irrecoverable in the books of account of the assessee. The proviso to this clause provides that for an assessee, to which section 36(1) (viia) of the Income-tax Act applies, deduction under said clause (vii) shall be limited to the amount by which the bad debt written off exceeds the credit balance in the provision for bad and doubtful debts account made under section 36(1) (viia) of the said Act.

11.3 The provisions of section 36(1)(vii) of the Income-tax Act are subject to the provisions of section 36(2) of the said Act. The clause (v) of sub-section (2) of section 36 of the Income-tax Act provides that the assessee, to which section 36(1)(viia) of the said Act applies, should debit the amount of bad debt written off to the provision for bad and doubtful debts account made under section 36(1) (viia) of the Income-tax Act.

11.4 Therefore, the banks or financial institutions are entitled to claim deduction for bad debt actually written off under section 36(1)(vii) of the Income-tax Act only to the extent it is in excess of the credit balance in the provision for bad and doubtful debts account made under section 36(1)(viia) of the said Act. However, certain judicial pronouncements have created doubts about the scope and applicability of proviso to clause (vii) of sub-section (1) of section 36 of the Income-tax Act and held that the proviso to clause (vii) of sub-section (1) of section 36 of the Income-tax Act applies only to provision made for bad and doubtful debts relating to rural advances.

11.5 Section 36(1)(viia) of the Income-tax Act contains three sub-clauses, i.e. sub-clause (a), sub-clause (b) and sub-clause (c) and only one of the sub-clauses i.e. sub-clause (a) refers to rural advances whereas other sub-clauses do not refer to the rural advances. In fact, foreign banks generally do not have rural branches. Therefore, the provision for bad and doubtful debts account made under clause (viia) of sub-section (1) of section 36 and referred to in proviso to clause (vii) of sub-section (1) of section 36 and clause (v) of sub-section (2) of section 36 of the Income-tax Act applies to all types of advances, whether rural or other advances.

11.6 It has also been interpreted that there are separate accounts in respect of provision for bad and doubtful debt under clause (viia) for rural advances and urban advances and if the actual write off of debt relates to urban advances, then, it should not be set off against provision for bad and doubtful debts made for rural advances. There is no such distinction made in clause (viia) of sub-section (1) of section 36 of the Income-tax Act.

11.7 In order to clarify the scope and applicability of provision of clause (vii), (viia) of sub-section (1) and sub-section (2), an Explanation in clause (vii) of sub-section (1) of section 36 has been inserted stating that for the purposes of the proviso to clause (vii) of sub-section(1) of section 36 and clause (v) of sub-section (2) of section 36, only one account as referred to therein is made in respect of provision for bad and doubtful debts under clause (viia) of sub-section (1) of section 36 and such account relates to all types of advances, including advances made by rural branches. Therefore, for an assessee to which clause (viia) of sub-section (1) of section 36 applies, the amount of deduction in respect of the bad debts actually written off under clause (vii) of sub-section (1) of section 36 shall be limited to the amount by which such bad debts exceeds the credit balance in the provision for bad and doubtful debts account made under clause (viia) of sub-section (1) of section 36 without any distinction between rural advances and other advances.

11.8 Applicability: - This amendment takes effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

12. Disallowance of certain fee, charge, etc. in the case of State Government Undertakings

12.1 The provisions of section 40 of the Income-tax Act, 1961 before its amendment by the Act, specifies the amounts which shall not be deducted in computing the income chargeable under the head “Profits and gains of business or profession”. The non-deductible expense under the said section also includes statutory dues like fringe benefit tax, income-tax, wealth-tax, etc. Disputes have arisen in respect of income-tax assessment of some State Government undertakings as to whether any sum paid by way of privilege fee, license fee, royalty, etc. levied or charged by the State Government exclusively on its undertakings are deductible or not for the purposes of computation of income of such undertakings. In some cases, orders have been issued to the effect that surplus arising to such undertakings shall vest with the State Government. As a result it has been claimed that such income by way of surplus is not subject to tax. It is a settled law that State Government undertakings are separate legal entities than the State and are liable to income-tax.

12.2 In order to protect the tax base of State Government undertakings vis-à- vis exclusive levy of fee, charge, etc. or appropriation of amount by the State Governments from its undertakings, section 40 of the Income-tax Act has been amended to provide that any amount paid by way of fee, charge, etc., which is levied exclusively on, or any amount appropriated, directly or indirectly, from a State Government undertaking, by the State Government, shall not be allowed as deduction for the purposes of computation of income of such undertakings under the head “Profits and gains of business or profession”. The expression “State Government Undertaking” for this purpose includes ─

(i)

  a corporation established by or under any Act of the State Government;

(ii)

  a company in which more than fifty per cent of the paid-up equity share capital is held by the State Government;

(iii)

  a company in which more than fifty per cent of the paid-up equity share capital is held by the entity referred to in clause (i) or clause (ii) (whether singly or taken together);

(iv)

  a company or corporation in which the State Government has the right to appoint the majority of the directors or to control the management or policy decisions, directly or indirectly, including by virtue of its shareholding or management rights or shareholders agreements or voting agreements or in any other manner;

(v)

  an authority, a board or an institution or a body established or constituted by or under any Act of the State Government or owned or controlled by the State Government.

12.3 Applicability: - This amendment takes effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

13. Computation of income under the head “Profits and gains of business or profession” for transfer of immovable property in certain cases

13.1 Under the provisions of the Income-tax Act, when a capital asset, being immovable property, is transferred for a consideration which is less than the value adopted, assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, then such value (stamp duty value) is taken as full value of consideration under section 50C of the Income-tax Act. However, these provisions do not apply to transfer of immovable property, held by the transferor as stock-in-trade.

13.2 Accordingly, a new section 43CA has been inserted in the Income tax Act which provides that where the consideration for the transfer of an asset (other than capital asset), being land or building or both, is less than the stamp duty value, the value so adopted or assessed or assessable shall be deemed to be the full value of consideration for the purposes of computing income under the head “Profits and gains of business or profession”.

13.3 It has also been provided that where the date of an agreement fixing the value of consideration for the transfer of the asset and the date of registration of the transfer of the asset are not the same, the stamp duty value may be taken as on the date of the agreement for transfer and not as on the date of registration for such transfer. However, this exception shall apply only in those cases where amount of consideration or a part thereof for the transfer has been received by any mode other than cash on or before the date of the agreement.

13.4 Applicability: This amendment take effects from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

14. Taxability of immovable property received for inadequate consideration

14.1 Sub clause (b) of clause (vii) of sub-section (2) of section 56 of the Income-tax Act, before its amendment by the Act, inter alia, provided that where any immovable property is received by an individual or HUF without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property would be charged to tax in the hands of the individual or HUF as income from other sources.

14.2 The said provision does not cover a situation where the immovable property has been received by an individual or HUF for inadequate consideration. Accordingly, the provisions of clause (vii) of sub-section (2) of section 56 have been amended so as to provide that where any immovable property is received for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the difference between the stamp duty value of such property and the consideration, shall be chargeable to tax in the hands of the individual or HUF as income from other sources.

14.3 Considering the fact that there may be a time gap between the date of agreement and the date of registration, it has been provided that where the date of the agreement fixing the amount of consideration for the transfer of the immovable property and the date of registration are not the same, the stamp duty value may be taken as on the date of the agreement, instead of that on the date of registration. This exception shall, however, apply only in a case where the amount of consideration, or a part thereof, has been paid by any mode other than cash on or before the date of the agreement fixing the amount of consideration for the transfer of such immovable property.

14.4 Applicability: - This amendment takes effect from 1st April, 2014 and accordingly, applies in relation to the assessment year 2014-15 and subsequent assessment years.

15. Raising the limit of percentage of eligible premium for life insurance policies of persons with disability or disease

15.1 Under the provisions contained in clause (10D) of section 10 of the Income-tax Act, 1961 before amendment by the Act, any sum received under a life insurance policy, including the sum allocated by way of bonus on such policy, is exempt, subject to the condition that the premium paid for such policy does not exceed ten per cent of the ‘actual capital sum assured’.

15.2 Similarly as per the provisions of sub-section (3A) of section 80C of the Income-tax Act, prior to its amendment by the Act, the deduction under the said section is available in respect of any premium or other payment made on an insurance policy of up to ten per cent of the ‘actual capital sum assured’.

15.3 The above limit of ten per cent was introduced through the Finance Act, 2012 and applies to policies issued on or after 1st April, 2012. Some insurance policies for persons with disability or suffering from specified diseases provide for an annual premium of more than ten per cent of the actual capital sum assured. Due to the limit of ten per cent, these policies are ineligible for exemption under clause (10D) of section 10 of the Income-tax Act. Moreover in such cases, the deduction under section 80C is eligible only to an extent of the premium paid up to 10 percent of the ‘actual capital sum assured’.

15.4 In view of the above, it has now been provided that any sum including the sum allocated by way of bonus received under an insurance policy issued on or after 01.04.2013 for the insurance on the life of any person who is

(i)

  a person with disability or a person with severe disability as referred to in section 80U, or

(ii)

  suffering from disease or ailment as specified in the rules made under section 80DDB,
  shall be exempt under clause (10D) of section 10 of the Income-tax Act, if the premium payable for any of the years during the term of the policy does not exceed 15 percent of the actual capital sum assured.

15.5 Sub-section (3A) of section 80C of the Income-tax Act has also been amended so as to provide that the deduction under the said section on account of premium paid in respect of a policy issued on or after 01.04.2013 for insurance on the life of a person referred to in para 15.4 above shall be allowed to the extent of the premium paid but does not exceed fifteen percent. of the actual capital sum assured.

15.6 Applicability: - This amendment takes effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

16. Expanding the scope of deduction and its eligibility under section 80CCG

16.1 Section 80CCG of the Income-tax Act, before its amendment by the Act, inter-alia, provide that a resident individual who has acquired listed equity shares in accordance with the scheme notified by the Central Government, shall be allowed a deduction of fifty per cent of the amount invested in such equity shares to the extent that the said deduction does not exceed twenty five thousand rupees.

16.2 The deduction is one-time and is available only in one assessment year in respect of the amount so invested. The deduction is available to a new retail investor whose gross total income does not exceed ten lakh rupees. Rajiv Gandhi Equity Savings Scheme has been notified under section 80CCG.

16.3 With a view to liberalize the incentive available for investment in capital markets by the new retail investors, the provisions of section 80CCG have been amended so as to provide that investment in listed units of an equity oriented fund shall also be eligible for deduction in accordance with the provisions of section 80CCG. For this purpose “equity oriented fund “shall have the meaning assigned to it in clause (38) of section 10 of the Income-tax Act.

16.4 It has been further provided that the deduction under section 80CCG of the Income-tax Act shall be allowed for three consecutive assessment years, beginning with the assessment year relevant to the previous year in which the listed equity shares or listed units were first acquired by the new retail investor whose gross total income for the relevant assessment year does not exceed twelve lakh rupees. The modified Rajiv Gandhi Equity Savings Scheme has also been notified on 18th December, 2013.

16.5 Applicability: - This amendment takes effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

17. Deduction for contribution to Health Schemes similar to CGHS

17.1 Section 80D of the Income Tax Act, before its amendment by the Act, inter alia, provided that the whole of the amount paid in the previous year out of the income chargeable to tax of the assessee, being an individual, to effect or to keep in force an insurance on his health or the health of his family or any contribution made towards the Central Government Health Scheme (CGHS) as does not exceed in the aggregate fifteen thousand rupees, is allowed to be deducted in computing the total income of the assessee.

17.2 It has been noticed that there are other health schemes of the Central and State Governments, which are similar to the CGHS but no deduction is available to the subscribers of such schemes. In order to bring such schemes at par with the CGHS, section 80D has been amended. The benefit of deduction under this section within the said limit shall be available in respect of any payment or contribution made by the assessee to such other health scheme which has been notified by the Central Government in this behalf.

17.3 Applicability: This amendment takes effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

18. Deduction in respect of interest on loan sanctioned during financial year 2013-14 for acquiring residential house property

18.1 Under the provisions of section 24 of the Income-tax Act, before amendment by the Act, income chargeable under the head ‘Income from House Property’ is computed after making the deductions specified therein. The deductions specified under the aforesaid section are as under:-

i.

  A sum equal to thirty per cent of the annual value;

ii.

  Where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital.

It has also been provided that where the property consists of a house or part of a house which is in the occupation of the owner for the purposes of his own residence or cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him, then the amount of deduction as mentioned above shall not exceed one lakh fifty thousand rupees subject to the conditions provided in the said section.

18.2 Keeping in view the issue of affordable housing for families, an additional benefit for first home-buyers has been provided by inserting a new section 80EE in the Income-tax Act relating to deduction in respect of interest on loan taken for residential house property.

18.3 Section 80EE provides that in computing the total income of an assessee, being an individual, deduction shall be allowed on account of interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property.

18.3.1 The deduction under the said section shall not exceed one lakh rupees and shall be allowed in computing the total income of the individual for the assessment year beginning on 1st April, 2014 and in a case where the interest payable for the previous year relevant to the said assessment year is less than one lakh rupees, the balance amount shall be allowed in the assessment year beginning on 1st April, 2015.

18.3.2 The deduction shall be subject to the following conditions:- (i) the loan is sanctioned by the financial institution during the period beginning on 1st April, 2013 and ending on 31st March, 2014; (ii) the amount of loan sanctioned for acquisition of the residential house property does not exceed twenty-five lakh rupees; (iii) the value of the residential house property does not exceed forty lakh rupees; (iv) the assessee does not own any residential house property on the date of sanction of the loan.

18.3.3 It is also provided that where a deduction under section 80EE is allowed for any assessment year, in respect of interest referred to in sub-section (1), deduction shall not be allowed in respect of such interest under any other provisions of the Income Tax Act for the same or any other assessment year. The term “financial institution” has been defined to mean a banking company to which the Banking Regulation Act, 1949 applies including any bank or banking institution referred to in section 51 of that Act or a housing finance company. The term “housing finance company” has been defined to mean a public company formed or registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes.

18.4 Applicability: - This amendment takes effect from 1st April, 2014 and accordingly applies in relation to the assessment year 2014-15 and assessment year 2015-16.

19. One hundred percent deduction for donation to National Children’s Fund

19.1 Under the provisions of section 80G of the Income-tax Act, before its amendment by the Act, an assessee is allowed a deduction from his total income in respect of donations made by him to certain funds and institutions. The deduction is allowed at the rate of fifty per cent of the amount of donations made except in the case of donations made to certain funds and institutions specified in clause (i) of sub-section (1) of said section 80G, where deduction is allowed at the rate of one hundred per cent.

19.2 In the case of donations made to the National Children’s Fund, a deduction at the rate of fifty per cent of the amount so donated was allowed.

19.3 Donations to Funds which are of national importance have been generally provided a deduction of one hundred per cent of the amount donated. As the National Children’s Fund is also a Fund of national importance, the section has been amended to provide a hundred per cent deduction in respect of any sum paid as donation to the said Fund in computing the total income of an assessee.

19.4 Applicability: - This amendment takes effect from 1st April, 2014 and will, accordingly, apply in relation to assessment year 2014-15 and subsequent assessment years.

20. Contribution not to be in cash for deduction under section 80GGB & section 80GGC

20.1 Under section 80GGB of the Income-tax Act, before its amendment by the Act, any sum contributed by an Indian company to any political party or an electoral trust in the previous year, is allowed as deduction in computing the total income of such Indian company. A similar deduction is available to an assessee, being any person other than local authority and artificial juridical person under section 80GGC.

20.2 No specific mode was provided for making such contribution. With a view to discourage cash payments by the contributors, the provisions of aforesaid sections have been amended to provide that no deduction shall be allowed under section 80GGB and 80GGC in respect of any sum contributed by way of cash.

20.3 Applicability: - This amendment takes effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

21. Extension of the sunset date under section 80IA for the power sector

21.1 Under the provisions contained in the clause (iv) of sub-section (4) of section 80IA, before amendment by the Act, a deduction of profits and gains is allowed to an undertaking which, –

(a)

  is set up in any part of India for the generation or generation and distribution of power if it begins to generate power at any time during the period beginning on 1st April, 1993 and ending on 31st March, 2013;

(b)

  starts transmission or distribution by laying a network of new transmission or distribution lines at any time during the period beginning on 1st April, 1999 and ending on 31st March, 2013;

(c)

  undertakes substantial renovation and modernisation of the existing network of transmission or distribution lines at any time during the period beginning on 1st April, 2004 and ending on 31st March, 2013.

21.2 With a view to provide further time to such undertakings to commence the eligible activity for availing the tax incentive, the above provisions have been amended so as to extend the terminal date by a further period of one year i.e. up to 31st March, 2014.

21.3 Applicability: - These amendments take effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

22. Deduction for additional wages in certain cases

22.1 Section 80JJAA, before amendment by the Act, provided for a deduction of an amount equal to thirty per cent of additional wages paid to the new regular workmen employed in any previous year by an Indian company in its industrial undertaking engaged in manufacture or production of article or thing. The deduction is available for three assessment years including the assessment year relevant to the previous year in which such employment is provided.

22.2 No deduction under this section is allowed if the industrial undertaking is formed by splitting up or reconstruction of an existing undertaking or amalgamation with another industrial undertaking.

22.3 The tax incentive under section 80JJAA was intended for employment of blue collared employees in the manufacturing sector whereas in practice, it is being claimed for other employees in other sectors also. Therefore, the provisions of section 80JJAA have been amended so as to provide that the deduction shall be available to an Indian Company deriving profits from manufacture of goods in a factory.

22.4 The deduction shall be of an amount equal to thirty per cent of additional wages paid to the new regular workmen employed by the assessee in such factory, in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment is provided.

22.5 It has also been provided that the deduction under this section shall not be available if the factory is hived off or transferred from another existing entity or acquired by the assessee company as a result of amalgamation with another company.

22.6 Applicability: - This amendment takes effect from 1st April, 2014 and will, accordingly, apply in relation to assessment year 2014-15 and subsequent assessment years.

23. Rebate of Rs. 2000 for individuals having total income up to Rs. 5 lakh

23.1 With a view to provide tax relief to the individual tax payers who are in lower income bracket, a tax rebate has been provided to an assessee, being an individual resident in India and having total income not exceeding five lakh rupees.

23.2 The rebate shall be equal to the amount of income-tax payable on the total income for any assessment year or an amount of two thousand rupees, whichever is less. Consequently any individual having income up to Rs. 2,20,000 will not be required to pay any tax and every individual having total income above Rs. 2,20,000/- but not exceeding Rs. 5,00,000/- shall get a tax rebate of Rs. 2000/-.

23.3 Section 87A has been inserted in the Income-tax Act, 1961, and Section 87 of the said Act has also been consequentially amended.

23.4 Applicability: - These amendments take effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

24. Tax Residency Certificate

24.1 Section 90 of the Income-tax Act empowers the Central Government to enter into an agreement with the Government of any foreign country or specified territory outside India for the purpose of –

(i)

  granting relief in respect of double taxation,

(ii)

  exchange of information and

(iii)

  recovery of taxes.

Further section 90A of the Income-tax Act empowers the Central Government to adopt any agreement between specified associations for above mentioned purposes.

24.2 In exercise of this power, the Central Government has entered into various Double Taxation Avoidance Agreements (DTAAs) with different countries and has adopted agreements between specified associations for relief of double taxation. The scheme of interplay between DTAA and domestic legislation ensures that a taxpayer, who is resident of one of the contracting country to the DTAA, is entitled to claim applicability of beneficial provisions either of DTAA or of the domestic law. Sub-section (4) of sections 90 and 90A of the Income-tax Act inserted by Finance Act, 2012 make submission of Tax Residency Certificate (TRC) containing prescribed particulars, as a condition for availing benefits of the agreements referred to in these sections.

24.3 Concerns were expressed by Tax Authorities of other countries, as well as stakeholders that different countries issue TRC as per their practice and law. Therefore, the TRCs issued by different countries may not contain all the particulars which were mandatorily required to be included under section 90(4) or 90A (4) of the Income-tax Act.

24.4 In order to address the concerns expressed, sub-section (4) has been amended to omit the requirement that the prescribed particulars are to be mandatorily part of the certificate to be issued by the foreign government. Therefore, TRC issued by different countries in their respective formats would meet the requirement of sub-section (4). However, sub-section (5) has been introduced in sections 90 & 90A of the Income-tax Act to provide that the taxpayer shall be required to furnish such other documents and information as may be prescribed. This has been prescribed vide Notification 47/2013 dated 26th June 2013 amending Rule 21AB of Income-tax Rules, 1962.

24.5 Applicability: – These amendments have been made retrospectively from 1st April, 2013 and will, accordingly, apply in relation to the assessment year 2013-14 and subsequent assessment years.

25. GENERAL ANTI-AVOIDANCE RULE (GAAR)

25.1 The General Anti Avoidance Rule (GAAR) was introduced in the Income- tax Act by the Finance Act, 2012. The substantive provisions relating to GAAR are contained in Chapter X-A (consisting of sections 95 to 102) of the Income- tax Act. The procedural provisions relating to mechanism for invocation of GAAR and passing of the assessment order in consequence thereof are contained in section 144BA. The provisions of Chapter X-A as well as section 144BA would have come into force with effect from 1st April, 2014.

25.2 A number of representations were received against the provisions relating to GAAR. An Expert Committee was constituted by the Government with broad terms of reference including consultation with stakeholders and finalising the GAAR guidelines and a road map for its implementation. The Expert Committee’s recommendations included suggestions for legislative amendments, formulation of rules and prescribing guidelines for implementation of GAAR. The major recommendations of the Expert Committee have been accepted by the Government, with some modifications. Some of the recommendations accepted by the Government required amendment in the provisions of Chapter X-A and section 144BA.

25.3 In order to give effect to the recommendations, the following amendments have been made in GAAR provisions inserted in the Income-tax Act through the Finance Act, 2012:-

(A)

  The provisions of Chapter X-A and section 144BA will come into force with effect from April 1, 2016 as against the current date of April 1, 2014. The provisions shall apply from the assessment year 2016-17 instead of assessment year 2014-15.

(B)

  An arrangement, the main purpose of which is to obtain a tax benefit, would be considered as an impermissible avoidance arrangement. The provision of section 96 providing that it should be “the main purpose or one of the main purposes” has been amended accordingly.

(C)

  The factors like, period or time for which the arrangement had existed; the fact of payment of taxes by the assessee; and the fact that an exit route was provided by the arrangement, would be relevant but not sufficient to determine whether the arrangement is an impermissible avoidance arrangement. The provisions of section 97 which provided that these factors would not be relevant have been amended accordingly.

(D)

  An arrangement shall also be deemed to be lacking commercial substance, if it does not have a significant effect upon the business risks, or net cash flows of any party to the arrangement apart from any effect attributable to the tax benefit that would be obtained but for the application of Chapter X-A. The provisions as contained in section 97 have been amended to provide that an arrangement shall also be deemed to lack commercial substance if the condition provided above is satisfied.

(E)

  The Approving Panel shall consist of a Chairperson who is or has been a Judge of a High Court; one Member of the Indian Revenue Service not below the rank of Chief Commissioner of Income-tax; and one Member who shall be an academic or scholar having special knowledge of matters such as direct taxes, business accounts and international trade practices. The provision of section 144BA that the Approving Panel shall consist of not less than three members being income-tax authorities and an officer of the Indian Legal Service has been amended accordingly.

(F)

  The directions issued by the Approving Panel shall be binding on the assessee as well as the income-tax authorities and no appeal against such directions can be made under the provisions of the Act. The provisions of section 144BA providing that the direction of the Approving Panel will be binding only on the Assessing Officer have been amended accordingly.

(G)

  The Central Government may constitute one or more Approving Panels as may be necessary and the term of the Approving Panel shall be ordinarily for one year and may be extended from time to time up to a period of three years. The provisions of section 144BA have been be amended accordingly.

(H)

  The two separate definitions in the provisions of section 102, as inserted by Finance Act, 2012 namely “associated person” and “connected person” have been combined and there is only one inclusive provision defining a ‘connected person’. The provisions of section 102 have been amended accordingly.

25.4 Consequential amendments in other sections relating to procedural matters have also been made. Further, GAAR rules have been notified vide Notification No.75/2013 dated 23rd of September, 2013.

25.5 Applicability: – These amendments take effect from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent assessment years.

26. Taxation of Income by way of Royalty or Fees for Technical Services

26.1 Section 115A of the Income-tax Act provides for determination of tax in case of a non-resident taxpayer where the total income includes any income by way of Royalty and Fees for technical services (FTS) received under an agreement entered after 31.03.1976 and which are not effectively connected with permanent establishment, if any, of the non-resident in India. Prior to amendment of section 115A by the Act, the tax was payable on the gross amount of income at the rate of -

(i)

  30% if income by way of royalty or FTS is received in pursuance of an agreement entered on or before 31.05.1997;

(ii)

  20% if income by way of royalty or FTS is received in pursuance of an agreement entered after 31.05.1997 but before 01.06.2005; and

(iii)

  10% if income by way of royalty or FTS is received in pursuance of an agreement entered on or after 01.06.2005.

26.2 India has tax treaties with 87 countries, majority of tax treaties allow India to levy tax on gross amount of royalty at rates ranging from 10 per cent to 25 per cent, whereas the tax rate as per section 115A is 10 per cent. In some cases, this has resulted in taxation at a lower rate of 10 per cent even if the treaty allows the income to be taxed at a higher rate.

26.3 In order to correct this anomaly, the tax rate in case of non-resident taxpayer, in respect of income by way of royalty and fees for technical services as provided under section 115A, has been increased from 10 per cent to 25 per cent. This rate of 25 per cent shall be applicable to any income by way of royalty and FTS received by a non-resident, under an agreement entered after 31.03.1976, which is taxable under section 115A.

26.4 Applicability: – This amendment takes effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

27. Lower rate of tax on dividends received from foreign companies

27.1 Section 115BBD of Income-tax Act provides for taxation of gross dividends received by an Indian company from a specified foreign company (in which it has shareholding of 26 per cent or more) at the rate of 15 per cent if such dividend is included in the total income for the Financial Year 2012-13 i.e. Assessment Year 2013-14. The above provision was introduced as an incentive for repatriation of income earned by residents from investments made abroad subject to certain conditions.

27.2 In order to continue the tax incentive for one more year, section 115BBD has been amended to extend the applicability of this section in respect of income by way of dividends received from a specified foreign company in Financial Year 2013-14 also, subject to the same conditions.

27.3 Applicability : – This amendment takes effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15.

28. Removal of the cascading effect of Dividend Distribution Tax (DDT)

28.1 Section 115-O of the Income-tax Act provides for taxation of distributed profits of a domestic company. It provides that any amount declared, distributed or paid by way of dividends, whether out of current or accumulated profits shall be liable to be taxed at the rate of 15 per cent. The tax is known as Dividend Distribution Tax (DDT). Such distributed dividend is exempt in the hands of recipients.

28.2 Section 115BBD of Income Tax Act provides for taxation of gross dividends received by an Indian company from a specified foreign company (in which it has shareholding of 26 per cent or more) at the rate of 15 per cent.

28.3 Section 115-O provides that the tax base for DDT (i.e. the dividend payable in case of a company) is to be reduced by an amount of dividend received from its subsidiary if such subsidiary has paid the DDT which is payable on such dividend . This ensured removal of cascading effect of DDT in a multi-tier structure where dividend received by a domestic company from its subsidiary (which is also a domestic company) is distributed to its shareholders.

28.4 section 115-O has been amended in order to remove the cascading effect in respect of dividends received by a domestic company from a similarly placed foreign subsidiary ( i.e. the foreign company in which domestic company holds more than fifty per cent of equity share capital). It has been provided that where the tax on dividends received from the foreign subsidiary is payable under section 115BBD by the holding domestic company then, any dividend distributed by the holding company in the same year, to the extent of such dividends, shall not be subject to Dividend Distribution Tax under section 115-O of the Income-tax Act.

28.5 Applicability: – This amendment takes effect from 1st June, 2013.

29. Additional Income-tax on distributed income by company for buy- back of unlisted shares

29.1 The provisions of Section 2(22) (e) of the Income-tax Act, before its amendment by the Act, provide the definition of dividends for the purposes of the Income-tax Act. Section 115- O provides for levy of Dividend Distribution Tax (DDT) on the company at the time when company distributes, declares or pays any dividend to its shareholders. Consequent to the levy of DDT the amount of dividend received by the shareholders is not included in the total income of the shareholder. The consideration received by a shareholder on buy-back of shares by the company is not treated as dividend but is taxable as capital gains under section 46A of the Act.

29.2 A company, having distributable reserves, has two options to distribute the same to its shareholders either by declaration and payment of dividends to the shareholders, or by way of purchase of its own shares (i.e. buy back of shares) at a consideration fixed by it. In the first case, the payment by company is subject to DDT and income in the hands of shareholders is exempt. In the second case the income is taxed in the hands of shareholder as capital gains. Unlisted Companies, as part of tax avoidance scheme, resort to buy back of shares instead of payment of dividends in order to avoid payment of tax by way of DDT particularly where the capital gains arising to the shareholders are either not chargeable to tax or are taxable at a lower rate.

29.3 In order to curb such practice, a new Chapter XII-DA has been inserted in the Income-tax Act to provide that the consideration paid by the company for purchase of its own unlisted shares which is in excess of the sum received by the company at the time of issue of such shares (distributed income) will be charged to tax and the company would be liable to pay additional income-tax at the rate of 20 per cent of the distributed income paid to the shareholder. The additional income-tax payable by the company shall be the final tax on similar lines as dividend distribution tax. The income arising to the shareholders in respect of such buy back by the company would be exempt under section 10 (34A) of the Income-tax Act where the company is liable to pay the additional income-tax on the buy-back of shares.

29.4 Applicability: – These amendments take effect from 1stJune, 2013.

30. Rationalisation of tax on distributed income by the Mutual Funds

30.1 Under the provisions of section 115R of the Income-tax Act, before its amendment by the Act, any amount of income distributed by the specified company or a Mutual Fund to its unit holders is chargeable to additional income-tax. In case of any distribution made by a fund other than equity oriented fund to a person who is not an individual and HUF, the rate of tax is 30 per cent whereas in case of distribution to an individual or an HUF it is 12.5 per cent or 25 per cent depending on the nature of the fund.

30.2 In order to provide uniform taxation for all types of funds, other than equity oriented fund, the rate of tax on distributed income has been increased from 12.5 per cent to 25 per cent in all cases where distribution is made to an individual or a HUF.

30.3 Further in case of an Infrastructure debt fund (IDF) set up as a Non-Banking Finance Company (NBFC) the interest payment made by the fund to a non-resident investor is taxable at a concessional rate of 5 per cent. However in case of distribution of income by an IDF set up as a Mutual Fund the distribution tax is levied at the rates described above in the case of a Mutual Fund.

30.4 In order to bring parity in taxation of income from investment made by a non-resident Investor in an IDF whether set up as a IDF-NBFC or IDF-Mutual Fund, section 115R has been amended to provide that tax at the rate of 5 per cent on income distributed shall be payable in respect of income distributed by a Mutual Fund under an IDF scheme to a non-resident Investor.

30.5 Applicability: – These amendments take effect from 1st June, 2013.

31. Taxation of Securitisation Trusts

31.1 Section 161 of the Income-tax Act provides that in case of a trust if its income consists of or includes profits and gains of business then income of such trust shall be taxed at the maximum marginal rate in the hands of trust.

31.2 The special purpose entities set up in the form of trust to undertake securitisation activities were facing problem due to lack of special dispensation in respect of taxation under the Income-tax Act. The taxation at the level of trust due to existing provisions was considered to be restrictive particularly where the investors in the trust are persons which are exempt from taxation under the provisions of the Income-tax Act like Mutual Funds.

31.3 In order to facilitate the securitisation process, a special taxation regime has been provided in respect of taxation of income of securitisation entities, set up as a trust, from the activity of securitisation. Section 10 of the Income-tax Act has been amended and also a new Chapter XII-EA has been inserted therein for providing a special tax regime. The salient features of the special regime are:-

(i)

  In case of securitisation vehicles which are set up as a trust being a “Special purpose distinct entity” under SEBI (Public Offer and Listing of Securitised Debt Instruments) Regulations, 2008 or “Special Purpose Vehicle” in the form of trust (not as a company or other entity) under the guidelines on securitisation of standard assets issued by RBI and the activities of which are regulated by either SEBI or RBI, the income from the activity of securitisation of such trusts will be exempt from taxation.

(ii)

  The securitisation trust will be liable to pay additional income-tax on income distributed to its investors on the lines of income distribution tax levied in the case of mutual funds. The additional income-tax shall be levied at the rate of 25 per cent in case of distribution being made to investors who are individual and HUF and at the rate of 30 per cent in other cases. No additional income-tax shall be payable if the income distributed by the securitisation trust is received by a person in whose case income, irrespective of its nature and source, is not chargeable to tax. For instance, in the case of income being distributed to a mutual fund, whose income from all sources are exempt under section 10(23D) of the Income-tax Act, no additional income tax shall be payable.

(iii)

  Consequent to the levy of distribution tax, the distributed income received by the investor will be exempt from tax under section 10 (23D) of the Income-tax Act.

(iv)

  The securitisation trust will be liable to pay interest at the rate of one per cent for every month or part of the month on the amount of additional income-tax not paid within the specified time.

(v)

  The person responsible for payment of income or the securitisation trust will be deemed to be an assessee in default in respect of the amount of tax payable by him or it in case the additional income-tax is not paid to the credit of Central Government.

31.4 Applicability : – This amendment takes effect from 1st June, 2013.

32. Application of seized assets under section 132B

32.1 The provisions contained in section 132B of the Income-tax Act, before amendment by the Act, inter-alia, provide that seized cash may be adjusted against any existing liability under the Income-tax Act, Wealth-tax Act, Expenditure-tax Act, Gift-tax Act and Interest-tax Act and the amount of liability determined on completion of assessments pursuant to search, including penalty levied or interest payable and in respect of which such person is in default or deemed to be in default. Various courts have taken a view that the term “existing liability” includes advance tax liability of the assesse, which is not in consonance with the intention of the legislature. The legislative intent behind this provision is to ensure the recovery of outstanding tax/interest/penalty and also to provide for recovery of taxes/interest/penalty, which may arise subsequent to the assessment pursuant to search.

32.2 Accordingly, said section 132B has been amended to clarify that the existing liability does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII of the Income-tax Act.

32.3 Applicability: - This amendment takes effect from 1st June, 2013.

33Replacement of terms “Foreign Exchange Regulation Act, 1947″ and “Foreign Exchange Regulation Act, 1973″ with “Foreign Exchange Management Act, 1999″

33.1 Section 138 of the Income-tax Act provides for disclosure of information in respect of assesses. Sub-clause (i) of clause (a) of sub-section (1) of the said section, inter-alia, provides that the Board or any Income-tax authority specified by it may furnish or cause to be furnished to any officer or body performing any functions under any law relating to dealings in foreign exchange as defined in section 2(d) of the Foreign Exchange Regulation Act, 1947, any information so as to enable him to perform his functions under that law. Foreign Exchange Regulation Act, 1947 (FERA) referred to in the said section was repealed in 1973 and was substituted by Foreign Exchange Regulation Act, 1973. In 1999 a new Act, Foreign Exchange Management Act, 1999 (FEMA) was introduced. The definition of foreign exchange in FERA, 1947 has under gone slight modification in FEMA, 1999. The term foreign exchange is defined in clause (n) of section 2 of FEMA, 1999.

33.2 In view of the above, sub-clause (i) of clause (a) of sub-section (1) section 138 of the Income-tax Act has been amended to provide that foreign exchange shall have the meaning as assigned to it in section 2(n) of FEMA, 1999.

33.3 Similar amendments have been made in sections 10(4), 10(4B), 10(15), 10A, 10B, 48, 115AB, 115C, and 196A of the Income-tax Act.

33.4 Applicability: - This amendment will take effect from 1st April, 2013.

34. Return of Income filed without payment of self- assessment tax to be treated as defective return

34.1 The provisions contained in sub-section (9) of section 139, before amendment by the Act, provide that where the Assessing Officer considers that the return of income furnished by the assessee is defective; he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of fifteen days. If the defect is not rectified within the time allowed by the Assessing Officer, the return is treated as an invalid return. The conditions, the non-fulfillment of which renders the return defective have been provided in the Explanation to the aforesaid sub-section. Section 140A provides that where any tax is payable on the basis of any return, after taking into account the prepaid taxes, the assessee shall be liable to pay such tax together with interest payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, before furnishing the return. It has been noticed that a large number of assesses furnish their returns of income without payment of self-assessment tax.

34.2 With a view to ensure compliance of the provisions of section 140A, the Explanation to sub-section (9) of section 139 of the Income-tax Act has been amended to provide that the return of income shall be regarded as defective unless the tax together with interest, if any, payable in accordance with the provisions of section 140A has been paid on or before the date of furnishing of the return.

34.3 Applicability: - This amendment takes effect from 1st June, 2013.

35. Direction for special audit under sub-section (2A) of section 142

35.1 Sub-section (2A) of section 142 of the Income-tax Act, before its amendment by the Act, inter-alia, provided that if at any stage of the proceedings, the Assessing Officer having regard to the nature and complexity of the accounts of the assessee and the interests of the revenue, is of the opinion that it is necessary so to do, he may, with the approval of the Chief Commissioner or Commissioner, direct the assessee to get his accounts audited by an accountant and to furnish a report of such audit in the prescribed form. The expression “nature and complexity of the accounts” has been interpreted in a very restrictive manner by various courts.

35.2 Sub-section (2A) of section 142 has been amended to provide that if at any stage of the proceedings before him, the Assessing Officer, having regard to the nature and complexity of the accounts, volume of the accounts, doubts about the correctness of the accounts, multiplicity of transactions in the accounts or specialized nature of business activity of the assessee, and the interests of the revenue, is of the opinion that it is necessary so to do, he may, with the previous approval of the Chief Commissioner or the Commissioner, direct the assessee to get his accounts audited by an accountant and to furnish a report of such audit in the prescribed form.

35.3 Applicability: - This amendment takes effect from 1st June, 2013.

36. Exclusion of time in computing the period of limitation for completion of assessments and reassessments

36.1 Section 153 of the Income-tax Act, inter-alia, provides the time limit for completion of assessment and reassessment of income by the Assessing Officer. Explanation to section 153 provides that certain periods specified therein shall be excluded while computing the period of limitation for the purposes of the said section. Under the provisions of clause (iii) of Explanation 1 to section 153 of the Income-tax Act, prior to its amendment by the Act, the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of section 142 and ending with the last date on which the assesee is required to furnish a report of such audit, is excluded in computing the period of limitation for the purposes of assessment or reassessment. However, it did not provide for exclusion of time in case the direction of the Assessing Officer as aforesaid is set aside by the court.

36.2 Accordingly clause (iii) of Explanation 1 to section 153 has been amended to provide that the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited under sub-section (2A) of section 142 and ending with the last date on which the assessee is required to furnish report of such audit under that sub-section; or where such direction is challenged before a court, ending with the date on which the order setting aside such direction is received by the Commissioner, shall be excluded in computing the period of limitation for the purposes of section 153.

36.3 Similarly, clause (viii) of Explanation I to section 153 of the Income-tax Act, before its amendment by the Act, provided for exclusion of the period commencing from the date on which a reference for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information so requested is received by the Commissioner or a period of one year, whichever is less, in computing the period of limitation for the purposes of section 153. At times more than one reference for exchange of information is made in one case and the replies from the foreign Competent Authorities are also received in parts. In such cases, there will always be a dispute for counting the period of exclusion i.e. whether it should be from the date of first reference for exchange of information made or from the date of last reference. Similar dispute may also arise with regard to the date on which the information so requested is received.

36.4 With a view to clarify the above situation, the aforesaid clause (viii) of Explanation 1 to section 153 has been amended to provide that the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A of the Income-tax Act and ending with the date on which the information requested is last received by the Commissioner or a period of one year, whichever is less, shall be excluded in computing the period of limitation for the purposes of section 153.

36.5 Similar amendments have also been made in Explanation to section 153B of the Income-tax Act relating to time limit for completion of search assessment.

36.6 Applicability: - These amendments take effect from 1st June, 2013.

37. Time limit for completion of assessment or reassessment where reference is made to Transfer Pricing Officer.

37.1 Sections 153 and 153B of the Income-tax Act, inter alia, provide the time limit for completion of assessment and reassessment of income by the Assessing Officer. Time limits have been provided for completion of assessment or reassessment under sections 143(3), 147, 153A, 153C etc. of the Income-tax Act. These time limits get extended if a reference is made under section 92CA of the Income-tax Act to the Transfer Pricing Officer (TPO) during the course of assessment/reassessment proceedings. These time limits are either from the end of financial year in which notice for initiation of the proceeding was served or from the end of the assessment year to which the proceedings relate.

37.2 Vide Finance Act, 2012 the period of limitation as provided in sections 153 and 153B of the Income-tax Act was extended by three months. In all the cases where reference under section 92CA of the Income-tax Act was made to the Transfer Pricing Officer the period of limitation was extended to one year from the existing 9 months. Similar amendments were made in other parts of section 153 and section 153B of the Income-tax Act wherever reference of section 92CA was made.

37.3 As a result of insertion of 3rd proviso in sub-section (1) of section 153 an anomaly arose. In a case relating to assessment year 2009-10, where a reference was made under section 92CA of the Income-tax Act and the TPO passed the order before 01.07.2012, it could not get covered by the 3rd proviso which was inserted vide Finance Act 2012. Further, it could not get covered by 2nd proviso either. Therefore, it found a place only in 153(1) (a) as per which the time limit would be two years from the end of assessment year i.e. upto 31.03.2012. Therefore, it did not get the benefit of one extra year as was intended. Further, before amendments vide Finance Act 2012 this case would have been covered under 2nd proviso and the time limit for completion would have been 31-12-2012 (33 months). Thus, with the insertion of 3rd proviso vide Finance Act 2012 the time limit got reduced from 31-12-2012 to 31 -03-2012. This was not the intent of the legislature.

37.4 In view of the above, the provisions of 3rd proviso to sub-section (1) of section 153 of the Income-tax Act have been amended to provide that in case the assessment year in which the income was first assessable is the assessment year commencing on the 1st day of April, 2009 or any subsequent assessment year and during the course of the proceeding for the assessment of total income, a reference under sub-section (1) of section 92CA of the Income-tax Act is made, the provisions of clause (a) shall, notwithstanding anything contained in the first proviso, have effect as if for the words ‘two years”, the words “three years” had been substituted.”

37.5 Similar amendments have been made in sub-section (2), sub-section (2A) of section 153 and section 153B of the Income-tax Act where similar anomaly arose due to amendments carried out vide Finance Act, 2012 in the said sections.

37.6 Applicability: - The amendments take effect retrospectively from 1st July, 2012.

38. Clarification of the phrase “tax due” for the purposes of recovery in certain cases

38.1 Section 179 of the Income-tax Act provides that where the tax due from a private company cannot be recovered from such company, then the director (who was the director of such company during the previous year to which non-recovery relates) shall be jointly and severally liable for payment of such tax unless he proves that the non-recovery of tax cannot be attributed to any gross neglect, misfeasance or breach of duty on his part. This provision is intended to recover outstanding demand under the Income-tax Act of a private company from the directors of such company in certain cases. However, some courts have interpreted the phrase ‘tax due’, used in section 179, does not include penalty, interest and other sum payable under the Income-tax Act.

38.2 In view of the above, it has been clarified that for the purposes of the said section 179, the expression “tax due” includes penalty, interest or any other sum payable under the Income-tax Act. Amendment on the similar lines for clarifying the expression ‘tax due’ has also been made to the provisions of section 167C of the Income-tax Act.

38.3 Applicability: - These amendments take effect from 1st June, 2013.

39. Tax Deduction at Source (TDS) on transfer of certain immovable properties (other than agricultural land)

39.1 There is a statutory requirement under section 139A of the Income-tax Act read with rule 114B of the Income-tax Rules, 1962 to quote Permanent Account Number (PAN) in documents pertaining to purchase or sale of immovable property for value of Rs.5 lakh or more. However, the information furnished to the Income-tax Department in Annual Information Returns by the Registrar or Sub- Registrar indicate that a majority of the purchasers or sellers of immovable properties, valued at Rs. 30 lakh or more, during the financial year 2011-12 did not quote or quoted invalid PAN in the documents relating to transfer of immovable property.

39.2 Under the provisions of the Income-tax Act, prior to its amendment by the Act, tax is required to be deducted at source on certain specified payments made to residents by way of salary, interest, commission, brokerage, professional services, etc. On transfer of immovable property by a non-resident, tax is required to be deducted at source by the transferee. However, there is no such requirement on transfer of immovable property by a resident except in the case of compulsory acquisition of certain immovable properties.

39.3 In order to have a reporting mechanism of transactions in the real estate sector and also to collect tax at the earliest point of time, a new section 194-IA has been inserted in the Income-tax Act to provide that every transferee, at the time of making payment or crediting of any sum as consideration for transfer of immovable property (other than agricultural land) to a resident transferor, shall deduct tax, at the rate of 1 per cent of such sum.

39.4 In order to reduce the compliance burden on the small taxpayers, it has also been provided that no deduction of tax under this provision shall be made where the total amount of consideration for the transfer of an immovable property is less than fifty lakh rupees.

39.5 Further, in view of the provisions of section 203A every person deducting tax under this newly inserted section 194-IA would have required to obtain Tax Deduction and Collection Account Number (TAN). In order to reduce the compliance burden on the deductor deducting tax under this section, it is provided that the provisions of section 203A shall not apply to a person required to deduct tax in accordance with the provisions of section 194-IA.

39.6 Applicability: - This amendment takes effect from 1st June, 2013.

40. Income by way of interest on certain bonds and Government securities

40.1 Considering the current account deficit situation and the need to have foreign investment in India in rupees, a new section 194LD has been inserted in the Income-tax Act to provide for reduced rate of 5 per cent of withholding tax as against the normal rate of 20 per cent on interest payable on or after the 1st day of June, 2013 but before the 1st day of June, 2015 in respect of a rupee denominated bond of an Indian company or a Government security if the payment is made to a Foreign Institutional Investor (FII) or a Qualified Foreign Investor (QFI). It has been further provided that interest rate on rupee denominated bonds of an Indian company should not exceed the threshold limit to be notified by the Government. This rate has been notified vide Notification 56/2013 dated 29th July 2013 as below:

(i)

  in case of bonds issued before the 1st day of July, 2010, the rate of interest shall not exceed 500 basis points (bps) over the Base Rate of State Bank of India as on the 1st day of July, 2010.

(ii)

  in case of bonds issued on or after the 1st day of July, 2010, the rate of interest shall not exceed 500 basis points (bps) over the Base Rate of State Bank of India applicable on the date of issue of the said bonds.

40.2 Applicability: – This amendment takes effect from 1st June, 2013.

41. Meaning of “person responsible for paying” under Chapter XVII

41.1 Chapter XVII of the Income-tax Act, 1961 deals with collection and recovery of tax. Section 204 of the Income-tax Act defines the expression “person responsible for paying”. As per clause (iia) of the said section 204 the expression “person responsible for paying” in case of any sum payable to a non-resident Indian, being any sum representing consideration for the transfer by him of any foreign exchange asset, which is not a short-term capital asset, means the authorised dealer responsible for remitting such sum to the non-resident Indian or for crediting such sum to his Non-resident (External) Account maintained in accordance with the Foreign Exchange Regulation Act, 1973 and any rules made thereunder. The expression “authorised dealer” as mentioned above has been defined in the Explanation to the said section as having the meaning as assigned to it in clause (b) of section 2 of the Foreign Exchange Regulation Act, 1973. Further, in the Explanation, reference has been made to Foreign Exchange Regulation Act, 1973.

41.2 In 1999, Foreign Exchange Management Act, 1999 (FEMA) was introduced and it replaced the Foreign Exchange Regulation Act, 1973. In FEMA, the expression “authorised dealer” has been replaced by “authorised person”.

41.3 In view of the replacement of the Foreign Exchange Regulation Act, 1973 by the Foreign Exchange Management Act, 1999, an amendment in section 204 of the Income-tax Act has been made whereby the words “authorised dealer” have been replaced by the words “authorised person”. Further “authorised person” has been defined to have the meaning as assigned to it in clause (c) of section 2 of the Foreign Exchange Management Act, 1999.

41.4 Applicability - This amendment takes effect from 1st April, 2013.

42. Exemption from requirement of furnishing PAN under section 206AA to certain non-resident bond holder.

42.1 Under section 194LC of the Income-tax Act, the payment of interest by an Indian company to a non-resident on money borrowed in foreign currency under a loan agreement or through issue of a long term infrastructure bond is subject to deduction of tax at the rate of 5 per cent instead of general rate of deduction of tax at the rate of 20 per cent. Under section 206AA of the Act, if such non-resident does not provide his Permanent Account Number (PAN) to the payer, then the tax is required to be withheld at the rate of 20 per cent.

42.2 Considering the practical difficulties in obtaining PAN by the non-resident bondholders, section 206AA has been amended to provide that provisions of section 206AA of the Income-tax Act shall not apply to interest paid to a non-resident on long-term infrastructure bonds referred to in section 194LC of the Income-tax Act.

42.3 Applicability: - This amendment takes effect from 1st June, 2013.

43. Removal of exemption from levy of Tax Collection at Source (TCS) to cash sale of any coin or any other article weighing 10 grams or less

43.1 Finance Act, 2012 amended the provisions of section 206C of the Income-tax Act to provide that the seller of bullion or jewellery shall collect tax at the rate of 1 per cent of sale consideration from every buyer of bullion or jewellery if sale consideration exceeds two lakh rupees or five lakh rupees respectively and the sale is in cash. Further, it has also been provided that bullion shall not include any coin or any other article weighing 10 grams or less. As threshold of sales consideration for levy of TCS on cash sale of bullion has already been provided, there was no justification for providing separate exemption from levy of TCS to cash sale of any coin or any other article weighing 10 grams. In view of the above, section 206C has been amended to withdraw the separate exemption from levy of TCS provided to cash sale of any coin or any other article weighing 10 grams.

43.2 Applicability: - This amendment takes effect from the 1st June, 2013.

44. Appointment of President of the Appellate Tribunal

44.1 The provisions of section 252 of the Income-tax Act, inter-alia, provide for the constitution of Income Tax Appellate Tribunal (ITAT), the qualification of judicial members and accountant members, the appointment of president, senior vice-presidents and vice presidents etc. Sub-section (3) of section 252 provides that the Central Government shall appoint the Senior Vice-President or one of the Vice-Presidents of the Appellate Tribunal to be the President thereof.

44.2 The choice of the President is confined only to Senior Vice-President or one of the Vice Presidents as the President. In order to provide for a wider choice in the selection of a suitable candidate for the post of President of the tribunal an amendment has been carried out to include persons from judiciary.

44.3 Accordingly, the provisions of sub-section (3) of section 252 have been amended to provide that the Central Government shall appoint a person who is a sitting or retired Judge of a High Court and who has completed not less than seven years of service as a Judge in a High Court; or the Senior Vice-President or one of the Vice-Presidents of the Appellate Tribunal, to be the President thereof.

44.4 Applicability: - The amendment takes effect from 1st June, 2013.

45. Penalty under section 271FA for non-filing of Annual Information Return

45.1 Section 285BA of the Income-tax Act mandates furnishing of annual information return by the specified persons in respect of specified transactions within the time prescribed under sub-section (2) thereof. Sub- section (5) of the section empowers the Assessing Officer to issue notice if the annual information return has not been furnished by the due date.

45.2 Section 271FA of the income-tax Act, prior to its amendment by the Act, provided that if a person who is required to furnish an annual information return, as required under sub-section (1) of section 285BA of the Income-tax Act, fails to furnish such return within the time prescribed under that sub-section, the income-tax authority prescribed under the said sub-section may direct that such person shall pay, by way of penalty, a sum of one hundred rupees for every day during which the failure continues.

45.3 Section 271FA of the income-tax Act has been amended to provide that if a person who is required to furnish an annual information return, as required under sub-section (1) of section 285BA of the income-tax Act, fails to furnish such return within the time prescribed under sub-section (2) thereof, the income-tax authority prescribed under sub-section (1) of the said section may direct that such person shall pay, by way of penalty, a sum of one hundred rupees for every day during which the failure continues.

45.4 It is further provided that where such person fails to furnish the return within the period specified in the notice under sub-section (5) of section 285BA, he shall pay, by way of penalty, a sum of five hundred rupees for every day during which the failure continues, beginning from the day immediately following the day on which the time specified in such notice for furnishing the return expires.

45.5 Applicability - This amendment takes effect from 1st April, 2014.

46. Extension of time for approval in Part A of the Fourth Schedule to the Income-tax Act, 1961

46.1 Rule 4 in Part A of the Fourth Schedule to the Income-tax Act provides for conditions which are required to be satisfied by a Provident Fund for receiving or retaining recognition under the Income-tax Act. One of the requirements of rule 4 as contained in clause (ea) is that the establishment has to be notified by the Central Provident Fund Commissioner under section 1(4) of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 [EPF & MP Act] and has obtained exemption under section 17 of the said Act.

46.2 Rule 3 in Part A of the Fourth Schedule to the Income-tax Act provides that the Chief Commissioner or the Commissioner of Income-tax may accord recognition to any provident fund which, in his opinion, satisfies the conditions specified under the said rule 4 and the conditions which the Board may specify by rules.

46.3 The first proviso to sub-rule (1) of rule 3, prior to its amendment by the Act, inter alia, specified that in a case where recognition under the Income-tax Act has been accorded to any provident fund on or before 31st March, 2006, but such provident fund does not satisfy the conditions set out in clause (ea) of rule 4 on or before 31st March 2013, the recognition to such fund shall be withdrawn.

46.4 A number of applications were pending with the Employees’ Provident Fund Organization (EPFO) for grant of exemption under section 17 of EPF & MP Act. With a view to provide further time to the EPFO to decide on the pending applications seeking exemption under section 17 of the EPF & MP Act, the first proviso has been amended , so as to extend the time limit from 31st March, 2013 to 31st March, 2014.

46.5 Applicability: - This amendment takes effect retrospectively from 1st April, 2013.

47. Exemption from wealth tax to agricultural land situated in urban area.

47.1 Finance Act, 1992 amended the provisions of Wealth-tax Act with effect from 1st April, 1993 to provide that wealth tax shall be levied only on certain specified assets. The definition of assets on which wealth tax is leviable inter alia includes urban land. As per this definition urban land means land situated in the jurisdiction of municipality or cantonment board or land situated in notified area. However, certain categories of urban land such as land on which construction of a building is not permissible, land held for industrial purpose, land held as stock in trade, have been excluded from the definition of urban land. Normally on agricultural land, either no construction is allowed or allowed only for a specific purpose (mainly for agricultural needs), but no specific exemption has been provided to the agricultural land. Recently it has been held by the Hon’ble Supreme Court that agricultural land situated in urban area is liable for wealth tax. As the wealth tax is levied only on unproductive assets, there was no intention to levy wealth tax on the agricultural land which cannot be termed as unproductive assets.

47.2 In view of the above, the definition of urban land in the Wealth-tax Act, 1957 has been amended to specifically provide that wealth tax is not leviable on urban land which is,

(i)

  classified as agricultural land in the records of the Government; and

(ii)

  used for agricultural purposes.

47.3 Applicability: - This amendment takes effect retrospectively from 1st April, 1993.

48. Enabling provisions for facilitating electronic filing of annexure-less return of net wealth

48.1 Section 14 of the Wealth-tax Act provides for furnishing of return of net wealth as on the valuation date in the prescribed form and verified in the prescribed manner setting forth particulars of the net wealth and such other particulars as may be prescribed. Currently, certain documents, reports are required to be furnished along with the return of net wealth under the provisions of Wealth-tax Act read with the provisions of Wealth-tax Rules.

48.2 Sections 139C and 139D of the Income-tax Act contain provisions for facilitating filing of annexure-less return of income in electronic form by certain class of income-tax assesses. In order to facilitate electronic filing of annexure-less return of net wealth, new sections 14A and 14B have been inserted in the Wealth-tax Act on similar lines.

48.3 Consequently, the provisions of section 46 of the Wealth-tax Act which provide for rule making powers of the Board have also been amended.

48.4 Applicability: - These amendments take effect from 1st June, 2013.

49. Securities Transaction Tax (STT)

49.1 Securities Transaction Tax (STT) on transactions in specified securities was introduced vide Finance (No.2) Act, 2004.

49.2 Section 98 of the Finance (No.2) Act, 2004 has been amended to reduce STT rates in the taxable securities transactions as indicated hereunder:-

TABLE

S.No.

Nature of Taxable securities transaction

Payable by

Existing Rates (in per cent)

Proposed Rates (in per cent)

(1)

(2)

(3)

(4)

(5)

1.

Delivery based purchase of units of an equity oriented fund entered into in a recognised stock exchange in India

Purchaser

0.1

Nil

2.

Delivery based sale of units of an equity oriented fund entered into in a recognised stock exchange in India

Seller

0.1

0.001

3.

Sale of a futures in securities

Seller

0.017

0.01

4.

Sale of a unit of an equity oriented fund to the mutual fund

Seller

0.25

0.001

49.3 Applicability - These amendments take effect from 1st June, 2013 and will accordingly apply to any transaction made on or after that date.

50. Commodities Transaction Tax

50.1 Commodities Transaction Tax (CTT) has been introduced vide Chapter VII of the Act and has come into force from 1st July, 2013 as notified vide Notification S.O. 1768(E) dated 19th June, 2013. The CTT Rules, 2013 have been notified vide Notification S.O. 1769 (E) dated 19th June, 2013. CTT is levied on taxable commodities transactions entered into in a recognised association.

50.2 ‘Taxable commodities transaction’ has been defined to mean a transaction of sale of commodity derivatives in respect of commodities other than agricultural commodities traded in recognised associations. CTT is to be collected on taxable commodities transactions by the recognised associations.

50.2.1 Agricultural commodities which are not liable to CTT are almond, barley, cardamom, castor seed, channa/gram, copra, coriander/dhaniya, cotton, cotton seed oilcake/kapasia khali, guar seed, isabgul seed, jeera, kapas, maize feed, pepper, potato, rape/mustard seed, raw jute, red chilli, soya bean/seed, soymeal, turmeric, wheat.

50.3 The tax is levied at the rate, given in the Table below, on taxable commodities transactions undertaken by the seller as indicated hereunder:-

TABLE

S. No.

Taxable commodities transaction

Rate

Payable by

(1)

(2)

(3)

(4)

1.

Sale of commodity derivative 0.01 per cent Seller

50.4 The provisions with regard to collection and recovery of CTT, furnishing of returns, assessment procedure, power of assessing officer, chargeability of interest, levy of penalty, institution of prosecution, filing of appeal, power to the Central Government, etc. have also been provided.

50.5 Further, section 36 of the Income-tax Act has been amended to provide that an amount equal to the commodities transaction tax paid by the assessee in respect of the taxable commodities transactions entered into in the course of his business during the previous year shall be allowable as deduction, if the income arising from such taxable commodities transactions is included in the income computed under the head “Profits and gains of business or profession.

50.6.1 Sub-section (5) of section 43 of the Income-tax Act has also been amended to provide that eligible transaction in respect of trading in commodity derivatives carried out in a recognised association shall not be deemed to be speculative transaction. The eligible transaction shall include only those transactions in commodity derivatives which are subject to CTT. An Explanation has been inserted to provide that the expression “commodity derivative” shall have the meaning assigned to it under Chapter VII of the Act.

50.6.2 Applicability - The amendments in sections 36 and 43 of the Act take effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.

F No. 142/24/2013-TPL

Ashis Mohanty

Under Secretary to the Government of India

Rupee trading weak at 62.19 : 24-01-2014


The rupee was trading weak by 26 paise at 62.19 against the dollar at 11.52 a.m. local time.

The rupee fell 20 paise to 62.13 against the US dollar in early trade at the Interbank Foreign Exchange market today on increased demand for the American currency from importers.

Forex dealers said a weak opening in the domestic equity market and dollar’s gains against other currencies overseas put pressure on the rupee.

The domestic unit had lost 12 paise to close at a two-week low of 61.93 against the dollar yesterday.

Meanwhile, the benchmark BSE Sensex fell 82.20 points or 0.38 per cent to 21,291.46 in early trade today.

Source : PTI

Continued VAT uptick suggests states likely to benefit from GST : 24-01-2014


 As in the previous three years of high economic growth, states’ value-added tax revenue has continued to grow faster than their other major sources of “own tax revenue” (OTR) like stamp duty and excise on alcohol in the post-economic-crisis period, the Reserve Bank of India’s latest report on state finances reveals. This confirms that there is little rationale for many of the country’s largest states to be sceptical of the proposed goods and services tax (GST), the logical extension of the VAT system.

The BJP-ruled Gujarat and Madhya Pradesh along with Tamil Nadu and Uttar Pradesh have remained chary of GST. These states’ reluctance to embrace the proposed superior comprehensive indirect tax system, coupled with a lack of Centre-state consensus on the structure and ambit of GST, has stymied its introduction for long. It now looks certain that new system won’t be ushered in during the UPA-II government’s regime.

The RBI report on state finances (with the 2013-14 state budgets in focus) shows that VAT revenue has grown faster than the states’ overall tax revenue (including central transfers) in the three years to 2013-14. While VAT revenue grew 23.7% in 2011-12 and 19% in 2012-13, the overall tax revenue rose 19.5% and 17.8%, respectively.

The estimated growth for the current fiscal is also higher for VAT (17.2%) compared with 15.7% overall tax revenue growth.

Pertinently, this trend is particularly evident in the case of some of the states that remain indifferent to GST. Gujarat’s VAT revenue surged 39.4% in 2011-12 and 19% in 2012-13, while its overall tax revenue rose 20.9% and 18.7% in the same periods. Gujarat projects its VAT revenue to grow by 23% this fiscal and growth in all taxes including transfers from the Centre is estimated at just 13.9%. The growth so far this fiscal has been around 4% only.

Despite this, in general and surely in the aggregate, states’ VAT/sales tax revenue has grown much faster than the Centre’s indirect tax receipts also between 2009-13. Thanks to the 13th Finance Commission award (which hiked the states’ share in the Centre’s gross tax revenue to 32%

om 30.5% previously) and a comparatively better show by direct taxes, however, states have bolstered their tax revenue from central transfers also almost as much as they have from VAT. The Centre’s indirect tax receipts, comparable to states’ VAT proceeds, saw a deceleration in growth in recent years. The collections of excise, customs duty and service tax by the Centre grew just 13.7% in 2011-12 and 21% in 2012-13.

Clearly, states are reporting higher tax revenue growth than the Centre, the primary reason why their fiscal consolidation has been better while the Centre’s has slipped considerably. To increase their own tax revenue, many states have raised taxes on tobacco and liquor products and some have benefited from simplifying procures that enhanced tax compliance. Analysts, however, point out that even though VAT was meant to lead to harmonisation of rates, this hasn’t actually happened, with the tax being levied at rates ranging from 1% to 15%.

States that embraced VAT in 2005-06 had seen higher-than-historical growth in their sales tax/VAT revenue in the 2005-08 high-growth period also, establishing that the VAT system generates incremental revenue.

In states’ revenue kitty, tax revenue accounts for the bulk, of which their OTR forms the major chunk, completed by the states’ share in the central taxes. Within tax revenue, the largest item is VAT/sales tax followed by taxes on property (stamp duty and registration fee), state excise on alcohol and the taxes levied on vehicles. (To illustrate, 80% of Uttar Pradesh’s estimated revenue of Rs 1.77 lakh crore this fiscal comes from taxes and within this tax revenue, over half will come from the states’ OTR, of which 60% will be from sales tax/VAT/CST).

RBI deputy governor Urjit Patel says in a foreword to the report released on Wednesday: “State budgets for 2013-14 indicate a further move towards fiscal consolidation… During 2013-14, the revenue surplus-GDP ratio is budgeted to increase to 0.4% (from) 0.2% in 2012-13, contributing to a reduction in the gross fiscal deficit-GDP ratio to 2.1% (from) 2.3% in 2012-13. Revenue surplus is budgeted in 22 out of the 28 states in 2013-14.”

own revenue and transfers from the Centre as a proportion to GDP increased in 2012-13 (RE) over 2011-12. A higher own revenue-GDP ratio was due to increase in both OTR and own non-tax revenue as ratios to GDP in 2012-13. “While states’ OTR-GDP ratios recorded an increase primarily due to increased collections under ‘stamp and registration fee’, VAT and state excise, the increase in states’ ONTR-GDP ratio was due to higher receipts from general services, education, sports and art and culture. Current transfers from the Centre as a ratio to GDP also improved following an increase in the share of central taxes and an increase in grants to finance state plan schemes,” the RBI report said. Sales tax collections from petroleum products that account for around 30% of the total VAT/sales tax collections also boosted states’ OTRs in 2012-13.

Source : The Financial Express

Rupee falls 17 paise against dollar in early trade : 23-01-2014


MUMBAI: The rupee fell by 17 paise to 61.98 against the US dollar in early trade today at the Interbank Foreign Exchange market on increased demand for the American currency from oil importers.

Forex dealers said a weak opening at the domestic equity market also weighed on the rupee.

The rupee had gained 7 paise at 61.81 against the US dollar on increased selling of the American currency by exporters in yesterday’s trade.

Meanwhile, the benchmark BSE Sensex fell by 65.76 points, or 0.31 per cent, to 21,271.91 in early trade today.

Source : PTI

Notification No.08/2014 dated 22-01-2014


Notification u/s 35(1) (ii) – Approved organization – Amrita Vishwa Vidhyapcetham University Kochi – 08/2014 – Dated 22-1-2014 – Income Tax

NOTIFICATION NO. 8/2014

DATED 22-1-2014

It is hereby notified for general information that the organization Amrita Vishwa Vidhyapcetham University Kochi, (PAN – AAATM2403M) has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 ofthe Income-tax Act, 1961 (said Act), read with Rules 5C and 5E of the Income-tax Rules, 1962 (said Rules), assessment year 2013-2014 and onwards in the category of “University College and other Institution”, engaged in research activities subject to the following conditions, namely:—

(i)

The sums paid to the approved organization shall be utilized for scientific research;

(ii)

The approved organization shall carry out scientific research through its faculty members or its enrolled students;

(iii)

The approved organization shall maintain separate books of accounts in respect of the sums received by it for scientific research, reflect therein the amounts used for carrying out research, get such books audited by an accountant as defined in the explanation to sub-section (2) of section 288of the said Act and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139 of the said Act;

(iv)

The approved organization shall maintain a separate statement of donations received and amounts applied for scientific research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to above.

2. The Central Government shall withdraw the approval if the approved organization-

(a)

fails to maintain separate books of accounts as referred to in sub-paragraph (iii) of paragraph 1; or

(b)

fails to furnish its audit report as referred to in sub-paragraph (iii) of paragraph 1; or

(c)

fails to furnish its statement of the donations received and sums applied for scientific research as referred to in sub-paragraph (iv) of paragraph 1; or

(d)

ceases to carry on its research activities or its research activities are not found to be genuine; or

(e)

ceases to conform to and comply with the provisions of clause (ii) of sub-section (1) of section 35 of the said Act read with rules 5C and 5E of the said Rules.

[F. NO. 203/03/2013-ITA-II]

 

Notification No.09/2014 dated 22-01-2014


Central Government specifies the Foreign Portfolio Investors u/s 115AD – 09/2014 – Dated 22-1-2014 – Income Tax

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 9/2014,

NEW DELHI Dated: January 22, 2014

In exercise of the powers conferred by clause (a) of the Explanation to Section 115 ADof the Income-tax Act, 1961 (43 of 1961), the Central Government hereby specifies Foreign Portfolio Investors registered under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014, as Foreign Institutional Investor for the purposes of the said section.

F. No. 173/10/2014-(ITA.I)

(Deepshikha Sharma)

Dy. Secy.

Rupee down 10 paise against dollar in early trade : 22-01-2014


Continuing its falling streak for the fourth straight day, the rupee fell by 10 paise to 61.98 against the US dollar in early trade today at the Interbank Foreign Exchange market on sustained demand for the American currency from importers.

Forex dealers said apart from demand from importers, a lower opening in the domestic equity market also put pressure on the rupee but the strength of other currencies against the US dollar in global markets, capped the fall.

The rupee had lost 26 paise to close at a one-week low of 61.88 against the dollar in yesterday’s trade.

Meanwhile, the benchmark BSE Sensex fell 74.56 points, or 0.35 per cent, to 21,176.56 in early trade today

Source : The Economic Times

RBI panel wants retail inflation as new policy benchmark : 22-01-2014


The Urjit Patel committee on monetary policy framework has proposed setting up of a monetary policy committee (MPC) that will be headed by the Reserve Bank of India (RBI) governor and accountable for achieving inflation target set by it.

The report of the Patel committee, set up by RBI in September last year, has recommended that retail inflation, measured by the Consumer Price Index (CPI), replace wholesale inflation as the price anchor. The responsibility of the central bank, the panel has suggested, should be to bring the retail inflation rate down at four per cent, with a variation of 200 bps on either side, in three years. “The nominal anchor should be defined in terms of headline CPI (-based) inflation, which closely reflects the cost of living and influences inflation expectations relative to other available metrics,” the report has said.

If the MPC fails to achieve its target for three quarters in a row, it has to issue a public statement, mentioning reasons for failure and remedial measures, with signatures of all the five members.

Observers said if this practice was followed, the central bank would have valid reasons not to pay attention to any advisory from the government on its monetary policy stance. In recent times, finance ministers have repeatedly pressured the central bank to cut interest rates, even if the situation does not warrant such an action.

The observers also said the lines between the government and RBI were set to be re-drawn if the recommendations of the committee were accepted.

EASING POLICY FRAMEWORK
Highlights of Patel panel report

  • Nominal anchor: A shift to headline retail inflation
  • Road map: Cut inflation from 10% to 8% in one year; and to 6% in two years
  • Target: Retail inflation rate of 4% (+/- 200 bps)
  • Rule-based framework: To make conduct of monetary policy more predictable and transparent
  • Fiscal consolidation: Firm govt commitment  to cut fiscal deficit to 3% of GDP by FY17
  • Composition of monetary policy committee (MPC): RBI governor, a deputy governor, an executive director and two external members
  • Tenure of MPC: Three years (to meet once every two months)
  • Accountability: MPC to be responsible for meeting inflation target; to issue public statement with members’ signatures if it fails to achieve the target for 3 quarters
  • Phased refinement of operating framework: LAF, repo rate to continue as single policy rate in Phase-I; 14-day term repo will emerge as policy rate in Phase-II

Indicating a shift from a discretionary policy to a rule-based one, the panel has advocated adoption of a policy rate that is easily communicated and understood; it will be positive when inflation is above the nominal anchor.

Since bringing down inflation from the current level is essential to move to this proposed framework, the panel has also laid out a road map for this. It has suggested that the current level of retail inflation — at 10 per cent — be brought down to eight per cent within 12 months and then to six per cent over the next 24 months, before the recommended target of four per cent is formally accepted.

Barclays Chief India Economist Siddhartha Sanyal said the committee had taken a very aggressive stance. “This could boost the credibility of RBI if, indeed, the targets are achieved. However, it will be a challenging task and will depend a lot on coordination with fiscal authorities,” he added.

The committee has also recommended that the government should ensure it brings down its fiscal deficit below three per cent of gross domestic product (GDP) by 2016-17 and does away with administered prices, wages and interest rates.

In what could be construed as paying more if the government’s market borrowing is high, the panel has said that RBI’s open-market operations should be only for liquidity management and not for managing yields — a practice widely followed now, though not formally admitted to.

The panel has proposed a two-phased transition to the new operating framework. In the first phase, the weighted average call rate will remain the operating target and repo will continue as the single policy rate. It has emphasised the need for a spectrum of term repos of varying maturities, with 14-day as the anchor rate. In the second phase, the 14-day term repo will emerge as the policy rate.

To support the operating framework, the committee has recommended some new instruments in the monetary policy toolkit, such as a standing deposit facility. It has also called for market stabilisation and cash management bills to be phased out, since the government debt and cash management is being taken over by the government’s debt management office. The report has also elaborated on the impediments for transmission of the monetary policy. It has said, “the government should eschew suasion and directives to banks on interest rates that run counter to monetary policy actions.”

Among other impediments, the panel has proposed reduction in statutory liquidity ratio of banks, more frequent intra-year resets for small savings schemes and revisiting the issue of interest-rate subvention to the farm sector. The panel has also said all fixed-income financial products be treated on a par with bank deposits for the purpose of taxation and TDS (tax deducted at source).

Detailing the MPC framework, the Patel panel has said the RBI governor will be the chairman, while the deputy governor in charge of monetary policy will be the vice-chairman and the executive director will be a member. Besides, there will be two external members who will work full time and have access to information/analyses generated within RBI. They cannot hold any office of profit or undertake any activity seen as amounting to conflict of interest with the working of the MPC. The term of office of the MPC will ordinarily be three years, without a prospect of renewal.

Each MPC member will have one vote and the outcome of any issue will be determined by a majority in voting — which will have to be exercised, without abstaining. Minutes of the proceedings of the MPC will be released with a lag of two weeks from the date of the meeting.

The MPC will ordinarily meet once every two months and RBI will also place a bi-annual inflation report in the public domain. The MPC chairman will have a casting vote during exigencies. The committee will be asked to put out the bi-annual inflation report in the public domain on the basis of macroeconomic and monetary policy reviews.

The committee has also deliberated on the issue of volatile capital flows and suggested building up an adequate level of foreign exchange reserves. The adequacy should also to be determined by intervention requirement based on past experience.

Source : Business Standard

Rupee up 17 paise against dollar in early trade : 21-01-2014


The rupee snapped its two-day losing streak against the American currency by gaining 14 paise to 61.48 per dollar on selling of green currency by banks and exporters on the back of persistent foreign capital inflows into equity market.

The rupee resumed higher at 61.52 per dollar as against the last closing level of 61.62 per dollar at the Interbank Foreign Exchange (Forex) Market and hovered in a range of 61.46-61.57 per dollar before quoting at 61.48 per dollar at 1045 hrs.

Banks and exporters preferred to reduce their dollar position in view of sustained foreign capital inflows into stock market.

The Indian benchmark Sensex firmed up further by 58.73 points or 0.28 per cent to 21,263.78 at 1045 hrs.

Source : The Hindu

176/2/2014 – ST dated 20-01-2014


Clarification regarding issue of Discharge Certificate under VCES and availment of CENVAT credit – regarding. – Dated 20-1-2014 – Service Tax

Circular No. 176/2/2014 – ST

F. No. B1/19/2013-TRU (Pt)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

Tax Research Unit

New Delhi, dated the 20th January, 2014

To,

Chief Commissioners of Central Excise and Customs (All),

Director General (Service Tax), Director General (Systems),

Director General (Central Excise Intelligence), Director General (Audit),

Commissioners of Service Tax (All),

Commissioners of Central Excise (All),

Commissioners of Central Excise and Customs (All)

Madam/Sir,

Subject: Clarification regarding issue of Discharge Certificate under VCES and availment of CENVAT credit – regarding.

Trade and Industry has sought clarification as to whether the first installment of tax dues paid under Voluntary Compliance Encouragement Scheme (VCES), 2013 would be available as Cenvat Credit immediately after payment or Cenvat credit can be availed only after payment of tax dues in full and receipt of Acknowledgement of Discharge inform VCES-3.

2. The issue has been examined. As per VCES, under Section 108 (2) of the Finance Act, 2013, a declaration made under Section 107 (1) shall become conclusive only upon issuance of acknowledgement of discharge under Section 107 (7). Further, in terms of Rule 7 of the Service Tax VCES Rules 2013, the acknowledgement of discharge in form VCES-3 shall be issued within a period of 7 working days from the date of furnishing of details of payment of tax dues in full along with interest, if any, by the declarant.

3. It would be in the interest of VCES declarants to make payment of the entire service tax dues at the earliest and obtain the discharge certificate within 7 days of furnishing the details of payment. As already clarified in the answer to question No.22 of FAQ issued by CBEC dated 08.08.2013, eligibility of CENVAT credit would be governed by the CENVAT Credit Rules, 2004.

4. Chief Commissioners are also advised that upon payment of the tax dues in full, along with interest, if any, they should ensure that discharge certificate is issued promptly and not later than the stipulated period of seven days.

Yours sincerely,

(S. Jayaprahasam)

Technical Officer, TRU

Tel: 011-2309 2037

Notification No.02/2014 dated 20-01-2014


CENVAT Credit (Second Amendment) Rules, 2014 – 02/2014 – Dated 20-1-2014 – Central Excise – Non Tariff

[TO BE PUBLISHED IN THE GAZETTE OF INDIA,

EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(Department of Revenue)

NOTIFICATION NO. 02/2014-CX (N.T.),

Dated: January 20, 2014

G.S.R. (E).- In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the CENVAT Credit Rules, 2004, namely:-

1. (1) These rules may be called the CENVAT Credit (Second Amendment) Rules, 2014.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In rule 12 of the CENVAT Credit Rules, 2004, after the brackets, letters, figures and words, “[GSR 307(E), dated the 25thApril, 2007]” the words, figures, letters and brackets, “or No.1/2010-Central Excise, dated the 6th February, 2010 [G.S.R. 62(E), dated the 6th February, 2010]“ shall be inserted.

[F.No.332/09/2013-TRU]

(Raj Kumar Digvijay)

Under Secretary to the Government of India

Note.- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), dated the 10th September, 2004, vide notification No. 23/2004-Central Excise (N.T.) dated the 10th September, 2004, vide number G.S.R. 600(E), dated the 10thSeptember, 2004 and last amended vide notification No.1/2014-Central Excise (N.T.) dated the 8th January, 2014 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 6 (E), dated the 8th January, 2014.

 

97 dated 20-01-2014


Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards / Combating the Financing of Terrorism (CFT) Obligation of Authorised Persons under Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 Money changing activities – Circular – Dated 20-1-2014 – FEMA

RBI/2013-14/455

A.P. (DIR Series) Circular No. 97

January 20, 2014

To,

All Authorised Persons

Madam/ Sir,

Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards / Combating the Financing of Terrorism (CFT) Obligation of Authorised Persons under Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 Money changing activities

Attention of Authorised Persons is invited to F-Part-II of the Annex to the A.P. (Dir Series) Circular No. 17 [A.P. (FL/RL Series) Circular No. 04] dated November 27, 2009, as amended from time to time.

2. Based on several representations received from Authorised Money Changers (AMCs), regarding difficulties in submitting Resolution of the Board of Directors for undertaking foreign exchange transactions with an AMC and also Power of Attorney granted to its officials to conduct forex transactions on behalf of the company, it has been decided to rationalise the same. Accordingly, the requirement of Resolution of the Board of Directors is being done away with and a corporate may now submit to the AMC a list of officials with names and signatures authorized by the Managing Director / Chief Financial Officer of the company toconduct forex transactions on its behalf. The amended instructions are given in the Annex.

3. All the other instructions contained in the A.P. (DIR Series) Circular No. 17 [A.P. (FL/RL Series) Circular No. 04] dated November 27, 2009, as amended from time to time shall remain unchanged.

4. Authorised Persons may bring the contents of this circular to the notice of their constituents concerned.

5. These guidelines are also applicable mutatis mutandis to all agents/ franchisees of Authorised Persons and it will be the sole responsibility of the franchisers to ensure that their agents / franchisees also adhere to these guidelines.

6. Please advise your Principal Officer to acknowledge receipt of this circular letter.

7. The directions contained in this Circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999)and also under the, Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 and Prevention of Money-Laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005 as amended from time to time and are without prejudice to permission /approvals, if any, required under any other law.

Yours faithfully,

Rudra Narayan Kar

Chief General Manager-in-Charge


Annex
[Annex to A.P. (DIR Series) Circular No.97 dated January 20, 2014]

Extant Guidelines

Revised Guidelines

Features

Documents

Features

Documents

Establishment of Business Relationship – Corporate Certified copy each of the following documents.
(i) Certificate of incorporation
(ii) Memorandum & Articles of Association
(iii) Resolution of the Board of Directors for undertaking forex transactions with the AP
(iv) Power of attorney granted to its managers, officers or employees to conduct forex transactions on behalf of the corporate and their identification.
(v) PAN Card
(vi) Telephone Bill
Establishment of Business Relationship – Corporate Certified copy each of the following documents.
(i) Certificate of incorporation
(ii) Memorandum & Articles of Association
(iii) List of officials with names, designation and signatures authorized by the Managing Director / Chief Financial Officer of the company to conduct forex transactions on behalf of the company
(iv) PAN Card
(v) Telephone Bill
Note: Corporate should invariably pay to AMCs towards rupee leg of forex transactions through a cheque/bank account of corporate irrespective of the amount of forex transaction

 

 

96 dated 20-01-2014


Facilities for Persons Resident outside India – Clarification – Circular – Dated 20-1-2014 – FEMA

 

RBI/2013-14/454

A.P. (DIR Series) Circular No. 96

January 20, 2014

To

All Category – I Authorised Dealer Banks

Madam / Sir,

Facilities for Persons Resident outside India – Clarification

Attention of Authorized Dealers Category – I (AD Category- I) banks is invited to theForeign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 dated May 3, 2000 [Notification No. FEMA/25/RB-2000] and A.P. (DIR Series) Circular No.45 dated October 22, 2012 in terms of which Foreign Institutional Investors (FIIs) are allowed to approach any AD Category I bank for hedging their currency risk on the market value of entire investment in equity and/or debt in India as on a particular date subject to conditions specified therein.

2. We have been receiving references from market participants as to whether, along similar lines, it is possible for FIIs and other foreign investors to effect remittances on cash /TOM /spot basis to a bank other than the designated AD Category -I custodian bank. In this connection it is clarified that a foreign investor is free to remit funds through any bank of its choice for any transaction permitted under FEMA, 1999 or the Regulations / Directions framed thereunder. The funds thus remitted can be transferred to the designated AD Category -I custodian bank through the banking channel. Note should, however, be taken that KYC in respect of the remitter, wherever required, is a joint responsibility of the bank that has received the remittance as well as the bank that ultimately receives the proceeds of the remittance. While the first bank will be privy to the details of the remitter and the purpose of the remittance, the second bank, will have access to complete information from the recipient’s perspective. Besides, the remittance receiving bank is required to issue FIRC to the bank receiving the proceeds to establish the fact the funds had been remitted in foreign currency.

3. All other conditions in our A.P. (DIR Series) circular No.45 dated October 22, 2012apply mutatis mutandis.

4. AD Category – I bank may bring the contents of this circular to the notice of their constituents and customers.

5. The directions contained in this circular have been issued under sections 10(4) and11(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

 

95 dated 17-01-2014


Merchanting Trade Transactions – Circular – Dated 17-1-2014 – FEMA

 

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) and11(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

Rupee down 12 paise vs dollar in early trade : 20-01-2014


The rupee fell by 12 paise to 61.66 against the dollar in early trade today at the Interbank Foreign Exchange market due to demand for the US currency from importers.

Forex dealers said besides dollar’s gains against other currencies overseas and a lower opening of the domestic equity market also put pressure on the rupee.

The rupee had shed 1 paise to 61.54 against the dollar in Friday’s trade.

Meanwhile, the benchmark BSE Sensex fell by 45.15 points, or 0.21 per cent, to 21,018.47 in early trade today.

Source : The Economic Times

UBS: Impact of Aadhaar, GST, dedicated freight corridor to be significant : 17-01-2014


Upcoming general elections will remain a key driver for Indian markets during the first half of 2014, but some ongoing reform measures would bear fruit irrespective of the party coming to power, UBS has said.

“The biggest ‘known unknown’ is politics/elections, which will likely remain the key driver of the market in first half of this year,” global financial services major UBS said in a report, while urging the investors not to ignore the ‘unknown knowns’ beyond the election noise.

Listing three such ‘unknown knowns’, UBS said that these initiatives – Aadhaar unique identity programme, GST tax reforms and a Dedicated Freight Corridor (DFC) rail infrastructure project – are real and their effects will be felt in the foreseeable future irrespective of which political party is in power after the elections.

“We believe India’s ‘three arrows’ are real and that the effects will be felt in the foreseeable future irrespective of what political party is in power after the elections,” UBS said adding that their positive macro impact is likely to be significant and lasting.

“The positive macro impact is likely to be significant and lasting. This is especially so if we look at the arrows together rather than in isolation,” UBS said.

Each of the three reform measures — Aadhaar, GST and rail DFC — address the country’s twin deficits, the impaired investment cycle and promises to enhance productivity driven growth.

Aadhaar could help address the expenditure side of the fiscal problem, and drive financial inclusion with its own substantial benefits.

GST may materially aid the revenue side of the fiscal problem and the rail DFC could revive the investment cycle and potentially manufacturing/exports, apart from attracting foreign investments, it added.

“Three years from now, we believe India will look very different with the arrows in place,” UBS said adding that “the impact of each arrow could be over 1 per cent of GDP.”

Source : The Financial Express

Rupee up 14 paise against dollar in early trade : 17-01-2014


The rupee strengthened by 14 paise to 61.39 against the dollar in early trade at the Interbank Foreign Exchange market on increased selling of the US currency by exporters.

Forex dealers said dollar’s weakness against other currencies overseas on weak inflation figures and disappointing US corporate results supported the rupee but a lower opening in the domestic equity market capped the gains.

The rupee had gained 1 paise to close at 61.53 against the dollar in yes yesterday’s trade.

Meanwhile, the BSE benchmark index Sensex fell by 37.60 points, or 0.18 per cent, to 21,227.58 in early trade today.

Source : The Economic Times

Notification No.G.S.R. 32 (E) dated 16-01-2014


Chartered Accountants Procedures of Meetings of Quality Review Board, and Terms and Conditions of Service and allowances of the Chairperson and members of the Board (Amendment) Rules, 2014 – G.S.R. 32 (E) – Dated 16-1-2014 – Companies Law

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, the 16th January, 2014

G.S.R. 32 (E) – In exercise of the powers conferred by clause (g) of sub-section (2) of section 29A read with sub-section (1) of section 28D of the Chartered Accountants Act, 1949 (38 of 1949), the Central Government hereby makes the following rules further to amend the Chartered Accountants Procedures of Meetings of Quality Review Board, and Terms and Conditions of Services and allowances of the Chairperson and members of the Board Rules, 2006, namely: -

1. Short title and commencement – (1)These rules may be called the Chartered Accountants Procedures of Meetings of Quality Review Board, and Terms and Conditions of Service and allowances of the Chairperson and members of the Board (Amendment) Rules, 2014.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Chartered Accountants Procedures of Meetings of Quality Review Board, and Terms and Conditions of Service and allowances of the Chairperson and members of the Board Rules, 2006, in rule 9, in sub rule (2), after clause (i), the following clause shall be inserted namely: -

“(ia) The Chairperson and other members of the Board who are not Government servants while on tour abroad shall be entitled for reimbursement of lodging expenses, travelling allowance, daily allowance and other allowances at the same rates as are admissible to a Joint Secretary to the Government of India”.

[F. No. 12/50/2006-PI]

MANOJ KUMAR, Jt. Secy.

Note – The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide notification number G.S.R. 735 (E), dated the 27thNovember, 2006 and subsequently amended vide notification number G.S.R. 152 (E), dated the 5th March 2009.

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, the 16th January, 2014

G.S.R. 32 (E) – In exercise of the powers conferred by clause (g) of sub-section (2) of section 29A read with sub-section (1) of section 28D of the Chartered Accountants Act, 1949 (38 of 1949), the Central Government hereby makes the following rules further to amend the Chartered Accountants Procedures of Meetings of Quality Review Board, and Terms and Conditions of Services and allowances of the Chairperson and members of the Board Rules, 2006, namely: -

1. Short title and commencement – (1)These rules may be called the Chartered Accountants Procedures of Meetings of Quality Review Board, and Terms and Conditions of Service and allowances of the Chairperson and members of the Board (Amendment) Rules, 2014.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Chartered Accountants Procedures of Meetings of Quality Review Board, and Terms and Conditions of Service and allowances of the Chairperson and members of the Board Rules, 2006, in rule 9, in sub rule (2), after clause (i), the following clause shall be inserted namely: -

“(ia) The Chairperson and other members of the Board who are not Government servants while on tour abroad shall be entitled for reimbursement of lodging expenses, travelling allowance, daily allowance and other allowances at the same rates as are admissible to a Joint Secretary to the Government of India”.

[F. No. 12/50/2006-PI]

MANOJ KUMAR, Jt. Secy.

Note – The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide notification number G.S.R. 735 (E), dated the 27thNovember, 2006 and subsequently amended vide notification number G.S.R. 152 (E), dated the 5th March 2009.

94 dated 16-01-2014


Conversion of External Commercial Borrowing and Lumpsum Fee/Royalty into Equity – Circular – Dated 16-1-2014 – FEMA

 

RBI/2013-2014/449

A.P. (DIR Series) Circular No. 94

January 16, 2014

To

All Category – I Authorised Dealer banks

Madam/Sir,

Conversion of External Commercial Borrowing and Lumpsum Fee/Royalty into Equity

Attention of Authorised Dealer (AD) banks is invited to A.P. (DIR Series) Circular No. 15 dated October 1, 2004 on the captioned subject.

2. In terms of the said circular, an Indian company can issue equity shares against External Commercial Borrowings (ECB) subject to conditions mentioned therein and pricing guidelines as prescribed by the Reserve Bank from time to time regarding value of equity shares to be issued. Reserve Bank has received some references regarding how the rupee amount against which equity shares are to be issued shall be arrived at; in other words, what rate of exchange shall be applied to the amount in foreign currency borrowed or owed by the resident entity from/to the non-resident entity.

3. It is clarified that where the liability sought to be converted by the company is denominated in foreign currency as in case of ECB, import of capital goods, etc. it will be in order to apply the exchange rate prevailing on the date of the agreement between the parties concerned for such conversion. Reserve Bank will have no objection if the borrower company wishes to issue equity shares for a rupee amount less than that arrived at as mentioned above by a mutual agreement with the ECB lender. It may be noted that the fair value of the equity shares to be issued shall be worked out with reference to the date of conversion only.

4. It is further clarified that the principle of calculation of INR equivalent for a liability denominated in foreign currency as mentioned at paragraph 3 above shall apply, mutatis mutandis, to all cases where any payables/liability by an Indian company such as, lump sum fees/royalties, etc. are permitted to be converted to equity shares or other securities to be issued to a non-resident subject to the conditions stipulated under the respective Regulations.

5. Authorised Dealers may bring the contents of this circular to the notice of their constituents and customers concerned.

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

Yours faithfully,

Rudra Narayan Kar

Chief General Manager In-Charge

P. Chidambaram: Indian economy will get back to high growth path in three years : 16-01-2014


Attributing the decline in growth to global factors, Finance Minister P. Chidambaram today exuded confidence that the Indian economy will get gradually get back to high growth path in the next three years.

“It is true that there has been a slowdown in 2012-13 and in current year. The slowdown reflects the world wide trend. As global economy recovers and as new measures take effect, I am confident that Indian economy will also get back step by step to the high growth path in three years”, he said while delivering the valedictory address at Petrotech 2014.

India’s economic growth slipped to decade low of 5 per cent in 2012-13 and in the current fiscal it estimated to be around the same level. It grew by over nine per cent before it was hit by the global crisis of 2008.

P. Chidambaram expressed hope that the revised growth estimates for 2012-13 were likely to be better than the earlier projections.

The government is scheduled to come out with revised growth estimates for 2012-13 on January 31 and the advance estimates for the current fiscal on February 7.

Referring to the Current Account Deficit (CAD), the difference between inflow and outflow of foreign exchange, P. Chidambaram said it would be contained at USD 50 billion in the current fiscal.

The CAD soared to the all-time high of USD 88.2 billion or 4.8 per cent of the GDP in 2012-13. The government had taken several measures, including curbs on gold imports, to contain the CAD.

As regards the oil import bill, the Finance Minister said of the total imports of USD 491 billion in 2012-13, oil imports accounted for USD 164 billion.

“A developing country like India can not afford such a huge import bill or such a high level of CAD. Therefore, we were constrained to take some hard measures, including conservation measures and these measures have helped us contain the CAD,” he added.

Source : PTI

Rupee trading a tad weak at 61.57 : 16-01-2014


The rupee was trading a tad weak at 61.57 against the dollar at 11.28 a.m. local time.

The rupee opened weak by 10 paise at 61.65 per dollar against the previous close of 61.55 on the back of robust demand for dollars from oil importers.

According to government data released on Wednesday, wholesale inflation declined to a five-month low of 6.16 per cent in December.

“After witnessing gains in the last few sessions, the rupee was seen weakening slightly as the US dollar index strengthened taking cues from the better-than-expected retail sales data,” said Abhishek Goenka, Founder and CEO, India Forex Advisors.

The inter-bank call money rate, the rate at which banks borrow short-term money from each other, opened higher at 8.75 per cent against the previous close of 8.55 per cent.

Yield on the benchmark 8.83 per cent government bond, maturing in 2023, softened to 8.63 per cent from the previous close of 8.64 per cent. Prices ended sharply higher at Rs 101.29 from Rs 101.23.

Source : The Economic Times

Notification No.GSR 22 (E) dated 16-01-2014


CREATION OF DIRECTORATE OF INCOME-TAX (RISK ASSESSMENT) AT NEW DELHI – GSR 22 (E) – Dated 16-1-2014 – Income Tax

NOTIFICATION

DATED 16-1-2014

GSR 22 (E) - The President of India is pleased to give his assent to the creation of Directorate of Income Tax (Risk Assessment), Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, with immediate effect.

2. The Directorate of Income Tax (Risk Assessment) will be headed by a Director General of Income Tax who will be an officer of the rank of Chief Commissioner of Income Tax and will be located in New Delhi.

3. The Directorate of Income Tax (Risk Assessment) will function under the administrative control of the Director General of Income Tax (Risk Assessment).

4. The Directorate of Income Tax (Risk Assessment) shall be an attached office of CBDT.

5. The staff requirement of the Directorate of Income Tax (Risk Assessment) will be met from within the overall sanctioned strength of the Income Tax Department.

[F.NO.HRD/CM/196/1/2013-14/26/2014-AD.VII]

 

93 dated 15-01-2014


Clarification- Establishment of Liaison Office/ Branch Office/ Project Office in India by Foreign Entities- General Permission – Circular – Dated 15-1-2014 – FEMA

 

RBI/2013-14/447

A.P. (DIR Series) Circular No. 93

January 15, 2014

To

All Authorised Dealer Category – I Banks

Madam / Dear Sir

Clarification- Establishment of Liaison Office/ Branch Office/ Project Office in India by Foreign Entities- General Permission

Attention of Authorised Dealer Category –I (AD Category – I) banks is invited toRegulation 4 of Notification No.FEMA.22/2000-RB dated May 3, 2000, viz., Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000, as amended from time to time, in terms of which, no entity or person, being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China shall establish in India, a branch office or a liaison office or a project office or any other place of business by whatever name called, without the prior permission of the Reserve Bank.

2. It is clarified that the provisions of Regulation 4 of Notification No. FEMA 22/2000-RB dated 3rd May 2000, ibid, along with their specified conditions apply for entities from Hong Kong and Macau also.

3. Accordingly, applications from entities registered in / resident of Hong Kong and Macau, for establishment of Liaison/ Branch/ Project Offices or any other place of business by whatever name called shall require prior approval from Reserve Bank of India.

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

5. Reserve Bank has since amended the subject Regulations accordingly through the Foreign Exchange Management (Establishment in India of Branch or Office or Other Place of Business) (Amendment) Regulations, 2013, which have been notified videNotification No.FEMA.293/2013-RB dated November 12, 2013, vide G.S.R.No.767(E) dated December 06, 2013.

6. The directions contained in this circular have been issued under sections 10(4) and11(1) of the Foreign Exchange Management Act, 1999 (42 0f 1999) and are without prejudice to permission / approvals, if any, required under any other law.

Yours faithfully,

(C.D. Srinivasan)

Chief General Manager

 

979/03/2014-CX dated 15-01-2014


Implementation of decision of Hon’ble Supreme Court in case of M/s Fiat India ltd – reg . – Dated 15-1-2014 – Central Excise

Circular No. 979/03/2014-CX.

F. No. 6/7/2012-CX-1

Government of India

Ministry of Finance , Dept of Revenue

Central Board of Excise and Customs

New Delhi

New Delhi, the 15th Jan , 2014 .

Subject – Implementation of decision of Hon’ble Supreme Court in case of M/s Fiat India ltd – reg .

Attention is invited to the judgment of Hon’ble Supreme Court dated 29th August , 2012 in case of Fiat India Ltd [ 2012-TIOL-58-SC-CX or 2012 ( 283 ) E.L.T 161 ( S.C ) ] ( hereinafter referred to as the FIAT judgment ) . References have been received from trade and field formations seeking clarification on implementation of the judgment . The facts in the case of M/s Fiat India Ltd were that the cars were sold at a price substantially lower than the cost of the manufacture and such sales continued for a period of five years . The company admitted that the purpose of such pattern of sale was to achieve market penetration . The Hon’ble Supreme Court held that in such circumstances revenue could reject the transaction value declared under section 4and invoke the provisions of the Central Excise Valuation ( Determination of Price of Excisable Goods ) Rules , 2000 to assess Central Excise duty . Following clarifications are issued in this regard -

Transaction Value below manufacturing cost and profit

2. The first issue is whether the declared transaction value can be rejected in all cases where the transaction value is lower than the manufacturing cost and profit . The Hon’ble Supreme Court has not ruled that transaction value can be rejected in all cases where the declared value is lower than the manufacturing cost and profit . At paragraph 66 in the FIAT judgment , the Hon’ble Court has declined to hold its earlier judgment in case of Collector of Central Excise , New Delhi Vs Guru Nanak Refrigeration Corpn [ 2003(153) ELT 249 (SC) ] per-in curiam , distinguishing it on the basis of the facts of the case , though the transaction value in case of M/s Guru Nanak Refrigeration Corpn was less than the manufacturing cost and profit . The Hon’ble Supreme Court has cautioned against drawing general conclusions and inferences quoting the truism stated by Lord Halsbury that “ a case is only an authority for what it actually decides and not for what may seem to follow logically from it. ”

2.1 Further , in paragraph 50 , the Hon’ble Supreme Court has cited two instances where a manufacturer may sell goods at a price lower than the cost of manufacture and profit and yet the declared value can be considered as normal price . These instances are when the company wants to switch over its business or where a manufacturer has goods which could not be sold within a reasonable time . The Hon’ble Court has further held that these examples are not exhaustive . Therefore , mere sale of goods below the manufacturing cost and profit cannot be taken as the sole basis for rejecting the transaction value .

Verification of payment of duty

3. The second issue is regarding the procedure to be adopted by the field officers to identify cases where the ratio of the judgment would apply. It may be noted that , under the self-assessment procedure , there is a legal obligation on the assessee to correctly assess and pay the duty in terms of the Central Excise Act , 1944 read with the Valuation Rules , 2000 . Verification of this aspect may be conducted by the Central Excise officer during the audit of units . Aspects such as the percentage of loss at which sale has taken place , the period for which such loss making price has prevailed , reasons for sale at such loss making price , whether such sales are contrary to the standard and accepted business practices , and whether such sale is leading to erosion of capital of the company , may be looked into . In addition , due care may be taken at the level of the Commissioner to see whether the case at hand is similar to the facts and circumstances of the FIAT case .

3.1 Calculations of manufacturing cost may be carried out using CAS-4 standards . Information submitted by the manufacturer , duly certified by a Chartered or Cost Accountant should normally be accepted . Only where a decision to investigate a case has been taken at the level of the Commissioner and it is considered necessary in the interest of investigation, steps such as ordering Cost Audit of the Unit or summoning of the Costing data should be undertaken .

Period of application

4. The third issue is whether the judgment can be applied for periods prior to the date of the judgment ie 29-8-2012 , invoking the extended period of limitation . Under the provisions of valuation law , in a case where price is not the sole consideration for the sale , money value of any additional consideration flowing directly or indirectly from the buyer to the assessee is added to the transaction value in terms of rule 6 of theCentral Excise Valuation Rules , 2000 . However , in the FIAT judgment , sale of cars at an abnormally lower price to penetrate the market has been considered by the Hon’ble Supreme Court as constituting extra-commercial consideration , even when there was no additional consideration of money value flowing directly or indirectly from the buyer to the seller . For the period prior to the date of the judgment , in cases where a show cause notice has been issued on the grounds of the FIAT judgment alone , there may not be a case for invoking the extended period of limitation . In such cases , only the normal period of limitation will apply .

4.1 For the period after the date of the judgment , i.e from 29- 8-2012 onwards , if there is a sale in the circumstances similar to the case of M/s FIAT and yet transaction value of goods is declared as the correct assessable value , then such declaration would amount to wilful mis-statement of the assessable value .

5 The contents of this Circular may be brought to the notice of the trade / exporters by issuing suitable Trade / Public Notices. Suitable Standing Orders / Instructions may    be issued for the guidance of the assessing officers . Difficulties faced , if any , in implementation of the Circular may please be brought to the notice of the Board at an early date.

( M.K.Sinha )

Director – CX-1/6 .

INSTRUCTION NO. 01/2014 dated 15-01-2014


Certificate of Lower deduction or non-deduction of tax at source under section 197 of the Income-tax Act, 1961 – matter regarding. – Order-Instruction – Dated 15-1-2014 – Income Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

NEW DELHI

INSTRUCTION NO. 1/2014

Dated: January 15, 2014

To

All the Chief Commissioners & Directors General of Income Tax,

Certificate of Lower deduction or non-deduction of tax at source under section 197 of the Income-tax Act, 1961 - matter regarding.

As per the Citizens Charter the time line prescribed for a decision on application for no deduction of tax or deduction of tax at lower rate is one month. Instances have been brought to the notice of the Board, about considerable delay in issuing the lower/non deduction certificate under section 197 by the jurisdictional Assessing Officers.

2. I am directed to say that the commitment to tax payers as per the Citizens Charter must be scrupulously adhered to by the Assessing Officers and all applications for lower or no deduction of tax at source filed u/s 197 of the Income-tax Act, 1961 must be disposed of within the stipulated time frame as above.

3. This may be brought to the notice of all officers in the field for compliance.

4. Hindi version will follow.

F. No. 275/03/2014-IT(B)

(Sandeep Singh)

Under Secretary to the Govt. of India

01/2014 dated 15-01-2014


Report u/s 394A of the Companies Act, 1956- Taking accounts of comments/inputs from Income Tax Department and other sectoral Regulators while filing reports by RDs. – Dated 15-1-2014 – Companies Law

 General Circular No.   1/2014

F. No 2/1/2014

Ministry of Corporate Affairs
Government of India

5th Floor, A Wing, Shastri Bhawan,

Dr. R.P. Road, New Delhi,

15th January 2014.

To

Regional Directors,

All Registrar of Companies,

All Stakeholders.

Subject: Report u/s 394A of the Companies Act, 1956- Taking accounts ofcomments/inputs from Income Tax Department and other sectoral Regulators while filing reports by RDs.

Sir,

Section 394A of the Companies Act, 1956 requires service of a notice on the Central Government wherever cases involving arrangement/compromise (under Section 391) or reconstruction / amalgamation   (under Section  394) come up before the Court of competent jurisdiction. As the powers of the Central Government have been delegated to the Regional Directors (RDs) who also file representations on behalf of the Government wherever necessary.

2. It is to be noted that the said provisions is in addition to the requirement of the report to be received respectively from the Registrar of Companies and the Official Liquidator under the first and second provisos to Section 394(1). A joint reading ofSections 394 and 394A makes it clear that the duties to be performed by the Registrar and Official Liquidator under Section 394 and of the Regional Director concerned acting on behalf of the Central Government under Section 394A are quite different.

3. An instance has recently come to light wherein a Regional Director did not project the objections of the Income Tax Department in a case under Section 394. The matter has been examined and it is decided that while responding to notices on behalf of the Central Government under Section 394A, the Regional Director concerned shall invite specific comments from Income Tax Department within 15 days of receipt of notice before filing his response to the Court. If no response from the Income Tax Department is forthcoming, it may be presumed that the Income Tax Department has no objection to the action proposed under Section 391 or 394 as the case may be. The Regional Directors must also see if in a particular case feedback from any other sectoral Regulator is to be obtained and if it appears necessary for him to obtain such feedback, it will also be dealt with in a like manner.

4. It is also emphasized that it is not for the Regional Director to decide correctness or otherwise of the objections/views of the Income tax Department or other Regulators. While ordinarily such views should be projected by the Regional Director in his representation, if there are compelling reasons for doubting the correctness of such views, the Regional Director must make a reference to this Ministry for taking up the matter with the Ministry concerned before filing the representation under Section 394A.

5. This Circular is effective from the date of issue.

 Yours Faithfully,

(Vinod Sharma)

Deputy Director

Ph : 23385382 

 

 

Notification No.06/2014 dated 15-01-2014


DEDUCTION IN RESPECT OF NOTIFIED HEALTH SERVICE SCHEME U/S 80D OF THE INCOME-TAX ACT, 1961 – 06/2014 – Dated 15-1-2014 – Income Tax

 

(TO BE PUBLISHED IN PART II, SUB-SECTION(II) OF

SECTION 3 OF THE GAZETTE OF INDIA)

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

NOTIFICATION NO. 06/2014

DATED 15-1-2014

In exercise of thy powers conferred by clause (a) of sub-section (2) of section 80D of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies the Contributory Health Service Scheme of the Department of Space for the purposes of the said clause for the assessment year 2014-15 and subsequent assessment years.

[F.NO.149/97/2013-TPL]

Notification No.05/2014 dated 15-01-2014


AMENDMENT IN RULE 44CA – INCOME-TAX (FIRST AMENDMENT) RULES, 2014 – 05/2014 – Dated 15-1-2014 – Income Tax

 

(TO BE PUBLISHED IN PART II, SUB-SECTION(II) OF

SECTION 3 OF THE GAZETTE OF INDIA)

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

NOTIFICATION NO. 05/2014

DATED 15-1-2014

In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income-tax (1st Amendment) Rules, 2014.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962, in rule 44CA, -

(a) in sub- rule (1), for the bracket and words “(other than the Annexure and the statements”, the bracket and words “(including the Annexure and the statements” shall be substituted;

(b) for sub-rule (2), the following sub-rules shall be substituted, namely:-

“(2) Where an application has not been declared invalid under sub-section (2C) of section 245D or an application has been allowed to be further proceeded with under sub-section (2D) of that section, all the material and other information produced by the assessee before the Settlement Commission shall be sent to the Commissioner to enable him to furnish the report under sub-section (3) of section 245D.

(3) Where the proceeding before the Settlement Commission abates, the Commission shall send, all the material and other information produced by the assessee before the Commission and the results of any enquiry held or evidence recorded in the course of proceedings before it, to the Commissioner.”.

[F. NO. 142/32/2013-TPL]

 

 

92 dated 13-01-2014


Risk Management and Inter Bank Dealings – Circular – Dated 13-1-2014 – FEMA

 

RBI/2013-2014/446

A.P. (DIR Series) Circular No. 92

January 13, 2014

All Category – I Authorised Dealer banks

Madam/Sir,

Risk Management and Inter Bank Dealings

Attention of Authorised Dealers Category-I (AD Category-I) banks is invited to the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 dated May 3, 2000 (Notification No. FEMA/25/RB-2000 dated May 3, 2000) as amended from time to time and A.P. (DIR Series) Circular no. 58 dated December 15, 2011, A.P. (DIR Series) Circular no. 13 dated July 31, 2012 and A.P. (DIR Series) Circular no 36 dated September 4, 2013.

2. Under the extant regulations, the facility of cancellation and rebooking is not permitted for forward contracts, involving Rupee as one of the currencies, booked by residents to hedge current and capital account transactions. However, exporters are allowed to cancel and rebook forward contracts to the extent of 50 per cent of the contracts booked in a financial year for hedging their contracted export exposures and importers are allowed to cancel and rebook forward contracts to the extent of 25 percent of the contracts booked in a financial year for hedging their contracted import exposures.

3. On a review of the evolving market conditions and with a view to providing operational flexibility in respect of current and capital account transactions, it has been decided to allow, in case of contracted exposures, forward contracts in respect of all current account transactions as well as capital account transactions with a residual maturity of one year or less to be freely cancelled and rebooked. As far as the exposure of the FIIs/QFIs/other portfolio investors is concerned, forward contracts booked by these investors, once cancelled, can be rebooked up to the extent of 10 per cent of the value of the contracts cancelled. The forward contracts booked by these investors may, however, be rolled over on or before maturity.

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

5. The directions contained in this circular have been issued under Sections 10(4) and11(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,

(CD Srinivasan)

Chief General Manager

 

91 dated 13-01-2014


Exim Bank’s Line of Credit of USD 125 million to the Government of the Republic of Sudan – Circular – Dated 13-1-2014 – FEMA

RBI/2013-2014/445

A.P. (DIR Series) Circular No. 91

January 13, 2014

To,

All Category – I Authorised Dealer banks

Madam/Sir,

Exim Bank’s Line of Credit of USD 125 million to the Government of the Republic of Sudan

Export-Import Bank of India (Exim Bank) has entered into an Agreement dated July 24, 2013 with the Government of the Republic of Sudan, for making available to the latter, a Line of Credit (LOC) of USD 125 million (USD One Hundred and Twenty Five million) for financing eligible goods, services, machinery and equipment including consultancy services from India for the purpose of financing of Mashkour (earlier Elduem) Sugar Project in Sudan. The goods, services, machinery and equipment including consultancy services from India for exports under this Agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this Agreement. Out of the total credit by Exim Bank under this Agreement, the goods and services including consultancy services of the value of at least 75 per cent of the contract price shall be supplied by the seller from India and the remaining 25 percent goods and services may be procured by the seller for the purpose of Eligible Contract from outside India.

2. The Credit Agreement under the LOC is effective from December 20, 2013 and the date of execution of Agreement is July 24, 2013. Under the LOC, the last date for opening of Letters of Credit and Disbursement will be 48 months from the scheduled completion date(s) of contract(s) in the case of project exports and 72 months (July 23, 2019) from the execution date of the Credit Agreement in the case of supply contracts.

3. Shipments under the LOC will have to be declared on GR / SDF Forms as per instructions issued by the Reserve Bank from time to time.

4. No agency commission is payable under the above LOC. However, if required, the exporter may use his own resources or utilize balances in his Exchange Earners’ Foreign Currency Account for payment of commission in free foreign exchange. Authorised Dealer Category- l (AD Category-l) banks may allow such remittance after realization of full payment of contract value subject to compliance with the prevailing instructions for payment of agency commission.

5. AD Category-I banks may bring the contents of this circular to the notice of their exporter constituents and advise them to obtain full details of the Line of Credit from the Exim Bank’s office at Centre One, Floor 21, World Trade Centre Complex, Cuffe Parade, Mumbai 400 005 or log on to www.eximbankindia.in.

6. The Directions contained in this circular have been issued under sections 10(4) and11(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

 

Notification No.S.O. 283(E) dated 13-01-2014


To set up a sector specific Special Economic Zone for IT SEZ at Village Jhund Sarai and Bhangrola Villages, Distt. Gurgaon in the state of Haryana. – S.O. 283(E) – Dated 13-1-2014 – Special Economic Zone

MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

NOTIFICATION

New Delhi, the 13th January, 2014

S.O. 283(E).— Whereas, M/s. Suncity Haryana SEZ Developers Pvt. Ltd. had proposed underSection 3 of the Special Economic Zones Act, 2005 (28 of 2005), (hereinafter referred to as the said Act) to set up a sector specific Special Economic Zone for IT SEZ at Village Jhund Sarai and Bhangrola Villages, Distt. Gurgaon in the state of Haryana; And, whereas, the Central Government, in exercise of the powers conferred by sub-section (1) of Section 4 of the said Actread with rule 8 of the Special Economic Zones Rules 2006, had notified an area of 67.64 hectares vide Ministry of Commerce and Industry Notification Number S.O. 1783(E) dated the 18th October, 2007;

And, whereas, M/s. Suncity Haryana SEZ Developer Pvt. Ltd. has proposed to denotify the entire area of 67.64 hectares of the above Special Economic Zone and the Central Government has granted letter of approval for denotification of above area on 16th September, 2013 ;

Now, therefore, in exercise of the powers conferred by first proviso to rule 8 of the Special Economic Zones Rules 2006, the Central Government hereby rescinds the above notification except as respects things done or omitted to be done before such rescission.

[F. No. F. 2/451/2006-SEZ]

RAJEEV ARORA, Jt. Secy.

Notification No.S.O. 282(E) dated 13-01-2014


To set up a sector specific Special Economic Zone for Engineering at Village Hamirpur, Wazirpur, Khentawas Saidpur, District Gurgaon in the state of Haryana. – S.O. 282(E) – Dated 13-1-2014 – Special Economic Zone

MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

NOTIFICATION

New Delhi, the 13th January, 2014

S.O. 282(E).— Whereas, M/s. Raheja SEZ Ltd. (Formerly M/s. Raheja Haryana SEZ Developers Private Limited), had proposed under section 3 of the Special Economic Zones Act, 2005 (28 of 2005), (hereinafter referred to as the said Act) to set up a sector specific Special Economic Zone for Engineering at Village Hamirpur, Wazirpur, Khentawas & Saidpur, District Gurgaon in the state of Haryana;

And, Whereas, the Central Government, in exercise of the powers conferred by sub-section (1) of section 4 of the said Act read with rule 8 of the Special Economic Zone Rules, 2006, had notified an area of 103.0154 hectares vide Ministry of Commerce and Industry Notification Number S.O. 466(E) dated 10th March, 2008;

And, Whereas, M/s. Raheja SEZ Ltd. has proposed to denotify the entire area of 103.0154 hectares of the above Special Economic Zone;

Now, Therefore, in exercise of the powers conferred by first proviso to rule 8 of the Special Economic Zones Rules 2006, the Central Government hereby rescinds the above notification except as respects things done or omitted to be done before such rescission.

[F. No. F.1/28/2007-SEZ]

RAJEEV ARORA, Jt. Secy.

01/2014 dated 13-01-2014


DEDUCTION OF TAX AT SOURCE – RENT – CLARIFICATION OF TDS UNDER CHAPTER XVII-B ON SERVICE TAX COMPRISED OF PAYMENTS MADE TO RESIDENTS – Circular – Dated 13-1-2014 – Income Tax

 

CIRCULAR NO. 1/2014

DATED 13-1-2014

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.

2. Attention of CBDT has also been drawn to the judgment 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.

3. The matter has been examined afresh. In exercise of the powers conferred undersection 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.

4. This circular may be brought to the notice of all officer for compliance.

[F.NO.275/59/2012-IT(B)]

CBDT may do away with submission of ITRV forms : 13-01-2014


In what could be good news for lakhs of taxpayers filing their I-T returns online, CBDT is mulling doing away with the mandatory submission of paper verification printout to its processing centre in Bangalore.

Central Board of Direct Taxes (CBDT), the apex office to formulate policies for the Income Tax department, was prompted to take this “customer-friendly” step after it was recently informed that lakhs of such paper statements — ITRV — have not reached its Central Processing Centre (CPC) despite people filing their e-returns online.

CBDT is now considering either bringing a notification to make a change in the rules or an amendment in the I-T Act stipulating that taxpayers filing their returns online will no longer need to send ITRV through post to the Bangalore office.

The new measure, deliberated upon by the Finance Ministry and CBDT, will mean that the taxpayer will not even have to procure a digital signature as the department feels it has enough technology at its disposal to check cases of fake returns or under-reported I-T returns.

“There have been regular letters by taxpayers and other bodies to the board in this regard. Recently, it was noticed that lakhs of statements did not reach the CPC. The board may now totally do away with the procedure of sending by post the paper statement of an e-return.

“The decision could happen soon as this concerns a lot of taxpayers and will be seen as customer-friendly,” a source privy to the development told PTI.

The thinking at the highest level is that e-filing should be “hassle free and sans any glitches”, which will prompt more number of people to file their tax returns this way.

The I—T department is also bolstered by the fact that more and more number of people are opting to file their returns online.

According to current procedures, when a taxpayer files his or her returns online, the person is required to mandatorily send the ‘ITRV’ by post to the I—T department’s CPC based in Bangalore within 120 days.

The CPC, in return, sends an electronic acknowledgement to the tax return filer. The problem arises when the document sent by post does not reach the CPC because of lapses on the part of the taxpayer or some other reason.

In case of digital signatures (used by corporate entities), a bonafide statement that verifies the identity of the sender is required to be created by paying a fee and this requires regular renewal, which is why this is seen as a burden on salaried class and categories of small taxpayers.

Source : Business line

Centre yet to decide on retrospective taxation : 13-01-2014


The Central Government is yet to decide on the retrospective taxation issue, Parthasarathi Shome, adviser to the Finance Minister, said here on Saturday.

“The government has accepted most of the recommendations on General Anti-Avoidance Rules (GAAR) suggested by the panel chaired by me. But the government is yet to accept the issue on retrospective taxation,” Dr. Shome told an interactive session organised by the Calcutta Chamber of Commerce. He said that since India followed the source-based taxation rule, it was imperative that transfer of shares of a company abroad with assets in India be taxed, like what happened in the Vodafone and IBM cases. “But giving a retrospective effect will send wrong signals to investors and cause uncertainty. It should be in the rarest of rare cases,” Dr. Shome said.

Dr. Shome said that the government was working on a resolution which would be applicable to all companies facing this problem. He said that the government was also planning to include Controlled Foreign Companies (CFCs) within the Direct Taxes Code (DTC) where Indian subsidiaries were operating abroad in low-tax jurisdictions. Also, thinly capitalised companies, having more debt than equity, would be brought under GAAR.

Dr. Shome said GAAR would not be used as a tax generation tool, but to prevent erosion of the tax base by avoidance. He also said that the DTC and the GST were likely to be introduced in 2014-15 fiscal.

 Source : The Hindu

Tax breaks for fracking firms as UK goes ‘all out for shale’ : 13-01-2014


LONDON, JAN 13:  British Prime Minister David Cameron today promised tax breaks worth millions of pounds to local councils who encourage shale gas development, declaring the country was going “all out for shale”.

Cameron announced that local authorities in England will collect all of the tax collected from shale gas sites — double the current 50 per cent figure.

The Government calculates that this could be worth up to $2.8 million a year for a typical site.

“We’re going all out for shale,” Cameron said in a statement released by his Downing Street office.

“It will mean more jobs and opportunities for people, and economic security for our country.”

The Government hopes the move will ensure that local communities benefit more from the exploitation of shale gas resources in their area.

The industry last year announced plans for local communities to receive 100,000 British Pound when a test well is “fracked” — and a further 1 per cent of revenues if shale gas is discovered.

Fracking involves the blasting open of deep fissures using high pressure water jets in order to collect previously unreachable sources of gas.

Business Minister Michael Fallon earlier said Britain had to “embrace the extraordinary opportunities offered by shale gas”, despite protests from environmentalists about the possible contamination of groundwater.

“In the Seventies, North Sea oil helped salvage our economy from crippling stagnation,” he wrote in the Sun yesterday.

“We have a similar chance to create tens of thousands of jobs and energy security.

“A mile and more beneath us lies deposits of gas-bearing shale rock with the potential to guarantee energy supplies in an increasingly uncertain and competitive world,” he added.

French energy giant Total is later today set to reveal plans for fracking exploration in Britain when it takes a share in a licence in the Midlands, the Financial Times reported.

Friends of the Earth senior campaigner Jane Thomas said it was “ironic that a French-owned company is seeking to drill the UK for shale gas when it’s banned from fracking in France due to environmental concerns”.

Source : PTI

Rupee at 1-month high after factory data; broad dollar fall helps : 13-01-2014


The rupee was at 61.55/56 after hitting 61.52 at open, its highest since December 12 and below its close of 61.89/90 on Friday.

Country’s economic woes worsened on Friday with a surprise contraction in industrial production and a wider trade deficit, adding to troubles of the ruling alliance as it heads into a tough national election seeking a third term.

The US dollar nursed broad losses early on Monday after surprisingly soft employment data raised doubts about how quickly  the Federal Reserve can scale back stimulus.

The consumer price inflation data due to be released at 5:30 p.m. (1200 GMT) will be crucial for further near-term direction.

Gains in the domestic share market also aiding sentiment for the rupee. The main share index up 0.4 percent in pre-open trade, raising hopes for continued foreign fund inflows.

Source : The Economic Times

175/01/2014-Service Tax dated 10-01-2014


Levy of service tax on services provided by a Resident Welfare Association (RWA) to its own members – regarding. – Dated 10-1-2014 – Service Tax

Circular No. 175 /01 /2014 – ST

F. No. 354/237/2013-TRU

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise& Customs

Tax Research Unit

North Block, New Delhi

10th January, 2014

To

Chief Commissioners of Central Excise and Service Tax (All), Director General (Service Tax), Director General (Central Excise Intelligence), Director General (Audit), Commissioners of Service Tax (All), Commissioners of Central Excise and Service Tax (All).

Madam/Sir,

Subject: Levy of service tax on services provided by a Resident Welfare Association (RWA) to its own members – regarding.

Service tax on ‘club or association service’ which covers Resident Welfare Association (RWA) was introduced with effect from 16.06.2005, vide section 65(105)(zzze) read with section 65(25a) [(25a) was later renumbered as (25aa)]. Under the positive list approach which was followed prior to 1st July 2012, exemption was available undernotification No. 8/2007-ST dated 01.03.2007, if the total consideration received from an individual member by the RWA for the services does not exceed three thousand rupees per month. This notification was rescinded vide notification No. 34/2012-ST dated 20th June 2012, with effect from 1st July, 2012.

2. Under the negative list approach, with effect from 1st July, 2012, notification No.25/2012-ST [sl.no.28 (c)] provides for exemption to service by a RWA to its own members by way of reimbursement of charges or share of contribution up to five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members.

Certain doubts have been raised regarding the scope of the present exemption extended to RWAs under the negative list approach. These doubts have been examined and clarifications are given below:

Sl. No.

Doubt

Clarification

1. (i) In a residential complex, monthly contribution collected from members is used by the RWA for the purpose of making payments to the third parties, in respect of commonly used services or goods [Example: for providing security service for the residential complex, maintenance or upkeep of common area and common facilities like lift, water sump, health and fitness centre, swimming pool, payment of electricity Bill for the common area and lift, etc.]. Is service tax leviable?(ii) If the contribution of a member/s of a RWA exceeds five thousand rupees per month, how should the service tax liability be calculated? Exemption at Sl. No. 28 (c) innotification No. 25/2012-ST is provided specifically with reference to service provided by an unincorporated body or a non–profit entity registered under any law for the time being in force such as RWAs, to its own members.However, a monetary ceiling has been prescribed for this exemption, calculated in the form of five thousand rupees per month per member contribution to the RWA, for sourcing of goods or services from third person for the common use of its members.If per month per member contribution of any or some members of a RWA exceeds five thousand rupees, the entire contribution of such members whose per month contribution exceeds five thousand rupees would be ineligible for the exemption under the said notification. Service tax would then be leviable on the aggregate amount of monthly contribution of such members.
2. (i) Is threshold exemption under notification No. 33/2012-ST available to RWA?(ii) Does ‘aggregate value’ for the pusrpose of threshold exemption, include the value of exempt service?  Threshold exemption available under notification No. 33/2012-STis applicable to a RWA, subject to conditions prescribed in the notification. Under this notification, taxable services of aggregate value not exceeding ten lakh rupees in any financial year is exempted from service tax. As per the definition of ‘aggregate value’ provided in Explanation B of the notification, aggregate value does not include the value of services which are exempt from service tax.
3. If a RWA provides certain services such as payment of electricity or water bill issued by third person, in the name of its members, acting as a ‘pure agent’ of its members, is exclusion from value of taxable service available for the purposes of exemptions provided in Notification 33/2012-ST or 25/2012-ST ? In Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006, it is provided that expenditure or costs incurred by a service provider as a pure agent of the recipient of service shall be excluded from the value of taxable service, subject to the conditions specified in the Rule.For illustration, where the payment for an electricity bill raised by an electricity transmission or distribution utility in the name of the owner of an apartment in respect of electricity consumed thereon, is collected and paid by the RWA to the utility, without charging any commission or a consideration by any other name, the RWA is acting as a pure agent and hence exclusion from the value of taxable service would be available. However, in the case of electricity bills issued in the name of RWA, in respect of electricity consumed for common use of lifts, motor pumps for water supply, lights in common area, etc., since there is no agent involved in these transactions, the exclusion from the value of taxable service would not be available.
4. Is CENVAT credit available to RWA for payment of service tax? RWA may avail cenvat credit and use the same for payment of service tax, in accordance with the Cenvat Credit Rules.

3.         Trade Notice/ Public Notice to be issued. Hindi version to follow.

[Raj Kumar Digvijay]

Under Secretary to the Government of India

 

Notification No.01/2014 dated 10-01-2014


Seeks to amend notification No. 25/2012- Service Tax, dated the 20th June, 2012 – 01/2014 – Dated 10-1-2014 – Service Tax

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY,

PART II, SECTION 3, SUB-SECTION (i)]

Government of India

Ministry of Finance

(Department of Revenue)

Notification No. 01/2014 – Service Tax

New Delhi, 10th January, 2014

G.S.R….(E).­ In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.25/2012-Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide G.S.R. 467 (E), dated the 20th June, 2012, namely:-

In the said notification, in the opening paragraph, in entry 11, in item (a), for the words “district, State or zone”, the words “district, State, zone or Country” shall be substituted.

[F. No. 354 /21/ 2013-TRU]

(Raj Kumar Digvijay)

Under Secretary to the Government of India

Note.- The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 25/2012 – Service Tax, dated 20th June, 2012, vide G.S.R. 467 (E), dated the 20th June, 2012 and was last amended by notification No.14/2013- Service Tax, dated the 22nd October, 2013 vide G.S.R. 699(E), dated the 22nd October, 2013.

Import duty on refined oil raised to 10 per cent : 10-01-2014


‘Convenient accounting’ of subsidies to hit new Govt

The government, on Thursday, increased the import duty on refined edible oil to 10 per cent from 7.5 per cent at present to protect the domestic processing industry and farmers.

The increased duty was approved by the Cabinet Committee on Economic Affairs (CCEA).

The move is expected to fetch the government Rs.600 crore in revenue, while retail prices of refined oil may increase marginally.

“The CCEA has approved increasing import duty on refined edible oil to 10 per cent,” Food Minister K. V. Thomas told PTI after the meeting.

The agriculture, finance and commerce ministries supported the decision to maintain a 7.5 per cent import duty difference between refined and crude edible oils, he added.

The import duty on crude edible oil is now 2.5 per cent. India imports more than 10 million tonnes of vegetable oils every year, which is almost 50 per cent of the domestic need.

Local refiners are now operating below capacity, which affects farmers as well, because importing refined edible oil has become more viable than buying crude edible oil from overseas.

Source : PTI

‘Convenient accounting’ of subsidies to hit new Govt : 10-01-2014


The Finance Minister of the next government post-elections will have to pay the price for the United Progressive Alliance’s (UPA) subsidy and social spend. The Finance Ministry plans to book in next financial year, 2014-15, the expenditure that will be incurred on subsidies during the remaining months of the current fiscal (January-March).

Pushing this year’s expenditure to the next fiscal’s accounts will keep the fiscal deficit for 2013-14 within the target of 4.8 per cent of gross domestic product (GDP) — at least on paper.

Highly-placed sources told The Hindu that this ‘convenient accounting’ will ‘artificially’ limit the fiscal deficit this year but make it a headache for the next Finance Minister who will have to raise the resources needed to foot the bill for the fuel, food and fertilizer subsidies for January-March, 2013. The Budget Estimates (BE) for 2013-14 for these subsidies is Rs.2.21 lakh crore. The Finance Ministry has not so far raised before Parliament a demand for additional grants for these subsidies. However, as per latest official data, at the end of November, 2013, the fiscal deficit was already 94 per cent of the BE for 2013-14. With four months still to go in the current fiscal year, the Finance Ministry has limited space to manage the fiscal deficit, the excess of the government’s expenditure over its income. The UPA Government has not been able to garner through disinvestments the Rs.40,000 crore projected in the Union Budget. Moreover, tax collections are growing at a rate less than the target of 19 per cent. Union Finance Minister P. Chidambaram has pressed in budget cuts in social schemes in an election year to keep the fiscal deficit below 4.8 per cent but they are not going to be enough.

To make up for these cuts, the Finance Ministry has also sought from the big-spend ministries, including those for rural development, roads and health, estimates of expenditures that could be booked in the month of April.

Mr. Chidambaram has said that the UPA Government will not let the India’s fiscal deficit for 2013-14 breach the 4.8-per cent target. International rating agencies have warned that a slip-up will trigger a rating downgrade for India.

Senior Finance Ministry officials confirmed to The Hindu: “The subsidy bill of the last quarter of 2013-14 will be accounted for in the month of April so it will reflect in the expenditure for the next financial year or 2014-15.” They added that it was not unusual for the Finance Ministry to roll over expenditure from one financial year to the next.

Source : The Hindu

Rupee up 13 paise against dollar in early trade : 10-01-2014


The rupee appreciated 13 paise to 61.94 against the dollar in early trade today at the Interbank Foreign Exchange market on increased selling of the US currency by exporters and higher capital inflows.

Forex dealers said besides selling of the American currency by exporters, gains in other currencies against the dollar and a higher opening in the domestic stock market also buoyed the sentiment.

The rupee had ended flat at 62.07 against dollar yesterday.

Meanwhile, the BSE benchmark Sensex today rose 67.68 points, or 0.32 per cent, to trade at 20,781.05 in early trade.

Source : The Economic Times

Notification No.04/2014 dated 10-01-2014


Amount received in the form of grants-in-aid from the Central Government Orissa State AIDS Control Society. – 04/2014 – Dated 10-1-2014 – Income Tax

(TO BE PUBLISHED IN PART II, SUB-SECTION(II) OF

SECTION 3 OF THE GAZETTE OF INDIA)

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

NOTIFICATION NO. 04/2014

DATED 10-1-2014

S.O. 78(E) - In exercise of the powers conferred by clause (46) of Section 10 of theIncome-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, the Orissa State AIDS Control Society, a body constituted by the Government of Orissa in respect of the following specified income arising to that Society, namely:—

(a)    amount received in the form of grants-in-aid from the Central Government;

(b)    interest earned on grants-in-aid.

2.  This notification shall be deemed to have been applied for the financial years 2011-2012 and 2012-2013 and shall be applicable for the financial years 2013-2014, 2014-2015 and 2015-2016.

3. The notification shall be effective subject to the following conditions, namely:—

(a)    the Orissa State AIDS Control Society does not engage in any commercial activity;

(b)    the activities and the nature of the specified income of the Orissa State AIDS Control Society remain unchanged throughout the financial year; and

(c)    the Orissa State AIDS Control Society files return of income in accordance with the provision of clause (g) of sub-section (4C) section 139 of the Income-tax Act, 1961.

4. The grants received by the said Society shall be received and applied in accordance with the prevailing rules and regulations.

[F.NO.196/80/2012-ITA.I]

Notification No.S.O. 2327(E) dated 09-01-2014


Amendment in the Notification Number S.O. 2327(E)dated 10th October, 2011. – S.O. 2327(E) – Dated 9-1-2014 – Special Economic Zone

MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

NOTIFICATION

New Delhi, the 9th January, 2014

S.O. 111(E).—The Central Government, in exercise of the powers conferred by sub-section (1) read with subsection (5) of Section 31 of the Special Economic Zones Act, 2005 (28 of 2005), hereby makes the following amendment in the notification of the Ministry of Commerce and Industry, Department of Commerce, number S.O. 2327(E), dated 10th October, 2011 namely:—

In the said notification, the entries at Sl. No. 5 & 6 shall be substituted as under:

5. Shri P. K. Koshy, Managing Director, CII Guardian International Ltd.

6. Shri N. Jehangir, Managing Director, SFO Technologies Pvt. Ltd.

[F.No. A. 20/1/2006-SEZ]

RAJEEV ARORA, Jt. Secy.

90 dated 09-01-2014


Provisions under section 6 (4) of Foreign Exchange Management Act, 1999 – Clarifications – Circular – Dated 9-1-2014 – FEMA

 

RBI/2013-14/440

A.P. (DIR Series) Circular No. 90

January 9, 2014

To,

All Category- I Authorised Dealer Banks and Authorised Banks

Madam / Sir,

Provisions under section 6 (4) of Foreign Exchange Management Act, 1999 – Clarifications

Attention of Authorized Dealers is invited to Section 6 (4) of FEMA, 1999 in terms of which a person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India.

2. We have been receiving representations with regards to nature of transactions covered under Section 6(4) of FEMA, 1999. In this regard it is clarified that Section 6(4) of FEMA, 1999 covers the following transactions:

  1. Foreign currency accounts opened and maintained by such a person when he was resident outside India;
  2. Income earned through employment or business or vocation outside India taken up or commenced while such person was resident outside India, or from investments made while such person was resident outside India, or from gift or inheritance received while such a person was resident outside India;
  3. Foreign exchange including any income arising therefrom, and conversion or replacement or accrual to the same, held outside India by a person resident in India acquired by way of inheritance from a person resident outside India.
  4. A person resident in India may freely utilise all their eligible assets abroad as well as income on such assets or sale proceeds thereof received after their return to India for making any payments or to make any fresh investments abroad without approval of Reserve Bank, provided the cost of such investments and/ or any subsequent payments received therefor are met exclusively out of funds forming part of eligible assets held by them and the transaction is not in contravention to extant FEMA provisions.

3. Authorised Dealer Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

4. The directions contained in this circular have been issued under Section 10(4) andSection 11(1) of the FEMA, 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

 

89 dated 09-01-2014


Exim Bank’s Line of Credit of USD 42.61 million to the Government of the Republic of Benin – Circular – Dated 9-1-2014 – FEMA

 

RBI/2013-2014/439

A.P. (DIR Series) Circular No. 89

January 9, 2014

All Category – I Authorised Dealer banks

Madam/Sir,

Exim Bank’s Line of Credit of USD 42.61 million to the Government of the Republic of Benin

Export-Import Bank of India (Exim Bank) has entered into an Agreement dated September 06, 2013 with the Government of the Republic of Benin, for making available to the latter, a Line of Credit (LOC) of USD 42.61 million (USD Forty two million and Six Hundred and Ten Thousand) for financing eligible goods, services, machinery and equipment including consultancy services from India for the purpose of financing up gradation of water supply schemes in 69 villages in Benin subject to Government of Benin appointing a Project Management Consultant (PMC) for the preparation of Detailed Project Report (DPR) in Benin. The goods, services, machinery and equipment including consultancy services from India for exports under this Agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this Agreement. Out of the total credit by Exim Bank under this Agreement, the goods and services including consultancy services of the value of at least 75 per cent of the contract price shall be supplied by the seller from India and the remaining 25 percent goods and services may be procured by the seller for the purpose of Eligible Contract from outside India.

2. The Credit Agreement under the LOC is effective from December 16, 2013 and the date of execution of Agreement is September 06, 2013. Under the LOC, the last date for opening of Letters of Credit and Disbursement will be 48 months from the scheduled completion date(s) of contract(s) in the case of project exports and 72 months (September 05, 2019) from the execution date of the Credit Agreement in the case of supply contracts.

3. Shipments under the LOC will have to be declared on GR / SDF Forms as per instructions issued by the Reserve Bank from time to time.

4. No agency commission is payable under the above LOC. However, if required, the exporter may use his own resources or utilize balances in his Exchange Earners’ Foreign Currency Account for payment of commission in free foreign exchange. Authorised Dealer Category- l (AD Category-l) banks may allow such remittance after realization of full payment of contract value subject to compliance with the prevailing instructions for payment of agency commission.

5. AD Category-I banks may bring the contents of this circular to the notice of their exporter constituents and advise them to obtain full details of the Line of Credit from the Exim Bank’s office at Centre One, Floor 21, World Trade Centre Complex, Cuffe Parade, Mumbai 400 005 or log on to www.eximbankindia.in.

6. The Directions contained in this circular have been issued under sections 10(4) and11(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

 

88 dated 09-01-2014


Memorandum of Instructions for Opening and Maintenance of Rupee / Foreign Currency Vostro Accounts of Non-resident Exchange Houses – Circular – Dated 9-1-2014 – FEMA

 

RBI/2013-14/438

A. P. (DIR Series) Circular No. 88

January 09, 2014

To,

All Authorised Dealer Category – I Banks

Madam / Sir,

Memorandum of Instructions for Opening and Maintenance of Rupee / Foreign Currency Vostro Accounts of Non-resident Exchange Houses

Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to Part (B) of Annex-I to the A.P. (DIR Series) Circular No. 28 [A. P. (FL/RL Series) Circular No. 02] dated February 6, 2008 on the captioned subject, as amended from time to time.

2. With a view to expanding the scope of the Rupee Drawing Arrangements (RDAs), it has been decided to include additional items under Permitted Transactions under RDAs. The amended instructions under Part (B) of Annex-I to the above mentioned circular are as given in the Annex.

3. All other instructions issued vide A.P. (DIR Series) Circular No. 28 [A. P. (FL/RL Series) Circular No. 02] dated February 6, 2008, as amended from time to time, will remain unchanged.

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 Section 10(4) andSection 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


Annex
[Annex-I to A.P.(DIR Series) Circular No.28
A.P.(FL/RL Series) Circular No.02]

Earlier guidelines underPart (B) Permitted Transactions of Annex-I Revised guidelines under Part (B) Permitted Transactionsof Annex-I
Drawing Arrangements with Exchange Houses are primarily designed to channel inward personal remittances.Under no circumstances, donations / contributions to charitable institutions should be routed through the Exchange Houses. The following is the list of permissible transactions under Drawing Arrangements with Exchange Houses.

1. Credit to Non-resident (External) Rupee accounts maintained by Non-resident Indians in Indian Rupees.

2. Payments to families of Non-resident Indians.

3. Payments in favour of Insurance companies, Mutual Funds and the Post Master for premia / investments.

4. Payments in favour of bankers for investments in shares, debentures.

5. Payment to Coop. Housing Societies, Govt. Housing Schemes or Estate Developers for acquisition of residential flats in India in individual names subject to compliance of regulations thereof by the Non-resident Indians.

6. Payments of tuition/ boarding, examination fee etc. to schools, colleges and other educational institutions.

7. Payments to medical institutions and hospitals for medical treatment of NRIs / their dependents and nationals of Gulf Countries in India.

8. Payments to hotelsby nationals of Gulf countries / NRIs for their stay.

9. Payments to travel agents for booking of passages of NRIs and their families residing in India towards their travel in India by domestic airlines / rail, etc.

10. Trade transactions up to Rs. 2 lakhs per transaction.

Drawing Arrangements with Exchange Houses are primarily designed to channel inward personal remittances.Under no circumstances, donations / contributions to charitable institutions should be routed through the Exchange Houses. The following is the list of permissible transactions under Drawing Arrangements with Exchange Houses.

1. Credit to Non-resident (External) Rupee accounts maintained by Non-resident Indians in Indian Rupees.

2. Payments to families of Non-resident Indians.

3. Payments in favour of Insurance companies, Mutual Funds and the Post Master for premia / investments.

4. Payments in favour of bankers for investments in shares, debentures.

5. Payment to Coop. Housing Societies, Govt. Housing Schemes or Estate Developers for acquisition of residential flats in India in individual names subject to compliance of regulations thereof by the Non-resident Indians.

6. Payments of tuition/ boarding, examination fee etc. to schools, colleges and other educational institutions.

7. Payments to medical institutions and hospitals for medical treatment of NRIs / their dependents and nationals of Gulf Countries in India.

8. Payments to hotels by nationals of Gulf countries / NRIs for their stay.

9. Payments to travel agents for booking of passages of NRIs and their families residing in India towards their travel in India by domestic airlines / rail, etc.

10. Trade transactions up to Rs. 2 lakhs per transaction.

11. Payments to utility service providers in India, for services such as water supply, electricity supply, telephone (except for mobile top-ups), internet, television etc.

12. Tax payments in India

13. EMI payments in India to Banks and Non-Banking Financial Companies (NBFCs) for repayment of loans.

 

87 dated 09-01-2014


Resident Bank account maintained by residents in India – Joint holder – liberalization – Circular – Dated 9-1-2014 – FEMA

RBI/2013-2014/437

A.P. (DIR Series) Circular No. 87

January 9, 2014

To

All Banks Authorised to deal in Foreign Exchange

Madam/Sir,

Resident Bank account maintained by residents in India – Joint holder – liberalization

Attention of Authorised Dealer (AD) banks is invited to A.P.(DIR Series) Circular No.12 dated September 15, 2011 in terms of which individuals resident in India were permitted to include non-resident close relative(s) (relatives as defined in Section 6 of the Companies Act, 1956) as a joint holder(s) in their resident savings bank accounts on “former or survivor” basis. Such non-resident Indian close relatives are however not eligible to operate the account during the life time of the resident account holder in terms of said instructions.

2. Reserve Bank has received representations that for operational convenience the Non-Resident Indians (NRIs), as defined in Regulation 2(vi) of FEMA Notification No.5 dated May 3, 2000, may be permitted to operate such accounts on “Either or Survivor” basis. Accordingly, on a review, it has been decided that AD banks may include an NRI close relative (relatives as defined in Section 6 of the Companies Act, 1956) in existing / new resident bank accounts as joint holder with the resident account holder on “Either or Survivor” basis subject to the following conditions:

  1. Such account will be treated as resident bank account for all purposes and all regulations applicable to a resident bank account shall be applicable.
  2. Cheques, instruments, remittances, cash, card or any other proceeds belonging to the NRI close relative shall not be eligible for credit to this account.
  3. The NRI close relative shall operate such account only for and on behalf of the resident for domestic payment and not for creating any beneficial interest for himself.
  4. Where the NRI close relative becomes a joint holder with more than one resident in such account, such NRI close relative should be the close relative of all the resident bank account holders.
  5. Where due to any eventuality, the non-resident account holder becomes the survivor of such an account, it shall be categorized as Non-Resident Ordinary Rupee (NRO) account as per the extant regulations.
  6. Onus will be on the non-resident account holder to keep AD bank informed to get the account categorized as NRO account and all such regulations as applicable to NRO account shall be applicable.
  7. The above joint account holder facility may be extended to all types of resident accounts including savings bank account.

4. While extending this facility the AD bank should satisfy itself about the actual need for such a facility and also obtain the following declaration duly signed by the non-resident account holder:

“I am the joint account holder of SB/FD/RD/Current Account bearing No ……. which stands in my name and in the name of Shri/Smt. ……….. who is my ………. (state relationship). I hereby undertake that I shall not use the proceeds lying in the above account for any transaction in contravention of the provisions of the Foreign Exchange Management Act (FEMA) 1999, Rules/Regulations made thereunder and the related circulars/instructions issued by the Reserve Bank from time to time. I further undertake that if any such transaction is put through the said account in contravention of theFEMA, 1999 or Rules/Regulations made thereunder, I shall be held responsible for the same. I shall intimate my bank in the event of any change in my Non-resident / Resident status.”

5. Authorised Dealer Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

6. The directions contained in this circular have been issued under Section 10(4) andSection 11(1) of the FEMA, 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

 

86 dated 09-01-2014


Foreign Direct Investment- Pricing Guidelines for FDI instruments with optionality clauses – Circular – Dated 9-1-2014 – FEMA

 

RBI/2013-2014/436

A.P. (DIR Series) Circular No. 86

January 9, 2014

All Category – I Authorised Dealer banks

Madam/Sir,

Foreign Direct Investment- Pricing Guidelines for FDI instruments with optionality clauses

Attention of Authorised Dealers is invited to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000notified vide Notification No. FEMA 20 / 2000 -RB dated May 3, 2000 as amended from time to time. In terms of the extant instructions, only equity shares or preference shares/debentures are eligible to be issued to persons resident outside India under the Foreign Direct Investment Scheme in terms of Regulation 5 (1) of Foreign Exchange Management (Transfer and Issue of shares by a Person Resident outside India) Regulations, 2000 notified vide Notification No. FEMA 20/2000-RB dated May 3, 2000.

2. On a review, it has now been decided that optionality clauses may henceforth be allowed in equity shares and compulsorily and mandatorily convertible preference shares/debentures to be issued to a person resident outside India under the Foreign Direct Investment (FDI) Scheme. The optionality clause will oblige the buy-back of securities from the investor at the price prevailing/value determined at the time of exercise of the optionality so as to enable the investor to exit without any assured return. The provision of optionality clause shall be subject to the following conditions:

(a) There is a minimum lock-in period of one year or a minimum lock-in period as prescribed under FDI Regulations, whichever is higher (e.g. defence and construction development sector where the lock-in period of three years has been prescribed). The lock-in period shall be effective from the date of allotment of such shares or convertible debentures or as prescribed for defence and construction development sectors, etc. in Annex B to Schedule 1 of Notification No. FEMA. 20 as amended from time to time;

(b) After the lock-in period, as applicable above, the non-resident investor exercising option/right shall be eligible to exit without any assured return, as under:

(i) In case of a listed company, the non-resident investor shall be eligible to exit at the market price prevailing at the recognised stock exchanges;

(ii) In case of unlisted company, the non-resident investor shall be eligible to exit from the investment in equity shares of the investee company at a price not exceeding that arrived at on the basis of Return on Equity (RoE) as per the latest audited balance sheet. Any agreement permitting return linked to equity as above shall not be treated as violation of FDI policy/FEMA Regulations.

Note: For the above purpose, RoE shall mean Profit After Tax / Net Worth; Net Worth would include all free reserves and paid up capital.

(iii) Investments in Compulsorily Convertible Debentures (CCDs) and Compulsorily Convertible Preference Shares (CCPS) of an investee company may be transferred at a price worked out as per any internationally accepted pricing methodology at the time of exit duly certified by a Chartered Accountant or a SEBI registered Merchant Banker. The guiding principle would be that the non-resident investor is not guaranteed any assured exit price at the time of making such investment/agreement and shall exit at the price prevailing at the time of exit, subject to lock-in period requirement, as applicable.

3. Reserve Bank has since amended the Regulations and the changes have been notified vide Notification No. FEMA. 294/2013-RB dated November 12, 2013 vide G.S.R. No. 805(E) dated December 30, 2013.

4. All existing contracts will have to comply with the above conditions to qualify as FDI compliant.

5. AD Category – I banks may bring the contents of the circular to the notice of their constituents concerned.

6. The directions contained in this circular have been issued under Sections 10(4) and11(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

 

2. Due date for filing Quarterly Reconciliation Return for transaction under CST Act – within 3 months from the end of each quarter.


Title: 2. Due date for filing Quarterly Reconciliation Return for transaction under CST Act – within 3 months from the end of each quarter.
Date: 2014-06-30

1. Due Date for filing Particulars under the third proviso to section 194C(3)(i) to be furnished by a contractor responsible for paying any sum to such sub-contractor shall be in Form No. 15J. A copy shall be furnished before Commissioner of Income Tax for the Financial Year ending March 31.


Title: 1. Due Date for filing Particulars under the third proviso to section 194C(3)(i) to be furnished by a contractor responsible for paying any sum to such sub-contractor shall be in Form No. 15J. A copy shall be furnished before Commissioner of Income Tax for the Financial Year ending March 31.
Date: 2014-06-30

Monthly – Consolidated Statement of dues and remittance under EPF Scheme, 1952, EPS 1995 and Employees’ Deposit Linked Insurance Scheme, 1976 of the previous month to which the dues relate.


Title: Monthly – Consolidated Statement of dues and remittance under EPF Scheme, 1952, EPS 1995 and Employees’ Deposit Linked Insurance Scheme, 1976 of the previous month to which the dues relate.
Date: 2014-06-25

Due date for filing Monthly Payment of ESI Contribution for the previous month (plus grace period of 5 days)


Title: Due date for filing Monthly Payment of ESI Contribution for the previous month (plus grace period of 5 days)
Date: 2014-06-16

5. Due date for filing Monthly Payment of Provident Fund Contribution for the previous month (plus grace period of 5 days)


Title: 5. Due date for filing Monthly Payment of Provident Fund Contribution for the previous month (plus grace period of 5 days)
Date: 2014-06-14

5. Due date for filing Monthly Payment of Provident Fund Contribution for the previous month (plus grace period of 5 days)


Title: 5. Due date for filing Monthly Payment of Provident Fund Contribution for the previous month (plus grace period of 5 days)
Date: 2014-06-14

4. Due date for filing Exempted extablishment EPS/EDLIS Monthly Return of Members Leaving Service During the previous Month.


Title: 4. Due date for filing Exempted extablishment EPS/EDLIS Monthly Return of Members Leaving Service During the previous Month.
Date: 2014-06-14

3. Due date for filing Monthly EPF Return of Employees qualifying/joining/leaving for membership to the EPF for the first time during previous month.


Title: 3. Due date for filing Monthly EPF Return of Employees qualifying/joining/leaving for membership to the EPF for the first time during previous month.
Date: 2014-06-14

2. Due date for filing Advance Income Tax in case of company.


Title: 2. Due date for filing Advance Income Tax in case of company.
Date: 2014-06-15

1. Due date for filing Deposit of tax deducted at source during the previous month.


Title: 1. Due date for filing Deposit of tax deducted at source during the previous month.
Date: 2014-06-15

G20: Finance Ministry asks ORF for stance on BRICS bank : 09-01-2014


The Finance Ministry has caused ripples in economic diplomacy circles by asking Reliance-supported think-tank Observer Research Foundation (ORF) to draft strategy papers for India’s position in the G20 on the BRICS (Brazil, Russia, India China, South Africa) Development Bank.

The structure, location of its headquarters, membership, authorised capital stock and distribution of voting rights across member countries of the BRICS Development Bank will be taken up at the next BRICS Ministerial summit due to take place in Brazil. The date for the summit will be finalised after the India’s general election dates become known. Later this month, Economic Affairs Secretary Arvind Mayaram will attend a meeting of the BRICS Common Functionaries where the proposal on the Development Bank will be readied for putting up to the Ministerial.

At the Durban Summit in March 2013, the BRICS countries had decided to set up a Development Bank for funding infrastructure projects. The BRICS Development Bank will also create a Contingency Reserve Arrangement worth $100 billion that member countries will be able to tap should they have to counteract financial shocks in future such as the one caused by the Lehman Brothers collapse.

“It is rare for the Finance Ministry to seek inputs into policy issues pertaining to economic diplomacy from a think tank so closely associated with a private company,” highly-placed sources told The Hindu.

The ORF strategy paper with the Finance Ministry proposes four options for India’s position on the structure and ownership model for the BRICS Development Banks. Two of these include allowing private sector companies to own part of it alongside owner countries. “Private sector companies owning a part of a multilateral international body alongside sovereign countries would be odd though not completely unheard of,” the sources said.

 The option will open avenues for investing in real development projects for private companies, the ORF input says. It also adds that the downside of “allowing private entities or individual investors and giving them voting rights raises the risk of these players voting for personal or private gain”.

Source : The Hindu

Rupee down 17 paise against dollar in early trade : 09-01-2014


The rupee today weakened by 17 paise to 62.24 against the dollar in early trade at the Interbank Foreign Exchange market due to demand for the US currency from importers.

Forex dealers said besides dollar’s gains against other currencies overseas, increased demand from importers for the greenback also put pressure on the rupee.

They said, however, a higher opening of the domestic equity market capped the fall.

The domestic unit had gained 23 paise to one-week high of 62.07 against the dollar yesterday, amid a modest recovery in local stocks.

Meanwhile, the benchmark BSE Sensex rose by 42.10 points, or 0.20 per cent, to 20,771.48 in early trade today.

Source : PTI

1. Due date for filing Deposit of tax deducted at source during the previous month.


Title: 1. Due date for filing Deposit of tax deducted at source during the previous month.
Date: 2014-01-15

4. Exempted extablishment – EPS/EDLIS – Monthly Return of Members Leaving Service During the previous Month.


Title: 4. Exempted extablishment – EPS/EDLIS – Monthly Return of Members Leaving Service During the previous Month.
Date: 2014-01-15

3. Due date for filing Monthly EPF Return of Employees qualifying/joining/leaving for membership to the EPF for the first time during previous month.


Title: 3. Due date for filing Monthly EPF Return of Employees qualifying/joining/leaving for membership to the EPF for the first time during previous month.
Date: 2014-01-15

2. Due date for filing Advance Income Tax in case of company.


Title: 2. Due date for filing Advance Income Tax in case of company.
Date: 2014-01-15

1. Due date for filing Deposit of tax deducted at source during the previous month.


Title: 1. Due date for filing Deposit of tax deducted at source during the previous month.
Date: 2014-01-13

1. Last Date for filing of Return of Central Excise and Cenvat Credit for the previous month for EOU units.


Title: 1. Last Date for filing of Return of Central Excise and Cenvat Credit for the previous month for EOU units.
Date: 2014-01-10

3. Last Date for filing of Return of Central Excise and Cenvat Credit for the previous month For non SSI Units.


Title: 3. Last Date for filing of Return of Central Excise and Cenvat Credit for the previous month For non SSI Units.
Date: 2014-06-10

2. Due date for filing Monthly Details of receipt and consumption of principal inputs and finished excisable goods Declarations under central excise to be filed by a unit paying total duty (Cenvat Credit + Cash) of more than 1 crore.


Title: 2. Due date for filing Monthly Details of receipt and consumption of principal inputs and finished excisable goods Declarations under central excise to be filed by a unit paying total duty (Cenvat Credit + Cash) of more than 1 crore.
Date: 2014-06-10

1. Last Date for filing of Return of Central Excise and Cenvat Credit for the previous month for EOU units.


Title: 1. Last Date for filing of Return of Central Excise and Cenvat Credit for the previous month for EOU units.
Date: 2014-06-10

4. Last date for Submission of copy of declaration forms (Form 15G and form 15H) received from deductee by the deductor for non deduction of TDS under section 197A before the Chief Commissioner or Commissioner.


Title: 4. Last date for Submission of copy of declaration forms (Form 15G and form 15H) received from deductee by the deductor for non deduction of TDS under section 197A before the Chief Commissioner or Commissioner.
Date: 2014-06-07

3. Last date of submission of declaration i.e., for no TCS u/s 206C(1A) obtained from manufacturer to the Commissioner/Chief Commissioner of Income Tax as the case may be.


Title: 3. Last date of submission of declaration i.e., for no TCS u/s 206C(1A) obtained from manufacturer to the Commissioner/Chief Commissioner of Income Tax as the case may be.
Date: 2014-06-07

2. Due date for filing Monthly payment of TCS u/s 206CIssue of TDS certificates for the tax deducted at source 7 days from the date of deposit of TDS.


Title: 2. Due date for filing Monthly payment of TCS u/s 206CIssue of TDS certificates for the tax deducted at source 7 days from the date of deposit of TDS.
Date: 2014-06-07

1. Due Date for filing Monthly payment of TDS on all types of payments (Except in the case where amounted is credited in the Month of March 31)


Title: 1. Due Date for filing Monthly payment of TDS on all types of payments (Except in the case where amounted is credited in the Month of March 31)
Date: 2014-06-07

2. Due date for filing Monthly payment of Central Excise Duties for the previous month For non SSI Units (6th in case of electronic payment through internet banking)


Title: 2. Due date for filing Monthly payment of Central Excise Duties for the previous month For non SSI Units (6th in case of electronic payment through internet banking)
Date: 2014-06-05

1. Due date for filing Monthly Payment of Service Tax for assessees other than individual, Proprietorship Firm and Partnership Firm (6th in case of electronic payment through internet banking)


Title: 1. Due date for filing Monthly Payment of Service Tax for assessees other than individual, Proprietorship Firm and Partnership Firm (6th in case of electronic payment through internet banking)
Date: 2014-06-05

Due date for filing Certificate of tax deducted at source (TDS) to employees in respect of salary paid during the previous financial year.


Title: Due date for filing Certificate of tax deducted at source (TDS) to employees in respect of salary paid during the previous financial year.
Date: 2014-05-31

2. Due date for filing Quarterly issuance of Certificate of collection of tax at source (TCS) for the Quarter Ending March 31.


Title: 2. Due date for filing Quarterly issuance of Certificate of collection of tax at source (TCS) for the Quarter Ending March 31.
Date: 2014-05-30

1. Due date for filing Quarterly issuance of certificate of tax deducted at source (other than salary) for the quarter ending March 31


Title: 1. Due date for filing Quarterly issuance of certificate of tax deducted at source (other than salary) for the quarter ending March 31
Date: 2014-05-30

Due Date for filing Monthly Consolidated Statement of dues and remittance under EPF Scheme, 1952, EPS 1995 and Employees’ Deposit Linked Insurance Scheme, 1976 of the previous month to which the dues relate.


Title: Due Date for filing Monthly Consolidated Statement of dues and remittance under EPF Scheme, 1952, EPS 1995 and Employees’ Deposit Linked Insurance Scheme, 1976 of the previous month to which the dues relate.
Date: 2014-05-25

Due Date for filing Monthly Payment of ESI Contribution for the previous month (plus grace period of 5 days).


Title: Due Date for filing Monthly Payment of ESI Contribution for the previous month (plus grace period of 5 days).
Date: 2014-05-16

7. Due date for filing Monthly Payment of Provident Fund Contribution for the previous month (plus grace period of 5 days).


Title: 7. Due date for filing Monthly Payment of Provident Fund Contribution for the previous month (plus grace period of 5 days).
Date: 2014-05-15

6. Due date for Deposit of tax deducted at source during the previous month.


Title: 6. Due date for Deposit of tax deducted at source during the previous month.
Date: 2014-05-15

5. Due date for filing Quarterly Statement of deduction of tax at source (TDS) on salary u/s 192 for the quarter ending March.


Title: 5. Due date for filing Quarterly Statement of deduction of tax at source (TDS) on salary u/s 192 for the quarter ending March.
Date: 2014-05-15

4. Due Date for filing Quarterly Statement of deduction of tax at source (TDS) in respect of all other deductees for the quarter ending March.


Title: 4. Due Date for filing Quarterly Statement of deduction of tax at source (TDS) in respect of all other deductees for the quarter ending March.
Date: 2014-05-15

3. Due date for filing Quarterly Statement of deduction of tax at source (TDS) in respect of the deductee who is a non-resident not being a company or a foreign company or resident but not ordinarily resident for the quarter ending March 31.


Title: 3. Due date for filing Quarterly Statement of deduction of tax at source (TDS) in respect of the deductee who is a non-resident not being a company or a foreign company or resident but not ordinarily resident for the quarter ending March 31.
Date: 2014-05-15

2. Due Date for filing Quarterly Statement of collection of tax at source (TCS) for the Quarter Ending March 31.


Title: 2. Due Date for filing Quarterly Statement of collection of tax at source (TCS) for the Quarter Ending March 31.
Date: 2014-05-15

1. Due Date for filing Exempted establishment EPS/ EDLIS Monthly Return of members joining/leaving service during the previous month.


Title: 1. Due Date for filing Exempted establishment EPS/ EDLIS Monthly Return of members joining/leaving service during the previous month.
Date: 2014-05-15

4. Last Date for filing of Return of Central Excise and Cenvat Credit for the previous month For non SSI Units.


Title: 4. Last Date for filing of Return of Central Excise and Cenvat Credit for the previous month For non SSI Units.
Date: 2014-05-10

3. Due date for filing Monthly EPF Return of Employees qualifying/leaving for membership to the EPF for the first time during previous month.


Title: 3. Due date for filing Monthly EPF Return of Employees qualifying/leaving for membership to the EPF for the first time during previous month.
Date: 2014-05-10

2. Due date for filing Monthly Details of receipt and consumption of principal inputs and finished excisable goods Declarations under central excise to be filed by a unit paying total duty (Cenvat Credit + Cash) of more than 1 crore.


Title: 2. Due date for filing Monthly Details of receipt and consumption of principal inputs and finished excisable goods Declarations under central excise to be filed by a unit paying total duty (Cenvat Credit + Cash) of more than 1 crore.
Date: 2014-05-10

1. Last Date for filing of Return of Central Excise and Cenvat Credit for the previous month for EOU units.


Title: 1. Last Date for filing of Return of Central Excise and Cenvat Credit for the previous month for EOU units.
Date: 2014-05-10

5. Due date for filing Monthly payment of TCS u/s 206C.


Title: 5. Due date for filing Monthly payment of TCS u/s 206C.
Date: 2014-05-07

4. Last date for Submission of copy of declaration forms (Form 15G and form 15H) received from deductee by the deductor for non deduction of TDS under section 197A before the Chief Commissioner or Commissioner.


Title: 4. Last date for Submission of copy of declaration forms (Form 15G and form 15H) received from deductee by the deductor for non deduction of TDS under section 197A before the Chief Commissioner or Commissioner.
Date: 2014-05-07

3. Last date of submission of declaration i.e for no TCS u/s 206C(1A) obtained from manufacturer to the Commissioner/Chief Commissioner of Income Tax as the case may be.


Title: 3. Last date of submission of declaration i.e for no TCS u/s 206C(1A) obtained from manufacturer to the Commissioner/Chief Commissioner of Income Tax as the case may be.
Date: 2014-05-07

2. Last date for Issue of TDS certificates for the tax deducted at source 7 days from the date of deposit of TDS.


Title: 2. Last date for Issue of TDS certificates for the tax deducted at source 7 days from the date of deposit of TDS.
Date: 2014-05-07

1. Due date for filing Monthly payment of TDS on all types of payments (Except in the case where amounted is credited in the Month of March 31)


Title: 1. Due date for filing Monthly payment of TDS on all types of payments (Except in the case where amounted is credited in the Month of March 31)
Date: 2014-05-07

2. Due date for filing Monthly Payment of Service Tax for assessees other than individual, Proprietorship Firm and Partnership Firm (6th in case of electronic payment through internet banking)


Title: 2. Due date for filing Monthly Payment of Service Tax for assessees other than individual, Proprietorship Firm and Partnership Firm (6th in case of electronic payment through internet banking)
Date: 2014-05-05

1. Due date for filing Monthly payment of Central Excise Duties for the previous month For non SSI Units (6th in case of electronic payment through internet banking)


Title: 1. Due date for filing Monthly payment of Central Excise Duties for the previous month For non SSI Units (6th in case of electronic payment through internet banking)
Date: 2014-05-05

‘Immigration Bill is no threat’ : 08-01-2014


The new Nasscom President, R. Chandrashekhar, is optimistic that whatever comes out of the Immigration Bill will be practical and meaningful for Indian IT companies.

“The US is not a country which regulates businesses,” he said, adding that the demand for outsourcing services is positive in the coming year.

According to Chandrashekhar, while in conversations, the concerned lawmakers said they have been receptive to the concerns of IT exporters.

Adding that there is a shortage of high skilled tech workers in the US, he said the lawmakers need to look at this issue rationally and not emotionally.

IT firms and Nasscom are concerned that the high visa rejection rates — estimated at 40 per cent — is causing a lot of headache.

The US is still looking at high unemployment, and data from the US Bureau of Labor Statistics pegs this at 7 per cent in November (this does not include people who do not search for jobs, which would increase the number of unemployed people).

The new approach of Nasscom would be more on the lines of growth that would keep in mind the economic dynamics of the region.

Source : PTI

Rupee up 14 paise vs dollar in early trade : 08-01-2014


MUMBAI: The rupee gained 14 paise to 62.16 against the dollar in early trade today at the Interbank Foreign Exchange market on selling of the US currency by exporters and banks.

Besides, strengthening of the euro against the dollar overseas also supported the rupee, dealers said.

The rupee had closed one paisa higher at 62.30 against the dollar yesterday as exporters sold the US currency.

Meanwhile, the benchmark BSE index Sensex opened higher by 79.79 points, or 0 . 38 per cent, to 20,773,03 in early trade today.

Source : The Economic Times

Notification No.01/2014-CX dated 08-01-2014


CENVAT Credit (First Amendment) Rules, 2014. – 01/2014-CX – Dated 8-1-2014 – Central Excise – Non Tariff

 

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY,

PART II, SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION NO. 01/2014-CX. (N.T.)

Dated: January 8, 2014

In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the CENVAT Credit Rules, 2004, namely:-

1. (1) These rules may be called the CENVAT Credit (First Amendment) Rules, 2014.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In rule 3 of the CENVAT Credit Rules, 2004, -

(i) the Explanation occurring after the proviso to sub-rule (5B) shall be omitted;

(ii) in sub-rule (5C), after the words “production of said goods”, the words “and the CENVAT credit taken on input services used in or in relation to the manufacture or production of said goods” shall be inserted;

(iii) after sub-rule (5C), the following explanations shall be inserted, namely: -

“Explanation 1 .- The amount payable under sub-rules (5), (5A), (5B) and (5C), unless specified otherwise, shall be paid by the manufacturer of goods or the provider of output service by debiting the CENVAT credit or otherwise on or before the 5th day of the following month except for the month of March, where such payment shall be made on or before the 31st day of the month of March.

Explanation 2.- If the manufacturer of goods or the provider of output service fails to pay the amount payable under sub-rules (5), (5A), (5B) and (5C), it shall be recovered, in the manner as provided in rule 14, for recovery of CENVAT credit wrongly taken and utilised.”

F. No. 267/126/2011-CX.8

(Pankaj Jain)

Under Secretary to the Government of India

Note.- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), dated the 10th September, 2004, vide Notification No. 23/2004 – Central Excise (N.T.) dated the 10th September, 2004, vide number G.S.R. 600(E), dated the 10th September, 2004 and last amended vide Notification No. 18/2013-Central Excise (N.T.) dated the 31st December, 2013 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 808 (E), dated the 31st December, 2013.

Press Note No. 1 (2014 Series) dated 08-01-2014


Review of the existing policy on Foreign Direct Investment in the Pharmaceuticals Sector. – FDI GUIDELINES – Dated 8-1-2014 – FEMA

Government of India

Ministry of Commerce & Industry

Department of Industrial Policy & Promotion

Press Note No. 1 (2014 Series)

Subject : Review of the existing policy on Foreign Direct Investment in the Pharmaceuticals Sector.

1.0    Present Position :

1.1    Paragraph 6.2.18 of ‘Circular 1 of 2013-Consolidated FDI Policy’, effective from April 5, 2013, relating to the Foreign Direct Investment policy in the pharmaceuticals sector is as under:

6.2.18 Pharmaceuticals
6.2.18.1 Greenfield 100% Automatic
6.2.18.2 Brownfield 100% Government
Note : Government may incorporate appropriate conditions for FDI in brownfield cases, at the time of granting approval.

2.0    Reviewed Position :

2.1    The Government of India has reviewed the position in this regard and decided that the existing policy would continue with the condition that ‘non-compete’ clause would not be allowed except in special circumstances with the approval of the Foreign Investment Promotion Board.

3.0    The above decision will take immediate effect.

(Anjali Prasad)

Additional Secretary to the Government of India


D/o IPP File No. : No. 1/16/2010-FC-I dated 8th January 2014

Copy forwarded to :

1.      Press Information Officer, Press Information Bureau-for giving necessary publicity.

2.      NIC Section in the Department of Industrial Policy and Promotion – for uploading the Press Note on DIPP’s website.

5. Due date for filing EPF/ EPS Member’s annual Contribution card/ Consolidated annual contribution statement.


Title: 5. Due date for filing EPF/ EPS Member’s annual Contribution card/ Consolidated annual contribution statement.
Date: 2014-01-07

4. : Due date for filing Exempted Establishment EDLIS Annual Consolidated annual contribution statement.


Title: 4. : Due date for filing Exempted Establishment EDLIS Annual Consolidated annual contribution statement.
Date: 2014-04-30

3. Last date for filing Exempted Establishment EPS Annual Contribution card for members for the year/ Consolidated annual contribution statement.


Title: 3. Last date for filing Exempted Establishment EPS Annual Contribution card for members for the year/ Consolidated annual contribution statement.
Date: 2014-04-30

2. Due date for filing Yearly Declaration of Principal Inputs/ Annual Installed Capacity Statement Declarations under central excise to be filed by a unit paying total duty (Cenvat Credit + Cash) of more than 1 crore.


Title: 2. Due date for filing Yearly Declaration of Principal Inputs/ Annual Installed Capacity Statement Declarations under central excise to be filed by a unit paying total duty (Cenvat Credit + Cash) of more than 1 crore.
Date: 2014-04-30

1. Last date for filing Quarterly payment of TDS for payments u/s 192, 194A, 194D or 194H with the prior approval of the Joint Commissioner for the Quarter ending March 31.


Title: 1. Last date for filing Quarterly payment of TDS for payments u/s 192, 194A, 194D or 194H with the prior approval of the Joint Commissioner for the Quarter ending March 31.
Date: 2014-04-30

4. Last date for Filing of Refund claim by diplomats, bodies and organizations listing in Schedule VI.


Title: 4. Last date for Filing of Refund claim by diplomats, bodies and organizations listing in Schedule VI.
Date: 2014-04-28

3. Last date for Quarterly Filing of TDS Return for the quarter in which tax has been deducted.


Title: 3. Last date for Quarterly Filing of TDS Return for the quarter in which tax has been deducted.
Date: 2014-04-28

2. Due date for filing Half Yearly Return of Service Tax and Cenvat Credit for the Half Year ending previous month.


Title: 2. Due date for filing Half Yearly Return of Service Tax and Cenvat Credit for the Half Year ending previous month.
Date: 2014-04-28

1. Last date For all dealers including composition dealers, irrespective of turnover Rule 26(1)/hardcopy


Title: 1. Last date For all dealers including composition dealers, irrespective of turnover Rule 26(1)/hardcopy
Date: 2014-04-28

Due date for Filing Monthly Consolidated Statement of dues and remittance under EPF Scheme, 1952, EPS 1995 and Employees’ Deposit Linked Insurance Scheme, 1976 of the previous month to which the dues relate.


Title: Due date for Filing Monthly Consolidated Statement of dues and remittance under EPF Scheme, 1952, EPS 1995 and Employees’ Deposit Linked Insurance Scheme, 1976 of the previous month to which the dues relate.
Date: 2014-04-25

Due date for filing Monthly Payment of Provident Fund Contribution for the previous month (plus grace period of 5 days).


Title: Due date for filing Monthly Payment of Provident Fund Contribution for the previous month (plus grace period of 5 days).
Date: 2014-04-16

3. Due date for filing Exempted establishment EPS/ EDLIS Monthly Return of members joining/leaving service during the previous month.


Title: 3. Due date for filing Exempted establishment EPS/ EDLIS Monthly Return of members joining/leaving service during the previous month.
Date: 2014-04-15

2. : Due date for filing Monthly EPF Return of Employees qualifying for membership/leaving to the EPF for the first time during previous month.


Title: 2. : Due date for filing Monthly EPF Return of Employees qualifying for membership/leaving to the EPF for the first time during previous month.
Date: 2014-04-15

4. Last Date for filing of Return of Central Excise and Cenvat Credit for the previous month for EOU units.


Title: 4. Last Date for filing of Return of Central Excise and Cenvat Credit for the previous month for EOU units.
Date: 2014-04-10

3. Due date for filing Quarterly Return of Central Excise and Cenvat Credit for the Quarter ending previous month For SSI Units.


Title: 3. Due date for filing Quarterly Return of Central Excise and Cenvat Credit for the Quarter ending previous month For SSI Units.
Date: 2014-04-10

2. Last Date for filing of Return of Central Excise and Cenvat Credit for the previous month For non SSI Units.


Title: 2. Last Date for filing of Return of Central Excise and Cenvat Credit for the previous month For non SSI Units.
Date: 2014-04-10

1. Last date for filing Monthly Details of receipt and consumption of principal inputs and finished excisable goods – Declarations under central excise to be filed by a unit paying total duty (Cenvat Credit + Cash) of more than 1 crore.


Title: 1. Last date for filing Monthly Details of receipt and consumption of principal inputs and finished excisable goods – Declarations under central excise to be filed by a unit paying total duty (Cenvat Credit + Cash) of more than 1 crore.
Date: 2014-04-10

4. Last date for Submission of copy of declaration forms (Form 15G and form 15H) received from deductee by the deductor for non deduction of TDS under section 197A before the Chief Commissioner or Commissioner.


Title: 4. Last date for Submission of copy of declaration forms (Form 15G and form 15H) received from deductee by the deductor for non deduction of TDS under section 197A before the Chief Commissioner or Commissioner.
Date: 2014-04-07

3. Last date of submission of declaration i.e. for no TCS u/s 206C(1A) obtained from manufacturer to the Commissioner/Chief Commissioner of Income Tax as the case may be.


Title: 3. Last date of submission of declaration i.e. for no TCS u/s 206C(1A) obtained from manufacturer to the Commissioner/Chief Commissioner of Income Tax as the case may be.
Date: 2014-04-07

2. Due date for filing Issue of TDS certificates for the tax deducted at source – 7 days from the date of deposit of TDS.


Title: 2. Due date for filing Issue of TDS certificates for the tax deducted at source – 7 days from the date of deposit of TDS.
Date: 2014-04-07

1. Due date for payment of TCS u/s 206C.


Title: 1. Due date for payment of TCS u/s 206C.
Date: 2014-04-07

Notification No.03/2014 dated 07-01-2014


Agreement between the Government of the Republic of India and the Government of the Belize for the Exchange of Information with respect to taxes – 03/2014 – Dated 7-1-2014 – Income Tax

NOTIFICATION NO. 3/2014

DATED 7-1-2014

SO 48(E) - Whereas, an agreement (hereinafter referred to as the said agreement) was entered into between the Government of the Republic of India and the Government of Belize for the exchange of information with respect of taxes was signed at Belmopan, Belize on the 18th day of September, 2013;

And whereas, the date of entry into force of the said agreement is the 25th day of November, 2013, being the date of later of the notification of completion of the procedures as required by the respective laws for entry into force of the said agreement, in accordance with the Article 10 of the said agreement;

Paragraph 2 of the Article 10 of the said agreement provides that the provisions of the said agreement shall enter into force on the date of the later of the notifications referred to in paragraph 1 of this Article and shall thereupon have effect forthwith;

Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of said agreement between the Government of the Republic of India and the Government of Belize for the exchange of information with respect to taxes as set out in the Annexure hereto, shall be given effect to in the Union of India with effect from the date of entry into force of said agreement i.e., the 25th day of November, 2013.

ANNEXURE

AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF BELIZE FOR THE EXCHANGE OF INFORMATION WITH RESPECT TO TAXES

The Government of the Republic of India and the Government of Belize, desiring to facilitate the exchange of information with respect to taxes, have agreed as follows:

ARTICLE 1

OBJECT AND SCOPE OF THE AGREEMENT

The competent authorities of the Contracting Parties shall provide assistance through exchange of information that is foreseeably relevant to the administration and enforcement of the domestic laws of the Contracting Parties concerning taxes covered by this Agreement. Such information shall include information that is foreseeably relevant to the determination, assessment and collection of such taxes, the recovery and enforcement of tax claims, or the investigation or prosecution of tax matters. Information shall be exchanged in accordance with the provisions of this Agreement. The rights and safeguards secured to persons by the laws or administrative practice of the requested Party remain applicable to the extent that they do not unduly prevent or delay effective exchange of information.

ARTICLE 2

JURISDICTION

Information shall be exchanged in accordance with this Agreement without regard to whether the person to whom the information relates is, or whether the information is held by, a resident of a Contracting Party. However, a Requested Party is not obliged to provide information which is neither held by its authorities nor is in the possession or control of persons who are within its territorial jurisdiction.

ARTICLE 3

TAXES COVERED

1. The taxes which are the subject of this Agreement are:

(a)

in India, taxes of every kind and description imposed by the Central Government or the Governments of political subdivisions or local authorities, irrespective of the manner in which they are levied;

(b)

in Belize, taxes of every kind and description imposed by the Central Government or local authorities, irrespective of the manner in which they are levied.

2. This Agreement shall also apply to any identical or substantially similar taxes imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting Parties shall notify each other of any substantial changes, to the taxation and related information gathering measures which may affect the obligations of that Party pursuant to this Agreement.

ARTICLE 4

DEFINITIONS

1. For the purposes of this Agreement, unless otherwise defined:

(a)

the term “India” means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law, including the U.N. Convention on the Law of the Sea;

(b)

the term “Belize” means the land and sea areas as defined in Schedule 1 to the Belize Constitution, including the territorial waters and any other area in the sea and in the air within which Belize, in accordance with international law, exercises sovereign rights or its jurisdiction;

(c)

the term “Contracting Party” means India or Belize as the context requires;

(d)

the term “competent authority” means:

 

(i)

in the case of India, the Finance Minister, Government of India, or its authorized representative;

(ii)

in the case of Belize, the Minister of Finance or his authorised representative.

 

(e)

the term “person” includes an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting Parties;

(f)

the term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;

(g)

the term “publicly traded company” means any company whose principal class of shares is listed on a recognised stock exchange provided its listed shares can be readily purchased or sold by the public. Shares can be purchased or sold “by the public” if the purchase or sale of shares is not implicitly or explicitly restricted to a limited group of investors;

(h)

the term “principal class of shares” means the class or classes of shares representing a majority of the voting power and value of the company;

(i)

the term “recognised stock exchange” means:

 

(i)

in India, the National Stock Exchange, the Bombay Stock Exchange, and any other stock exchange recognised by the Securities and Exchange Board of India;

(ii)

in Belize, the International Stock Exchange of the United Kingdom and Republic of Ireland Limited, the New York Stock Exchange, the American Stock Exchange, the National Association of Securities Dealers’ Automated Quotation System of the United States of America or any other stock exchange approved for this purpose by the Minister of Finance; and

(iii)

any other stock exchange which the competent authorities agree to recognise for the purposes of this Agreement.

 

(j)

the term “collective investment fund or scheme” means any pooled investment vehicle, irrespective of legal form.

(k)

the term “public collective investment fund or scheme” means any collective investment fund or scheme provided the units, shares or other interests in the fund or scheme can be readily purchased, sold or redeemed by the public. Units, shares or other interests in the fund or scheme can be readily purchased, sold or redeemed “by the public” if the purchase, sale or redemption is not implicitly or explicitly restricted to a limited group of investors;

(l)

the term “tax” means any tax to which this Agreement applies;

(m)

the term “requesting Party” means the Contracting Party-

 

(i)

submitting a request for information to, or

(ii)

having received information from,

 

the requested Party.

(n)

the term “requested Party” means the Contracting Party—

 

(i)

which is requested to provide information, or

(ii)

which has provided information.

 

(o)

the term “information gathering measures” means laws and administrative or judicial procedures that enable a Contracting Party to obtain and provide the requested information;

(p)

the term “information” means any fact, statement, document or record in whatever form;

2. As regards the application of this Agreement at any time by a Contracting Party, any term not defined therein shall, unless the context otherwise requires or the competent authorities agree to a common meaning pursuant to the provisions of Article 9 of this Agreement, have the meaning that it has at that time under the law of that Party, any meaning under the applicable tax laws of that Party prevailing over a meaning given to the term under other laws of that Party.

ARTICLE 5

EXCHANGE OF INFORMATION UPON REQUEST

1. The competent authority of the requested Party shall provide upon request information for the purposes referred to in Article 1. Such information shall be exchanged without regard to whether the requested Party needs such information for its own tax purposes or whether the conduct being investigated would constitute a crime under the laws of the requested Party if such conduct occurred in the requested Party.

2. If the information in the possession of the competent authority of the requested Party is not sufficient to enable it to comply with the request for information, that Party shall use all relevant information gathering measures to provide the requesting Party with the information requested, notwithstanding that the requested Party may not need such information for its own tax purposes.

3. If specifically requested by the competent authority of the requesting Party, the competent authority of the requested Party shall provide information under this Article, to the extent allowable under its domestic laws, in the form of depositions of witnesses and authenticated copies of original records.

4. Each Contracting Party shall ensure that its competent authority, for the purposes of this Agreement, has the authority to obtain and provide upon request:

(a)

information held by banks, other financial institutions, and any person, including nominees and trustees, acting in an agency or fiduciary capacity;

(b)

information regarding the legal and beneficial ownership of companies, partnerships, collective investment funds or schemes, trusts, foundations, “Anstalten” and other persons, including, within the constraints of Article 2, ownership information on all such persons in an ownership chain; in the case of collective investment funds or schemes, information on shares, units and other interests; in the case of trusts, information on settlors, trustees and beneficiaries; in the case of foundations, information on founders, members of the foundation council and beneficiaries; and equivalent information in case of entities that are neither trusts nor foundations.

5. This Agreement does not create an obligation on the Contracting Parties to obtain or provide ownership information with respect to publicly traded companies or public collective investment funds or schemes unless such information can be obtained without giving rise to disproportionate difficulties.

6. The competent authority of the requesting Party shall provide the following information to the competent authority of the requested Party when making a request for information under the Agreement to demonstrate the foreseeable relevance of the information to the request:

(a)

the identity of the person under examination or investigation;

(b)

the period for which information is requested;

(c)

the nature of the information requested and the form in which the requesting Party would prefer to receive it;

(d)

the tax purpose for which the information is sought;

(e)

grounds for believing that the information requested is present in the requested Party or is in the possession or control of a person within the jurisdiction of the requested Party;

(f)

to the extent known, the name and address of any person believed to be in possession or control of the requested information;

(g)

a statement that the request is in conformity with the laws and administrative practices of the requesting Party, that if the requested information was within the jurisdiction of the requesting Party then the competent authority of the requesting Party would be able to obtain the information under the laws of the requesting Party or in the normal course of administrative practice and that it is in conformity with this Agreement;

(h)

a statement that the requesting Party has pursued all means available in its own territory to obtain the information, except those that would give rise to disproportionate difficulties.

7. The competent authority of the requested Party shall forward the requested information as promptly as possible to the requesting Party. To ensure a prompt response, the competent authority of the requested Party shall:

(a)

Confirm receipt of a request in writing to the competent authority of the requesting Party and shall notify the competent authority of the requesting Party of deficiencies in the request, if any, within 60 days of the receipt of the request.

(b)

If the competent authority of the requested Party has been unable to obtain and provide the information within 90 days of receipt of the request, including if it encounters obstacles in furnishing the information or it refuses to furnish the information, it shall immediately inform the requesting Party, explaining the reason for its inability, the nature of the obstacles or the reasons for its refusal.

ARTICLE 6

TAX EXAMINATIONS ABROAD

1. At the request of the competent authority of the requesting Party, the requested Party may allow representatives of the competent authority of the requesting Party to enter the territory of the requested Party, to the extent permitted under its domestic laws, to interview individuals and examine records with the prior written consent of the individuals or other persons concerned. The competent authority of the requesting Party shall notify the competent authority of the requested Party of the time and place of the intended meeting with the individuals concerned.

2. At the request of the competent authority of the requesting Party, the requested Party may allow representatives of the competent authority of the requesting Party to be present at the appropriate part of a tax examination in the requested Party, in which case the competent authority of the requested Party conducting the examination shall, as soon as possible, notify the competent authority of the requesting Party about the time and place of the examination, the authority or official designated to carry out the examination and the procedures and conditions required by the requested Party for the conduct of the examination. All decisions with respect to the conduct of the tax examination shall be made by the Party conducting the examination.

ARTICLE 7

POSSIBILITY OF DECLINING A REQUEST FOR INFORMATION

1. The competent authority of the requested Party may decline to assist:

(a)

where the request is not made in conformity with this Agreement; or

(b)

where the requesting Party has not pursued all means available in its own territory to obtain the information, except where recourse to such means would give rise to disproportionate difficulty; or

(c)

where disclosure of the information would be contrary to public policy (ordre public) of the requested Party.

2. This Agreement shall not impose on a Contracting Party the obligation:

(i)

to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, provided that information described in paragraph 4 of Article 5 shall not be treated as such a secret or trade process merely because it meets the criteria in that paragraph; or

(ii)

to obtain or provide information, which would reveal confidential communications between a client and an attorney, solicitor or other admitted legal representative where such communications are:

 

(a)

produced for the purposes of seeking or providing legal advice or

(b)

produced for the purposes of use in existing or contemplated legal proceedings; or

 

(iii)

to carry out administrative measures at variance with its laws and administrative practices, provided nothing in this subparagraph shall affect the obligations of a Contracting Party under paragraph 4 of Article 5.

3. A request for information shall not be refused on the ground that the tax claim giving rise to the request is disputed.

4. The requested Party shall not be required to obtain and provide information which the requesting Parly would be unable to obtain in similar circumstances under its own laws for the purpose of the administration or enforcement of its own tax laws or in response to a valid request from the requested Party under this Agreement.

5. The requested Party shall not decline to provide information solely because the request does not include all the information required under Article 5 if the information can otherwise be provided according to the law of the requested Party.

ARTICLE 8

IMPLEMENTATION LEGISLATION

The Contracting Parties shall enact any legislation necessary to comply with, and give effect to, the terms of the Agreement. Such legislation shall be enacted within six months of entry into force of this Agreement.

ARTICLE 9

MUTUAL AGREEMENT PROCEDURE

1. Where difficulties or doubts arise between the Contracting Parties regarding the implementation or interpretation of the Agreement, the competent authorities shall endeavour to resolve the matter by mutual agreement. In addition, the competent authorities of the Contracting Parties may mutually agree on the procedures to be used under Articles 5, 6 and 8 of this Agreement.

2. The competent authorities of the Contracting Parties may communicate with each other directly for purposes of reaching agreement under this Article.

ARTICLE 10

ENTRY INTO FORCE

1. The Contracting Parties shall notify each other in writing, through diplomatic channels, of the completion of the procedures required by the respective laws for the entry into force of this Agreement.

2. This Agreement shall enter into force on the date of the later of the notifications referred to in paragraph 1 of this Article and shall thereupon have effect forthwith.

ARTICLE 11

TERMINATION

1. This Agreement shall remain in force until terminated by either Contracting Party.

2. Either Contracting Party may, after the expiry of five years from the date of its entry into force, terminate the Agreement by serving a written notice of termination to the other Contracting Party through diplomatic channels.

3. Such termination shall become effective on the first day of the month following the expiration of a period of six months after the date of receipt of notice of termination by the other Contracting Party. All requests received up to the effective date of termination shall be dealt with in accordance with the provisions of the Agreement.

In witness whereof, the undersigned, being duly authorised thereto, have signed this Agreement.

DONE in duplicate at Belmopan this 18 day of Sept. 2013, each in the Hindi and English languages, both texts being equally authentic. In case of divergence of interpretation, the English text shall prevail.

[F.NO.503/4/2012-FTD-I]

 

6. Due date for filing Monthly payment of Central Excise Duties for the month of March For non SSI Units.


Title: 6. Due date for filing Monthly payment of Central Excise Duties for the month of March For non SSI Units.
Date: 2014-03-31

5. Due date for filing Monthly / Quarterly Challan for payment of Service Tax for all assesses for the month of March.


Title: 5. Due date for filing Monthly / Quarterly Challan for payment of Service Tax for all assesses for the month of March.
Date: 2014-03-31

4. Due date for filing Quarterly Reconciliation Return for transaction under CST Act within 3 months from the end of each quarter.


Title: 4. Due date for filing Quarterly Reconciliation Return for transaction under CST Act within 3 months from the end of each quarter.
Date: 2014-03-31

3. Due date of filing Wealth Tax Return in respect of previous year in case of assessees who have failed to file return on due dates.


Title: 3. Due date of filing Wealth Tax Return in respect of previous year in case of assessees who have failed to file return on due dates.
Date: 2014-03-31

2. Due date of filing return in respect of previous year in case of assessees who have failed to file return on due dates.


Title: 2. Due date of filing return in respect of previous year in case of assessees who have failed to file return on due dates.
Date: 2014-03-31

1. Due date for filing Quarterly payment of Central Excise Duties for the month of March For SSI Units.


Title: 1. Due date for filing Quarterly payment of Central Excise Duties for the month of March For SSI Units.
Date: 2014-03-31

Due date for filing Monthly Consolidated Statement of dues and remittance under EPF Scheme, 1952, EPS 1995 and Employees’ Deposit Linked Insurance Scheme, 1976 of the previous month to which the dues relate.


Title: Due date for filing Monthly Consolidated Statement of dues and remittance under EPF Scheme, 1952, EPS 1995 and Employees’ Deposit Linked Insurance Scheme, 1976 of the previous month to which the dues relate.
Date: 2014-03-25

Notification No.02/2014 dated 07-01-2014


Agreement for Avoidance of double taxation and prevention of fiscal evasion with foreign countries – Albania – 02/2014 – Dated 7-1-2014 – Income Tax

NOTIFICATION NO. 2/2014

DATED 7-1-2014

SO 47(E) - 1. Whereas, an agreement (hereinafter referred to as the said agreement) was entered into between the Government of the Republic of India and the Council of Ministers of Republic off Albania for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital which was signed at New Delhi on the 8th day of July, 2013;

2. And whereas, the date of entry into force of the said agreement is the 4th day of December, 2013, being the date of later of the notifications of completion of the procedures as required by the respective laws for entry into force of the said agreement, in accordance with paragraph 2 of Article 31 of the said agreement;

3. Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of said agreement between the Government of the Republic of India and the Council of Ministers of Republic of Albania for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital, as set out in the Annexure hereto, shall be given effect to in the Union of India with effect from date of entry into force of said agreement i.e., the 4th day of December, 2013.

ANNEXURE

AGREEMENT BETWEEN

THE GOVERNMENT OF THE REPUBLIC OF INDIA

AND

THE COUNCIL OF MINISTERS OF THE REPUBLIC OF ALBANIA

FOR THE AVOIDANCE OF DOUBLE TAXATION AND

THE PREVENTION OF FISCAL EVASION

WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL

The Government of the Republic of India and the Council of Ministers of the Republic of Albania, desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital and with a view to promoting economic cooperation between the two countries, have agreed as follows:

ARTICLE 1

PERSONS COVERED

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2

TAXES COVERED

1. This Agreement shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its political subdivisions or of its local authorities, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property and taxes on the total amounts of wages or salaries paid by enterprises.

3. The existing taxes to which the Agreement shall apply are in particular:

(a)

in Albania:

 

(i)

the income taxes (including corporate profits tax and personal income tax);

(ii)

the tax on small business activities, and

(iii)

the property tax;

 

(hereinafter referred to as “Albanian Tax”);

(b)

in India:

 

(i)

the income tax, including any surcharge thereon;

(ii)

the wealth tax, including any surcharge thereon;
(hereinafter referred to as “Indian tax”).

4. The Agreement shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws.

ARTICLE 3

GENERAL DEFINITIONS

1. For the purposes of this Agreement, unless the context otherwise requires:

(a)

the term “Albania” means the Republic of Albania, and when used in a geographical sense means the territory of the Republic of Albania including territorial waters and air space over them as well as any area beyond the territorial seas of the Republic of Albania which, under its laws and in accordance with international law, is an area within which the Republic of Albania may exercise its rights with respect to the seabed and subsoil and their natural resources;

(b)

the term “India” means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law, including the U.N. Convention on the Law of the Sea;

(c)

the terms “a Contracting State” and “the other Contracting State” mean the Republic of India or the Republic of Albania as the context requires;

(d)

the term “person” includes an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States;

(e)

the term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;

(f)

the term “enterprise” applies to the carrying on of any business;

(g)

the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

(h)

the term “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

(i)

the term “competent authority” means:

 

(i)

in Albania: the General Tax Department, authorized by the Ministry of Finance;

(ii)

in India: the Finance Minister, Government of India, or its authorized representative;

 

(j)

the term “national” means:

 

(i)

any individual possessing the nationality of a Contracting State;

(ii)

any juridical person, partnership or association deriving its status as such from the laws in force in a Contracting State;

 

(k)

the term “tax” means Albanian or Indian tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Agreement applies or which represents a penalty or fine imposed relating to those taxes;

(l)

The term “fiscal year” means:

 

(i)

in the case of Albania: the financial year beginning on the 1st day of January;

(ii)

in the case of India: the financial year beginning on the 1st day of April.

2. As regards the application of the Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

ARTICLE 4

RESIDENT

1. For the purposes of this Agreement, the term “resident of a Contracting State” means-any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of registration or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does net include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

(a)

he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);

(b)

if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;

(c)

if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;

(d)

if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. If the State in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement.

ARTICLE 5

PERMANENT ESTABLISHMENT

1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2. The term “permanent establishment” includes especially:

(a)

a place of management;

(b)

a branch;

(c)

an office;

(d)

a factory;

(e)

a workshop;

(f)

a sales outlet;

(g)

a warehouse in relation to a person providing storage facilities for others;

(h)

a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on; and

(i)

a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

3. (a) A building site or construction, installation or assembly project or supervisory activities in connection therewith constitutes a permanent establishment only if such site, project or activities last more than six months.

(b) The furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose constitutes a permanent establishment, but only where activities of that nature continue (for the same or connected project) within the country for a period or periods aggregating more than six months within any twelve month period.

4. Notwithstanding the preceding provisions of this Article the term “permanent establishment” shall be deemed not to include:

(a)

the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;

(b)

the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;

(c)

the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d)

the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;

(e)

the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;

(f)

the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent of an independent status to whom paragraph 7 applies – is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person:

(a)

has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or

(b)

has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise; or

(c)

habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself.

6. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 7 applies.

7. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph.

8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

ARTICLE 6

INCOME FROM IMMOVABLE PROPERTY

1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.

2. The term “immovable property” shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.

ARTICLE 7

BUSINESS PROFITS

1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the tax laws of that State. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights, or, by way of commission or other charges for specific services performed or for management, or, except in the case of banking enterprises, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than toward reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights, or by way of commission or other charges for.’ specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.

5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

ARTICLE 8

INTERNATIONAL TRAFFIC

1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircrafts in international traffic shall be taxable only in that State.

2. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbor of the ship is situated, or, if there is no such home harbor, in the Contracting State of which the operator of the ship is a resident.

3. Profits derived by a Transportation enterprise which is a resident of a Contracting State from the use, maintenance, or rental of containers (including trailers and other equipment for the transport of containers) used for the transport of goods or merchandise in international traffic shall be taxable only in that Contracting State unless the containers are used solely within the other contracting State.

4. For the purposes of this Article interest on investments directly connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft if they are integral to the carrying on of such business, and the provisions of Article 11 shall not apply in relation to such interest.

5. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

ARTICLE 9

ASSOCIATED ENTERPRISES

1. Where:

(a)

an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b)

the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

2. Where a Contracting State includes in the profits of an enterprise of the State – and taxes accordingly – profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall, if necessary consult each other.

ARTICLE 10

DIVIDENDS

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the-other Contracting State may be taxed in that other State.

2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the dividends. This paragraph shall not affect the. taxation of the company in respect of the profits out of which the dividends are paid.

3. The term “dividends” as used in this Article means income from shares of any kind, or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

5. Where, a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

ARTICLE 11

INTEREST

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but, if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State, provided that it is derived and beneficially owned by:

(a)

the Government, a political sub-division or a local authority of the other Contracting State; or .

(b)

(i) in the case of Albania, the Central Bank of Albania; and
(ii) in the case of India, the Reserve Bank of India, the Export-Import Bank of India, the National Housing Bank; or

(c)

any other institution as may be agreed upon from time to time between the competent authorities of the Contracting States through exchange of letters.

4. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 12

ROYALTIES AND FEES FOR TECHNICAL SERVICES

1. Royalties or fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such royalties or fees for technical services may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties or fees for technical services is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties or fees for technical services.

3. (a) The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films or films or tapes used for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience.

(b) The term “fees for technical .services” as used in this Article means payments of any kind, other than those mentioned in Articles 14 and 15 of this Agreement as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel.

4. The provisions of paragraph 1 and 2 shall not apply if the beneficial owner of the royalties, or fees for technical services being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

5. (a) Royalties and fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority, or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.

(b) Where under sub-paragraph (a) royalties or fees for technical services do not arise in one of the Contracting States, and the royalties relate to the use of, or the right to use, the right or property, or the fees for technical services relate to services performed, in one of the Contracting States, the royalties or fees for technical services shall be deemed to arise in that Contracting State.

6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the 3ther provisions of this Agreement.

ARTICLE 13

CAPITAL GAINS

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State.

3. Gains from the alienation of ships or aircraft operated in international traffic, or movable property pertaining to the operation of such ships or aircraft shall be taxable only in the Contracting State of which the alienator is a resident.

4. Gains from the alienation of shares in a company which is a resident of a Contracting State may be taxed in that State.

5. Gains from the alienation of any property other than that referred to in preceding paragraphs of this Article, shall be taxable only in the Contracting State of which the alienator is a resident.

ARTICLE 14

INDEPENDENT PERSONAL SERVICES

1. Income derived by an individual who is a resident of a Contracting State from the performance of professional services or other independent activities of a similar character shall be taxable only in that State except in the following circumstances, when such income may also be taxed in the other Contracting State:

(a)

if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or

(b)

if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year concerned; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State.

2. The term “professional services” includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, surgeons, dentists, auditors and accountants.

ARTICLE 15

DEPENDENT PERSONAL SERVICES

1. Subject-to-the provisions of Articles 16, 18, 19, 20 and 21T salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

(a)

the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year concerned, and

(b)

the remuneration is paid by, or on behalf of, an employer who is not. a resident of the other State, and

(c)

the. remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic, by an enterprise of a Contracting State may be taxed in that State.

ARTICLE 16

DIRECTORS’ FEES

Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or of a similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17

ARTISTES AND SPORTSPERSONS

1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from personal activities as such exercised in the other Contracting State, may be taxed in that other State.

2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

3. The provisions of paragraphs 1 and 2, shall not apply to income from activities performed in a Contracting State by entertainers or sportspersons if the activities are substantially supported by public funds of one or both of the Contracting States or of political subdivisions or local authorities thereof. In such a case, the income shall be taxable only in the Contracting State of which the entertainer or sportsperson is a resident.

ARTICLE 18

PENSIONS

Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.

ARTICLE 19

GOVERNMENT SERVICE

1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:

(i)

is a national of that State; or

(ii)

did not become a resident of that State solely for the purpose’ of rendering the services.

2. (a) Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages and other similar remuneration and to pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

ARTICLE 20

PROFESSORS, TEACHERS AND RESEARCH SCHOLARS

1. A professor, teacher or research scholar who is or was a resident of the Contracting State immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college or other similar approved institution in that other Contracting State shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding two years from the date of his arrival in that other State.

2. This Article shall apply to income from research only if such research is undertaken by the individual in the public interest and not primarily for the benefit of some private person or persons.

3. For the purposes of this Article, an individual shall be deemed to be a resident of a Contracting State if he is resident in that State in the fiscal year in which he visits the other Contracting State or in the immediately preceding fiscal year.

ARTICLE 21

STUDENTS

1. A student who is or was a resident of one of the Contracting States immediately before visiting the other Contracting State and who is present in that other Contracting State solely for the purpose of his education or training, shall besides grants, loans and scholarships be exempt from tax in that other State on:

(a)

payments made to him by persons residing outside that other State for the purposes of his maintenance, education or training; and

(b)

remuneration which he derives from an employment which he exercises in the other Contracting State if the employment is directly related to his studies.

2. In respect of grants, loans, scholarships and remuneration from employment not covered by paragraph 1, a student described in paragraph 1 shall, in addition, be entitled during such education or training to the same exemptions, reliefs or reductions in respect of taxes available to residents of the State which he is visiting.

3. The benefits of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this Article, for more than six consecutive years from the date of his first arrival in that other State.

ARTICLE 22

OTHER INCOME

1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

3. Notwithstanding the provisions of paragraph 1, if a resident of a Contracting State derives income from sources within the other Contracting State in form of lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any nature whatsoever, such income may be taxed in the other Contracting State.

ARTICLE 23

CAPITAL

1. Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.

2. Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or by movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, may be taxed in that other State.

3. Capital represented by ships and aircraft operated in international traffic by an enterprise of a Contracting State, and by movable property pertaining to the operation of such ships and aircraft shall be taxable only in that Contracting State.

4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

ARTICLE 24

ELIMINATION OF DOUBLE TAXATION

Double taxation shall be eliminated as follows:

1. In Albania:

(a)

Where a resident of Albania derives income or owns capital which, in-accordance with the provisions of this Agreement may be taxed in India, Albania shall allow:

 

(i)

as a deduction from the Albanian tax on the income of that resident an amount equal to the income tax paid in India; and

(ii)

as a deduction from the Albanian tax on the capital of that resident, an amount equal to the capital tax paid in India.

 

Such deduction in either case shall not, however, exceed that part of the Albanian tax on income or on capital as computed before the deduction is given, which is attributable, as the case may be, to the income or the capital which may be taxed in India.

(b)

Where in accordance with any provision of the Agreement income derived or capital owned by a resident of Albania is exempt from tax in Albania, Albania may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident take into account the exempted income or capital.

2. In India:

(a)

Where a resident of India derives income or owns capital which, in accordance with the provisions of this Agreement, may be taxed in Albania, India shall allow as a deduction from the tax on the income or capital of that resident, an amount equal to the tax paid in Albania.
Such deduction shall not, however, exceed that portion of the tax as computed before the deduction is given, which is attributable, as the case may be, to the income or capital which may be taxed in Albania.

(b)

Where in accordance with any provision of the Agreement income derived or capital owned by a resident of India is exempt from tax in India, India may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, take into account the exempted income or capital.

ARTICLE 25

NON-DISCRIMINATION

1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.

2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favorably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. This provision shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which a company of the other Contracting State has in the first mentioned State at a rate of tax which is higher than that imposed on the profits of a similar company of the first mentioned Contracting State, nor as being in conflict with the provisions of paragraph 3 of Article 7.

3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.

4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.

5. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.

ARTICLE 26

MUTUAL AGREEMENT PROCEDURE

1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 25, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.

2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.

ARTICLE 27

EXCHANGE OF INFORMATION

1. The competent authorities of the Contracting States shall exchange such information (including documents or certified copies of the documents) as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

2. Any information received under paragraph 1 by a Contracting State shall be treated 3s secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes, referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

(a)

to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b)

to supply information (including documents or certified copies -of the documents) which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

(c)

to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public).

4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to. the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.

ARTICLE 28

ASSISTANCE IN THE COLLECTION OF TAXES

1. The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.

2. The term “revenue claim” as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount.

3. When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.

4. When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned State or is owed by a person who has a right to prevent its collection.

5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature .as such. In. addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.

6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall only be brought before the courts or administrative bodies of that State. Nothing in this Article shall be construed as creating or providing any right to such proceedings before any court or administrative body of the other Contracting State.

7. Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be

(a)

in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or

(b)

in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection,

the competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first-mentioned State shall either suspend or withdraw its request.

8. In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation:

(a)

to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b)

to carry out measures which would be contrary to public policy (ordre public);

(c)

to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be. available under its laws or administrative practice;

(d)

to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other Contracting State.

ARTICLE 29

LIMITATION OF BENEFITS

1. Except as otherwise provided in this Article, a person (other than an individual), which is a resident of a Contracting State and which derives income from the other Contracting State shall be entitled to all the benefits of this Agreement otherwise accorded to residents of a Contracting State only if such a person is a qualified person as defined in paragraph 2 and meets the other conditions of this Agreement for the obtaining of any of such benefits.

2. A person of a contracting state is a qualified person for a fiscal year only if such a person is either:

(a)

a governmental entity; or

(b)

a company incorporated in either of the Contracting States, if -

 

(i)

the principal class of its shares is listed on a recognised stock exchange as defined in paragraph 5 of this Article and is regularly traded on one or more recognised stock exchanges, or

(ii)

at least 50% of the aggregate vote or value of the shares in the company is owned directly or indirectly by one or more individuals residents of either of the Contracting States or/and by other persons incorporated in either of the Contracting States, atleast 50% of the aggregate vote or value of the shares or beneficial interest of which is owned directly or indirectly by one or more individuals residents of either of the Contracting States; or

 

(c)

a partnership or association of persons, at least 50% or more of whose beneficial interests is owned by one or more individuals residents of either of the Contracting States or/and by other persons incorporated in either of the Contracting States, at least 50% of the aggregate vote or value of the shares or beneficial interest of which is owned directly or indirectly by one or more individuals residents of either of the Contracting States; or

(d)

a charitable institution or other tax exempt entity whose main activities are carried on in either of the Contracting States:

Provided that the persons mentioned above will not be entitled to the benefits of the Agreement if more than 50% of the person’s gross income for the taxable year is paid or payable directly or indirectly to persons who are not residents of either of the Contracting States in the form of payments that are deductible for the purpose of computation of tax covered by this Agreement in the person’s state of residence (but not including arm’s length payment in the ordinary course of business for services or tangible property and payments in respect of financial obligations to a bank incurred in connection with a transaction entered into with the permanent establishment of the bank situated in either of the Contracting States).

3. The provisions of paragraphs 1 and 2 shall not apply and a resident of a Contracting State will be entitled to benefits of the Agreement with respect to an -item of income derived from the other State, if the resident actively carries on business in the State of residence (other than the business of making or managing investments for the resident’s own account unless these activities are banking, insurance or security activities) and the income derived from the other Contracting States is derived in connection with or is incidental to that business and that resident satisfies the other conditions of this Agreement for the obtaining of such benefits.

4. A resident of a Contracting State shall nevertheless be granted the benefits of the Agreement if the competent authority of the other Contracting State determines that the establishment or acquisition or maintenance of such person and the conduct of its operations did not have as one of its principal purposes the obtaining of benefits under the Agreement.

5. For the purposes of this Article the term ‘recognised stock exchange’ means

(a)

in India, any stock exchange which is recognised under the Securities Contracts (Regulation) Act, 1956; and

(b)

any other stock exchange which the competent authorities agree to recognise for the purposes of this Article.

6. Notwithstanding anything contained in paragraphs 2 to 5 above, any person shall not be entitled to the benefits of this Agreement, if its affairs were arranged in such a manner as if it was the main purpose or one of the main purposes to avoid taxes to which this Agreement applies.

ARTICLE 30

MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.

ARTICLE 31

ENTRY INTO FORCE

1. The Contracting States shall notify each other in writing, through diplomatic channels, of the completion of the procedures required by the respective laws for the entry into force of this Agreement.

2. This Agreement shall enter into force on the date of the later of the notifications referred to in paragraph 1 of this Article.

3. The provisions of this Agreement shall have effect:

(a)

in Albania, in respect of income derived or capital owned on or after the first day of January’ of the calendar year next following the year in which the Agreement enters into force;

(b)

in India, in respect of income derived or capital owned in any fiscal year beginning on or after the first day of April next following the calendar year in which the Agreement enters into force.

ARTICLE 32

TERMINATION

This Agreement shall remain in force indefinitely until terminated by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving the written notice of termination at least six months before the end of any calendar year beginning after the expiration of a period of five years from the date of entry into force of the Agreement. In such event, the Agreement shall cease to have effect:

(a)

in India, in respect of income derived or capital owned in any fiscal year on or after the first day of April next following the calendar year in which the notice is given.

(b)

in Albania, in respect of income derived or capital owned on or after the first day of January of the calendar year next following that in which the notice of termination is given;

IN WITNESS WHEREOF the undersigned, duly authorized thereto, have signed this Agreement.

DONE in duplicate at New Delhi on this 8th day of July, 2013 each in English Hindi and Albanian languages, all texts being equally authentic. In case of divergence between texts, the English text shall prevail.

[F.NO.501/1/2003-FTD-I]

 

Due date for filing Monthly Payment of ESI Contribution for the previous month (plus grace period of 5 days)


Title: Due date for filing Monthly Payment of ESI Contribution for the previous month (plus grace period of 5 days)
Date: 2014-03-17

5. Due date for filing Monthly Payment of Provident Fund Contribution for the previous month (plus grace period of 5 days)


Title: 5. Due date for filing Monthly Payment of Provident Fund Contribution for the previous month (plus grace period of 5 days)
Date: 2014-03-14

4. Due date for filing Exempted establishment EPS/ EDLIS Monthly Return of members joining/leaving service during the previous month.


Title: 4. Due date for filing Exempted establishment EPS/ EDLIS Monthly Return of members joining/leaving service during the previous month.
Date: 2014-03-14

2. Due date for Deposit of tax deducted at source during the previous month.


Title: 2. Due date for Deposit of tax deducted at source during the previous month.
Date: 2014-03-15

1. Due date for filing Advance Income Tax in case of company/ non-corporate assessee.


Title: 1. Due date for filing Advance Income Tax in case of company/ non-corporate assessee.
Date: 2014-03-15

978/2/2014-CX dated 07-01-2014


Levy of the Education Cess and the Secondary and Higher Education Cess on other cesses- reg. – Dated 7-1-2014 – Central Excise

 

Circular No. 978/2/2014-CX

F.No.262/2/2008-CX.8

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

New Delhi, the 7th January, 2014

To

(1)   The Chief Commissioner of Central Excise (All)

(2)   The Chief Commissioner of Central Excise & Customs (All)

(3)   The Chief Commissioner of Customs (All)

(4) Directors General (All)

(5) Webmaster.cbec@icegate.gov.in

Madam/Sir,

Sub: Levy of the Education Cess and the Secondary and Higher Education Cess on other cesses- reg.

Attention is invited to Circular No. 345/2/2004-TRU (Pt.) dated 10th August, 2004, in which it was clarified that the Education Cess chargeable under Section 93(1) of theFinance (No.2) Act, 2004 is to be calculated by taking into account only such duties which are both levied and collected by the Department of Revenue.

2.   Representations have been received from trade and field formations seeking clarification as to whether the Education Cess chargeable under Section 93(1) of theFinance (No.2) Act, 2004 and the Secondary and Higher Education Cess chargeable under Section 138(1) of the Finance Act, 2007 should be calculated taking into account the cesses which are collected by the Department of Revenue but levied under an Act which is administered by different departments such as Sugar Cess levied under Sugar Cess Act, 1982, Tea Cess levied under Tea Act, 1953 etc.

3.   The matter has been examined. A cess levied under an Act which is not administered by Ministry of Finance (Department of Revenue) but only collected by Department of Revenue under the provisions of that Act cannot be treated as a duty which is both levied and collected by the Department of Revenue.

4.   It is, therefore, reiterated that the Education Cess and the Secondary and Higher Education Cess are not to be calculated on cesses which are levied under Acts administered by Department/Ministries other than Ministry of Finance (Department of Revenue) but are only collected by the Department of Revenue in terms of those Acts.

5.   All pending assessment may be finalized accordingly.

6.   Difficulties, if any, may be brought to the notice of Board.

Yours faithfully,

(Vikas Kumar)

Director (CX.8)

Service tax on works contracts – post L&T decision – 07-01-2014


JANUARY 07, 2014

By S Sivakumar, LL.B., FCA, FCS, ACSI, Adv.

I had in my two write-ups carried by TIOL on 30/09/ 2013 & 25/10/ 2013 tried to understand the historic decision of the Hon’ble Supreme Court in the L&T case [2013-TIOL-46-SC-CT-LB ]. The purpose of the present piece is to specifically look at the service tax implications arising out of this decision.

One might ask,What hasservice tax got to do with the L&T decision? After all, this is a decision given in the context of the VAT law and how can this decision have an impact on service tax law. And, vis-à-vis service tax, won’t the sub-silentio concept apply?

In my view although the L&T decision has been rendered in the context of the VAT law, there can be no denying the fact that this decision will have a bearing on the service tax law on works contracts given the fact that w.e.f 1-7-2012 for a transaction to be a works contract under the service tax law, it is a pre-requisite that the same transaction should be a works contract under the VAT law as well, apart from meeting certain other requirements. Hence, it becomes clear that the service tax law on works contracts will have to follow the VAT law on service tax, with folded hands. Given this…. how can one not recognize the impact of the L&T decision on service tax levy on works contracts?

Para 115 of this decision will have a direct bearing on the levy of service tax on works contracts, vis-à-vis the VAT levy. This all important short para of the decision is reproduced below….

Quote

115. It may, however, be clarified that activity of construction undertaken by the developer would be works contract only from the stage the developer enters into a contract with the flat purchaser. The value addition made to the goods transferred after the agreement is entered into with the flat purchaser can only be made chargeable to tax by the State Government.

Unquote

It is clear that, in terms of Para 115, the typical civil works contract, involving construction of flats, commercial buildings, etc. can be subjected to the service tax levy, only in respect of the value addition that happens post the date of the agreement entered into with the flat buyer. Let us assume that the total value of a flat is Rs. 100 lakhs, with Rs. 30 lakhs being treated as the value of the land. Further assume that, as on the date of the agreement between the Developer and the flat purchaser, 70% of the work has already been completed in the flat. In terms of the L&T decision, only Rs. 21 lakhs representing 30% of Rs. 70 lakhs can be treated as a works contract, while Rs. 49 lakhs representing 70% of Rs. 70 lakhs would be treated as the value of sale of immovable property by the Developer/Landowner. From the service tax law point of law (as well as, under the VAT law) it is then clear that, the States can levy sales tax/VAT only on the portion of the value that is attributable post the date of the agreement.

While the discussion insofar as the VAT law can perhaps conclude here, a discussion on the service tax levy on works contracts would need to consider the impact arising out of a competing entry, which stands in the name of ‘construction services’. Even prior to 1-7-2012, as we know, we have had these two competing entries which dictated the levy of service tax on works contracts, viz. construction services and works contract services. One would recall that while commercial construction services were brought into the service tax net from 10-9-2004, residential construction services were subjected to service tax levy from 16-6-2005. Of course, works contract services were brought into the service tax net, as a new service, from 1-6-2007. We must bear in mind that, all of these services, though seemingly overlapping, have successfully survived, independent of each other, in the pre 01-07-2012 era. Nay, it would seem that they would continue to survive, in their individual avatars, even after 1-7-2012, in terms of the description of the taxable services under Sections 66E(b) and 66E(h), of the Finance Act, 1994.

It is very interesting to note that, the word ‘works contract’ has not been used at all, in terms of the language used in Section 66E(b) (as well as, under the definition of ‘Commercial or Industrial Construction services’ and ‘Construction of Complex services’ as they existed prior to 1-7-2012) and this consequently, gives rise to the view that, the L&T decision would NOT have a bearing in so far as the levy of service tax on ‘construction services’ covered under Section 66E(b) is concerned. While Section 66E of the Finance Act, 1994 does not talk of classification of taxable services, one must bear in mind that, the constitutional validity of a similar entry in terms of the Explanations inserted to the definition of ‘commercial or industrial construction’ services and ‘construction of complex’ services was upheld by the High Courts of Bombay, Punjab & Haryana and Madras. Given further the fact that this entry is under the ‘Declared List’, the chances of a challenge to its legality on constitutional grounds look very bleak.

Be that as it may….. a close look at the description of services under Section 66E(b) and Section 66E(h) would indicate that, while services covered under the earlier entry could cover the services rendered under the latter entry, the converse is not true. Thus, works contracts, which are otherwise covered under Section 66E(h) could very well get covered under Section 66E(b), while the reverse is not true. Hence, there is every possibility for a ‘works contract’ transaction to be treated as ‘construction services’, in terms of Section 66E(b) and the Developer/Builder being required to pay service tax on works contracts, in terms of the entry under Section 66E(b). In terms of the law that exists now, the Developer/Builder would have the choice to opt for either of the entries under Section 66E(b) or Section 66E(h). But, in the aftermath of the L&T decision, it would seem that, there would be a lot of pressure (from the Department, of course) for the Developer/Builder to pay service tax under ‘construction services’ by opting for the Abatement Scheme under Notification No. 26/2012-ST, in terms of which, service tax is payable on 25% of the total value inclusive of the value of the land, subject to the condition that the carpet area of the flat is less than 2000 square feet or when the total value is less than Rs. 1 crore. Else, the service tax would be payable on 30% of the total value, inclusive of the land value, under Notification No. 26/2012-ST.

Another interesting question that would arise is, whether the Developer/Builder can continue to discharge service tax liability on 40% of the entire construction value, based on Rule 2A of the Service Tax (Determination of Value) Rules, 2006, without considering the impact of the L&T decision. This would seem to be an impossibility inasmuch as once the Developer/Builder treats his service as a ‘works contract’, in terms of Section 66E(h), service tax can be levied only on the value addition yet to be effected, as on the date of the agreement, in terms of the L&T decision, as the service tax law on works contracts would follow the VAT law.

In effect, post L&T decision, the Developer/Builder would seem to have two choices, viz.

++ to classify his service as a ‘works contract’ in terms of Section 66E(h) and pay service tax in terms of the L&T decision, on the balance value of construction completed on and after the date of the agreement.

++ to classify his service as ‘construction service’ in terms of Section 66E(b) and opt for the abatement scheme under Notification No. 26/2012-ST.

In my view…. the Developer/Builder would be well advised to opt for this route rather than take the risk of implementing the L&T decision and opting to collect service tax on the value of the work done post the date of the agreement and also lose the CENVAT credit for the portion of the service attributable to the pre-agreement period.Taking the above example….I would wonder if the Service Tax Department would let go of the huge drop in the service tax quantum, in terms of the service being brought under Section 66E(h) as contrasted to Section 66E(b). In the case of the former, the service tax would be leviable on Rs. 21 lakhs, while if the service is brought under Section 66E(b), service tax would be leviable on Rs. 1 crore.

Now…. how does the L&T decision affect the levy of service tax in respect of Joint Development Agreements? Let’s take a look at Para 111 of the decision, which reads as under:

Quote

111. In the development agreement between the owner of the land and the developer, direct monetary consideration may not be involved but such agreement cannot be seen in isolation to the terms contained therein and following development agreement, the agreement in the nature of the tripartite agreement between the owner of the land, the developer and the flat purchaser whereunder the developer has undertaken to construct for the flat purchaser for monetary consideration. Seen thus, there is nothing wrong if the transaction is treated as a composite contract comprising of both a works contract and a transfer of immovable property and levy sales tax on the value of the material involved in execution of the works contract. The observation in the referral order that if the ratio in Raheja Development1 is to be accepted then there would be no difference between works contract and a contract for sale of chattel as chattel overlooks the legal position which we have summarized above. 111. In the development agreement between the owner of the land and the developer, direct monetary consideration may not be involved but such agreement cannot be seen in isolation to the terms contained therein and following development agreement, the agreement in the nature of the tripartite agreement between the owner of the land, the developer and the flat purchaser whereunder the developer has undertaken to construct for the flat purchaser for monetary consideration. Seen thus, there is nothing wrong if the transaction is treated as a composite contract comprising of both a works contract and a transfer of immovable property and levy sales tax on the value of the material involved in execution of the works contract. The observation in the referral order that if the ratio in Raheja Development1 is to be accepted then there would be no difference between works contract and a contract for sale of chattel as chattel overlooks the legal position which we have summarized above.

Unquote

There is a view that, in terms of Para 111, reproduced above, even Joint Development Agreements could get treated as works contracts under the VAT law. In this context, it would be interesting for TIOL readers to note that, the Karnataka High Court is yet to pronounce its verdict on the leviability of VAT on joint development agreements. Till the VAT law on this highly contentious subject is settled,the question of levying service tax on joint development agreements would not arise, in my view, as the service tax law on works contract would necessarily have to follow the VAT law, not-withstanding some CESTAT decisions, the Board Circular No. 151/2/2012-ST dated February 10, 2012 and the Education Guide.

I am aware that in some states there is a statutory provision in the VAT law for levying tax on joint development agreements. In such States, the service tax levy on joint development agreements would follow the VAT law. However, in the case of Karnataka, we do not have such a provision and VAT is sought to be levied on the basis of a Circular issued by the Commissioner of Commercial Taxes, Karnataka in 2009, the legal validity of which, is before the Karnataka High Court. Given this….the law on levy of service tax on joint development agreements would attain finality only after the VAT law is settled.

There is yet another service tax related valuation issue that would crop up in respect of construction contracts post the L&T decision. The Hon’ble Apex Court makes a strong statement that the label of payment is not decisive but the factum of the payment is. A simple reading of this important statement could lead one to conclude that, Developers/Builders would be better off by including certain contentious items like non-refundable deposits, amounts collected towards providing water/electricity connections, etc., for purposes of valuation of the taxable services.

Before parting……

It would seem that, the safe route for the Developer/Builder would be to opt for the Abatement Scheme under Notification No. 26/2012-ST and collect and discharge service tax liability after availing the abatement benefit, rather than take the route in terms of Section 66E(h) of the Finance Act, 1994. There would, of course, be no need for reversal of CENVAT credit under Rule 6(3) of the Cenvat Credit Rules, 2004. With full CENVAT credit availability, this would seem to be a ‘safe harbour’ for Developers/Builders, rather than going on a litigation path vis-à-vis ‘works contract’ services.

Even from a practical perspective, it would seem that implementing the L&T decision would pose great challenges, especially, in terms of valuation of the work done up to the date of the agreement. Even from this angle, the Developers/Builders would be better off to opt to classify their services under ‘constructions services’ and avail of the entire cenvat credit. As such, there is no statutory bar for the Developer/Builder who has been paying tax under ‘works contract’ services to shift to paying tax under ‘construction services’.

Given the fact that the L&T decision has been rendered in the context of civil construction contracts, it would not be wise to extend the implications from this decision to other works contracts like AMCs, etc.

In terms of the pure Developers, who have contracted out the complete construction activity to contractors, it is interesting to note that, the Apex Court, while referring to its own decision in State of AP v. L&T Ltd [ 2008-TIOL-186-SC-CT] which had laid down the law that it is the contractor who transfers property in goods to the property buyer who is to be treated as the ‘works contractor’ has not overruled this decision. Thus, while pure Developers would not be works contractors under the VAT law as well as, under the service tax, they would still be covered under ‘construction services’ in terms of Section 66E(b).

No proposal to raise quota of subsidised LPG cylinders: Oil Secretary : 07-01-2014


The Government has no proposal before it to raise the quota of subsidised LPG cylinders to 12 per household in a year from the current limit of nine, Oil Secretary Vivek Rae has said.

“There is no proposal in my ministry,” he told reporters here today on the sidelines of an industry event.

Finance Minister P. Chidambaram had last week stated that there were demands from “several chief ministers” for raising the quota of subsidised cylinders and the government “will look into” them.

Rae said his ministry, as of now, is not processing or proposing any change in the subsidised quota.

“I am not aware if there is any decision (on raising the limit) at political level,” he said.

With a view to cutting its subsidy bill, the Government had capped the supply of subsidised domestic LPG cylinders to six per household in a year in September 2012. The quota was raised to nine bottles per household a year in January 2013.

Officials said state-owned oil firms currently lose Rs 762.70 per cylinder on the sale of subsidised LPG and the Government will have to pay higher subsidy if the quota is raised.

Source : PTI

Rupee trading slightly weak at 62.36 : 07-01-2014


The rupee was trading slightly weak at 62.36 against the dollar at 11.40 a.m. local time on thin volumes as investors await crucial data on inflation next week.

The domestic unit had ended weak by 17 paise at 62.33 on Monday due to strong American currency and weak domestic equity market.

After opening weak by 7 paise at 62.40 day at the Interbank Foreign Exchange market, the rupee largely remained range-bound in the morning session, trading in a narrow range of 62.41 to 61.34 per dollar.

The American currency was also trading strong against overseas currencies on continued sentiments of positive outlook given by the US central bank last week.

Asian currencies were trading mixed compared to the dollar.

Further, the BSE-benchmark Sensex was trading down by 113.46 points (0.55 per cent) at 20,673.84 points in the morning trade.

Call rates and bonds

In the morning trade, the interbank call money rate, the rate at which banks borrow short-term money from each other, was trading marginally down at 8 per cent from Monday’s close of 8.75 per cent.

Amid less movement during the day, the yield on benchmark government security 8.83 per cent, maturing in 2023, was trading flat from the previous close of 8.78 per cent. Prices were trading a tad softer at Rs100.27 from Monday’s close of Rs 100.29.

“With the extent of liquidity support likely to be lower through open market operations (OMOs), we now expect the 10-year yield to settle around 8.5 per cent by March 2014,’’ a YES Bank report had said on Monday.

Source : Business Line

F.NO.225/189/2013/ITA.II dated 06-01-2014



Section 138 of the Income-Tax Act, 1961 – Central Board of Direct Taxes specified authority for the purpose of providing information for purposes of implementation of National Food Security Act, 2013. – Order-Instruction – Dated 6-1-2014 – Income Tax

 

ORDER

DATED 6-1-2014

1. In exercise of powers conferred under section 138(1)(a) of Income-tax Act, 1961, the Central Board of Direct Taxes hereby directs that Director General of Income-tax (Systems) shall be the specified authority for the purpose of providing following information for purposes of implementation of National Food Security Act, 2013.

Information about (i) Name; (ii) Father’s name; and (iii) Address of Resident individual Income-tax Payees of a particular State/Union Territory.

This information will be furnished to the designated authority of a State/Union Territory (as notified by Central Government vide Notification No. 1 dated 6-1-2014). The information shall be provided for two consecutive financial years prior to the financial year preceding the financial year in which information has been sought (For example, if information has been sought in FY 2013-14, the information shall be provided for FY 2010-11 and FY 2011-12)

2. It is also clarified that in case, it is found that some of the data about Resident Individual Income-tax payees being assessed in the particular State/Union Territory is not complete, such fact will be intimated to designated authority concerned of State/Union territory by Director General of Income-tax (Systems).

3. It is further clarified that due to confidentiality of data, the information will be provided by Director General of Income-tax (Systems) after signing of MoU with the designated authority concerned on behalf of such State/Union Territory which inter alia would include the mode of transfer of data, maintenance of confidentially and mechanism for safe preservation of data.

[F.NO.225/189/2013/ITA.II]

 

Notification No.01/2014 dated 06-01-2014


In pursuance of sub-clause (ii) of clause (a) of sub-section (1) of Section 138 of the Income Tax Act, 1961 – 01/2014 – Dated 6-1-2014 – Income Tax

(TO BE PUBLISHED IN PART 11, SUB-SECTION(11) OF

SECTION 3 OF THE GAZETTE OF INDIA)

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

NOTIFICATION NO. 01/2014

Dated: January 6, 2014

Whereas the Central Government is of the opinion that it is necessary to do so in the public interest and therefore, in pursuance of sub-clause (ii) of clause (a) of sub-section (1) of Section 138 of the Income-tax Act, 1961, the Central Government hereby specifies the officer of the rank of Secretary in various States(s) / Union territories in India who is responsible for implementation of the National Food Security Act, 2013 on behalf of respective Government in such State(s) / Union Territories, for the purposes of the said clause.

(F. No. 225/189/2013-ITA.II)

(Richa Rastogi)

Under Secretary to the Government of India

85 dated 06-01-2014


External Commercial Borrowings (ECB) Policy – Liberalisation of definition of Infrastructure Sector – Circular – Dated 6-1-2014 – FEMA

 

RBI/2013-2014/429

A.P. (DIR Series) Circular No. 85

January 6, 2014

To

All Category – I Authorised Dealer banks

Madam/Sir,

External Commercial Borrowings (ECB) Policy – Liberalisation of definition of Infrastructure Sector

Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to theNotification No. FEMA.281/2013-RB dated July 19, 2013 published in the Gazette of India vide G.S.R. No. 627 (E) dated September 12, 2013 and to the A.P. (DIR Series) Circular No. 48 dated September 18, 2013 in terms of which definition of infrastructure sector for the purpose of raising ECB was expanded taking into account the Harmonised Master List of Infrastructure sub-sectors and Institutional Mechanism for its updation approved by Government of India vide Notification F.No.13/06/2009-INF dated March 27, 2012.

2. On a review, it has been decided that, for the purpose of ECB, ‘Maintenance, Repairs and Overhaul’ (MRO) will also be treated as a part of airport infrastructure. Accordingly, MRO, as distinct from the related services which are other than infrastructure, will be considered as part of the sub-sector of Airport in the Transport Sector of Infrastructure.

3. All other aspects of ECB policy shall remain unchanged.

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

5. The directions contained in this circular have been issued under sections 10(4) and11(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

 

84 dated 06-01-2014


Issue of Non convertible/ redeemable bonus preference shares or debentures – Clarifications. – Circular – Dated 6-1-2014 – FEMA

 

RBI/2013-2014/428

A.P. (DIR Series) Circular No. 84

January 6 , 2014

To

All Category – I Authorised Dealer banks

Madam/Sir,

Issue of Non convertible/ redeemable bonus preference shares or debentures – Clarifications

Attention of Authorised Dealers Category- I (AD Category-I) banks is invited toRegulation (2ii) and Regulation 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 notified videNotification No.FEMA.20/2000 -RB dated May 3, 2000, as amended from time to time, in terms of which equity shares, compulsorily and mandatorily convertible preference shares and compulsorily and mandatorily convertible debentures are treated as a part of share capital for the purpose of Foreign Direct Investment.

2. Reserve Bank of India has been receiving references from some Indian companies regarding issue of non-convertible/ redeemable bonus preference shares or debentures to non-resident shareholders from the general reserve under a Scheme of Arrangement by a Court, under the provisions of the Companies Act, as applicable. So far, Reserve Bank has been granting permission for such issuances on a case-to-case basis. On a review and with a view to rationalizing and simplifying the procedures, it has been decided that an Indian company may issue non-convertible/redeemable preference shares or debentures to non-resident shareholders, including the depositories that act as trustees for the ADR/GDR holders, by way of distribution as bonus from its general reserves under a Scheme of Arrangement approved by a Court in India under the provisions of the Companies Act, as applicable, subject to no-objection from the Income Tax Authorities.

3. The above general permission to Indian companies is only for issue of non-convertible/ redeemable preference shares or debentures to non-resident shareholders by way of distribution as bonus from the general reserves. The issue of preference shares(excluding non-convertible/redeemable preference shares) and convertible debentures (excluding optionally convertible/partially convertible debentures) under the FDI scheme would continue to be subject to A.P. (DIR Series) Circular Nos.73 and74 dated June 8, 2007 as hitherto.

4. Reserve Bank of India has since amended the Regulations and notified videNotification No.FEMA.291/2013-RB dated October 4, 2013 notified vide G.S.R. No.818 (E) dated December 31, 2013.

5. AD Category – I banks may bring the contents of the circular to the notice of their constituents concerned.

6. The directions contained in this circular have been issued under Sections 10(4) and11(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

 

Rupee trading weak at 62.29 on strong dollar : 06-01-2014


The rupee was trading weak by 13 paise at 62.29 against the dollar at 11.38 a.m. local time.

The rupee opened weak by 17 paise at 62.33 due to strong dollar and lower domestic and Asian equity market. The domestic unit had ended strong at 62.16 on Friday.

The rupee hovered in the range of 62.26-62.46 per dollar during the morning session.

The American currency has strengthened against overseas currencies on upbeat outlook by the US central bank.

Outgoing Federal Reserve Chairman Ben Bernanke has fuelled the expectations of more stimulus reduction highlighting the positive outlook on the US economy.

Further, the BSE-benchmark Sensex was trading down by 70 points (0.33 per cent) at 20,782 points in the morning trade at about 10 a.m. local time.

Till such time, the Indian rupee moved in the 62.32 to 62.46 per dollar range at the Interbank Foreign Exchange market.

Call rates and bonds

In the morning trade, the interbank call money rate, the rate at which banks borrow short-term money from each other, was trading higher at 7.85 per cent from the previous close of 7.65 per cent on Friday.

Amid less movement during the day, the yield on benchmark government security 8.83 per cent (maturing in 2023) was trading softer at 8.81 per cent from Friday’s close of 8.83 per cent. Prices were trading higher at Rs 100.10 from Rs 99.95 on Friday.

 Source : The Economic Times

Narendra Modi promises to reform taxation system : 06-01-2014


Narendra Modi today promised to reform the taxation system in the country, saying it has become a burden on the common man and the need of the hour is to change it.

“The present taxation system is a burden on common man. It leads to bureaucratic control. The need of the hour is to look into it afresh and bring reforms. Our party is already working on it.

“…My party leaders and experts have recently met and considered the issue for over three hours. Some problems may appear in the first sight but we will have a look at it and find new solutions,” Modi said at an event organised by yoga guru Ramdev, who had demanded abolition of all kinds of taxes and pitched for a single ‘Banking Transaction Tax’ if the BJP leader becomes Prime Minister.

The BJP Prime Ministerial candidate’s remarks assume significance as the party has been talking about abolition of taxes in its internal meetings in the past as well. Former BJP President Nitin Gadkari had last month said that he was contemplating incorporating a proposal to abolish income, sales and excise taxes in the vision document of his party.

Gadkari is heading the team that is preparing the vision document for the general elections.

Ramdev had also said that once Modi succeeds in coming to power, he should declare the black money being held by Indians in foreign banks to be national wealth and bring it back and also set up a National Farmer Income Commission.

Modi as well as BJP President Rajnath Singh and Leader of Opposition in Rajya Sabha Arun Jaitley expressed support for the proposals saying the party would examine them in all seriousness.

“The expectation and hope, which Baba Ramdev has put in the BJP and me personally, we will try our best to live up ton it,” Modi said, adding, “If intentions are right, solutions can be found for all problems.”

Excessive taxes, Jaitley said, also cause a rise in black money as people stash away money illegally to evade levies.

He said the life of the common man had become all about paying taxes since his birth

to death, listing out numerous taxes levied on using road to house, service, electricity, water besides income tax.

“Whatever a man earns through his hard work, he can finally keep only a small fraction of it and the rest goes out… There is a dire need to simplify the tax regime, to rationalise it,” he said, adding he had come to appreciate points made by Ramdev and his aides following his long interactions with them over the years.

The BJP President also seconded the yoga guru’s demand, saying there is a need for reform. This alternative of transaction tax is very good. We will consider it and do the best we can”.

Modi blamed the “wrong” policies of the UPA government for economic woes, saying it had resulted in the decline of manufacturing industry, which required an immediate boost if economy was to recover.

He said “policy paralysis” had resulted in lack of coal for power industry despite India having vast reserves of it. Power projects have stalled, forcing us to import steel as industrialists cannot manufacture it here in the absence of electricity even though we have plenty of iron ore, he said.

that the word ‘disappointment’ was not in his dictionary.

Rajnath Singh contrasted the achievements of Atal Bihari Vajpayee-led NDA government and UPA regime, saying the former enjoyed “current account surplus” while the latter suffered from current account deficit.

Only 27 lakh news jobs were added to the economy during the UPA rule while NDA created employment for over six crore youths, he said.

Ramdev also used the occasion to hit out at Delhi Chief Minister Arvind Kejriwal and his party AAP for forming government with the support of Congress.

“There will be two poles in the elections. One will have Congress and all those who either give it or take from it support. Voting for them will be like voting for Congress. You will have to remember it,” he said.

He also spoke about recent cases of gold smuggling, invoking decades of 60s and 70s when it was rampant and caused the rise of underworld.

“Even sand is being smuggled these days. We are talking about corruption. State needs progressive policy drive and its execution with transparency. It will remove corruption,” he said.

BJP leaders also underlined their long commitment to fight against black money, recalling L K Advani’s yatra across the country on the issue.

Modi said despite having over 65 per cent of its population under 35 years of age, Indian had failed to capitalise on the strength of its young population, blaming UPA.

“This demographic dividend could have been an asset but the country’s leadership has converted it into demographic disaster,” he said, recalling how a high-powered body set up by Prime Minister for skill-development never met for three years while it was supposed to meet every three month.

He said things can be turned around with strong will and intention, stating

Source : PTI

2. Due date for filing Details of receipt and consumption of principal inputs and finished excisable goods – Declarations under central excise to be filed by a unit paying total duty (Cenvat Credit + Cash) of more than 1 crore.


Title: 2. Due date for filing Details of receipt and consumption of principal inputs and finished excisable goods – Declarations under central excise to be filed by a unit paying total duty (Cenvat Credit + Cash) of more than 1 crore.
Date: 2014-03-10

1. Last Date for filing of Return of Central Excise and Cenvat Credit for the previous month For non SSI Units/EOU Units.


Title: 1. Last Date for filing of Return of Central Excise and Cenvat Credit for the previous month For non SSI Units/EOU Units.
Date: 2014-03-10

5. Due date for Submission of copy of declaration forms (Form 15G and form 15H) received from deductee by the deductor for non deduction of TDS under section 197A before the Chief Commissioner or Commissioner.


Title: 5. Due date for Submission of copy of declaration forms (Form 15G and form 15H) received from deductee by the deductor for non deduction of TDS under section 197A before the Chief Commissioner or Commissioner.
Date: 2014-03-07

4. Last date of submission of declaration i.e., for no TCS u/s 206C(1A) obtained from manufacturer to the Commissioner/Chief Commissioner of Income Tax as the case may be.


Title: 4. Last date of submission of declaration i.e., for no TCS u/s 206C(1A) obtained from manufacturer to the Commissioner/Chief Commissioner of Income Tax as the case may be.
Date: 2014-03-07

3. Due date for Issue of TDS certificates for the tax deducted at source 7 days from the date of deposit of TDS.


Title: 3. Due date for Issue of TDS certificates for the tax deducted at source 7 days from the date of deposit of TDS.
Date: 2014-03-07

2. Due date for filing payment of TCS u/s 206C.


Title: 2. Due date for filing payment of TCS u/s 206C.
Date: 2014-03-07