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

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

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

Call Us : +91-7676887733
Email us : info@s3solutions.in
Download

For reforms’ sake, Narendra Modi govt must stop pampering small savers : 07-01-2017


Though the surge of liquidity has allowed banks to sharply cut rates for new borrowers—no bank has cut base rates—a longer-run solution is not possible unless the government stops pampering small savers. As long as interest rates on small savings like NSC and PPF remain high, this acts as a floor to bank interest rates—else, depositors will abandon them for post office accounts—and, in turn, on lending rates. It is for this reason that, last February, the government decided to recalibrate small savings’ rates regularly, in keeping with the regular fall in rates on government securities (G-Secs) which are the benchmark for all interest rates in the economy. As the release said, ‘small savings interest rates are perceived to limit the banking sector’s ability to lower deposit rates’; so, ‘in the context of easing the transmission of the lower interest rates”, the government announced it would recalibrate interest rates on small savings on a quarterly basis to ‘align the small saving interest rates with the market rates of the relevant Government securities’. For certain schemes like Sukanya Samriddhi Yojana and the Senior Citizen Savings Scheme, the spreads were kept at very high levels—75 bps and 100 bps, respectively—while for others like Kisan Vikas Patras and 1/2/3-year deposits, the 25 bps spread was removed. Certain dates were fixed for the rates to be notified on the basis of the previous quarter’s average GSec rates.

The first rate-cuts were made for April, though the cut which was to be announced in June—for the July to September period—was not made, and a very minor reset was done for the October to December period. No reset was announced—it was to be done on December 15—for the January to March period. As a result, interest rates on small savings continue to remain very high. While the yield on a 5-year G-Sec has fallen from 7.378% in April to 6.179% today, interest rates on 5-year NSCs are at 8%, down from 8.5% in FY16—since such savings were to have a 25 bps spread, the rates should have been around 6.7-6.8%; bank deposits of a similar tenure have seen rates fall from 7.5% in early April to 6.5% today. The PPF rate, based on the 25 bps spread it was to have over 10-year GSecs, should have been under 7% since the 3-month average bond yield was 6.57%—the actual rate is much higher at 8%. Once you factor in the tax benefits on small savings—interest earnings on PPF are tax-free—and keep in mind bank interest rates are taxable, the difference becomes even worse. Given the government had announced this reform almost a year ago, why it is not being implemented is odd—this makes it clear that a high degree of ad hocism still remains when it comes to even notified reforms.

Source : Financial Express

Sebi gives approval to BSE for international clearing corporations : 07-12-2017


Markets regulator Sebi has given approval to BSE for setting up a global clearing corporation in international financial services centre (IFSC) at Gujarat’s GIFT city.

Sebi has granted recognition to India International Clearing Corporation for one year, commencing on December 29, 2016, and ending on the December 28, 2017, the regulator said in a notification.

BSE, in November, had received in-principle approval from Sebi to set up international exchange and clearing corporations at Gujarat International Finance-Tech City (Gift City).

Trading members are expected to trade through India International Exchange (India INX), an arm of leading domestic bourse BSE, which is expected to go ‘live’ next week.

The BSE board at its meeting held on May 5, 2016, had approved creation of two wholly-owned subsidiary companies for the purpose of setting up the first international exchange and clearing corporations.

Rival National Stock Exchange (NSE), is also going to open its international exchange at GIFT IFSC in the near future.

Source : PTI

Budget 2017: Basic income for bottom 50% of public will be a political master-stroke : 07-01-2017


What the prime minister’s speech of December 31, 2016, made clear was that India was firmly moving away from the anti-poverty policies pursued by all previous governments. The new approach, made possible by technology, is to get away from the Amartya Sen advocated in-kind income transfers to some version of cash transfers.

Two major in-kind poverty alleviation policies in operation are PDS and NREGA. Both involve a large scale government involvement. The former has the government (Food Corporation of India) involved in procurement, storage, transport, and distribution of food. NREGA has the government planning projects, employing people, on what is touted as the largest work programme in the world. What is not as well-advertised (especially by the sponsors) is that both are amongst the most corrupt schemes in the world. Though given the recent demonetisation effort, one must add the biggest daddy of all corrupt—the Indian tax administration—to the list.

Study after PDS study has proven Rajiv Gandhi right in his (informed) 1985 conjecture that no more than 15% of PDS food distribution reaches the poor. What is not well-recognised, especially by the persistent PDS advocates, is that only 50 % of food procured and stored by the government reaches anybody, rich or poor. Where does this 50% go? Towards the generation of black income for corrupt government officials, liquor manufacturers, food mills, etc. Ditto with the NREGA programme where jobs (and income) are allocated to ghost workers and panchayat leaders. Together, the black income generated by these two programmes is more than 1% of GDP, or Rs 175,000 crore.

Helped by technology, and Aadhaar (Supreme Court, please note), the Direct Benefit Transfer (DBT) scheme has gathered considerable momentum over the last few years. A logical expansion of DBT is the policy of Universal Basic Income (UBI), i.e., a guaranteed minimum income to all (population, adult, worker, or variant thereof). Chief economic adviser Arvind Subramaniam has stated that the new Economic Survey will contain a large section on UBI. For those interested in efficient redistribution of income, this news is extremely welcome.

But should income transfers be universal, i.e., to every individual in the economy, or should they be targeted to specific individuals? And should government still pursue schemes like PDS and NREGA, or should such wasteful and corrupt government schemes be scrapped so that deserving individuals can get more? These two questions will hopefully be addressed in the Economic Survey.

In the meantime, some preliminary calculations to aid our thinking, and formulation, of a UBI policy. The accompanying table contains some basic data for the Indian economy for FY17. If the assumption is made that the distribution of consumption has not changed since FY12 (the real distribution did not change between 1983 and FY12; so, this is an eminently reasonable assumption), then some reasonable calculations can be made about the magnitude, and efficacy, of income transfer policy.

For FY12, data are from the NSS survey. For FY17, approximate (and lower bound) consumption data are obtained from wage data for ploughman and carpenters. The rate of growth in these wages of the poor and semi-skilled indicate an increase of 58% and 69%, respectively, over the last five years. The lower 58% growth is taken as the mean growth in expenditure for all. Consumer prices rose by 40% between FY12 and FY17; this implies that the Tendulkar poverty level in FY17 is no more than 9% of the population.

basic-income-1

This background information for India, circa FY17, yields important policy conclusions. The defining line for the absolute poor should not be absolute—it should increase with the level of per capita income, and should include the lower middle-class as well. The Tendulkar definition of poverty is now obsolete and captures too few of those deserving income transfers.

A poverty line some 22% higher (R1,525 per person per month) than the equivalent Tendulkar poverty line of R1,250 for FY17 yields a national poverty rate of 20%. The average poverty gap with the higher poverty line is approximately R300 per poor person per month. The poverty gap is defined as the difference between the average consumption level of the poor and the relevant poverty line. To reduce this new absolute poverty level (20% of population or 265 million) to zero, the government needs to transfer, on an annual basis, R1 lakh crore. This is only 0.7% of GDP. At present, via PDS and NREGA, the government spends R1.75 lakh crore (R1.35 lakh crore on PDS and R0.4 lakh crore on NREGA).

So, here is an efficient way for the government to eliminate poverty on an ongoing basis, and to help the lower middle-class as well, say 50% of the population. The demonetisation policy will allow increased personal income tax collections, possibly around R1 lakh crore to R1.5 lakh crore a year. Thus, R3 lakh crore are available with the government for redistribution if it decides to scrap PDS and NREGA (if it is serious about rooting out corruption, no better place to begin). [Income tax and data on consumption of automobiles and two-wheelers can easily help the government target the bottom 50%.]

Without any strain on the budget, the government can transfer R3 lakh crore to 265 million people, or approximately R1,000 per person per month. This will result in a 50% increase in consumption for the (median) 50th percentile consumer; and a 65% increase for the 25th percentile consumer. The PDS scheme, at best, transfers R160 per month to each person, rich or poor, lucky enough to receive, the transfer (a subsidy of R20 for each kilogram of PDS food consumed).

The political Opposition is demanding that the Budget be postponed because there are elections in five states in February and March. Even though there is a 2012 precedent, this demand seems most illogical. However, it is not an absurd political demand. Perhaps, the Opposition has broadly done the above calculations and believes that it is likely that a targeted basic income transfer scheme is in the offing. If such a policy is announced, it will be an economic and political master-stroke. Which is why the Opposition will go to extreme lengths to prevail. Unfortunately for them, they don’t have logic, law, or the numbers in Parliament to prevail.

Source : Economic Times

Notification No.2/2017 06-01-2017


Income tax (1st Amendment) Rules, 2017 – 2/2017

MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 2/2017

New Delhi, the 6th January, 2017

G.S.R. 14(E).-In exercise of the powers conferred by section 139A and section 285BA, read with 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, 2017.

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

2. In the Income-tax Rules, 1962 (hereinafter referred to as the principal rules), in rule 114B, after the third proviso, the following proviso shall be inserted namely,-

“Provided also that a person who has an account (other than a time deposit referred to at S.No.12 of the Table and a Basic Saving Bank Deposit Account) maintained with a banking company or a cooperative bank to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act) and has not quoted his permanent account number or furnished Form No. 60, as the case may be, at the time of opening of such account or subsequently, he shall furnish his permanent account number or Form No. 60, as the case may be, to the person specified in clause (c) of sub-rule (1) of rule 114C on or before the 28th day of February, 2017.”.

3. In the principal rules, in rule 114C, after sub-rule (2), the following sub-rule shall be inserted, namely:-

“3. The person referred to in sub-rule (1) or sub-rule (2) who has received any document in which permanent account number is mentioned or as the case may be, a declaration in Form No.60 has been furnished, shall ensure that the valid permanent account number or the fact of furnishing of Form No.60, is duly mentioned in the records maintained for the transactions referred to in rule 114B and the permanent account number or the details of Form No.60 are linked and mentioned in any information furnished to the income-tax authority or any other authority or agency under any provision of the Act or any rule prescribed therein.”.

4. In the principal rules, in rule 114D, in sub-rule (2), the following proviso shall be inserted, namely:

“Provided that the statement in respect of the transactions listed in clause (ii) of column (3) of serial number (10) of the Table under rule 114B shall be furnished on or before the 15th day of January, 2017.”

5. In the principal rules, in rule 114E,-

(i) in sub-rule (2), in the Table, after serial number 12 and entries relating thereto, the following serial number and entries shall be inserted, namely:-

Sl. No. Nature and value of transaction Class of person (reporting person)
(1) (2) (3)
“13. Cash deposits during the period 1st April, 2016 to 9th November, 2016 in respect of accounts that are reportable under Sl.No.12. (i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).”;

(ii) in sub-rule (5), in the proviso, after the words, brackets and figures “serial number (12)”, the words, brackets and figures “and serial number (13)” shall be inserted.

6. In the principal rules, in Appendix-II, in Form No.61A, in Part C, for ‘C.3’ and entries relating thereto, the following shall be substituted, namely:-

“C.3 ACCOUNT SUMMARY  
C.3.1 Aggregate gross amount credited to the account in cash  
C.3.2 Aggregate gross amount debited to the account in cash  
C.3.3 Aggregate gross amount credited to the account in cash from 1st day of April, 2016 to 8th November, 2016  
C.3.4 Aggregate gross amount credited to the account in cash from 9th day of November, 2016 to 30th day of December, 2016  
C.3.5 Remarks”.  

[F. No. 370142/32/2016-TPL]

Dr. T. S. MAPWAL, Under Secy.

Note : The principal rules were published vide notification S.O. 969(E), dated the 26th March, 1962 and last amended vide notification S.O. 4168(E) dated the 27thDecember, 2016.

25 – 05-01-2017


EXIM BANK’S GoI SUPPORTED LINE OF CREDIT OF US 4.22 MILLION TO GOVERNMENT OF REPUBLIC OF BURUNDI

A.P. (DIR SERIES 2016-17) CIRCULAR NO. 25DATED 5-1-2017

Export-Import Bank of India (Exim Bank) has entered into an Agreement dated February 14, 2014 with the Government of the Republic of Burundi for making available to the latter, a Government of India supported Line of Credit (LOC) of USD 4.22 million (USD Four million two hundred and twenty thousand) for the purpose of financing the farm mechanization in Burundi. The goods, machinery, equipment, 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% of the contract price shall be supplied by the seller from India and the remaining 25% goods and services may be procured by the seller for the purpose of the eligible contract from outside India.

2. The credit agreement under the LOC is effective from December 20, 2016 and the date of execution of agreement is February 14, 2014. Under the LOC, the last date for opening of letter of Credit and Disbursement will be 48 months for Project Export Contracts from the schedule completion date(s) of contract(s) and 72 months for supply contracts, from the date of execution of the Agreement.

3. Shipments under the LOC will have to be declared on EDF/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-I (AD Category-I) 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 section 10(4) and section 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.

 

Notification No. : 01/2016 Dated: 05-01-2017


EFFECTIVE EXCISE DUTY PAYABLE ON SPECIFIED PRODUCTS – AMENDMENT IN NOTIFICATION NO. 2/2011-C.E., DATED 1-3-2011

NOTIFICATION NO. 1/2017-C.E.DATED 5-1-2017

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, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 2/2011-Central Excise, dated the 1st March, 2011, published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (i), vide G.S.R. 117 (E), dated the 1st March, 2011, namely:-

In the said notification, in the Table, serial number 49 and the entries relating thereto shall be omitted.

 

No.01/2017 Dated: 04-01-2017


Double Taxation Agreement – India-Sweden Convention For Avoidable Of Double Taxation And Prevention Of Fiscal Evasion – Suspension Of Collection Of Taxes During Mutual Agreement Procedure (Map) – Order-Instruction

Instruction No. 1/2017

[F.NO.500/5/2016-APA-II],

Government of India Ministry of Finance Department of Revenue(Central Board of Direct Taxes)

New Delhi the, 4th January 2017

To,

All The Principal Chief Commissioners of Income-tax

Subject:  Double Taxation Agreement – India-Sweden Convention For Avoidable Of Double Taxation And Prevention Of Fiscal Evasion – Suspension Of Collection Of Taxes During Mutual Agreement Procedure (Map)

Attention is invited to Article 26 of the India – Sweden DTAC, which provides for Mutual Agreement Procedure (MAP) between the Competent Authorities of India and Sweden for avoiding taxation which is not in accordance with the Convention. During the pendency of MAP, recovery of tax demand could lead to potential hardships for the taxpayers as tax demand is yet to attain finality. Considering the hardship faced by the taxpayers during the pendency of MAP, as well as for efficient management of collection of revenue, the Competent Authorities of India and Sweden have signed a Memorandum of Understanding (MoLI) regarding suspension of collection of taxes during the pendency of MAP. In terms of the MoU, the collection of outstanding taxes in case of a taxpayer whose case is pending in MAP before the Competent Authorities of India and Sweden, would be kept in abeyance for a period of two years (extendable to a maximum period of five years through mutual agreement between the Competent Authorities of India and Sweden) subject to furnishing of a bank guarantee of an amount equal to the amount of tax under dispute and interest accruing thereon, as per the provisions of the Income-tax Act.

2. On receipt of a formal request for suspension of collection of outstanding tax from a taxpayer who is a resident of Sweden and where MAP has been invoked through the Competent Authority of Sweden, the Assessing Officers are required to keep the enforcement of collection of outstanding taxes in abeyance for a period of two years in respect of such taxpayers subject to fulfilment of the following conditions:

(i) the Foreign Tax and Tax Research I (FT&TR I) Division of the Central Board of Direct Taxes confirms the pendency of MAP; and

(ii) the taxpayer furnishes a bank guarantee to the Assessing Officer in the model draft format annexed to the MoU for an amount calculated in accordance with the manner indicated therein.

3. Further, the provisions of the MoU shall also apply to an Indian resident taxpayer in cases involving transfer pricing adjustments, where MAP has been invoked by the resident of Sweden through the Competent Authority of Sweden.

4. The effect of the MoU is that the furnishing of the bank guarantee should be treated as sufficient arrangement for exercising discretion by the Assessing Officer for extension of time limit for payment of taxes in terms of sub-section (3) of Section 220 of the Income-tax Act. The extension, however, shall subsist only for two years from the date on which communication from FT&TR I Division about the invocation/pendency of MAP is received by the Assessing Officer. This period of two years may be extended through mutual agreement between the Competent Authorities of India and Sweden and any such extension will be communicated to the Assessing Officer by FT&TR I Division of the CBDT. However, in no case shall the aggregate periods for which collection is suspended exceed five years.

5. In case the Competent Authorities of India and Sweden agree that there is no resolution possible, an intimation to this effect shall be given to the Assessing Officer who shall, thereafter, be entitled to enforce recovery of the taxes (including interest and penalty, if any). If the taxpayer fails to pay the taxes (including interest and penalty, if any), the Assessing Officer shall be entitled to invoke the bank guarantee. In case the time limit of two years has expired and no communication has been received from FT&TR I Division about MAP resolution, the Assessing Officer, before proceeding to making recoveries or invoking the bank guarantee, shall seek inputs from FT&TR I Division about the status of MAP in such cases. Recovery of taxes (including interest and penalty, if any) may only be proceeded with after getting confirmation from FT&TR I Division that no extension beyond two years has been granted through mutual agreement between the Competent Authorities of India and Sweden.

6. In cases where a resolution of dispute is arrived at by the Competent Authorities of India and Sweden after mutual consultation, the taxes (including interest and penalty, if any) payable by the Indian taxpayer shall be determined by the Assessing Officer in terms of such resolution, as per the procedure laid down in Rule 44H of the Income-tax Rules, 1962. After the revised notice of demand is sent to the taxpayer, the amount shall be recoverable from the taxpayer. In case the taxpayer fails to pay the demand, the bank guarantee so furnished shall be invoked after seeking the consent of the Indian Competent Authority, which shall grant the same after intimating its counterpart in Sweden.

7. The Assessing Officers as well as their controlling officers are advised to keep a close watch on the limitation of the bank guarantee furnished under the MAP. For this purpose, a control register should be maintained in the office of the Assessing Officers and the same may be periodically inspected by the jurisdictional Additional or Joint CIT and/or the jurisdictional Principal CIT or CIT.

8. A copy of the MoU, along with its Annexure containing the model draft format of the bank guarantee, is enclosed.

9. These instructions are issued under section 119 of the Income-tax Act and the same may be brought to the notice of all the officers in your charge.

MEMORANDUM OF UNDERSTANDING BETWEEN THE COMPETENT AUTHORITY OF INDIA AND THE COMPETENT AUTHORITY OF SWEDEN REGARDING SUSPENSION OF COLLECTION OF TAXES DURING MUTUAL AGREEMENT PROCEDURE

The Competent Authority of India

and

The Competent Authority of Sweden

Having regard to the hardship faced by the taxpayers during the pendency of a Mutual Agreement Procedure, under Article 26 of the Convention between the Government of the Republic of India and the Government of the Kingdom of Sweden for the avoidance of double taxation and the prevention of fiscal evasion with respect to faxes on income and on capital, which was signed on 24th June, 1997 (the “Convention”);

Having determined and agreed that efficient processing of Mutual Agreement Procedure (“MAP”) cases will be facilitated by suspending collection of any amounts of tax, including also any related interest or penalties, for any taxable years which are the subject of MAP proceedings;

WHEREAS:

(A) The Competent Authorities have arranged and desired to agree that with regard to amounts of taxes covered under Article 2 of the Convention and potentially payable to the Government of India, the Assessing Officer will suspend collection in accordance with this Memorandum;

and

(B) The Competent Authorities have arranged and desired to agree that with regard to amounts of taxes covered under Article 2 of the Convention and potentially payable to the Government of Sweden, the Swedish Tax Authority will suspend collection in accordance with this Memorandum.

NOW THEREFORE, in consideration of the premises, covenants and conditions herein contained and in implementing this arrangement:

(1) The tax authorities of India and Sweden shall retain the right to demand security in appropriate cases, as deemed fit and necessary to avoid prejudicing the interests of their respective governments.

(2) In India, as security, a taxpayer shall provide an irrevocable Bank Guarantee issued by any scheduled bank, or by an Indian branch of a foreign bank approved by the Reserve Bank of India to carry out banking business in India, as per Annexure ‘A’ to this Memorandum.

(3) In Sweden, as security, a taxpayer shall, upon demand, provide an irrevocable Bank Guarantee issued by a bank that is authorized by the Swedish Financial Supervisory Authority or any other form of security deemed adequate by the Swedish Tax Authority.

(4) The amount, if any, for which security is demanded under paragraph (2) or (3) above, as the case may be, shall not exceed the amount of additional tax demanded by the tax authority requiring the security (aggregated for all the periods pending before the Competent Authorities), and, if applicable, as adjusted by the Assessing Officer in accordance with domestic laws, and subject to further adjustment for interest on these amounts calculated at the statutory rate on non payments.

(5) Collection of any interest or penalty levied from the concerned taxpayer, in relation to amounts suspended from collection under this Memorandum, shall also be suspended subject to paragraph (A). For the avoidance of doubt, interest, if appropriate, will continue to run while the collection is suspended.

(6) The Competent Authorities shall endeavour to either resolve or close the case within a period of two years from the date on which one Competent Authority notifies the other that the application from the Taxpayer(s) for assistance under the MAP has been received.

(7) The maximum period for which collection can be suspended under this Memorandum shall be two years unless extended by mutual consent by both the Competent Authorities. However, in no case shall the aggregate periods for which collection is suspended exceed five years.

(8) Any draw-down upon a Bank Guarantee referred to in paragraph (2) or (3) above will be done after notification by one Competent Authority to the other about the completion of the Mutual Agreement Procedure, or of the time limit under paragraph (7), whichever earlier.

(9) In the event of a lapse of security under paragraph (2) or (3), the taxpayer shall be permitted to substitute another form of security under such paragraph, provided such substitution takes effect not less than 30 days prior to the lapse of the prior security. Such substitution will relieve the bank which provided the first Bank Guarantee from its obligations to the concerned Government of India or Sweden under that first security.

(10) The terms of this Memorandum may be reviewed by the Competent Authorities at anytime in the future upon the request of either party.

(11) This Agreement shall enter into force on the thirtieth day after the notification in writing by the Competent Authority of Sweden to the Competent Authority of India of the completion of the procedures required by its law for the entry into force of this Agreement. AVE AGREED as follows:

Dated at Stockholm, 7 February, 2013

For the Competent Authority of Sweden

For the Competent Authority of India

Annexure ‘A’

To

The President of India acting through and represented by

[Designation],

Income Tax Department,

Ministry of Finance,

Government of India, New Delhi.

Bank Guarantee

Bank guarantee as security for keeping the recovery of Tax Demand in abeyance during the pendency of Mutual Agreement Procedure (MAP)

[Applicable in case of non-resident assesses, and Indian companies and other entities affiliated with Swedish companies, who have invoked the Mutual Agreement Procedure]

This Deed of Bank guarantee made this . . . . . . . . . . . . . day of 20. . . , by [INSERT: Name and Address of Guaranteeing Bank] (hereinafter called “the Bank”, which expression shall, unless excluded by or repugnant to the context, include its successors and assignees) to the President of India acting through and represented by [Designation], Income Tax Department, Ministry of Finance, Government of India, New Delhi (hereinafter called “the Government”).

WHEREAS the Government has agreed that [INSERT: Name, Address, and permanent account number of the Assessee] (hereinafter called “the Assessee”, which expression shall, unless excluded by or repugnant to the context, include its successors and assignees) shall furnish a Bank Guarantee in respect of a demand of Rs. [INSERT: Amount of Tax in dispute] for the assessment year(s) . . . . . . . . . . . . in lieu of which the recovery of any part of such demand shall not be enforced until 30 days after the Assessing Officer receives written notice of the MAP Agreement between the Competent Authorities of the Governments of India and Sweden, and the Assessee will not be treated as in default for the above assessment year (s);

AND WHEREAS THE Bank has at the request of the Assessee agreed to execute these presents:

NOW THEREFORE THIS DEED WITNESSES AS FOLLOWS

In consideration of the Government agreeing to treat the Assessee as not in default for Rs. [INSERT: Amount of Tax in dispute, plus interest specified in paragraph (1) below] for the assessment year(s) . . . . . . . . . . . . . . . . .

1. The Bank irrevocably guarantees and undertakes, for the term provided in paragraph (2) below, that the Bank shall indemnify and keep indemnified the Government to the extent of the said sum of Rs [INSERT: Amount of Tax in dispute] (Rupees [written text]) and interest accruing at the rate specified in the Income-tax Act of 1961 as amended from time to time, for non-payment of taxes on this amount after [INSERT date from which recovery could otherwise be made] or any amount as adjusted by the order of the Assessing Officer which may be passed after the furnishing of the guarantee. On advice from the Government that the Assessee has failed and neglected to observe any of its obligations to the Government with regard to the terms and conditions of the agreements between the Assessee and the Government that may underlie this Bank Guarantee, the decision of the Government as to whether any amount should be paid out by the Bank to the Government hereunder shall be final and binding.

2. The Bank further agrees that the guarantee herein contained shall remain in full force and effect for a period of 3 years from the date hereof, i.e., till [INSERT: date]; and further agrees to renew this guarantee for another 3 years on the following terms: the Bank will provide the Government with written notice no later than 60 days prior to the expiration date of this Bank Guarantee if the taxpayer has not renewed the agreements between the Assessee and the Bank that underlie this Bank Guarantee for an additional period of 3 years. If the Government does not receive a renewal of this Bank Guarantee or a substitute Bank Guarantee for the amounts of tax and interest in dispute prior to 30 days before the expiration date of this Bank Guarantee, the Government may instruct the Bank to pay the guaranteed amounts prior to expiration of the Bank Guarantee.

Provided further that, notwithstanding any other things contained herein, the liabilities of the Bank shall be limited to the maximum of the guaranteed amount of Rs. [INSERT: Amount of tax in dispute]

(Rupees [INSERT: written text]), as increased by interest pursuant to paragraph (1) during the term of this Bank Guarantee; and unless a claim in writing is lodged with the Bank, or action to enforce the claim under the guarantee is filed or initiated against the Bank, within six months from the date of expiry of the guarantee period fixed hereunder or where such period is extended under the terms of this guarantee from the date of such extended period as the case may be, all the rights of the Government under this guarantee shall be forfeited and the Bank shall be relieved and discharged from liabilities hereunder.

3. The obligations of the Bank to the Government under this Bank guarantee will terminate upon the occurrence of any of the following for the taxable years in question:

(i) the payment by the Bank or the Assessee to the Government of the guaranteed amounts;

(ii) the payment by the Assessee to the Government of all amounts owed, as agreed to by the Competent Authorities in a MAP Agreement;

(iii) a MAP Agreement by the Competent Authorities that the Government will not seek to recover any part of the previously demanded amounts; or

(iv) the Assessee furnishes to the Government similar security from another Bank.

4. The guarantee herein contained shall not be discharged or affected by any change in the constitution either of the Assessee or of the Bank.

5. The Government shall have the fullest liberty without affecting the guarantee to postpone for any time, or from time to time, any of the powers exercisable by it against the Assessee, or to either enforce or forbear any of the terms and conditions under this guarantee or under the Income-tax Act and Income-tax Rules, and the Bank shall not be released from its liabilities under this guarantee by any exercise by the Government of the liberty with reference to the matter aforesaid or by reasons of time being given to the Assessee, or by any other act of forbearance or enforcement on the part of the Government, or by any indulgence by the Government to the Assessee, or by any other matter or thing whatsoever which under the law relating to sureties would but for these provisions have the effect of so releasing the Bank from its such liability. The Bank hereby agrees and undertakes that any claim which the Bank may have against the Assessee shall be subject and subordinate to the prior payment and performance in full of all the obligations of the Bank hereunder and the Bank will not without prior written consent of the Government exercise any legal rights or remedies of any kind in respect of any such payment or performance so long as the obligations of the Bank hereunder remain owing and outstanding, regardless of the insolvency, liquidation or bankruptcy of the Assessee or otherwise howsoever. The Bank will not counter claim or set off against its liabilities to the Government hereunder any sum outstanding to the credit of the Government with it.

6. This Bank Guarantee shall be governed by and construed in accordance with the laws of the Republic of India (without regard to its principles of conflict of laws).

7. The Bank undertakes not to revoke this guarantee during its currency except with the previous consent of the Government in writing.

8. Notwithstanding anything stated above, liability of the Bank under this guarantee is restricted to Rs. [INSERT: Amount of Tax in dispute, plus interest specified in paragraph (1) above] (Rupees [written text]) and is valid for the period(s) described in paragraph 2 above. Unless a demand or claim under this guarantee is lodged with the Bank on or before [INSERT: date, as established in paragraph (2) above], all rights of the Government under the said guarantee shall be forfeited and the Bank shall be relieved and discharged from all liabilities thereunder whether or not this document shall have been returned to the Bank.

IN WITNESS WHEREOF, the Bank, through its duly authorized representative, has set its hand stamp on this . . . . . . . . . . day of . . . . . . . . . .at . . . . . . . . . .

Witness For and on behalf of the Bank
(Signature) (Designation with Bank Stamp)
Name (Attorney as per power of Attorney No. . . . . . . . . . . )
Date

Budget 2017: No MAT relief for SEZ units likely : 04-01-2017


Special economic zone (SEZ) units and developers are unlikely to get relief from the minimum alternate tax (MAT) in the coming Budget despite a strong pitch for their removal by the commerce ministry, according to sources.

The revival of SEZs — once a growth engine for the country’s exports — was among the key steps proposed by the Board of Trade (BoT), headed by commerce and industry minister Nirmala Sitharaman, last year to help reverse a slowdown in the country’s exports. The BoT could again suggest steps to boost SEZs when it meets later this month, said an official. Currently MAT is levied at 18.5% on the book profit of firms, with the effective rate over 21%, factoring in surcharges and cess.

In fact, the commerce ministry has been consistent in its demand for the removal of MAT and the dividend distribution tax (on SEZ developers) in recent years on grounds that the tax exemption will improve export competitiveness in times of a slowdown in the international markets they cater for. However, the finance ministry is again reluctant to offer any breather, fearing revenue losses.

“The proposal (to scrap MAT, DDT) is very much there (this year), but you have to take a hard look at the revenue implications before anything of this sort is done,” an official source told FE. In the last Budget, international financial services centre were exempt from the DDT, but retained the same (at 20.4%) on SEZs.

Before the MAT and DDT were imposed in 2011-12, growth in exports from SEZs was as high as 121% (2009-10) and 43% (2010-11), far exceeding the increase in the country’s overall goods exports for these years. After a near 11% drop in 2014-15, exports from SEZs dropped 3.3% in the last fiscal.

Although they paid a few thousand crores as MAT in the last fiscal and another hundreds of crore as the dividend distribution tax, SEZs availed of direct tax breaks of R18,400 crore in 2014-15, a finance ministry official had earlier said, arguing that SEZs were still benefitting.

Source : Financial Express

Service charge advisory will create chaos: FHRAI : 04-01-2017


The apex body of restaurants and hotels in India has written to the Department of Consumer Affairs, asking it to withdraw an advisory making service charges optional, saying there was nothing illegal about levying the fee.

Making service charges discretionary will create chaos and disrupt the smooth functioning of restaurants across the country and lead to unnecessary litigation between them and consumers, said the Federation of Hotel & Restaurant Associations of India (FHRAI).

The department said on Monday that service charges billed by restaurants are optional and it is up to customers to pay them. The department cited complaints that hotels and restaurants are levying an additional 5 to 20% in bills in lieu of tips, regardless of the kind of service provided.

In its letter to the department, FHRAI said service charges – an amount paid to the staff of a restaurant or other establishment by customers and guests – are lawful and that it is up to an establishment to decide whether and how much to collect. FHRAI members met officials in the department on Tuesday and were told the matter would be looked into, said Pradeep Shetty, chairman of FHRAI’s legal matters sub-committee.

“We regret that the department came out with such an advisory, which pits consumers against the industry. While consumer rights are paramount, the rights of individual establishments should not be impinged upon,” Shetty said.

FHRAI said in its letter that service charges are “considered a beneficial payment since it is meant for the benefit of the staff of the establishment…The service charge is disclosed in advance and the same is clearly included as a separate heading in the bill as a charge not as a tax. Thus, there is complete transparency with regard to the amount, the rate and the purpose of the charge.”

The department said on Monday that service charges billed by restaurants are optional and it is up to customers to pay them. The department cited complaints that hotels and restaurants are levying an additional 5 to 20% in bills in lieu of tips, regardless of the kind of service provided.

In its letter to the department, FHRAI said service charges – an amount paid to the staff of a restaurant or other establishment by customers and guests – are lawful and that it is up to an establishment to decide whether and how much to collect. FHRAI members met officials in the department on Tuesday and were told the matter would be looked into, said Pradeep Shetty, chairman of FHRAI’s legal matters sub-committee.

“We regret that the department came out with such an advisory, which pits consumers against the industry. While consumer rights are paramount, the rights of individual establishments should not be impinged upon,” Shetty said.

FHRAI said in its letter that service charges are “considered a beneficial payment since it is meant for the benefit of the staff of the establishment…The service charge is disclosed in advance and the same is clearly included as a separate heading in the bill as a charge not as a tax. Thus, there is complete transparency with regard to the amount, the rate and the purpose of the charge.”

Citing previous rulings, FHRAI said the practice of collecting service charges has been upheld by the National Consumer Disputes Redressal Commission. “We request you to kindly withdraw the subject mentioned press note as there is nothing illegal or unlawful – much less unfair – in an establishment collecting a service charge from its guests,” it added.

Industry officials said the practice was critical to incentivise staff.

“The guidelines from the government should be clear with the processes that need to be followed,” said Vikas Chadha, executive director at Keys Hotels. “Customers and hotels should have clarity on how we reward service by the staff. It’s a huge motivation for the staff and makes the staff put in extra efforts rather than being transactional.”

“Levying service charge is an established practice of several years and it has even been upheld in the court of law,” said Anurag Katriar, executive director at Mumbai-based deGustibus Hospitality Pvt. Ltd. “Most of money collected goes to the staff and is an integral part of their incomes. Discontinuation of the same at this stage will adversely impact millions of workers and therefore we plan to continue levying the service charge as before.”

Source : PTI

Government may abolish place of effective management tax : 04-01-2017


The forthcoming budget is likely to introduce the concept of ‘Controlled Foreign Corporation’ (CFC) as an anti-avoidance measure. At the same time, the more subjective concept of taxing a foreign company if its ‘place of effective management’ (POEM) is in India may be done away with. This move is expected to help Indian companies with overseas subsidiaries as also MNCs with operations in India.

POEM was first introduced in Budget 2015 with effect from April 1 of the same year. However, as only draft guidelines were in place, Budget 2016 deferred its application to the fiscal year 2016-17

Currently , the provisions relating to POEM are in force, even as final guidelines are still awaited. Earlier a foreign company (be it a subsidiary of an Indian company or parent of an Indian company) was not subject to income tax (I-T) in India unless its affairs were `wholly controlled and managed’ in India. In general terms, this meant that a tax incidence would not arise in India, unless the entire decision-making team was in India.

Now, since April 1, 2016, a foreign company has the risk of a tax exposure in India if its POEM is considered to be in India -the determination of which is subjective according to tax experts. Government officials admit that the framework of CFC as also the challenges faced by companies under POEM have been discussed in the run-up to the budget.

“A CFC regime with adequate checks and balances can protect the revenue’s interest without jeopardising business houses whose global income can be caught within the Indian I-T net on account of ill-con ceived POEM regulations. POEM could be used as a harassment tool and create huge uncertainty in India, especially as there is no jurisprudence on the subject,“ says Nishith Desai, founder of the law firm Nishith Desai Associates.

Mukesh Butani, managing partner at BMR Legal, explains, “If at all anti-avoidance provisions are required -in addition to general anti-avoidance rules (GAAR), which will be introduced from April next -a CFC route is a better alternative. CFC regulations cover unlisted foreign companies, set up in low-tax countries that are owned and controlled by Indian resident holders, where the passive income (such as interest, dividend, capital gains, transactions with related parties) is accumulated  overseas instead of being repatriated back to India. A CFC does not result in the foreign company being treated as an Indian taxpayer. Rather, it isolates the passive income of the foreign company and subjects only such in come to tax in the hands of the Indian shareholders.“

On the other hand, the process of determination of POEM is primarily based on whether or not the foreign company is engaged in `active business’ outside India. To meet the `active business’ test, its passive (nonbusiness) income should not be more than 50% and it should meet certain parameters in terms of employees, assets and payroll expenditure.

“However, subjectivity creeps in even if the foreign company has an active business outside India. Practical aspects such as common directors on the board of the Indian parent company and its foreign subsidiary could trigger a POEM exposure for the foreign subsidiary and a tax incidence in India.Location of professional leadership teams in both India and the foreign country could also result in a POEM exposure. Under POEM, we are discouraging MNCs from locating their regional headquarters in  India or holding board meetings in India,“ says Butani.

Properly drafted CFC norms would provide more clarity and mitigate litigation compared to POEM, sum up experts.

Source : Economic Times

NEWSLETTER DATED JAN 03, 2017 FOR THE IT INDUSTRY


S3-Newsletter dated Jan 3 2017

Notification No. GSR 12(E) (F.NO.C-2/4/2016-SEZ), 03-01-2017


SPECIAL ECONOMIC ZONES (AMENDMENT) RULES, 2017 – AMENDMENT IN RULE 76

NOTIFICATION NO. GSR 12(E) (F.NO.C-2/4/2016-SEZ)DATED 3-1-2017

In exercise of the powers conferred by section 55 of the Special Economic Zones Act, 2005 (28 of 2005), the Central Government hereby makes the following rules further to amend the Special Economic Zones Rules, 2006, namely:—

(1) These rules may be called the Special Economic Zones (Amendment) Rules, 2017.
(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Special Economic Zones Rules, 2006, in Rule 76, for the words “professional services (excluding legal services and accounting) rental/leasing services without operators”, the words “professional services, rental/leasing services without operators” shall be substituted.

24 – 03-01-2017


EXCHANGE FACILITY TO FOREIGN CITIZENS

A.P. (DIR SERIES 2016-17) CIRCULAR NO. 24DATED 3-1-2017

Attention of Authorized Persons is invited to the A.P. (DIR Series) Circular No. 20 dated November 25, 2016 permitting foreign citizens to exchange foreign exchange for Indian currency notes up to a limit of Rs. 5000/- per week till December 15, 2016 and extended up to December 31, 2016 vide A.P. (DIR Series) Circular No. 22 dated December 16, 2016.

2. On a review it has been decided that the instructions contained in the A.P. (DIR Series) Circular No. 20 dated November 25, 2016 shall continue to be in force till January 31, 2017.

3. Authorised Persons may follow the above instructions and bring the contents of this circular to the notice of their constituents.

4. 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 are without prejudice to permissions/approvals, if any, required under any other law.

F.No.276/104/2016-CX.8A (Pt.) – 3-1-2017


Inclusion of Show Cause Notice issued in relation to sub-section (11) of Section 28 of the Customs Act, 1962 on the competency of officers of DGDRI, DGCEI and Customs (Prev.) in the Call Book – Dated 3-1-2017 – Central Excise

F.No.276/104/2016-CX.8A (Pt.)

Ministry of Finance Department of Revenue Central Board of Excise & Customs

(Legal Cell)

‘C’ Wing, 5th Floor, HUDCO-VISHALA Building

Bhikaji Cama Place, R.K. Puram,

New Delhi-66: dated the 03.01.2017

Instruction

To,

1.  All Principal Chief Commissioners/ Chief Commissioners of Customs, Central Excise and Service Tax;

2.  The Director General of Revenue Intelligence/ Central Excise Intelligence;

3.  <webmaster.cbec@icegate.gov.in>

Sir/Madam,

Sub: Inclusion of Show Cause Notice issued in relation to sub-section (11) of Section 28 of the Customs Act, 1962 on the competency of officers of DGDRI, DGCEI and Customs (Prev.) in the Call Book-reg.

I am directed to refer to Board Instructions of even no. dated 29.06.2016 & 28.12.2016 (copy available on CBEC website) on the above subject.

2.  In this regard, I am directed to say that the Board inter alia, had referred the issue of pending adjudications of cases covered by the above said Board Instruction to the Ld. Solicitor General of India. The Ld. Solicitor General has opined, inter alia, that in view of the unconditional stay in force, granted by the Hon’ble Supreme Court, the Department could continue with adjudication of the Show Cause Notices hitherto covered by the Mangali Impex judgment.

3.  Thus in view of the opinion of the Ld. Solicitor General, the Board Instruction of even no. dated 29.06.2016 & 28.12.2016 on the above subject are hereby withdrawn. Consequently, the Show Cause Notices, which were kept in the Call Book in view of the above said Board Instructions, needs to be taken out of the Call Book immediately and the adjudication of such Show Cause Notices are to be proceeded with in accordance with law.

Yours faithfully,

(Harsh Vardhan)

Senior Analyst

Ph. 011-26195405

Centre seeks Mukul Rohatgi view on tax on inter-state movement of goods : 03-01-2016


The Centre has sought the views of Attorney General (A-G) on who should have the right to tax inter-state movement of goods.

This is a new flashpoint to have emerged in the wrangling between the central and state governments for ringing in the goods and services tax (GST). But, as the reference will take some time to go through, the meeting of the GST Council this week to sort the differences could remain undecided.

Last month, the finance ministry had referred the dispute to the law ministry for its comments. In a surprising quick turnaround, the law ministry had advised North Block that the Centre will have full powers to tax inter-state movement of goods. The view was based on a series of rulings handed down by the Supreme Court over the years. The view has annoyed states, which have vehemently protested the advice. According to them, since each state administration has run the sales tax regime on goods for decades, they have built up the expertise to handle inter-state transactions, too.

On the other hand, central government’s indirect tax cadre officers who have seen their turf progressively whittled as the taxation powers of GST has expanded, have felt relieved at the law ministry’s advice. GST brings most indirect tax under its fold. More powers to states mean the taxes will be handled by the state government officers led by the respective IAS cadres.

The specialised cadre of indirect tax officers belonging to the Central Board of Excise and Customs (CBEC) are consequently on the losing end. The officers association of CBEC have called for a meeting among themselves to take stock of the developments.

If  Attorney General Mukul Rohatgi, the highest law officer in the central government supports finance ministry’s position that states should tax inter-state movement of goods, the reference can be placed before the Cabinet for nullifying the law ministry’s advice.

This could cool the frayed tempers at the meeting of the GST Council, the highest decision making body which has representations from all state governments.

Source : Financial Express

‘Govt directive on service charge will lead to confusion’ : 03-01-2017


The government’s clarification that service charge on food bill is not compulsory and a dissatisfied customer can choose to have it waived will “lead to confusion and quarrels”, hotels and restaurant owners said today. Federation of Hotel and Restaurant Associations Of India (FHRAI), the apex industry body, also said it will approach the Consumer Affairs Ministry over the matter.

“It will lead to confusion and quarrels,” FHRAI Chairman – Legal Matters Sub-Committee Pradeep Shetty told PTI when asked for comments on the government’s statement on service charge.

Union Consumer Affairs Ministry today said service charge on a food bill is not compulsory and a customer can choose to have it waived if not satisfied with the experience.

The Centre has also asked states to ensure that hotels/ restaurants disseminate this information through displays in their premises.

Shetty said “service is an individual charge and FHRAI has already told its members that it should be prominently displayed”. “We will approach the ministry on this,” he said.

National Restaurant Association of India (NRAI) President Riyaaz Amlani said: “As long as service charge is mentioned prominently in the menu, it cannot be termed as unfair or defective practice”.

Service charge is an above board practice and there are even judicial pronouncements to support that ‘service charge’ can be charged by hotels and restaurants, he added.

The ministry had stated that it had received a number of complaints from consumers that hotels and restaurants are following the practice of charging ‘service charge’ in the range of 5-20 per cent, in lieu of tips, which a consumer is forced to pay irrespective of the kind of service provided to him.

Source : PTI

GST Council to meet officials from six key sectors tomorrow : 03-01-2017


The all powerful GST Council headed by the Finance Minister will meet tomorrow the representatives of six crucial sectors, including IT, telecom, banking and insurance, to assess the implementation hurdles under the new GST regime.

Also, presentation will be made by sector representatives of Civil Aviation and Railways at the two-day GST Council meeting that begins here tomorrow, sources said.

Software association Nasscom, which is also scheduled to meet the GST Council, will voice its concerns over issues such as tax treatment of software, and also make a case for single registration under the new GST regime.

“We support the introduction of GST but the implementation of GST should not complicate the business operations of IT companies,” R Chandrashekar, President of Nasscom, told PTI.

He said the software association would express concerns with regard to GST implementation during the meeting with GST Council tomorrow.

Nasscom’s concerns pertain to areas like classification of software, import of services from related parties, and taxation rules based on location of receiving services.

Stating that the first draft of GST law had classified all ‘intangibles’ as services thereby ensuring a uniform tax rate, the revised law removed the clarification.

“This could lead to a situation where software classification can be disputed even under the GST regime. Electronic downloads should be treated as services as the majority practice prevalent globally,” according to Nasscom’s recent representation to the Revenue Department.

Nasscom also contends that revisions in the draft GST law does not facilitate offering a single interface for overseas/domestic clients in cases where large service contracts are supplied to multiple client sites from single or multiple delivery centres.

Also, the revised draft potentially makes onsite services delivered overseas at customer site liable to payment of GST, followed by a refund which blocks capital and complicates the transaction, it added.

“This will therefore imply that onsite services are imported into India, GST discharged, and then exported, and the GST paid on the onsite service then filed for refund – additional unnecessary transactions for companies which operate in a Branch office model, and associated compliance and working capital troubles,” says Nasscom.

Nasscom is also of the view that the legislation should clearly provide for centralised registration of central taxes of IGST (Integrated-GST) and CGST (central GST), which is within the Central Government power itself.

The GST Council among other things will deliberate on the issue of jurisdiction of assessees in the new regime. This will be the eighth meeting of the Council since it met for the first time on September 22, 2016.

At the end of the last meeting of the Council on December 23, 2016, Jaitley said that the Council has made a ‘reasonable headway’ on supporting legislations and a discussion on Integrated GST law will take place in the next meeting.

The dual control over assessees is also part of the Integrated-GST legislation that Parliament needs to pass before the new regime is rolled out.

The stumbling block in the GST roll out is the issue of dual control issue — which deals with which taxpayers should be controlled by the Centre and who should be governed by the states after a single tax will replace levies like central excise, service tax and VAT.

States like West Bengal and Kerala are unrelenting on their position of being given right to control all assessees with up to Rs 1.5 crore annual turnover

Source : Economic Times

Notification No. 382/2016-RB/GSR 01(E) 02-01-2017


FEM (TRANSFER OR ISSUE OF ANY FOREIGN SECURITY) (SECOND AMENDMENT) REGULATIONS, 2016 – AMENDMENT IN REGULATION 6

NOTIFICATION NO.FEMA.382/2016-RB/GSR 01(E)DATED 2-1-2017

In exercise of the powers conferred by clause (a) of sub-section (3) of section 6 and sub-section (2) of section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India hereby makes the following amendments in the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 (Notification No. FEMA.120/RB-2004 dated July 7, 2004) namely:—

Short Title & Commencement

1. (i) These Regulations shall be called the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) (Second Amendment) Regulations, 2016.

(ii) They shall be deemed to have come into force from the date of publishing in the Gazette.

Amendment of Regulation

2. In the Principal Regulations, in Regulation 6, in sub-regulation (2), after the existing clause (vi), the following shall be inserted, namely:

“(vii) Indian Party shall make no direct investment in an overseas entity [set up or acquired abroad directly as JV/WOS or indirectly as Step Down Subsidiary] located in the countries identified by the Financial Action Task Force (FATF) as “non-co-operative countries and territories” as per list available on FATF website www.fatf-gafi.org or as notified by the Reserve Bank of India from time to time.”

India’s economy trumped Britain in 2016 : 02-01-2016


It is no mean achievement when Indian economy flexed its muscles in 2016 and briefly nosed ahead of Britain — its once colonial master. But the honour was fleeting as India quickly fell back to the sixth-largest position, with considerable headwinds from demonetisation and delay in GST rollout queering the pitch.

At the start of 2016, everything looked hunky-dory as the country took pride in being the world’s fastest-growing major economy, but the momentum seemed to have petered out by the end of the year as spending took a hit and industrial activity faltered with the junking of 86 per cent of currency in circulation, leading to an across-the-board downgrade in growth projections.

The first half saw India being called the bright spot – and rightly so — in a world searching for growth engine. The government moved in to reconfigure its economic architecture through new institutional mechanisms – like the one to tackle monetary policy.

But Brexit, protectionist signal from Donald Trump fresh from the surprise US presidential election win, the Syrian turmoil and an uptick in oil prices partly reversed some of the gains and capped 2016 as a tumultuous year.

The economic agenda for 2017 remain clear. Finance Minister Arun Jaitley needs to impart a big push to the economic activity in the budget – coming up in a month — through not just raising spending on socio-economic infrastructure but dealing with the fallout of the cash recall exercise.

The need of the hour is a ‘feel-good’ budget that will give people something to look forward to while taking the reforms agenda to the logical conclusion, including a schedule for the landmark GST launch that can be honoured.

Once expected to overtake the UK GDP in 2020, the moment arrived early enough in mid-December on the back of a near 20 per cent drop in the value of the pound after the shock Brexit vote.

This squeezed UK’s 2016 GDP to 1.87 trillion pound (USD 2.29 trillion) as against India’s USD 2.3 trillion (Rs 153 lakh crore). But the change of fortunes came when forex rates realigned and the UK economy stood at USD 2.3 trillion compared with USD 2.25 trillion of Indian economy as the year drew to a close.

The jury is still out as India is expected to bridge the gap in the new year even if it were to grow at a lower pace of 7 per cent and UK’s growth is projected at no more than 2 per cent through 2020.

Although economists are wary of comparing the relative size of economies using the volatile market exchange rates and prefer purchasing power parity instead, which adjusts the differences in local purchasing power, India’s fifth spot behind the US, China, Japan and Germany speaks volumes.

The single-biggest spoiler was the cash ban, which has triggered fears of a blow to consumption, particularly in rural areas, with the dominant services sector being the worst hit. Also, industrial output and investment may feel the pinch which coupled with job losses and a drop in demand could add to the disruption.

Demonetisation also acted as a speed breaker in the planned take-off of the Goods and Services Tax, the biggest piece of reform since Independence, from April 1. States that saw their revenues being affected by demonetisation have stalled a consensus on supplementary legislations, and the April 1 schedule looks a tall order now.

But to give credit where it is due — Prime Minister Narendra Modi and Finance Minister Jaitley — there was never a moment that saw commitment to reforms slipping. After cleaning up the economic mess left by the previous UPA government, the Modi government has bitten the bullet and started carrying out tough structural and deeper reforms.

Despite this, private investments are still hard to come by in a big way and loans to corporate remained subdued throughout the year.

Gross domestic product, by some estimates, has slowed to 6.5 per cent in the third quarter, from 7.3 per cent in July-September.

The government is confident that these are only short-term blips, and in the long run, India is well poised to hop on to the higher growth trajectory.

While the economy grew by 7.2 per cent in the first half of the current fiscal, the Reserve Bank of India (RBI) downgraded projections for 2016-17 to 7.1 per cent, from the previous 7.6 per cent. Fitch too lowered it to 6.9 per cent from 7.4 per cent while S&P had slashed its projections of 7.9 per cent to 6.9 per cent even before the November 8 demonetisation announcement.

While inflation was in check and trade and capital flows remained largely unaffected, exports – often seen as the engine for growth – have been tepid. Public investment has been robust, but private investment is yet to pick up. Industrial activity has been weakened by demonetisation, which has taken a toll on consumption demand, the mainstay of the economy.

From the biggest change in RBI’s eight-decade history by adopting an inflation-targeting framework and moving to a collective interest-rate decision making to overhauling of the century-old bankruptcy law to concerted efforts to make India a ‘one nation and one market’ through GST, the transformation has been complete that laid the pitch for long-term structural benefits.

The new bankruptcy code will allow quick closure of businesses gone bad and prevent build-up of NPAs, which are already are at a 16-year high of 12 per cent.

As the reforms momentum picked up, India overtook the UK economy in absolute terms in mid-December though it is still less than one-fifth of the UK in per capita terms. Though the glory was short-lived, it did highlight India’s arrival on the global stage as an economic powerhouse that one can afford to ignore at its own peril.

More importantly, it has been able to shed any residual notion of colonial inferiority. This is reflected in getting tax havens like Mauritius, Cyprus and now Singapore to redraw tax avoidance treaties with India, which is also negotiating a trade deal with the UK, post Brexit.

The way government handles the after-effect of demonetisation and the all-crucial Budget will now shape the narrative for the economy in 2017.

Source : Financial Express

No.01/2017 Dated: 02-01-2017


DEDUCTION OF TAX AT SOURCEINCOME-TAX DEDUCTION FROM SALARIES UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961 – Circular

 

Cir_01

Notification No.1/2017 02-01-2017


U/s 35(1) (ii) Of IT Act 1961 Central Government approved TATA Translational Cancer Research Centre – 01/2017

MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION No. 01/2017

New Delhi, the 2nd January, 2017

S.O. 22(E).-It is hereby notified for general information that the organization TATA Translational Cancer Research Centre (‘TTCRC’) under the aegis of TATA Medical Centre Trust (PAN:- AABTT2222Q) has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 (said Act), read with Rules 5C and 5D of the Income-tax Rules, 1962 (said Rules), from Assessment year 2016-2017onwards in the category of ‘Scientific Research Association’, subject to the following conditions, namely:-

(i) The sole objective of the approved ‘Scientific Research Association’ ‘TTCRC’ shall be to undertake scientific research;

(ii) The approved organization shall carry out scientific research by itself;

(iii) The approved organization shall maintain separate books of accounts for ‘TTCRC’ 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 288 of 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 for ‘TTCRC’ 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 referred to in sub-paragraph (iii) of paragraph 1; or

(b) fails to furnish its audit report 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 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 5D of the said Rules.

[F. No. 203/41/2015/ITA-II]

ANKITA PANDEY, Under Secy.

Investment strategy being reworked due to Singapore tax treaty, GAAR arrival from FY18 : 02-01-2017


As the Indian government amended the Singapore treaty to give clarity on taxation, many foreign portfolio investors (FPIs) and private equity firms are exploring new structures and routes for Indian investments, people in the know said.

The new routes or structures being explored by the investors are also in the context of GAAR (general anti-avoidance rule) –the direct taxation regulation that is set to come into force from April 1this year.

Many FPIs are taking a relook at their investment strategy in the context of these two main changes, and whether they need to or could change the way they invest to save on some taxes.

“There are several recent/impending tax developments that investors will have to look at, including amended tax treaties, GAAR and also, what offshore transactions amount to indirect transfer of shares. In relation to private equity firms, given grandfathering of investments made till March 31, 2017, the real impact is likely to be felt only from FY 2021-22, as that’s the likely time horizon when PE firms will exit their investments made post April 1, 2017,” said Ketan Dalal, senior tax partner, PwC.

Experts point out that while the Singapore treaty would only impact foreign investors, GAAR is not just cross-border. GAAR is set to impact even Indian investors and companies, said experts.

Industry trackers say some smaller FPIs investing in India through Mauritius are looking at increasing the number of employees in the island nation.

“In some cases, some custodian and middle men are reaching out to these FPIs and offering that some employees be transferred to the latter’s payroll. If FPIs don’t have substance in Mauritius there will be adverse taxation, so this could be a way of showing that they actually have an operational base in Mauritius,” a person in the know said.

On the other hand, tax officers said they are aware of such arrangements and assured that it will be difficult to circumvent regulations.”Foreign investors, who hitherto are protected by treaty exemptions, will need to rethink the strategy for their India investments due to renegotiation of tax treaties by India.

They may choose to invest through different jurisdictions or structures; however, these structures will need to pass the substance test under GAAR which will come into effect from April 1, 2017,” said Punit Shah, partner, Dhruva Advisors.

Some FPIs may even look at relocating to Singapore from Mauritius even as the treaty benefits in both cases are almost similar .

“Singapore as a jurisdiction for investing into India could have a slight edge over Mauritius considering the proposed GAAR in India which will also come into force from April 2017,” said Rajesh H Gandhi, partner, Deloitte Haskins & Sells.

Source : Business Standard

GST to shore up economy, noteban to have far reaching impact: Urjit Patel : 02-01-2017


The Reserve Bank of India (RBI) Governor Urjit Patel has said that the nationwide Goods and Services Tax (GST) and legislation of bankruptcy code should impart resilience to the economy.

The governor in his Financial Stability Report published by the RBI said that the withdrawal of specified bank notes will impart far reaching changes going forward.

“With respect to demonetisation, it is expected to significantly transform the domestic economy in due course in terms of greater intermediation, efficiency gains, accountability and transparency through increasing adoption of digital modes of payments, notwithstanding the short-term disruptions in certain segments of the economy and public hardship,” added Patel.

Adding to this, he said that the global financial crisis has prompted regulators to require banks to undertake stress tests to see if their risk appetite matches their risk taking capacity.

Source : Economic Times

Notification No. : 50/2016 Dated: 31-12-2016


SECTION 4A OF THE CENTRAL EXCISE ACT, 1944 – EXCISABLE GOODS WITH REFERENCE TO RETAIL SALE PRICE – VALUATION OF – AMENDMENT IN NOTIFICATION NO.49/2008-C.E. (N.T.), DATED 24-12-2008

NOTIFICATION NO. 50/2016-C.E. (N.T.)DATED 31-12-2016

In exercise of the powers conferred by sub-sections (1) and (2) of section 4A of the Central 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. 49/2008-Central Excise (N.T.), dated the 24th December, 2008, published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i), vide number G.S.R. 882(E), dated the 24th December, 2008, namely :—

In the said notification, in the Table,—

(i) against serial number 51, for the entries in column (2), the entries “3824 99 24 or 3824 99 90″ shall be substituted;
(ii) against serial number 58, for the entries in column (3), the entries “Unglazed Vitrified Tiles (whether polished or not) or Glazed Tiles” shall be substituted;
(iii) serial number 59 and the entries relating thereto shall be omitted;
(iv) against serial number 76, for the entry in column (2), the entry “8472 90″ shall be substituted.

2. This notification shall come into force on the 1st day of January, 2017

Notification No. : 49/2016 Dated: 31-12-2016


SECTION 5 OF THE CENTRAL EXCISE TARIFF ACT, 1985 – AMEND THE FIRST AND SECOND SCHEDULES – POWER OF CENTRAL GOVERNMENT TO – AMENDMENT IN FIRST SCHEDULE TO SAID ACT

NOTIFICATION NO.49/2016-C.E. (N.T.)DATED 31-12-2016

In exercise of the powers conferred by sub-section (1) of section 5 of the Central Excise Tariff Act, 1985 (5 of 1986), 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 First Schedule to the Central Excise Tariff Act, 1985 [as amended by Eighth Schedule to the Finance Act, 2016, (28 of 2016)] namely:—

1. In the said First Schedule,—

(1) in Chapter 29, in heading 2937,—
(i) tariff item 2937 31 00 and the entries relating thereto shall be omitted;
(ii) against tariff item 2937 9011 for the entry in column (2), the entry “Epinephrine” shall be substituted;
(2) in chapter 38, against tariff item 3824 91 00;
(i) in column (3), the entry “kg.” shall be inserted;
(ii) in column (4), the entry “12.5%” shall be inserted;
(3) in Chapter 44, in heading 4421, for tariff items 4422 91 12, 4423 91 13, and 4424 91 14 and the entries relating thereto, the following shall be substituted, namely:—
“4421 91 12 - – - – For jute machinery kg. 12.5% -
4421 91 13 - – - – For silk regenerated and synthetic fibre machinery kg. 12.5% -
4421 91 14 - – - – For other machinery kg. 12.5% -”;
(4) in Chapter 55, for heading 5502, sub-heading 5502 00, tariff items 5502 00 10 to 5502 00 90 and the entries relating thereto, the following shall be substituted, namely:—
“5502 ARTIFICIAL FILAMENT TOW
5502 10 – Of cellulose acetate
5502 10 10 — Viscose rayon tow kg. 12.5% -
5502 10 90 — Other kg. 12.5% -
5502 90 – Other;
5502 90 10 — Viscose rayon tow kg. 12.5% -
5502 90 90 — Other kg. 12.5% -”;
(5) in Chapter 94, in heading 9403, for tariff items 9401 82 00 and 9401 83 00 and the entries relating thereto the following shall be substituted, namely:—
” 9403 82 00 - – Of bamboo u 12.5% -
9403 83 00 - – Of rattan u 12.5% -”

2. This notification shall come into force on the 1st day of January, 2017.

5 Major events to shape Indian economy and politics in 2017 : 31-12-2016


It is an undeniable fact that the world is now more aware than ever. Oxford dictionary’s word of the year was ‘post-truth’ which essentially means situations in which emotional and personal beliefs shape the opinion of the public than objective facts. This term has become a mainstay in the political commentary of the world as well as India especially after the US elections and the demonetisation move by the Indian government. This concept has influenced the Indian consciousness to a large extent especially since this year has been one of the most momentous political years of this generation. It has been almost an era-defining year remembered by the US Presidential elections for the world and demonetisation for India. So will the drama continue in 2016? While the economic climate of the world is now more complex than ever, there were some historic reforms in India which will show its effects in 2017 and the times to come. Here’s a look at the probable rise, fall and struggle of different avenues which might define the year to come:

Donald Trump’s inauguration of the US President’s post and its impact on India
Donald Trump’s victory in the US Presidential elections was one of the most shocking results in politics of 2016. But the real thing will start in 2017 when he ascends to arguably the most powerful post in the world. There will be a lot of attention to his address during the inauguration and his justifications regarding polarisation the of the elections and his cabinet appointments. Apart from that, there will be a lot of focus on its impact on India, as for how the world’s most economically developed nation’s president will affect the fastest developing economy. Trump’s opinion on India has largely been positive. For India, the good points include investment flows and the fact that PM Narendra Modi could find his biggest ally in Trump against Pakistan. The bad points include an immigration issue, free trade and outsourcing as well as a tax plan. While Trump has not directly targetted Indians, but he has been quite vocal for his stringent immigration policies. A new tax plan, meanwhile, can lure

Demonetisation

By the end of the year 2016, Narendra Modi government’s 50-day window to exchange old Rs 500 and Rs 1000 currency notes will also close. This will give rise to a lot of calculations, theories and speculations and agree or not, it will shape the political and economic climate in the country for a long time to come. PM Modi had announced a ban on higher value currency notes on November 8, and that had led to a lot of adulation as well as criticism from citizens and economists all the same. PM Modi has reiterated the narrative of curbing black money by saying that the move was directed towards a long-term structural transformation instead of being a short minded approach. Demonetisation of higher value currency notes have affected India in ways more than one, and it will affect the Indian economy in 2017, but whether it will be a spectre of default or there will be wider implementation remains to be seen. While the economic fallout of the such a radical move will take some time to be evaluated, but the evaluation of its political implications will continue its course throughout the year.

Union Budget

The Union Budget 2017-18 will be presented on February 1. The government had decided to advance the budget presentation by a month, with the thought that it should not be presented in the middle of Assembly polls in states like Uttar Pradesh, Punjab, Goa, Manipur and Uttarakhand. This decision was also taken to aid in the completion of the legislative approval for annual spending plans and tax proposals before the start of the new financial year on April 1. There was also the historic decision of scrapping a separate Railway Budget and merging it with the General Budget. According to the government, the unified budget will bring Railways to centre stage and showcase a holistic picture of the financial position of the government. The demonetisation move has also affected the possibilities of the union budget, because of the resulting disruption to growth, revenues and asset sales. There will also be a push on the cashless economy narrative as the government is expected to take certain measures towards that path. We can also expect to see some cuts in personal and corporate taxes and more public investments

GST Bill

This reform agenda will be a point of focus for many investors. The Goods and Services Tax Bill is popularly acknowledged as a transformational indirect tax reform, and will unite the country as a single market with a common tax structure under the narrative of ‘one country, one tax’. But the probability of the absence of a clear-cut projection on the revenue on account of a shift of GST regime in the 2017-18 year has led to some scepticism among top government officials as they have been moving up the Budget presentation date. Even, Finance ministry officials had reportedly expressed anxiety about GST projections, pinning their hopes on the GST Council reaching a consensus on the tax rate structure before the Budget making process to enable them to make projections for next year.

UP and Punjab Elections

The Election Commission is will announce the Uttar Pradesh, Uttarakhand, Goa and Punjab assembly election dates in January 2017. The polling will likely start from February and go on until March. BJP after massive defeats in New Delhi and Bihar retrieved some momentum back in its favour in 2016 with a single assembly election win in Assam. But the moot question on the consciousness of its top politicians has been that whether Prime Minister Narendra Modi’s demonetisation gamble will pay off in the 2017 assembly elections. The war cry of demonetisation is not only going to affect the ruling party but also many opposition parties as well. This will affect the economy of UP the most as it is the largest state in India. Additionally, the rise of the Aam Aadmi party has also turned the traditional poll dynamics in these regions, upside down.

Source : Business Standard

 

Scheme to settle tax disputes extended till January 31: CBDT : 31-12-2016


The government has extended its one-time tax dispute resolution scheme by a month, giving companies including Vodafone and Cairn Energy time till January 31 to accept its offer to settle retrospective tax demands.

The Direct Tax Dispute Resolution Scheme, announced by finance minister Arun Jaitley in the budget for 2016-17, seeks to settle disputes arising out of retrospective change in income tax law dealing with indirect transfers as also end nearly 2.6 lakh pending tax cases where Rs 5.16 lakh crore are locked in.

The offer to settle the disputes was to end on December 31, but it has now been extended till January 31, Central Board of Direct Taxes (CBDT) said on Friday

The scheme, opened on June 1, provides for waiving interest and penalties if the principal amount involved in retrospective tax cases is paid.

For disputes other than the retrospective tax cases, taxpayers whose appeal is pending as on February 29, 2016 before the CIT (Appeals) can settle cases by paying the disputed tax and interest up to the date of assessment.

For a disputed tax amount of up to Rs 10 lakh, the penalty will be forgone.

In cases where the disputed tax amount is above Rs 10 lakh, a penalty of 25% will be levied.

Through the scheme, the government had hoped to settle major retrospective tax cases facing Vodafone Group and Cairn Energy of UK. It also expected a third of the other tax disputes to be settled.

Its extension comes against the backdrop of tepid response from companies. So far, none of the companies facing retrospective tax cases have come forward.

Source : PTI

Congress spokesperson P Chidambaram targets government, RBI : 31-12-2016


NEW DELHI: Taking a dig at Prime Minister Narendra Modi, senior Congress spokesperson P Chidambaram on Friday said that according to the PM’s announcement it was only fair that the woes of demonetisation came to an end on December 30.

The former union minister also said that the government and the Reserve Bank of India should make public the agenda note and the minutes of the meeting of the Board of Directors of the central bank held on November 8, the day demonetisation was announced.

“I had cautioned that the test of demonetisation lies in the manner in which it will be implemented.

It is now abundantly clear that the whole exercise was undertaken without forethought and planning, without consulting key officials, without understanding the crucial role of money in circulation and without assessing the capacity of the currency printing presses to supply new notes,” Chidambaram said.

“Besides, the seizure of bundles of new Rs 2,000 notes is a clear evidence of corruption at the level of the RBI, the currency chests and the bank branches.

“Altogether, the whole exercise has been a case of total mismanagement, administrative collapse and widespread corruption,” he added.

The former minister said that among the worst-affected due to demonetisation are farm labourers, daily wagers, self-employed and those who run small businesses. “Many of them have been economically ruined. They will require help to re-build their lives,” he said.

Source : Economic Times

Enhance working capital limit for MSMEs: RBI to banks : 30-12-2016


In a relief to small and medium enterprises hit by demonetisation, Reserve Bank of India (RBI) on Thursday said banks may provide ‘additional working capital limit’ to micro, small and medium enterprises (MSME) borrowers.

“Banks are hereby advised that they may use the facility of providing… ‘additional working capital limit’ (approved by their boards) to their MSE borrowers, to overcome the difficulties arising out of such cash flow mismatches also,” RBI said in a notification.

This would be a one-time measure up to March 31 and should thereafter be normalised in fresh working capital assessment cycle, it said.

Consequent upon withdrawal of legal tender status of Rs 500 and Rs 1000 notes and based on feedback that some MSEs are facing temporary difficulties in carrying out their normal business due to cash flow mismatches, the decision was taken, the central bank said.

Prime Minister Narendra Modi on November 8 announced scrapping of Rs 500 and Rs 1,000 notes, which resulted in cash crunch in the market and slowdown in business.

The contribution of MSME sector, including service segment, to the country’s GDP is around 40 per cent, while the total employment in the sector is 805.24 lakh.

On Wednesday, the RBI gave borrowers another 30 days over and above the 60 days for repayment of housing, car, farm and other loans worth up to Rs 1 crore before their accounts are classified as non-performing asset (NPA).

So, borrowers together get 90 days breather from getting the account classified under NPA category.

The above dispensation will apply to dues payable between November 1 and December 31, 2016, it said.

Source : Business Standard

Notification No. 14/2016 – DGIT(S)-ADG(S)-2/e-Filing Notification/106/2016 30-12-2016


Procedure for Registration and Submission of Form V for Reporting under Pradhan Mantri Garib Kalyan Deposit Scheme (PMGK), 2016 – 14/2016 – DGIT(S)-ADG(S)-2/e-Filing Notification/106/2016

DGIT(S)-ADG(S)-2/e-Filing Notification/106/2016

Government of India Ministry of Finance Central Board of Direct Taxes Directorate of Income Tax (System)

Notification No. 14 of 2016

New Delhi, 30th December, 2016

Procedure for Registration and Submission of Form V for Reporting under Pradhan Mantri Garib Kalyan Deposit Scheme (PMGK), 2016

In exercise of the powers conferred by sub-section (c) of section 199B of the Finance Act, 2016 (28 of 2016), the Central Government in consultation with the Reserve Bank of India notified the Pradhan Mantri Garib Kalyan Deposit Scheme (PMGK), 2016.

As per para 7(2) of the PMGK deposit Scheme, 2016, the Authorised banks are required to furnish electronically the details of deposits made under PMGK in Form V not later than next working day to enable the Department to verify the information of the deposit before accepting the declaration.

The following procedure shall be followed by the Authorised banks for furnishing the PMGK deposit details.

(a)   Registration and generation of Income Tax Department Registered Entity Identification Number (ITDREIN): The Authorised bank is required to get registered with the Income Tax Department by logging in to the e-filing website (http://incometaxindiaefiling.gov.in/) with the log in ID (PAN). A link to register Authorised bank has been provided under “My Account>Manage ITDREIN”. Once ITDREIN is generated, the Authorised bank will receive a confirmation e-mail on the registered e-mail ID and SMS at registered mobile number. There will be no option to de-activate ITDREIN, once ITDREIN is created.

(b)   Registration of designated director and principal officer: After generating ITDREIN, the Authorised bank will be required to submit the details of designated director and principal officer. The designated director and principal officer will receive a confirmation e-mail with an activation link. An SMS along with OTP (One time Password) will also be sent to the registered Mobile Number. For completion of registration, the designated director and principal officer should click on the Activation link, enter the Mobile PIN(OTP), Password and Confirm Password and click on Activate Button. On success, the registration will be complete.

(c)   Preparation of Form V (PMGK Deposit Scheme) data file: Every Authorised bank is required to submit the PMGK deposit details in Form V. The prescribed schema for Form V and a utility to prepare XML file can be downloaded from the e-filing portal home page under Forms (other than ITR) tab. The filer can also refer to the User Manual for ITDREIN Registration and Upload of Form V.

(d)   Submission of Form V (PMGK Deposit Scheme):The designated director is required to login to the e-filing portal with the ITDREIN, PAN (of the designated director) and password. The form is required to be submitted using a Digital Signature Certificate of the designated director.

(S. S. Rathore)

Pr. DGIT (Systems), CBDT

Notification No. 13/2016 – DGIT(S)-ADG(S)-2/e-Filing Notification/106/2016 30-12-2016


Procedure for registration for statement of financial transactions (SFT) as per section 285BA of Income-tax Act 1961 read with Rule 114E of Income-tax Rules, 1962 – 13/2016 – DGIT(S)-ADG(S)-2/e-Filing Notification/106/2016

DGIT(S)-ADG(S)-2/e-Filing Notification/106/2016

Government of India Ministry of Finance Central Board of Direct Taxes Directorate of Income Tax (System)

Notification No. 13 of 2016

New Delhi, 30th December, 2016

Procedure for registration for statement of financial transactions (SFT) as per section 285BA of Income-tax Act 1961 read with Rule 114E of Income-tax Rules, 1962

Section 285BA of the Income Tax requires specified reporting persons to furnish statement of financial transaction. Rule 114E of the Income Tax Rules, 1962 (hereunder referred as the Rules) specifies that the statement of financial transaction required to be furnished under sub-section (1) of section 285BA of the Act shall be furnished in Form No. 61A.

2. As per sub rule (6)(a) of Rule 114E, every reporting person shall communicate to the Principal Director General of Income-tax (Systems) the name, designation, address and telephone number of the Designated Director and the Principal Officer and obtain a registration number.

3. As per sub rule (4)(b) of Rule 114EPrincipal Director General of Income-tax (Systems) shall specify the procedures, data structures and standards for ensuring secure capture and transmission of data, evolving and implementing appropriate security, archival and retrieval policies.

4. In exercise of the powers delegated by Central Board of Direct Taxes (‘Board’) under Sub rule (4)(a) and (4)(b) of Rule 114E of the Income tax Rules 1962, the Principal Director General of Income-tax (Systems) hereby lays down the following procedures:

(a)   Registration and Generation of Income Tax Department Registered Entity Identification Number (ITDREIN): The reporting financial institution is required to get registered with the Income Tax Department by logging in to the e-filing website (http://incometaxindiaefiling.gov.in/) with the log in ID used for the purpose of filing the Income Tax Return of the reporting financial institution. A link to register reporting financial institution has been provided under “My Account>Manage ITDREIN”. Once ITDREIN is generated, the reporting entity will receive a confirmation e-mail on the registered e-mail ID and SMS at registered mobile number. There will be no option to de-activate ITDREIN, once ITDREIN is created.

(b)   Submission of details of reporting entity: After generation of ITDREIN, the reporting financial institution will be required to submit details of the reporting entity on the screen. Once registered, the reporting entity will have an option to edit the details.

(c)   Registration of designated director and principal officer: After submission of reporting entity details, the reporting financial institution will be required to submit the details of designated director and principal officer. The designated director and principal officer will receive a confirmation e-mail with an activation link. An SMS along with OTP (One time Password) will also be sent to the registered Mobile Number. For completion of registration, the designated director and principal officer should click on the Activation link, enter the Mobile PIN(OTP), Password and Confirm Password and click on Activate Button. On success, the registration will be complete.

(S. S. Rathore)

Pr. DGIT (Systems), CBDT

Finance Ministry directs infra ministries to assess impact of demonetisation : 30-12-2016


The finance ministry has directed six main infrastructure ministries to do an on the spot assessment of demonetisation on their sectors, sub-sectors or specific projects.

The department of economic affairs has sought status reports from ministries of urban development, road transport and highways, power, shipping, civil aviation and the railway board for the first time since the announcement of demonetisation by Prime Minister Narendra Modi on November 8.

Prior to this, the government had sent teams of bureaucrats to study the immediate impact of note ban. The teams had then red-flagged the loss of livelihood in rural areas and the adverse impact on the farm sector during the rabi season.

The letters addressed to secretaries of ministries say the finance ministry’s coin and currency division has sought a status report on the impact of demonetisation on infrastructure sector. The reports would be studied to gauge if the government needs to take any targeted steps to avoid economic slowdown.

A senior government official told ET, “We have been asked to study the impact of demonetisation on not just the overall sector but also of projects that may fail to take off.” The government is also worried about its adverse impact on big-ticket flagship programmes, including Housing for All, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), smart cities mission and Swachh Bharat.

The official said, “The government is very cautious about its performance in the infrastructure sector. Since the government has reached the half-way mark of its term, any adverse impact on infrastructure will not bode well for the economy.”

According to sources, ministries have already reported a slight slowdown in private sector interest in public-private partnership (PPP) projects. However, there are areas that have seen a sudden spurt. The urban development ministry has reported a sharp increase in property tax collections by municipal bodies. “But this does not necessarily classify as an infrastructure sector indicator. The increase has really been because municipal bodies allowed users to pay their property taxes and other chaharges in old Rs 500 and Rs 1,000 notes,” the official said.

Source : PTI

The good, bad and ugly of 2016′s shock and awe declaration: the demonetisation drive that ends today : 30-12-2016


First the good news. Demonetisation has crippled the parallel economy thriving mostly around gold and real estate.

Yet, few expect this lull to last forever. Black money will make a strong comeback once liquidity returns to various markets, economists opine.

“Black money generation via cash may lessen, but it may continue with property or gold. Demonetisation alone may not be able to reduce black money,” said Madan Sabnavis, chief economist at Care Ratings.

Now for the side effects: Demonetisation has applied the brakes on economic progress due to low liquidity in the system. Inadequate currency supply, in an economy that is predominantly cash-driven, reduces the buying power of people and, at a macro level, their consumption pattern

But perhaps not for too long. “There’s a problem at the moment but it may not remain so for long… people will start consuming once they have more money at their disposal. Demand is only deferred, not denied,” said Shyam Srinivasan, MD and CEO, Federal BankBSE 0.68 %. Less cash may well be a way of life, paving way for non-cash transactions.

Usage of cards — credit and debit — has grown four-fold in number of transactions since November 8. Average ticket size of card transactions has fallen, signalling card usage for low-ticket daily purchases.

“Usage of cards has gone up considerably… we’re seeing significant interest from people asking for their first cards,” said Adhil Shetty, CEO of BankBazaar.com, an online marketplace for bank products. Ewallets such as Paytm and FreeCharge have added to their user base too.

But a totally cashless society may well be a pipe dream and the clamour for cash will persist. Though new currency notes are out, bank branches are still not able to satiate cash requests. Most banks have set withdrawal limits much below the mark prescribed by RBI (Rs 24,000 per week).

A couple of bank managers whom ET spoke to, said branches in south Mumbai were receiving only 60 per cent of net daily cash requirement. Bank-imposed withdrawal limits are leading to hoarding of cash, which is counter-productive. “People are scared banks will not give money when they urgently need it. We’re telling them not to panic but they have their fears,” admitted Srinivasan.

Officials feel card and cash payment options are crucial for the ‘consumption story’ to unfold to its desired extent and potential. “A healthy balance of cash and card is critical for our economy. Non-availability of either channel may affect growth and consumption pattern,” said Loney Antony, MD, HitachiBSE 2.39 % Payment Services

Source : Economic Times

PM Narendra Modi’s December 31 address: Will he drop a ‘bombshell’ to bring in ‘acche din’ for New Year 2017? : 29-12-2016


Is Prime Minister Narendra Modi set to spring another surprise (read: shock!) on December 31? Reports suggest that PM Modi will address the nation at 7:30 PM on December 31, or before the “dawn of the New Year”. While it is said that Indians have a short term memory, we believe that PM Modi’s November 8 address to the country will easily go down as one of the most remembered speeches by an Indian Prime Minister. Prime Minister Narendra Modi it seems has the penchant for addressing the nation, making announcements, and in short sending everyone into a tizzy with his ‘out-of-the-box’ decisions. If ‘demonetisation’ of old Rs 500 and Rs 1000 notes was not enough, we wonder what PM Modi has up his sleeve this time??? As the nation awaits to see what PM Modi has to say to his ‘Mitron’, we take a look at 5 possible points that may feature on his agenda:

1) Increase in withdrawal limits from ATMs and banks: Dear PM Modi, we are tired of standing in queues, really! Be nice to people, give them this wonderful New Year 2017 gift. Yes, please hike the withdrawal limit, better still ask banks to start giving people their rightful Rs 24,000! The situation has admittedly eased in 50 days, there is little doubt about that. Yet, many banks are still allowing customers to withdraw only Rs 10,000 at a time, as against Rs 24,000. That’s the first important thing that needs to be addressed. Also, ATMs should be allowed to dispense at least Rs 5,000 per card.

2) Sops for cashless transactions: This one seems likely, since the focus of the entire demonetisation drive (apart from black money and fake currency crackdown) has been to move India towards a ‘less-cash’ economy. Through Digi Dhan Melas and contests, the Modi government is already promoting and pushing people to adopt digital means of financial transactions. The Prime Minister may announce yet another set of tax sops.

3) Further crackdown on black money: In his December 25 ‘Mann Ki Baat’, PM Modi had said that the law against ‘Benami Property’ would soon become operational. “You are possibly aware of a Law about Benami Property in our country which came into being in 1988, but neither were its rules ever framed, nor was it notified. It just lay dormant gathering dust. We have retrieved it and turned it into an incisive law against ‘Benami Property’. In the coming days, this law will also become operational. For the benefit of the Nation, for the benefit of the people, whatever needs to be done will be accorded our top priority,” he had said. A lot of skeptics had said that most of the country’s black money is in the form of real estate, instead of cash. PM Modi may announce this crackdown to come down hard on black money hoarders.

4) Summing up the aftermath of demonetisation: In a bid to silence the growing din from the Opposition and his critics, PM Modi may decide to explain to the common man how the whole drive has benefited the country. While people are divided on the gains from the whole drive, there is near unanimous opinion that the move could have been planned and implemented better, ensuring less pain to the common man. If PM Modi is able to comprehensively sum up what the entire demonetisation drive has achieved, he may reduce the anguish of people for sure.

5) Happy New Year! Oh yes, even as all of us wait with baited breath on the next ‘bombshell’ from the Prime Minister, he may have a good laugh by simply wishing everyone a Happy New Year!

With PM Modi it doesn’t pay to speculate, for he has a tendency pulling a rabbit out of the hat! Let’s just hope that whatever he announces or says brings in ‘acche din’ for India in the years to come.

Source : Financial Express

RBI approved cash ban just hours before Modi’s November 8 speech : 29-12-2016


The board of India’s central bank approved the move to ban high-denomination notes less than three hours before Prime Minister Narendra Modi announced the decision in a televised address to the nation.

Information on how many members favored or opposed the move isn’t “on record,” the Reserve Bank of India said in response to queries from Bloomberg News under the Right to Information Act. Power Minister Piyush Goyal had told lawmakers on November 16 that it was the authority’s 10-member board that came up with the idea.

Modi’s surprise November 8 decision to withdraw 86 percent of bank notes in circulation has squelched demand for goods and services in Asia’s third-largest economy, where cash dominates transactions. The RBI has been criticized for a lack of preparedness and numerous policy U-turns that contributed to the ensuing chaos. Questions have also been raised about the central bank’s independence and communication policy under the leadership of Governor Urjit Patel.

The decision to withdraw the legal tender character of the 500 ($7.3) and 1000 rupee notes to the central government was taken at 5:30 p.m. on November 8 at a board meeting, the RBI said in its responses.

The bank’s board consists of Governor Patel, his three deputies — R Gandhi, S.S. Mundra and N.S. Vishwanathan — along with a host of eminent personalities including the Economic Affairs Secretary Shaktikanta Das.

It remains unclear what kind of preparations the RBI made for the currency ban that caused chaos across India: it did not respond to queries on how many new 2,000 and 500 rupee notes were being printed each day in its mints or the number of hours each day the printing presses were working in the month leading up to the Nov. 8 announcement .

Nearly 50 days after the decision, there is still a shortage of cash in circulation, with ATMs regularly running out of money and a 2,500 rupee per day cap on ATM withdrawals.

“The RBI top management must communicate more through the media and speaking opportunities,” former Deputy Governor Usha Thorat wrote in an opinion piece. “This is necessary in the interest of transparency and credibility. It generates confidence that the RBI believes in honest communication.”

Source : PTI

All the investments, expenditures you can claim as tax break under Section 80C : 29-12-2016


Most of us are already well aware of the deduction available under section 80C of the Income tax Act, 1961. The maximum amount of deduction that can be claimed under section 80C is Rs 150000 for FY2016-17 which is the same as for FY2015-16. The section offers various investment options to the taxpayer which not only generate returns for him but can also be claimed as deduction while calculating total taxable income.

Majority of people invest in life insurance policies, PPF, ELSS etc. in order to avail this deduction, but there are several other options too which are worth considering. Deduction under Section 80C is not only available for investments but also for specified expenditures made by the tax-payer. However, in order to claim the deduction for a particular financial year you need to invest/spend the deductible amount in that financial year.

Here’s a list of different investments and expenditures which can be claimed as deduction by the taxpayer under Section 80C for the current financial year i.e. FY16-17.

Provident Fund (PF) & Voluntary Provident Fund (VPF)

A part of your salary is deducted monthly as your contribution towards PF. The total amount deducted annually can be claimed by you as deduction while computing your total (taxable) income. An employee can increase this contribution if he is willing to get a less take-home salary. This additional contribution is called VPF and is also eligible for deduction under Section 80C. The interest earned up to 9.5% is tax-free and anything over and above it will be taxed as your salary income.

So if you don’t want to get into the dilemma of choosing and buying the most appropriate investment option to avail tax benefits, then you can simply increase your VPF so that the EPF and VPF contributions total up to Rs 150000.

Public Provident Fund (PPF)

PPF is a scheme provided by the government and the investment in it is eligible for deduction under Section 80C. You can invest as low as Rs 500 and as high as Rs 150000 in a financial year. The interest on PPF is currently tax-free (compounded yearly) and the normal maturity period is 15 years. A point worth noting is that the interest rate is assured but not fixed. The rate is subject to revision every quarter. The interest rate on PPF was reduced from 8.1% to 8% with effect from October 1, 2016.

Life Insurance Premiums
Any amount that you pay towards life insurance premium for yourself, your spouse or your children can also be included in Section 80C deduction. Please note that the premium paid by you for your parents (father/ mother/ both) or your in-laws is not eligible for deduction under Section 80C. If you are paying premium for more than one insurance policy, all the premiums can be included. It is not necessary to have the insurance policy from Life Insurance bought from private players (registered under Insurance Regulatory and Development Authority of India or IRDAI) can be considered here.

Equity Linked Savings Scheme (ELSS)

There are some mutual fund (MF) schemes specially created to offer you tax savings and these are called Equity Linked Savings Scheme (ELSS). The investments that you make in ELSS are eligible for deduction under Section 80C. This is one of the best ways to grow your money and enjoy tax benefit simultaneously as the return generated by ELSS is much more than those generated by other investment products.

Home Loan Principal Repayment

The Equated Monthly Installment (EMI) that you pay to repay your home loan consists of two components – Principal and Interest. The principal qualifies for deduction under Section 80C. Even the interest can save you significant income tax, but that would be under Section 24 and section 80EE of the Income Tax Act.

So if you have an outstanding home loan in your name, then the repayment of the principal amount made by you in a financial year can be claimed as deduction under Section 80C and you need not invest in other products specifically to avail tax benefits.

Further, any payment made to development authorities like Delhi Development Authority (DDA) in order to purchase a house (which has been allotted to you in a scheme made in this regard) also qualifies as deduction under section 80C.

Sukanya Samriddhi Account

In this scheme, you can open an account on behalf of your minor daughter. Any amount deposited in this account would be eligible for deduction under Section 80C. Further, this account can be opened for a maximum of two girls and in case of twins this facility will be extended to the third child as well.

The amount has to be deposited in this account for 15 years. The account will be mature after 21 years, which means that you don’t have to deposit anything between the 16th and 21st year.

The minimum annual deposit is Rs 1000, which can go up to Rs 150000.

Interest rate on new deposits is subject to revision every quarter. The rate was reduced from 8.6% p.a to 8.5% p.a. with effect from October 1, 2016. The interest earned here is also tax-free.

National Savings Certificate (NSC)
NSC is a tax-saving instrument with a maturity period of five years. A person can purchase an NSC for as low as Rs 100. Any investments in NSC are eligible for deduction under Section 80C. This interest is compounded half yearly and is taxable. However, this being a cumulative scheme (i.e., interest is not paid to the investor but instead accumulates in the account), each year’s interest is considered reinvested in the NSC. Since it is deduction as it does not get reinvested, but is paid back to the investor along with the interest of the previous years and the capital amount. The interest on new issue of these certificates is revised quarterly by the government.

So in a nutshell, the interest earned every year, except the last one, is tax-free.

Infrastructure Bonds
Also popularly called Infra Bonds, these are issued by infrastructure companies, not the government. The amount invested in these bonds can also be included in Section 80C deduction.

Five-year Bank Fixed Deposits (FDs)

Any term deposit with a tenure of at least five years with a scheduled bank also qualifies for deduction under section 80C and the interest earned on it is taxable.

Senior Citizen Savings Scheme 2004 (SCSS)

This scheme, as the name suggests, is meant only for senior citizens.

Any individual in the 60 or above age group can open an account under this scheme. An individual above 55 but less than 60, and having retired under a Voluntary Retirement Scheme or a Special Voluntary Retirement Scheme, can also open an account under this scheme, but such an account must be opened within three months of the retirement date.

If you are retired defence personnel, then you can open this account without any age limit, provided you fulfill other specified conditions.

Any investment in this account would be eligible as deduction under Section 80C. The current annual rate of interest offered under this scheme is 8.5 per cent payable quarterly. Please note the interest is payable quarterly instead of compounded quarterly. Thus, unclaimed interest on these deposits won’t earn any further interest and also the interest earned is chargeable to tax. Interest on this scheme is also reset every quarter by the government for new accounts opened under the scheme.

Five-year Post Office Time Deposit (POTD) Scheme
POTDs are similar to bank fixed deposits. They are available for different time durations like one, two, three and five years but only five-year POT qualifies for tax-saving under section 80C. The interest rates offered by them is compounded quarterly, but paid annually.

Please note that the interest earned is entirely taxable.

NABARD Rural Bonds
The NABARD Rural Bonds issued by NABARD (National Bank for Agriculture and Rural Development) also qualify for deduction under section 80C. These bonds are tax-free and also offer decent interest rates.

Unit linked Insurance Plan (Ulip)

An insurance product which covers life insurance and also provides the benefits of equity investments, Ulips have attracted the attention of investors and tax-savers because of their multiple advantages -life cover, tax-saving and also helping you grow your money by giving decent returns in the long-term.

Payment of Tuition Fees

Paying your kids’ school fees is an expenditure which can’t be ignored. Now imagine that the amount paid by you as tuition fees (excluding development fee of donation amount), whether at the time of admission or thereafter, is eligible as deduction to you and will help you save tax.

Please note that the fees should be paid to a school, college, or university in India only.

Contributions to National Pension System (NPS)
Any contribution made by an individual (whether employed or not) to the National Pension Scheme is also allowed as deduction to the individual under section 80CCD. Also note that the combined deduction under section 80C and 80CCD cannot exceed Rs 1.5 lakh. However, if one contributes an additional Rs 50,000 to NPS (over and above the combined limit of Rs 1.5 lakh) it can be claimed as deduction under section 80CCD(1B) i.e. total deduction that can be claimed for contributions to NPS is Rs 1.5 lakh plus Rs 50,000 under two different sections of the Income Tax Act.

Source : Economic Times

Notification No.124/2016 29-12-2016


Seeks to Amend Notification Number S.O. 1902(E) dated the 26th May, 2016 – 124/2016

MINISTRY OF FINANCE (Department of Revenue)

NOTIFICATION No. 124/2016

New Delhi, the 29th December, 2016

S.O. 4222(E).-In exercise of the powers conferred by section 202 of the Finance Act, 2016 (28 of 2016), the Central Government hereby amends the notification of the Ministry of Finance (Department of Revenue), number S.O. 1902(E) dated the 26th May, 2016, published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii) dated the 26th May, 2016, namely:-

2. In the said notification, for the figures, letters and words “31st day of December, 2016”, the figures, letters and words “31st day of January, 2017” shall be substituted.

[F. No. 142/11/2016-TPL]

Dr. T. S. MAPWAL, Under Secy.

Note: Principal notification was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii) dated the 26th May, 2016 vide notification under S.O. 1902(E) dated the 26th May, 2016.

Notification No.123/2016 28-12-2016


Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax (Amendment) Rules, 2016 – 123/2016

 

MINISTRY OF FINANCE (Department of Revenue)

NOTIFICATION No. 123/2016

New Delhi, the 28th December, 2016

G.S.R. 1180(E).-In exercise of the powers conferred by section 85 read with section 32, section 74 and section 77 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015), the Central Board of Direct Taxes hereby makes the following rules, to amend the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Rules 2015, namely :-

1. (1) These rules may be called the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax (Amendment) Rules, 2016.

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

2. In the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Rules, 2015 (herein after referred to as the principal rules), after rule 12, following shall be inserted, namely:

“13. Payment of sum under sub-sections (2) or (5) of section 32.-For the purpose of sub-section (2) or sub-section (5) of section 32 of the Act, the employer or debtor, as the case may be, shall remit the sum by way of pay order, drawn on an authorised bank or a branch of the State Bank of India, or a branch of the Reserve Bank of India in favour of the Assessing Officer or the Tax Recovery Officer who has made requisition under sub-section (1) or sub-section (4) of section 32 of the Act, as the case may be.

14. Service of notice, summons, requisition, order or any other communication under section 74.-(1) For the purposes of sub-section (1) of section 74, the addresses (including the address for electronic mail or electronic mail message) to which a notice or summons or requisition or order or any other communication under the Act may be delivered or transmitted shall be as provided in sub-rule (2) and sub-rule (3).

(2) The addresses for communications to be delivered or transmitted in the manner provided in clause (a) or clause (b) of sub-section (1) of section 74 shall be-

(i) the address available in the PAN database of the addressee; or

(ii) the address available in the return furnished under the Income-tax Act to which the communication relates; or

(iii) the address available in the last return furnished under the income-tax Act by the addressee; or

(iv) in the case of addressee being a company, address of registered office as available on the website of Ministry of Corporate Affairs:

Provided that the communication shall not be delivered or transmitted to the address mentioned in item (i) to (iv) where the addressee furnishes in writing any other address for the purposes of communication to the tax authority or any person authorised by such authority issuing the communication.

(3) The addresses for communications to be delivered or transmitted electronically in the manner provided in clause (c) of sub-section (1) of section 74, shall be-

(i) the e-mail address available in the return furnished under the Income-tax Act by the addressee to which the communication relates; or

(ii) the e-mail address available in the last return furnished under the Income-tax Act by the addressee; or

(iii) in the case of addressee being a company, e-mail address of the company as available on the website of the Ministry of Corporate Affairs; or

(iv) any e-mail address made available by the addressee to the tax authority or any person authorised by such tax authority.

(4) The Principal Director General of Income-tax (Systems) or the Director General of Incometax (Systems) shall specify the procedure, formats and standards for ensuring secure transmission of electronic communication and shall also be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to such communication.

15. Approved valuer under section 77.-(1) The Principal Commissioner or Commissioner shall maintain a register to be called the Register of Valuers in which the names and addresses of persons approved under sub-section (1) of section 77 of the Act shall be entered as valuers.

(2) Any person who is registered as a valuer under section 34AB of the Wealth-tax Act, 1957 (27 of 1957), may apply to the jurisdictional Principal Commissioner or Commissioner for being approved as valuer under sub-section (1) of section 77 of the Act.

(3) An application for approval as a valuer under sub-rule (2) shall be in Form 8 and shall be verified in the manner specified therein and shall be accompanied by a fee of rupees five thousand which shall not be refunded.

(4) Subject to the provisions of sub-rule (5), the Principal Commissioner or Commissioner shall, within fifteen days from the end of the month in which Form 8 is received, approve such person as valuer under sub-section (1) of section 77 of the Act

(5) The Principal Commissioner or Commissioner on being satisfied that the details furnished in Form 8 are incorrect or false may, after providing a reasonable opportunity of being heard, reject the application for approval as a valuer under sub-section (1) of section 77 of the Act”.

3. In the principal rules, in the Appendix, after Form-7, the following Form shall be inserted

As India enters 2017, Narendra Modi’s mastery of the message will be tested : 28-12-2016


Prime Minister Narendra Modi will go into 2017 watchful but unbowed.

In what will be a busy year of state elections, economists are slashing India’s growth forecasts because Modi’s unprecedented cash clampdown is denting demand. The experiment has missed its first marker of success and the almost-daily regulatory flip flops are enraging citizens.

Yet, analysts point to the fact that India hasn’t seen bloody riots of the kind witnessed in Venezuela, which followed Modi in banning higher-value banknotes before it reversed the move. Perhaps most importantly, a fractured opposition hasn’t been able to capitalize on the social pain triggered by the world’s most sweeping currency policy change in decades.

“So far there has been no successful mobilization of public opinion against demonetization,” said Sanjaya Baru, New Delhi-based director at the International Institute of Strategic Studies and media adviser to Modi’s predecessor, who’s written books analyzing former administrations. “Though we can’t say what’s going to happen in the future, at least so far it would seem like Modi is on top.”

The move tests Modi’s reputation as the master of the message. He has touted the cash ban as India’s strongest step against tax evasion and graft in a nation where rising economic inequality helped him sweep to power with the biggest electoral mandate in 30 years.

Modi on Nov. 8 banned 500 and 1,000 rupee notes, removing 86 per cent of currency in circulation. With TVs beaming pictures of serpentine queues spilling out of banks and newspapers carrying stories of rural distress, he pleaded with Indians to give him until Dec. 30 to ease the strife.

Here’s the impact: India’s economy is projected to grow 6.5 per cent October-December instead of the 7.8 percent economists had predicted earlier. Moody’s Investors Service says asset quality at Indian banks — reeling under a pile of bad loans — will weaken. Small businesses, the biggest creators of jobs, are estimated to forfeit transactions worth $9 billion.

International observers such as former U.S. Treasury Secretary Lawrence Summers and former World Bank Chief Economist Kaushik Basu have criticized Modi’s move.

“Even if consumption revives quickly on the back of remonetization, investment could remain muted for longer,” said Pranjul Bhandari, Mumbai-based economist at HSBC Holdings Plc. “The output gap, that is the slack in the economy, will likely remain negative for two quarters longer than we had initially estimated, making it unattractive for investors.”

Medium as Message
And while the potential impact on state polls due in 2017 is not yet clear, the subdued outlook hasn’t dented the performance of Modi’s party in municipal elections over the past month.

One reason could be his ability to channel his message via social media, as President-elect Donald Trump does, allowing Modi to speak directly to the public without any media filter.

“This shows the importance people attach to good governance,” Modi tweeted on Dec. 20 of the election results.

He, however, hasn’t held a single national press conference since taking office and interviews are vetted. Instead, Modi relies on public speeches and has used the medium more than 10 times since Nov. 8 to defend demonetization.

Incorruptible
Modi’s speeches brim with rhetorical flourish and his bold cash clampdown became important part of his narrative as he approached the half way mark in his term early November.

“Modi presented himself as someone with fire in the belly, willing to change things in the country,” said Ullekh NP, author of War Room: The People, Tactics and Technology Behind Narendra Modi’s 2014 Win. “People at least for now believe his message; that he’s incorruptible, that he has no family, that he’s focused on the nation. But unlike an election campaign, where promises suffice, here there’s prolonged hardship for people.”

Support for Modi will waver if opposition parties form alliances in Uttar Pradesh, Ullekh said by phone from the key electoral state.

Shifting Goalposts
Modi’s skill in rebranding has allowed him to recast his message even as massive deposits of old notes being turned in at banks robbed him of his main reason for the demonetization.

Indians have deposited 13 trillion rupees of the 15.4 trillion rupees invalidated by Modi’s move, undermining the government’s estimate that about 5 trillion rupees of this was unaccounted money and wouldn’t reach banks.

“It seems very likely that the original aim of the demonetization drive — forcing illicit wealth holders to come to light — has already very nearly failed,” said Vaninder Singh, an analyst at NatWest Markets, adding that this has pushed the government to change its commentary to fostering a cashless economy. “At what level of economic pain will we see an inflection in Modi’s ratings? The answer depends upon how ‘patriotic sacrifice’ interacts with economic pain.”

Political rivals allege that the shifting goalposts indicate Modi’s Nov. 8 decision was never intended to target black money. Leaders from the main opposition Indian National Congress party said they’ll have to hold smaller rallies in Uttar Pradesh due to the cash clampdown. The state’s Chief Minister Akhilesh Yadav, from the Samajwadi Party, said he’s sure to win because the lines of harassed citizens queuing up at cash machines will now shift to vote for him at polling booths.

Faith and Fear
Uttar Pradesh is due to vote by mid-May. It is India’s most populous state and the biggest contributor to farm output. Elections will be held before that in four other states, including Punjab, called the ‘bread basket of India.’

“Farmers are hurting,” said Ajay Vir Jakhar, chairman of lobby group Farmers’ Forum and grandson, son, and brother of Congress politicians. “Demonetization will have limited impact politically because opposition isn’t able to take advantage of the pain.”

Investors will focus on the government’s first growth forecast for the year through March — due Jan. 7 — to assess the economic impact. Meanwhile, tax officials are raiding homes and offices across the country in a China-style crackdown on corruption, seizing bundles of currency notes and stashes of gold and jewelry.

Modi should follow his cash ban by lowering corporate and income tax rates in the budget — likely Feb. 1 — to encourage compliance, said analysts at Kotak Institutional Equities Ltd., adding that critics of his Nov. 8 decision are underestimating the “psychological” impact of the step.

The move “will reinforce the faith of the general population in the government’s efforts to clean up the system and instill fear in a section of the society, which hitherto has had little regard for the laws of the land,” they wrote in a Dec. 19 report. “Faith and fear.”

Source : Financial Express

Income Tax Slabs for the Financial Year 2016-17 (Assessment Year 2017-18) : 28-12-2016


The tax an Indian pays every year is calculated on the basis of his/her gross total income. The tax is calculated according to the income tax slabs announced by the government every year in the Budget. The annual union budget is normally announced in the month of February.

Income tax slab rates for the financial year 2016-17 (assessment year 2017-18)

Normal tax rates applicable to a resident individual below the age of 60 years, non-resident individual, resident/non-resident HUF, AOP, BOI, artificial juridical person.

Income Tax Slabs for the Financial Year 2016-17 (Assessment Year 2017-18)
Normal tax rates applicable to a resident individual of the age of 60 years or above at any time during the year but below the age of 80 years
Income Tax Slabs for the Financial Year 2016-17 (Assessment Year 2017-18)
Normal tax rates applicable to a resident individual of the age of 80 years or above at any time during the year
Income Tax Slabs for the Financial Year 2016-17 (Assessment Year 2017-18)
After taking the deductions under Section 80 (C) to 80 (U), the tax is payable after adding the cess and surcharge, if applicable.
The surcharge is levied @ 15% on the amount of income tax where net income exceeds Rs 1 crore. In case where surcharge is levied, the cess will be levied on the tax amount plus surcharge.
However, a resident individual whose net income is equal to or less than Rs 5 lakh can avail rebate under Section 87(A). The amount of rebate under this section is 100% of the income tax or Rs 5,000 whichever is less. It is deductible before calculating the cess.
Source : PTI

Union Budget 2017 likely to be taxpayer-friendly : 28-12-2016


The post-demonetisation Budget is likely to be citizen- and taxpayer-friendly and will aim to push growth. This was the central message that emanated from an interaction between Prime Minister Narendra Modi and a group of economists organised by the NITI Aayog on Tuesday.

The consultations saw the PM remark that while people in general were not tax evaders, they did want taxes better utilised and accounted for.

“Tax simplification figured quite a lot… on direct taxation, corporate and personal income tax, reducing exemptions, bringing down the tax rate and aligning tax system to make India competitive with international destinations,” NITI Aayog vice-chairman Arvind Panagariya said.

A source said the Modi government’s third Budget may offer incentives and packages to boost consumption and accelerate economic growth, a concern after reports that demonetisation had suppressed demand and reduced discretionary spending.

After the meeting, Panagariya said all attendees stressed on the need to bring firms and businesses into the formal economy – a goal of demonetisation – as this would lead to growth of more secure and productive jobs.

Panagariya said the meeting between PM and economists focussed on three key points — agriculture, jobs and budget-related issues.

In the meeting, there was a discussion on strategies to work on Modi’s goal to double farmers’ income by 2022 and expand the digital payment revolution to include the agriculture sector, he said, adding there were suggestions on moving to high-value agriculture products.

A source said Modi sought suggestions on setting up or developing world-class agriculture universities on the lines of IITs and IIMs. Experts favoured simplification and reduction in personal income tax rates and harmonisation of customs duties to global levels in a bid to boost economic activities. On the inverted duty structure, it was suggested that harmonisation of tariffs could resolve the issue.

Source : Economic Times

23 – 27-12-2016


PURCHASE AND SALE OF SECURITIES OTHER THAN SHARES OR CONVERTIBLE DEBENTURES OF AN INDIAN COMPANY BY A PERSON RESIDENT OUTSIDE INDIA

A.P. (DIR SERIES 2016-17) CIRCULAR NO.23DATED 27-12-2016

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 (the Principal Regulations) notified vide Notification No. FEMA.20/2000-RB, dated May 3, 2000, as amended from time to time, in terms of which, eligible investors, viz., SEBI registered Foreign Institutional Investors (FIIs), Qualified Foreign Investors (QFIs), registered Foreign Portfolio Investors (FPIs) and long term investors registered with SEBI, may purchase securities indicated in Schedule 5 on repatriation basis and subject to such terms and conditions as may be specified by the SEBI and the Reserve Bank from time to time.

2. With a view to providing flexibility in regard to the manner in which non-convertible debentures/bonds issued by Indian companies can be acquired by FPIs, it has now been decided to allow them to transact in such instruments either directly or in any manner as per the prevalent/approved market practice.

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

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

No.43/2016 Dated: 27-12-2016


EXPLANATORY NOTES ON PROVISIONS OF THE TAXATION AND INVESTMENT REGIME FOR PRADHAN MANTRI GARIB KALYAN YOJANA, 2016 AS CONTAINED IN CHAPTER IX-A OF THE FINANCE ACT, 2016

Circular No.43 of 2016

F.No. 142/33/2016-TPL

Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes

(TPL Division)

***

Dated: 27th December,2016

EXPLANATORY NOTES ON PROVISIONS OF THE TAXATION AND INVESTMENT REGIME FOR PRADHAN MANTRI GARIB KALYAN YOJANA, 2016 AS CONTAINED IN CHAPTER IX-A OF THE FINANCE ACT, 2016

Introduction

1. The Taxation Laws (Second Amendment) Act, 2016 has been enacted by Parliament on 15.12.2016. The said Act has inter alia amended the provisions of Finance Act, 2016 and inserted a new Chapter on, ‘The Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (hereinafter ‘the Scheme’) in the Finance Act, 2016.

2. The Scheme provides an opportunity to persons having undisclosed income in the form of cash or deposit in an account maintained with a specified entity (which includes banks, post office etc.) to declare such income and pay tax, surcharge and penalty totaling in all to 49.9 per cent. of such declared income. Besides, the Scheme provides that a mandatory deposit of not less than 25% of such income shall be made in the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 (hereinafter ‘the PMGKY Deposit Scheme’) which has separately been notified by the Department of Economic Affairs. The Scheme has commenced on 17.12.2016 and shall remain open for declarations/deposit upto 31.03.2017.

Scope of the Scheme

3. A declaration under the aforesaid Scheme may be made in respect of any income in the form of cash or deposit in an account maintained by the person with a specified entity, chargeable to tax under the Income-tax Act for any assessment year commencing on or before the 1st day of April, 2017. No deduction in respect of any expenditure or allowance or set-off of any loss shall be allowed against the income in respect of which a valid declaration is made under the Scheme.

Tax, surcharge, penalty & deposit under the Scheme

4. The person making a declaration under the Scheme would be liable to pay tax at the rate of thirty per cent. of the undisclosed income as increased by surcharge to be called the Pradhan Mantri Garib Kalyan Cess calculated at the rate of thirty-three per cent. of such tax. In addition, penalty at the rate of ten per cent. of the undisclosed income shall be payable.

The declarant shall also be required to deposit an amount not less than twenty-five per cent. of the undisclosed income in the PMGKY Deposit Scheme. The deposit shall bear no interest and the amount deposited shall have a lock-in period of four years.

Time limits for declaration and making payment

5. A declaration under the Scheme can be made anytime on or after 17th December, 2016 but on or before 31st March, 2017. The tax, surcharge and penalty payable under the Scheme and deposit to be made in the Deposit Scheme, shall be paid/made before filing of declaration under the Scheme. The declaration shall be accompanied with proof of payment made in respect of tax, surcharge and penalty payable under the Scheme and proof of deposit made in the PMGKY Deposit Scheme.

Form for declaration

6. A declaration under the Scheme in Form-1 as prescribed in the Rules may be made at any time on or before 31.03.2017. After such declaration has been furnished, the notified Principal CIT/ CIT will issue an acknowledgment in Form-2 to the declarant within 30 days from the end of the month in which the declaration under Form-1 is made.

Filing of declaration

7. A declaration under the Scheme can be filed:

(i) Electronically under digital signature with CIT(CPC) Bengaluru or jurisdictional Principal CIT/CIT notified under section 120 of the Income-tax Act, 1961.

(ii) Electronically through Electronic Verification Code (EVC) or in print form with jurisdictional Principal CIT /CIT notified under section 120 of the Income-tax Act, 1961.

Declaration not eligible in certain cases

8. The provisions of this Scheme shall not apply-

(a) in relation to any person in respect of whom an order of detention has been made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 subject to the conditions specified under the Scheme.

(b) in relation to prosecution for any offence punishable under Chapter IX or Chapter XVII of the Indian Penal Code, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Unlawful Activities (Prevention) Act, 1967, the Prevention of Corruption Act, 1988, the Prohibition of Benami Property Transactions Act, 1988 and the Prevention of Money-Laundering Act, 2002;

(c) to any person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992;

(d) in relation to any undisclosed foreign income and asset which is chargeable to tax under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Circumstances where declaration shall be invalid

9. A declaration shall be void and shall be deemed never to have been made where a declaration has been made by misrepresentation or suppression of facts or without payment of tax and surcharge or penalty or without depositing the requisite amount in the PMGKY Deposit Scheme, and in such cases all the provisions of the Income-tax Act, including penalties and prosecutions, shall apply accordingly.

Tax, etc., not refundable

10. Any tax, surcharge or penalty paid under the Scheme shall not be refundable under any circumstances.

Effect of valid declaration

11. Where a valid declaration as detailed above has been made, the following consequences will follow:

(a) The amount of undisclosed income declared shall not be included in the total income of the declarant under the Income-tax Act for any assessment year;

(b) A declarant under this Scheme shall not be entitled, in respect of undisclosed income or any amount of tax and surcharge paid thereon, to re-open any assessment or reassessment made under the Income-tax Act or the Wealth-tax Act, 1957, or to claim any set-off or relief in any appeal, reference or other proceeding in relation to any such assessment or reassessment

(c) The contents of the declaration shall not be admissible in evidence against the declarant for the purpose of any proceeding under any Act other than the Acts referred in Para- 8 above.

(Dr Thakur Singh Mapwal)

Under Secretary to the Government of India

 

Income Tax returns filing: Check out the 80 C tax benefits of up to Rs 1.5 lakh : 27-12-2016


As three months remain for tax-related investments, salaried individuals should look at various provisions under Section 80C of the Income Tax Act, 1961. Section 80C entitles an employee to certain deductions from the gross total income, up to a maximum limit of R1.5 lakh.

Investments for saving tax
Investments in Public Provident Fund (PPF), national savings certificates (NSCs), employee’s contribution to provident fund (PF), tax-saving mutual funds, five-year fixed deposits in banks or post office and premiums paid for life insurance products all come under the purview of Section 80C. Section 80C also offers market-linked investment options, such as equity-linked savings schemes (ELSS) and unit-linked insurance plans (Ulips). ELSS, which come with a three-year lock-in period, are routed to the equity market through mutual fund houses. Ulips, which come with a five-year lock-in, are routed through insurance companies.

Deduction on stamp duty
An individual who has taken a home loan can avail of deduction towards principal repayment in the financial year. Under Section 80C, taxpayers can claim deduction on the amount paid as stamp duty for property registration in his own name. This is over and above the principal payment that qualifies under Section 80C. However, for deduction under Section 80C for total amount, including principal loan repayment, stamp duty and registration charges, the total amount cannot be over R1.5 lakh. Under Section 24, the tax payer can claim deduction of R2 lakh on the interest amount paid for the housing loan, provided it is taken from a bank or an housing finance company.

Rajiv Gandhi Equity Savings Scheme
Under Section 80CCG, a new retail investor can put money in Rajiv Gandhi Equity Savings Scheme (RGESS). Here, one can invest in one or more financial years in a block of three consecutive financial years beginning with the initial year in which the deduction has to be claimed. This tax exemption is available over and above the exemption available under Section 80C. The investor can invest in shares of BSE 100 or CNX 100, stocks of public sector
enterprises, units of exchange-traded funds and mutual funds. A new retail investor with gross income of up to R12 lakh can avail of benefits under this scheme, with a permissible investment of R50,000. The exemption is available for R25,000, i.e., 50% of the invested amount. The scheme comes with a lock-in period of three years.

Tuition fees for two children
Tuition fees paid for two children will be deducted from your income under Section 80C. The law states that the deduction will be on the actual payment of fee and not on books, bus fare, etc. Tuition fees include money paid whether at the time of admission or thereafter, to any university, college, school or other educational institution in India, for the purpose of full-time education of any two children of the salaried employee. Full-time education includes any educational course offered by a university, college, school or other institution to a student who is enrolled in a full-time course. Money paid as development fees or donation or capitation fees or payment of similar nature will not be eligible for deduction. The law clearly mentions that full-time education includes play-school activities, pre-nursery and nursery classes. Salaried employees, however, cannot claim tax exemption under tuition fees if their child is studying abroad.

Source : Business Line

Notification No.122/2016 27-12-2016


Income-tax (36th Amendment) Rules, 2016 – 122/2016 – Dated 27-12-2016

MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION No. 122/2016

New Delhi, the 27th December, 2016

INCOME-TAX

S.O. 4168(E).-In exercise of the powers conferred by sub-section (1) of 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 (36th Amendment) Rules, 2016.

(2) It shall be deemed to have come into force from the 1st day of April, 2016.

2. In the Income-tax Rules, 1962, in rule 67, for sub-rule (2), the following shall be substituted, namely:-

“(2) The manner of investment referred to in sub-rule (1) shall be in accordance with the following Table, namely:-

TABLE

INVESTMENT PATTERN

Sl. No.

INVESTMENT

Percentage amount to be invested in items referred to in column(2)

(1) (2) (3)
i. Government Securities and Related Investments :( a) Government Securities;(b) other securities, as defined in section 2(h) of the Securities Contracts (Regulation) Act, 1956, the principal whereof and interest whereon is fully and unconditionally guaranteed by the Central Government, or any State Government;

and/or

(c) units of mutual funds set up as dedicated funds for investment in Govt. securities and regulated by the Securities and Exchange Board of India.

Minimum forty-five per cent. and upto fifty per cent.
ii. Debt Instruments and Related Investments:(a) Listed (or proposed to be listed in case of fresh issue) debt securities issued by bodies corporate, including banks and public financial institutions, which have a minimum residual maturity period of three years from the date of investment;(b) Basel III Tier-I bonds issued by scheduled commercial banks under the guidelines issued by the Reserve Bank of India;

(c) Rupee Bonds having an outstanding maturity of at least three years issued by institutions of the International Bank for Reconstruction and Development, International Finance Corporation and Asian Development Bank;

(d) Term Deposit receipts of not less than one year duration issued by scheduled commercial banks, which satisfy the following conditions on the basis of published annual reports for the most recent years, as required to have been published by them under any law for the time being in force:

(i) having declared profit in the immediately preceding three financial years;

(ii) maintaining a minimum Capital to Risk Weighted Assets Ratio of nine per cent., or mandated by prevailing norms of Reserve Bank of India, whichever is higher;

(iii) having net non-performing assets of not more than four per cent. of the net advances; and

(iv) having a minimum net worth of not less than two hundred crore rupees and/or

(e) units of debt mutual funds as regulated by Securities and Exchange Board of India;

(f) The following infrastructure related debt instruments;

(i) Listed (or proposed to be listed in case of fresh issue) debt securities issued by body corporates engaged mainly in the business of development or operation and maintenance of infrastructure, or development, construction or finance of low cost housing and including securities issued by Indian Railways or any of the body corporates in which it has majority shareholding, or any Authority of the Government which is not a body corporate and has been formed mainly with the purpose of promoting development of infrastructure:

Provided that any structural obligation undertaken or letter of comfort issued by the Central Government, Indian Railways or any Authority of the Central Government, for any security issued by a body corporate engaged in the business of infrastructure, which notwithstanding the terms in the letter of comfort or the obligation undertaken, fails to enable its inclusion as security covered under subclause (b) of clause (i), shall be treated as an eligible security under this subcategory;

(ii) Infrastructure and affordable housing Bonds issued by any scheduled commercial bank, which meets the conditions specified in sub-clause (d) of clause (ii);

(iii) Listed (or proposed to be listed in case of fresh issue) securities issued by Infrastructure debt funds operating as a Non-Banking Financial Company and

regulated by the Reserve Bank of India;

(iv) Listed (or proposed to be listed in case of fresh issue) units issued by Infrastructure Debt Funds operating as a Mutual Fund and regulated by Securities and Exchange Board of India.

Minimum thirty-five per cent. and upto forty-five per cent.
iii. Short-term Debt Instruments and Related Investments(a) Money market instruments;(b) Units of liquid mutual funds regulated by the Securities and Exchange Board of India.

(c) Term Deposit Receipts of up to one year duration issued by such scheduled commercial banks which satisfy all the conditions mentioned in sub-clause (d) of clause (ii).

Upto five per cent.
iv. Equities and Related Investments(a) Shares of body corporates listed on Bombay Stock Exchange or National Stock Exchange, which have,-(i) Market capitalization of not less than five thousand crore rupees as on the date of investment; and

(ii) Derivatives with the shares as underlying, traded in either of the two stock exchanges; and/or

(b) Units of mutual funds regulated by the Securities and Exchange Board of India, which have minimum sixty five per cent. of their investment in shares of body corporates listed on Bombay Stock Exchange or National Stock Exchange;

(c) Exchange Traded Funds/ Index Funds regulated by the Securities and Exchange Board of India that replicate the portfolio of either Bombay Stock Exchange Sensex Index or National Stock Exchange Nifty fifty Index;

(d) Exchange Traded Funds issued by Securities and Exchange Board of India regulated mutual funds constructed specifically for disinvestment of shareholding of the Government of India in body corporates;

(e) Exchange traded derivatives regulated by the Securities and Exchange Board of India having the underlying of any permissible listed stock or any of the permissible indices, with the sole purpose of hedging. v.

Minimum five per cent. and upto fifteen per cent.
v. Asset Backed, Trust Structured and Miscellaneous Investments(a) mortgage based Securities or Residential mortgage based securities;(b) units issued by Real Estate Investment Trusts regulated by the Securities and Exchange Board of India;

(c) Asset Backed Securities regulated by the Securities and Exchange Board of India.

(d) Units of Infrastructure Investment Trusts regulated by the Securities and Exchange Board of India.

Upto five per cent.

Provided that the portfolio invested under sub-clause (b) of clause (i) of the said Table shall not be in excess of ten percent of the total portfolio of the fund:

Provided further that, irrespective of the proportion of investments specified in clause (i) of the said table, exposure of a trust to any Individual Mutual Fund, under sub-clause (c) of the said clause, which has been set up as a dedicated fund for investment in Government Securities, shall not exceed five per cent. of its total portfolio at any point of time and fresh investments made in them shall not exceed five per cent. of the fresh accretions in the year:

Provided also that the investment stated in sub-clause (b) of clause (ii) shall be made only in such Tier-I bonds which are proposed to be listed in case of initial offering of the bonds and if such Tier-I bonds are listed and regularly traded, investment shall be made in such bonds of a Scheduled commercial Bank from the Secondary Market:

Provided also that the total portfolio invested, at any time, in Tier I bonds referred to sub-clause (b) of clause (ii) of the said Table shall not be more than two per cent. of the total portfolio of the fund; and

(i) no investment in initial offerings shall exceed twenty per cent. of the initial offering,

(ii) the aggregate value of Tier I bonds of any particular bank held by the fund at any point of time, shall not exceed twenty per cent. of such bonds issued by that Bank.

Provided also that for sub-clause (c) of clause (ii) of the said Table, a single rating of AA or above by a domestic or international rating agency will be acceptable:

Provided also that the debt securities covered under sub-clause (b) of clause (i) of the said Table shall be excluded from the securities covered under clause (ii) of the said Table.

Provided also that in sub-clause (e) of clause (ii), fresh investment in Debt Mutual Funds shall not be more than five per cent. of the fresh accretions invested in the year and the portfolio invested in them shall not exceed five per cent. of the total portfolio of the fund at any point in time.

Provided also that the investment under sub-clause (a), (b) and items (i) to (iv) of (f) of clause (ii) of the said Table shall be made only in such securities which have minimum AA rating or equivalent in the applicable rating scale from at least two credit rating agencies registered with Securities and Exchange Board of India under Securities and Exchange Board of India (Credit Rating Agency) Regulation, 1999.

Provided also that in case of item (iii) of the sub- clause (f) of clause (ii) of the said Table the ratings shall relate to the Non-Banking Financial Company and for item (iv) of the sub-clause (f) of clause (ii) of the said Table the ratings shall relate to the investment in eligible securities rated above investment grade of the scheme of the fund:

Provided also that if the securities or entities have been rated by more than two rating agencies, the two lowest of all the ratings shall be considered:

Provided also that investments under sub-clauses (a), (b) and sub-clause (f) of clause (ii) of the said Table requiring a minimum AA rating, shall be permissible in securities having investment grade rating below AA in case the risk of default for such securities is fully covered with Credit Default Swaps issued under Guidelines of the Reserve Bank of India and purchased along with the underlying securities and purchase amount of such Swaps shall be considered to be investment made under this clause:

Provided also that investment stated in sub-clause (a) of clause (iii) of the said Table in paper issued by body corporates shall be made only in such instruments which have minimum rating of Al + by at least two credit rating agencies registered with the Securities and Exchange Board of India and if paper has been rated by more than two rating agencies, the two lowest of the ratings shall be considered:

Provided also that investment in sub-clause (a) of clause (iii) of the said Table in Certificates of Deposit of up to one year duration issued by scheduled commercial banks will require the bank to satisfy all conditions mentioned in sub-clause (d) of clause (ii) of the said table:

Provided also that the aggregate portfolio invested in such mutual funds stated in sub-clause (b) of clause (iv) of the said Table shall not be in excess of five per cent. of the total portfolio of the fund at any point in time and the fresh investment in such mutual funds shall not be in excess of five per cent. of the fresh accretions invested in the year:

Provided also that the portfolio invested in derivatives in terms of contract value shall not be in excess of five per cent. of the total portfolio invested in sub-clauses (a) to (d) of clause (iv) of the said Table:

Provided also that investment under clause (v) of the said Table shall only be in listed instruments or fresh issues that are proposed to be listed:

Provided also that investment under clause (v) of the said Table shall be made only in such securities which have minimum AA or equivalent rating in the applicable rating scale from at least two credit rating agencies registered by the Securities and Exchange Board of India under Securities and Exchange Board of India (Credit Rating Agency) Regulations, 1999:

Provided also that in case of the sub-clause (b) and (d) of the clause (v) of the said Table, the ratings shall relate to the rating of the sponsor entity floating the trust:

Provided also that if the securities/entities have been rated by more than two rating agencies, the two lowest of the ratings shall be considered:

Provided also that any proceeds arising out of exercise of put option, tenure or asset switch or trade of any asset before maturity can be invested in any of the permissible categories in the manner that at any given point of time the percentage of assets under that category shall not exceed the maximum limit prescribed for that category and also shall not exceed the maximum limit prescribed for the sub-categories, if any. However, asset switch because of any Reserve Bank of India mandated Government debt switch would not be covered under this restriction.

Provided also that fresh accretions to the fund shall be invested in the permissible categories specified in this investment pattern in a manner consistent with specified maximum permissible percentage amounts to be invested in each such investment category, while also complying with such other restrictions as made applicable for various sub-categories of the permissible investments:

Provided also that the turnover ratio, being the value of securities traded in the year divided by the average value of the portfolio at the beginning of the year and at the end of the year, should not exceed two.

Provided also that in the event of the rating of any instrument mentioned in the Table for being rated and their rating falling below the investment grade, as confirmed by One Credit Rating Agency registered under sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the option of exit shall be considered and exercised, as appropriate, in a manner that is in the best interest of the subscribers and released fund shall be invested in accordance with the manner provided in the Table:

Provided also that if the fund has engaged services of professional fund manager or asset managers for management of its assets, payment to whom is made on the basis of the value of each transaction, the value of funds invested by them in any mutual fund mentioned in any of the clauses of the Table or Exchange Traded Funds or Index Funds shall be reduced before computing the payment due to them.

Explanation 1.- The manner of investment specified in this sub-rule shall apply to the aggregate amount of investible moneys with the fund in the previous year.

Explanation 2.-For the purposes of this sub-rule,-

(i) Fresh accretions to the funds shall be the sum of un-invested funds from the past and receipts like contributions to the funds, dividend, interest, commission, amount received on the maturity of investment made prior to the 1st day of April, 2015 etc., as reduced by obligatory outgo during the financial year.

(ii) the expression “Government securities” shall have the meaning assigned to it in clause (b) of section 2 of the Securities Contracts (Regulation) Act, 1956;

(iii) the expression “Infrastructure” for the purposes of sub-clause (f) of clause (ii) of the Table shall have the meaning as referred to in Notification dated 2nd March, 2015 (F No 11/14/2013-PR) of Department of Financial Services.

(iv) the expression “public financial institutions” shall have the meaning as assigned to it under section 2 of the Companies Act, 2013 (1 of 2013);

(v) the expression “public sector company” shall have the meaning assigned to it in clause (36A) of section 2 of the Income-tax Act;

(vi) the expression “securities” shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956.]

[201, F. No. 370142/4/2016-TPL]

ABHISHEK GAUTAM, Under Secy. (Tax Policy & Legislation)

Note: The principle rules were published vide Notification No. S.O. 969 dated the 26th March, 1962 which has been amended from time to time, the last amendment being S.O. 4110 (E) dated 21st December, 2016.

 

Submit tax saving proofs to your employer to prevent excess TDS : 27-12-2016


With your company’s accounts department knocking on your door to submit income-tax saving proofs, it’s time for you to gather all the relevant papers in one place.

Since April 2016, the department would have been computing taxes on your salary based on the proposed investment declaration submitted by you earlier.

The taxes deducted at source (TDS) are covered under Section 192 of the Income-tax Act, 1961 making it the obligation of the employer to withhold taxes at the time of payment of salaries.

Once the actual proof is submitted, the accounts department will compute the taxes based on the proofs of the actual investments made by you. And for that you will have to furnish the documentary evidence of having actually made the investments as per the investment declaration made earlier You can make tax-saving investments different from those declared by you earlier but the deduction from taxable income will be given only on the basis of the actuals submitted and not on the basis of the  proposed declaration made earlier.

The last date for such submissions varies, but most organisations would expect you to submit them by March 10, 2017. However, employers start asking for them in January (in this case Jan 2017) itself as they would like to start deducting tax at source on the basis of tax calculations based on actual investments from January.. This will also enable the employee to finalise tax adjustments, if any, in the balance months of the current financial year (2016-17).If taxes have been deducted in excess or less, accordingly, they will get deducted in the last 3 months of the FY. Do not wait till March as then there wont be any scope for finalising and one could see a huge tax burden in that month and less of take-home pay.

The documents need not be attached or sent to Income-tax Department at the time of tax filing. Instead, it’s the employer who has to receive them from employees and deduct tax accordingly.

At times it is found that after taking into account the tax saving investments/expenditures, the tax already deducted by one’s employer is in excess and cannot be adjusted in subsequent months. In such cases the excess TDS will reflect in the Form 16 and the refund will have to be claimed by you from the I-T Department by filing the appropriate income tax return.
The important tax saving investment/expenditure proofs include .

Investments – Under Section 80C
When it comes to investments such as Equity Linked Savings Schemes (ELSS) of mutual funds (MFs), life insurance, submit the ELSS fund statement, premium paid receipts respectively. For Public Provident Fund (PPF), if it is maintained with a bank or a post office, submit photocopies of the passbook showing all the transactions and the account details. In case you are maintaining PPF online, take a printout of the e-receipt showing transactions and the account details. In case you are maintaining PPF online, take a printout of the e-receipt showing transactions and the account details. In case of Sukanya Samriddhi Scheme and 5-year tax saving fixed deposit, the deposit receipt or a certificate from the bank has to be submitted to the employer.

Tuition fees
In case of tuition fees, submit photocopies of the school receipt carrying the schools’ seal and signature of the receiver.

First-time home buyers
For the current financial year, Section 80EE allows tax benefits for first-time home buyers under which the benefit can be claimed on home loan interest. This deduction is over and above the Rs 2 lakh limit under Section 24 of the Income-tax Act. Hard copies of  all the relevant documents have to be submitted.

House Rent Allowance Exemption
For those who claim HRA relief, the Permanent Account Number (PAN) of the landlord is mandatory. This condition is not applicable for those whose rent payment is less than or equal to Rs 1 lakh per annum, i.e., Rs 8,333 per month.

A copy of the lease rent agreement or declaration by the landlord in a prescribed format is to be submitted. Further, ownership proof of landlord of rented premises, which can be house tax receipt or the latest electricity bill or share certificate in case of co-operative society houses have to be submitted. The original rent receipts for the period April 2016 till date have to be provided.

Housing loan repayment (principal)
The certificate from a financial institution specifying the principal paid during April 2016 to March 2017 needs to be submitted. Ask the institution to mention the provisional amount for the last 2-3 months of the current financial year as equated monthly instalments (EMIs) would still be pending.

Loss from housing property – interest on housing loan – self occupied
The interest certificate from the bank or financial institution, specifying the break-up of interest and the principal amount for FY 2016-17 would be required. Possession/construction completion certificate are a must for availing the relief by some employers. Further, the date of loan taken and the date of possession are mandatory to avail the benefit.

Loss from housing property – interest on housing loan – let out on rent
If the house for which loan has been availed is let out, the same should be submitted with certificate from a financial institution specifying principal and interest paid during April 2016 to March 2017 (FY 2016-17).

New Pension Scheme (NPS)
There is no need to submit proof of actual Investments in case the investments in NPS is through Corporate Model or Employee Model as the same are recovered and deposited by company in your PRAN (Permanent Retirement Account Number) account. However, if you have opted for investment of Rs 50,000 under NPS on your own, i.e., outside salary, then submission of copies of PRAN card, NPS Transaction Statement for Tier 1 Account is necessary.

Mediclaim premium
Call up the insurer and ask him to send the statement for tax purpose under Section 80D. The premium should not be paid by cash and should be paid by cheque or digital transfer from the bank account.

Conclusion
It’s better to get a confirmation on the actual requirement from your accounts department. Not all will be asking for all the above mentioned documents, while few others might have their own set of requirements. The documents, if not submitted within time, may make you end up with excess TDS which would have to be claimed as refund. Also, as a precaution, retain the original copies for personal income-tax assessment .

Source : PTI

 

IDS Instruction No.3 – 27-12-2016


Viewing of MIS relating to Tax payments made under IDS 2016 and tax payment and TDS claim matching before issue of Form 4 – enhancements of functionalities – Income Disclosure Scheme, 2016 – Order-Instruction

IDS Instruction No.3

DIRECTORATE OF INCOME TAX (SYSTEM)

ARA Center, Ground Floor, E-2, Jhandewalan Extension,

New Delhi – 110055

 F.No. 1/20/CIT(OSD)/efiling/Electronic Verification/2013-14

 Dated: 27/12/2016

Subject: Viewing of MIS relating to Tax payments made under IDS 2016 and tax payment and TDS claim matching before issue of Form 4 – enhancements of functionalities – Income Disclosure Scheme, 2016 – Reg.

Sir/Madam,

Reference may be made to IDS Instruction Number 1 issued on 24.06.2016 and IDS Instruction Number 2 issued on 01.07.2016. The functionalities of viewing online Form 1, uploading manual/paper Form 1 received by PCIT/CIT, generation of Form 2 for e-Filed/paper Form 1, viewing of Form 3 submitted online and generation of Form 4 for e-Filed/paper Form 1 were made available to PCIT/CIT on the efiling portal of the Income Tax Department.

2. The key changes introduced in this release is the functionality to view MIS relating to Tax payments made under IDS 2016 and tax payment and TDS claim matching before issue of Form 4. The details of the steps are annexed. Accordingly, the process of reviewing Form 3 or uploading Manual Form 3 and issue of Form 4 have been enhanced. The detailed instructions are given in the user manual enclosed.

3. The Principal CIT or the CIT is required to personally access the portal and use these functionalities in the case of any taxpayer where the Permanent Account Number (PAN) is within his/her jurisdiction by logging in to the E-filing portal. The Principal CIT or the CIT can view the MIS reports both e-Filed and Manual Forms 1 and 3 and Forms 2 and 4 issued by PCIT/CIT by accessing the E-filing portal using the TAXNET for which a network node and RSA token are pre-requisites. The URL to be used for this purpose is: https://efilingreports.incometax.gov.in

4. The PCCIT and CCIT in the hierarchy can view the MIS reports for both e-Filed and Manual Forms 1 and 3 and Forms 2 and 4 issued by PCIT/CIT by accessing the E-filing portal in the similar manner using their user ID, password and RSA token.

5. For any clarifications/ difficulties users are advised to contact the following:

i) Sh. R.K. Mishra, CIT(CPC) , 09449005568, rkmishra@incometax.gov.in

ii) Sh. M. Jagadeesan, DD(S), 08762300586, jagadeesan@incometax.gov.in

6. This issues with the approval of Pr. DGIT(S).

Yours sincerely,

(Ramesh Krishnamurthi)

Additional Director General (Systems)

Weeks before Budget, Finance Minister Arun Jaitley lists out benefit of low tax rates : 27-12-2016


India has been guided by the principle that a lower level of taxation is the key to building a globally competitive economy in the past two and a half decades since liberalisation, FM Arun Jaitley said, touching off speculation about his plans for the Budget, which is just weeks away. “We have seen post-1991 the entire course of economy altering itself,” he said. “What you need is a broader base of economy, for which you need a lower level of taxation.”

Jaitley subsequently scotched any broader interpretation of his remarks with a tweet. “I have read several inaccurate versions of my speech today at NACEN (National Academy of Customs Excise and Narcotics) in the media.”

EThad reported on Monday that the government is likely to announce dramatic changes in the direct tax regime and both personal and corporate taxes could be slashed. The government’s November 8 demonetisation announcement has led to economic dislocation and tax cuts would help reverse the loss in sentiment.

Before 1991, policies reflected the belief that higher taxes will fetch more revenue, Jaitley said while inaugurating the professional training programme of Indian Revenue Service officers in Faridabad.

The Budget is likely to be announced on February 1, almost a month earlier than usual, in order to ensure that spending can kick off from the April 1start of the financial year itself.

“You need to manufacture products and provide services which are more competitive in character and therefore your taxes have to be globally compatible,” Jaitley said. “Competition is not merely domestic, competition is global.”

The last two and a half decades have been guided by that principle, he told the officers. The Indian Revenue Service administers and runs the country’s tax network.

The government had in the 2015 Budget announced a road map to lower corporate taxes to 25% over the next four years while simultaneously phasing out exemptions. A beginning was made in the last Budget when rates were cut marginally for companies with a turnover of up to Rs 5 crore.

India’s peak tax rate, including surcharges, is as much as 35% but the effective rate is only around 23% due to multiple exemptions. The introduction of the goods and services tax (GST) is also expected to bring down effective indirect taxes.

Jaitley said the belief of the past seven decades was that tax avoidance was not improper or immoral. “That was considered to be commercial smartness,” he said.

This needs to change, as does the attitude of tax officials, Jaitley said.

“Voluntary compliances have to increase and the mindset of the taxpayer (should be) that payment of legitimate taxes is a responsibility and that then should be reciprocated by you with a confidence in the taxpayer that the taxpayer is to be trusted, except when it’s proven otherwise,” Jaitley said, outlining the role of tax officials. “And therefore, only in those select cases, very objectively selected, you go in for a wider audit or a wider scrutiny itself.”

There should be no room for discretion, he said. “There are no grey areas in taxation laws. It’s either white or black. Either a tax is payable or a tax is not payable. And therefore to discover grey areas in fiscal laws is not possible,” Jaitley said. “That’s the same principle that applies to criminal law also. Either an offence has been committed or not committed. You interpret the law as it is without adding or subtracting a word, that’s the primary function of the taxperson,” he said.

Source : EconomicTimes

Notification No. GSR 2(E) [F.NO.C.2/1/2016-SEZ], 26-12-2016


SPECIAL ECONOMIC ZONES (AMENDMENT) RULES, 2016 – SUBSTITUTION OF RULE 5A

NOTIFICATION NO. GSR 2(E) [F.NO.C.2/1/2016-SEZ]DATED 26-12-2016

In exercise of the powers conferred by section 55 of the Special Economic Zones Act, 2005 (28 of 2005), the Central Government hereby makes the following rules further to amend the Special Economic Zones Rules, 2006, namely:—

Short title and commencement

1. (1) These rules may be called the Special Economic Zones (Amendment) Rules, 2016.

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

2. In the Special Economic Zones Rules, 2006, for rule 5A, the following shall be substituted, namely:—

“5A. Infrastructure requirements relating to information technology, Bio-technology, Research and Development facilities, Fabless Semi-conductor Industry and Electronic Manufacturing Services —In case of a Special Economic Zone relating to information technology, Bio-technology, Research and Development facilities, Fabless Semi-conductor Industry and Electronic Manufacturing Services, the following facilities shall be ensured, namely:—

(a) twenty-four hours uninterrupted power supply at stable frequency in the zone;
(b) reliable connectivity for uninterrupted and secure data transmission;
(c) provision for central air-conditioning system; and
(d) a ready to use, furnished plug and pay facility for end users.”.

Notification No.121/2016 26-12-2016


M/s. Devraj Infrastructures Ltd. Notified as an industrial park for the purposes of Section 80-IA(4) – 121/2016

MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 121/2016

New Delhi, the 26th December, 2016

(INCOME-TAX)

S.O. 4164(E).-Whereas the Central Government in exercise of the powers conferred by clause (iii) of subsection (4) of section 80-IA of the Income-tax Act, 1961(43 of 1961) (hereinafter referred to as the said Act), has framed and notified a scheme for industrial park, by the notification of the Government of India in the Ministry of Finance (Department of Revenue, Central Board of Direct Taxes) vide number S.O. 51 (E), dated the 8th January, 2008;

And whereas M/s Devraj Infrastructures Ltd, having its industrial park at the village Piplaj Opp. Vrundavan Farm, Tehsil City Distt. Ahmedabad, Gujarat – 382405 (survey numbers : 99 to 102, 108, 112 to 116, 118 to 124, 126, 127 & 129 of Village Piplaj and Survey nos. 774, 776, 778, 780 to 784, 786 & 789 to 792 of village Lambha).

Now, therefore, in exercise of the powers conferred by clause (iii) of sub-section (4) of section 80-IA of the said Act, read with rule 18C of the Income-tax Rules, 1962, the Central Government hereby notifies the undertaking from the date of commencement of the industrial park the 5th September, 2010 being developed and being maintained and operated by M/s Devraj Infrastructure Ltd., for the purposes of the said clause (iii) subject to the terms and conditions mentioned in the Annexure to this notification.

ANNEXURE

The terms and conditions on which the approval of the Government of India has been accorded for setting up of

an industrial park by Devraj Infrastructures Ltd.

(i)

Name of the industrial undertaking : Devraj Infrastructures Ltd.

(ii)

Location : Survey numbers: 99 to 102, 108, 112 to 116, 118 to 124, 126, 127 & 129 of Village Piplaj and Survey nos. 774, 776, 778, 780 to 784, 786 & 789to 792 of village Lambha.

(iii)

Minimum constructed floor area : 15000 square meters.

(iv)

Proposed industrial activities : As defined in Industrial Park Scheme,  2008 notified by the Government of India, Ministry of Finance (Department of Revenue, Central Board of Direct Taxes) vide notification Number. S.O. 51 (E), dated the 8th January, 2008.

(v)

Percentage of allocable area earmarked for industrial use : 75% or more.

(vi)

Percentage of allocable area earmarked for commercial use : 10% or less.

(vii)

Minimum number of industrial units : 30 units.

(viii)

Date of commencement : 5th September, 2010.

2. The industrial park shall be construed as developed on the date of its commencement that is, the 5th September, 2010.

3. The industrial park should be owned by one undertaking.

4. The tax benefits under the Income-tax Act, 1961 shall be available to the undertaking only if minimum number of thirty industrial units are located in the industrial park and for the purpose of computing the minimum number of industrial units, all units of a person and his associated enterprises shall be treated as a single unit.

5. No industrial unit, alongwith the units of an associated enterprise, shall occupy more than twenty five per cent. of the allocable area.

6. The tax benefits under the Income-tax Act, 1961 shall be available only to the undertaking notified by this notification and not to any other person who may subsequently develop, develops and operates or maintains and operates the notified industrial park, for any reason.

7. The undertaking, subject to the fulfillment of the term and conditions mentioned in this notification, may at its option claim deduction under clause (iii) of sub-section (4) of section 80-IA of the Income-tax Act, 1961 for any ten consecutive assessment years out of fifteen years beginning from the assessment year relevant to the date of commencement of industrial park mentioned in this notification.

8. The industrial units located in the industrial park shall undertake only those activities as specified in Industrial Park Scheme, 2008 mentioned above.

9. The undertaking shall keep separate books of accounts for the industrial park and shall file its income tax returns by the due date before the Income-tax Department.

10. This notification shall be invalid, if-

(i) the application on the basis of which the approval is accorded by the Central Government contains wrong information or misinformation or some material information has not been provided in it;

(ii) it is for the location of the industrial park for which approval has already been accorded in the name of another undertaking,

and Devraj Infrastructures Ltd. shall be solely responsible for any repercussions of such invalidity.

11. The undertaking shall furnish an annual report to the Central Board of Direct Taxes in Form IPS-II as provided in the Industrial Park Scheme, 2008 mentioned above.

12. The terms and conditions mentioned in this notification as well as those included in the aforesaid Industrial Park Scheme, 2008 should be adhered to during the period for which benefits under the said scheme are to be availed and in case the undertaking, fails to comply with any of the conditions, the Central Government may withdraw the aforesaid approval.

13. Any amendment of the project plan without the approval of the Central Government or detection of such amendment in future, or failure on the part of the undertaking to disclose any material fact, shall invalidate the approval of the industrial park.

14. This order is being issued in compliance to the order of Hon’ble High Court of Gujarat at Ahmedabad in Special Civil Application no. 17118 of 2014 dated 08-09/08/2016.

[F. No. 178/07/2009-ITA-I]

DEEPSHIKHA SHARMA, Director

Next black money battle will be against benami property: Modi : 26-12-2016


With just five days to go for the December 30 deadline of easing ‘all cash crunch pains’, Prime Minister Narendra Modi on Sunday urged people, especially in rural India, to go cashless, pointing out that “during the past few days, cashless trading has increased by 200-300 per cent”.

Addressing the nation on Christmas Day, in his monthly radio broadcast Mann Ki Baat, Modi highlighted his government’s “battle against black money and corruption”, and said there was no question of a “retreat’. A law against ‘benami’ property would be brought in soon, he added.

“You are possibly aware of a law about benami property in our country, which came into being in 1988, but neither were its rules ever framed nor was it notified. It just lay dormant gathering dust. We have retrieved it and turned it into an incisive law… In the coming days, this law will also become operational,” he said.

Defending the frequent changes to the cash withdrawal and deposit rules by the Reserve Bank of India, he said: “The government, being sensitive amends rules as required, keeping the convenience of the people as its foremost consideration, so that citizens are not subjected to hardships.” He added that “to counter new offensives, we too have to devise appropriate new responses and antidotes.”

Reward schemes

Urging people to go cashless, he said rewards and benefits had been announced under two schemes for traders and consumers — Digidhan Vyapar Yojana and Lucky Grahak Yojana — and urged people, especially the rural poor, to use mobile phones for e-payments.

Even the poor can use USSD (unstructured supplementary service data, a technology that facilitates digital payment without the Internet) on ordinary mobile phones to buy and sell goods as well as make payments and thus become eligible for the reward scheme. In rural areas, too, people can buy or sell through AEPS (Aadhaar-Enabled Payment System) and can win rewards, Modi said.

“For the next 100 days, starting today, 15,000 people making digital payments will get ₹1,000 cashback in a daily lucky draw,” Modi said, adding that “a bumper draw will be held on BR Ambedkar’s birthday (April 14).”

On cashless payment of wages, the Prime Minister said that “in a way” this would convert the informal sector into the formal sector, ending the exploitation faced by workers. “The cut, which had to be paid earlier, has stopped now and it has become possible for the worker, the artisan and such poor persons to get their full amount of money.”

In his first radio broadcast after a completely washed out Winter Session of Parliament, the Prime Minister took pot-shots at the Opposition. Citing the President and Vice-President’s “explicit displeasure”, he said “this time the session became the object of ire of our countrymen. Indignation was expressed everywhere about the activities in Parliament”. However, he expressed satisfaction that both Houses had passed the Disabilities Bill.

Source : Business Line

Note-ban sop: Govt may raise I-T exemption limit for individuals : 26-12-2016


In a move to assuage the common man for the demonetisation hardship he has put up with, the Centre is considering increasing the income tax threshold in the coming fiscal.

“An increase in the personal income tax threshold by at least a few thousand rupees and further easing of compliance measures for individual taxpayers are on the cards. This will add a feel good factor to the Budget,” said a person privy to the development.

The Finance Ministry is understood to be looking at raising the income tax threshold by ₹20,000 to ₹50,000. However, the proposal has to be balanced by available revenue space and a final decision is likely to be taken closer to the Budget date.

At present, individual assesses do not have to pay any tax on income up to ₹2.5 lakh a year. The threshold is even higher for senior citizens at ₹3 lakh a year; it is ₹5 lakh for those above 80.

Finance Minister Arun Jaitley, in his first Budget of 2014-15, raised the threshold by ₹50,000 from ₹2 lakh to ₹2.5 lakh for individual taxpayers and to ₹3 lakh for senior citizens. This time, however, expectations are higher as it would give the common people, who have been queuing outside ATMs for money, more income for consumption. This would help boost demand that seems to be under pressure after the demonetisation.

As an added incentive, the Finance Ministry is also looking at further easing the compliance burden on individual assessees. “Most processes such as filing and refunds are already online. The objective will be to further cut the physical interface between the taxpayer and the department,” said the source while cautioning that this may have to be balanced by the requirement of more disclosures in the Income Tax Return forms.

Panel for e-scrutiny

The Central Board of Direct Taxes recently set up a committee to formulate a ‘Standard Assessment Procedure’ for e-scrutiny, which would provide more transparency and certainty to taxpayers.

Experts and industry chambers have suggested raising the I-T threshold along with more sops for cashless transactions. CII, in its pre-Budget memorandum, had urged the government to revise the exemption limit due to the rise in the cost of living. “The income trigger for peak rate in other countries is significantly higher,” it said.

Source : Business Standard

Digital payments will help lower fiscal deficit: FM Arun Jaitley : 26-12-2016


Finance Minister Arun Jaitley today expressed hope that demonetisation will help increase government revenue and lower fiscal deficit, leading to higher expenditure on defence and rural infrastructure.

With the junking of the old high-value currency, the parallel economy has become part of the formal system, which leads to higher accountability and taxation that boost economic growth and transparency, he said at the launch of Digi Dhan Mela here.

He illustrated this point by saying that shifting towards less cash economy will help bridge fiscal deficit and bring about improvement in rural India.

The government will pass on lesser burden to the posterity if the fiscal deficit is lower, he added. At the same time, it will augment capability of administration, increase defence expenditure and improve spending on the poor.

The government aims to bring down fiscal deficit to 3.99 per cent of GDP this fiscal.

Anonymity of money is gone with demonetisation as the money has come into the banking framework and becomes part of the formal system leading to strengthening of banking, he said.

The banks, in turn, can extend more loans and help build a better economy, Jaitley added.

Earlier in the day, Prime Minister Narendra Modi unveiled two schemes — Lucky Grahak Yojana and Digi Dhan Vyapaar Yojana — for customers and traders alike to promote mobile banking and e-payments

A total of 15,000 people will get rewards as Christmas gift through a draw, whereby each of them will have Rs 1,000 in their accounts.

“Starting today, this scheme will continue for the next 100 days. Everyday, 15,000 people are going to receive rewards of Rs 1,000 each. In the next 100 days, lakhs of families are going to receive crores of rupees as gift, but you will be entitled to this gift only if you make use of mobile banking, e-banking, RuPay card, UPI, USSD – such means and methods of digital payment,” Modi said.

In addition, there will be a grand draw once every week for such customers in which the prize money will be in lakhs of rupees.

On April 14, on the occasion of birth anniversary of Dr Baba Saheb Ambedkar, there will be a mega bumper draw where rewards will be in crores of rupees.

Source : Economic Times

Goa slashes VAT on petrol by 6 percent : 24-12-2016


With assembly polls due early next year, the BJP-led coalition government in Goa on Friday slashed VAT on petrol from 15 to 9 per cent to bring the price of the fuel to Rs 60 per litre.This is the third time in the last four and a half years that the state government has slashed value added tax on petrol in Goa to bring it to or under Rs 60 per litre.

Petrol prices in Goa had fallen drastically in 2012 after BJP-led government nearly abolished 22 per cent VAT on petrol price as part of a poll promise made in the party’s election manifesto to bring down petrol prices to do away with VAT on petrol.

However, over the last two years, the government increased the VAT to the pre-2012 levels, with Chief Minister Laxmikant Parsekar claiming the 2012 decision to bring down VAT on petrol to 0.1 per cent was only to bring down prices at a time when fuel prices were at an all-time high.

Parsekar had said the price of petrol in Goa would be kept at around Rs 60 per litre by reducing and increasing VAT as required.

Source : Financial Express

No limit, but be fair on fee: SEBI to investment advisors : 24-12-2016


Can an investment advisor charge variable fee on prepaid model (profit sharing) with fixed tenure to its clients?

According to SEBI, there is no ceiling on fee structure. However, the charges should be fair and reasonable to its clients.

This was clarified by the market regulator in an informal guidance to MarketMagnify, a SEBI-registered investment advisor.

MarketMagnify, which is currently offering a subscription-based model, also known as fixed fee model, plans to introduce a variable fee structure.

The investment advisory firm sought SEBI’s guidance on whether it can charge variable fees on post-profit model.

“If yes, whether is it compulsory to enter into an agreement in writing or mentioning the terms in an e-mail shall be sufficient,” it asked SEBI. The company has also witten to SEBI on whether it can charge variable fees (profit-sharing) on prepaid model without fixed tenure.

Refund issue

For these, SEBI clarified, “An investment advisor advising a client may charge fees, subject to any ceiling as may be specified by the board, if any.

“The investment advisor should ensure that the fees charged to the clients is fair and reasonable.”

The investment advisor has also sought clarifications on whether it can provide for refund of a certain proportion of the fees charged in case of failure to provide specified profit within limited time-frame, thereby limiting their responsibility.

Another question MarketMagnify raised with SEBI was: “Would an investment advisor be responsible to make good losses incurred by the client in case of fixed fee (subscription-based model), assuming such losses are not caused due to negligence on the part of the advisor but due to inherent market risks.”

For this, SEBI said, “The current SEBI Investment Advisory Regulations do not have any provisions on that front.”

Source : PTI

Remove ‘anti-profiteering’ provision from Model GST Law: Assocham : 24-12-2016


Against the backdrop of the ongoing Goods and Services Tax (GST) Council meet, industry lobby Assocham has asked for removal of the anti-profiteering provision from the model law.

“Associated Chambers of Commerce and Industry of India has suggested removal of a provision in the revised Model GST Law dealing with anti-profiteering since it is open to misuse and subjective interpretation,” Assocham said in a statement here on Friday.

The suggestion was made by the industry chambers in a detailed representation to the Central Board of Excise and Customs (CEBC) and Finance Minister Arun Jaitley.

In the revised Model GST Law, the central government has been given powers to constitute an authority to examine whether input tax credits availed of by any registered taxable person, or the benefit of a reduction in the tax rate, has resulted in a commensurate reduction in the price of the goods or services supplied.

Also, the authority would have powers to impose penalties where the prices of goods or services supplied are not reduced. “While the intent of such a proposal cannot be questioned, the industry believes that it will be very difficult to implement and the costs of compliance and administration will significantly outweigh the risks that some businesses will seek to ‘profiteer’ from the change in indirect tax systems,” the statement added.

Source : Economic Times

No.42/2016 Dated: 23-12-2016


Clarifications on the Direct Tax Dispute Resolution Scheme, 2016

Circular No. 42 of 2016

F.No.142/11/2016-TPL

Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes (TPL Division)

New Delhi, dated 23rd December, 2016

Clarifications on the Direct Tax Dispute Resolution Scheme, 2016

The Direct Tax Dispute Resolution Scheme, 2016 (hereinafter referred to as ‘the Scheme’) incorporated as Chapter X of the Finance Act, 2016 provides an opportunity to tax payers who are under litigation to come forward and settle the dispute in accordance with the provisions of the Scheme. The provisions of the Scheme have been clarified vide Circular No.33 of 2016 dated 12.09.2016. Subsequently, further queries have been received from the field authorities and other stakeholders. The Central Government has considered the queries and decided to clarify the same in the form of questions and answers as follows.-

Question No.1: There are cases where the Assessing Officer (AO) has made addition on account of provisions under section 9 of the Income-tax Act, 1961 (the Act), which was later retrospectively amended, especially with regard to royalty and fees for Technical Services. What would be the position of the case of an assessee vis-à-vis the Scheme, where an addition has been made by AO before such retrospective amendment? Whether the case would be treated as one being in consequence of retrospective amendment and accordingly whether the assessee would be eligible to avail the benefit of the Scheme?

Answer: As per clause (g) of sub-section (1) of section 201 of the Finance Act, 2016, ‘specified tax’ includes a tax which is validated by an amendment made to the Income-tax Act with retrospective effect. Hence, a case where an addition has been made by AO before such retrospective amendment and the addition has got validated by such amendment, is eligible to avail the Scheme provided a dispute in respect of such addition/tax is pending as on 29.02.2016.

Question No.2: There are assessees who have filed writ petitions in Courts against the constitutional validity of retrospective amendment to the Income-tax Act. Can the assessees who have filed such writs in Courts still contest the constitutional validity of such amendments, even after availing the benefit under the Scheme?

Answer: As per section 203(3)(a) of the Finance Act, 2016, where the declaration under the Scheme is in respect of specified tax and the declarant has filed any writ petition before the High Court or the Supreme Court against any order in respect of the specified tax, he shall withdraw such writ petition with the leave of the Court wherever required and furnish proof of such withdrawal along with the declaration filed under the Scheme. It is hence clear that if the assessee avails the Scheme, he cannot contest the constitutional validity of retrospective amendment in the High Court or Supreme Court.

Question No.3: There are cases where assessees are in different stages of appeal for different years on similar issue(s). In such a situation, if an assessee avails the benefits of the Scheme for a particular year/years, whether the revenue would withdraw its appeal against the assessee, in the year(s) in which the assessee has got the relief? If such is the case, at what stage would the revenue withdraw its appeal?

Answer: In respect of ‘tax arrear’, the Scheme is available only if dispute is pending before Commissioner (Appeals). Hence the question of withdrawal of appeal by revenue does not arise in such cases.

In respect of ‘specified tax’, section 203(3) of the Finance Act, 2016 states that the declarant before opting for the said Scheme has to withdraw his pending appeal or writ petition. It also states that in a case where the declarant has initiated or given notice for proceeding of arbitration, conciliation or mediation, he shall withdraw such notice or claim prior to filing of the declaration under the Scheme. The Scheme nowhere speaks of withdrawal of any appeal or proceeding by the revenue. Hence, the question of withdrawal of appeal by the revenue owing to opting of the Scheme by the assessee in some other year(s) on a similar issue does not arise.

Question No.4: Can the tax payments under the Scheme be allowed to be made in instalments, as granted under IDS, 2016?

Answer: Since, the date of making payment under the Scheme is provided in Section 204 of the Finance Act, 2016 itself, the tax payments under the Scheme cannot be allowed to be made in instalments.

Question No.5: Whether an assessee is eligible to make a declaration in respect of ‘specified tax’ where a dispute was pending as on 29.02.2016 in form of a reference made by AO before the Committee constituted by CBDT on 28.08.2014 under section 119 of the Act, but the final order determining the ‘specified tax’ thereon was passed after 29.02.2016, and the appeal/writ/arbitration/conciliation/ mediation etc. in respect of the same was filed before commencement of the Scheme i.e. 01.06.2016?

Answer: As per the provisions of the Scheme, a declarant may make a declaration in respect of a ‘specified tax’ for which a dispute was pending as on 29.02.2016. The term ‘dispute pending as on 29.02.2016’ refers to the tax determined under the Income-tax Act or the Wealth-tax Act which has been disputed by the assessee. In the above referred case, the specified tax has been determined by AO after 29.02.2016; hence the question of dispute pending in respect of such tax as on 29.02.2016 does not arise. Therefore, the assessee in the present case is not eligible to avail the Scheme.

Question No.6: Whether a penalty order under section 271C or 271CA of the Income-tax Act for which an appeal is pending with CIT(Appeals) is covered under the Scheme?

Answer: As per the Scheme, ‘tax arrear’ in case of penalty is linked to the total income finally determined. Since, penalty order under section 271C or 271CA is not linked to the assessment proceedings, such orders are not covered under the Scheme.

Question No.7: Whether the cases in which, consequent upon search, assessments have been completed under section 143(3) of the Act shall be eligible to avail the Scheme?

Answer: As the search cases are not eligible for the Scheme, an assessment made consequent to search under section 143(3) read with section 153B of the Act is not eligible to avail the Scheme.

Question No.8: Clause(5) of section 203 of the Finance Act, 2016, refers to deemed revival of ‘consequences’ under the Income-tax Act or the Wealth-tax Act, as the case may be, under which proceedings against the declarant are or were pending. There is no explicit reference to deemed revival of ‘proceedings’. Please clarify?

Answer: Clause (5) of section 203 provides that in a case where the conditions specified therein are not fulfilled, it shall be presumed as if the declaration was never made under the Scheme; therefore, in case of rejection of declaration, the proceedings pending against the assessee before issuance of certificate under 204(1) shall stand revived.

(Dr. T.S. Mapwal)

Under Secretary to the Government of India

Demonetisation not last action against corruption: Panagariya : 23-12-2016


Terming Prime Minister Narendra Modi’s demonetisation scheme as a “frontal attack” on black money, NITI Ayog vice-chairman Aravind Panagariya today said more such actions are in store to curb corruption.

“If you are asking that demonetisation is the last step to curb corruption, then I will say no. I think more actions will be taken, but in terms of taking action against the existing black money and also in changing the roles, and the policy regime in such a way that future accumulation of black money is also discouraged…. So we need to do both,” Panagariya told a local news channel during his visit to the state to attend a function.

Stating that he should not speculate on the actions to be taken, the NITI Ayog vice-chairman said the Prime Minister has to decide about this in consultation with his advisors.

“We will wait and see…,” he said adding, discussion were on and hopefully some action would be seen in the budget.

He said the Union Finance Minister had already had a commitment to streamline the corporate income tax and hopefully some progress would be made.

“Some progress was made last year. Lets hope more progress in the coming year. So simplification of taxes and reduction in the tax rates should discourage accumulation of black money,” Panagariya said.

Replying to a question on the changing scenario in wake of demonetisation scheme, Panagariya said, “There will be some impact in the 2016-17 fiscal because of demonetisation. We have only the five months left.

“In the pre-demonetisation, we did okay and the GDP growth was 7.2 per cent. Currently we don’t have information to access, but I can tell you of 13 analysts and observers, 11 said the impact will be less than one per cent while two predicted a larger impact,” he said.

Asked about the negative impact of demonetisation on the people, Panagariya said, “The people have been with the Prime Minister despite hardships and they are also observing that he is doing it ultimately for the goof of the country.”

“The black money holders are being punished. I will say few governments had this courage to make a frontal attack on black money. The Prime Minister has, in fact, done a frontal assault on black money and people are generally supportive of it,” Panagariya added.

Source : Economic Times

RBI slaps fine on 5 foreign banks for violating FEMA rules : 23-12-2016


The Reserve Bank on Wednesday imposed penalty on five foreign banks, including Deutsche Bank and Standard Chartered Bank, for violation of its instructions on reporting requirements of the FEMA.

The three other banks are: Bank of America, Bank of Tokyo Mitsubishi and The Royal Bank of Scotland.

RBI said they have been fined for violation of its instructions on reporting requirements of the Foreign Exchange Management Act, 1999 (FEMA).

 Germany’s Deutsche Bank has been imposed fine of Rs 20,000, while Bank of America, Bank of Tokyo Mitsubishi, The Royal Bank of Scotland and Standard Chartered Bank have been fined Rs 10,000 each.

“The penalties have been imposed in exercise of the powers vested in the Reserve Bank under the provisions of Section 11(3) of FEMA 1999, taking into account, the violations of the instructions/directions/guidelines issued by the Reserve Bank of India, from time to time,” RBI said.

RBI said it has issued show cause notices to all the banks, in response to which the banks submitted written replies and also made oral submissions thereon.

“After considering the facts of the cases and the banks’ replies in the matter, Reserve Bank came to the conclusion that the violations were substantiated and warranted imposition of penalty,” RBI said further.

Notification No.1166/2016 22-12-2016


ESIC_Notification_on_21k_limit

From cash to digital: An audacious demonetisation goal for India : 22-12-2016


What was initially spoken of as a much-needed assault on both the stock and flow of black money in the country has morphed in recent weeks into a campaign to move the transaction habits built over decades in this country from cash to digital. Critics may point out that barring Sweden, no developed country has any pretentions to being a cash free society and point out that of the 100 million retail outlets in the country, barely a couple of million are ready for cashless transactions. But there should be no doubt that the vision of a truly digital India can be achieved if the right steps are taken to transform technology, processes and mindsets across the country.

In this matter, there is much to be learned from the experiences of large business corporations who have embarked on a digital journey, and are in various stages of making the transformation a reality. If one were to look at a global “best in class” case, there is none better than China’s Ping An Financial Services. Ping An’s real transformation started with the setting up of Ping An Digital in 2014 which induced a new culture of innovation, created a marketplace where every type of customer could interact digitally and set Ping An on the path to becoming the first truly customer centric integrated digital financial services company in the world. Its vision for 2018 is to have a fourfold jump in transactions and revenues with 80% of transactions being digital.

Ping An or, for that matter Citibank, or visionary Indian corporations such as HDFC and Bajaj Finserv pride themselves on their ability to effect large scale transformation by focusing on a Run-Transform-Innovate approach. The Run dimension will ensure that processes, technology and customer touch points are tightly managed with high security, new incremental ideas for transformation are brought into day-to-day processes and disruptive ideas for innovation are explored to change the rules of the game.

What is the message here for a truly Digital India and the audacious goal of a cash free country? Niti Aayog, the ministries of IT and telecom besides Nasscom and the internet and mobile and e-commerce and m-commerce lobby groups are already hard at work in designing scalable models which can provide the reach and ease of use to citizens. The opportunity exists for the Common Services Centres (CSCs) of the ministry of IT, the Digital Literacy Centres (DLCs) and large scale volunteering to carry this message to every Indian—let us help you to go digital through a step-by-step understanding of digital access, e-banking through Aadhaar and Jan Dhan accounts and e-payments through multiple options. Pressing call centres and telecom companies into the mission and conducting collaborative public awareness programmes will also show every Indian citizen that we all care and help make Digital India a vibrant reality!

The approach that works for successful digital transformation in large national and global corporates will work for Digital India as well. There needs to be a strong push from the leadership, collaborators have to work together to design an effective process for skill development, the technologies must be competitive and easy to disseminate and use, and there must be a real effort to understand the diverse needs of citizens.

Should we sit on the sidelines and wait for some miracle to resolve the demonetisation fallouts? The magic is in our intent and every Indian can get involved and make it happen!

The writer is Chairman of 5F World and Nasscom Foundation

Source : Financial Express

FM-chaired GST Council meets today, tomorrow : 22-12-2016


The Goods & Services Tax (GST) Council will meet on Thursday and Friday to take up drafts of the model GST, integrated GST and states’ compensation Bills.

The aim will be to address the contentious issue of administrative turf  between Centre and  states.  Tax experts say this will be difficult.

The Centre might push a cross-empowerment model of random choosing and division of five% of the assessees between Centre and the states, using a computer programme. The parameters on which the assessees could be chosen would be in-built in software written for this purpose.

However, states want sole control over assessees up to Rs 1.5 crore of annual turnover.

Naveen Wadhwa of Taxmann thinks a solution could be found outside the suggested models. He says states could have sole control over assessees up to Rs 1.5 crore of turnover if their supplies are intra-state; above that, the Centre should. If supplies are inter-state, the Centre should have control over all assessees, he said.

In any case, he feels, the April 1, 2017, target date is now difficult to meet.

Almost half of the 99 sections of the model GST Bill have already been approved by the Council and the rest would be taken up in the two-day meeting. “If the issue of administrative control is sorted, the Bill could be tabled in the Budget session of Parliament,” says R Muralidharan, senior director with consultancy Deloitte.

However, even then the issue of rolling out a GST from April would be a challenging one, he added. If the issue is not resolved in the meeting, the Council can try once more in January, he said.

The issue of administrative control would be taken by the Council “if time permits”, finance minister Arun Jaitley had said earlier. The two-day meeting earlier this month did not take up the issue.

Last week, Jaitley had described the prickly issue as minor in the larger frame of things. He had suggested each assessee be assessed only once, since central taxes like excise and service tax and state levies like VAT are being subsumed into one.

“You have the pre-existing (tax) machinery of the Centre and states. (It has to be decided) how the burden of this assessment is going to be shared between the Centre and states, and how we cross-empower both the Centre and states,” he had said.

Source : Business Standard

GST Council to consider model laws tomorrow : 22-12-2016


The GST Council will begin its two-day meeting tomorrow to consider the model GST laws and iron out differences on the vexed issue of jurisdiction over assessees in the new indirect tax regime.

This will be the seventh meeting of the Council, which is headed by Union Finance Minister Arun Jaitley and has state ministers as members.

With as many as 20 chapters of the model GST law cleared in its last meeting earlier this month, the Council will tomorrow discuss the remaining 7 chapters and then on Friday take up the dual control issue.

As consensus eluded the Council meeting, the subsequent GST legislations — CGST, IGST and compensation law — could not be introduced in the Winter session of Parliament that ended last week. This has threatened the April 2017 rollout target of the Goods and Services Tax (GST).

Experts now say that implementation of GST should be postponed by three months to July next year as industry would need time to prepare their IT infrastructure.

Source : Economic Times

Notification No.120/2016 21-12-2016


Income-tax (35th Amendment) Rules, 2016 – 120/2016

MINISTRY OF FINANCE (Department of Revenue)

NOTIFICATION NO. 120/2016

New Delhi, the 21st December, 2016

S.O.4110(E).- In exercise of the powers conferred by section 285BA read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income-tax ( 35th Amendment) Rules, 2016.

(2) They shall be deemed to have come into force from the 7th August, 2015.

2. In the Income-tax Rules, 1962, in rule 114F, in clause (1), in the Explanation,-

(I) in clause (g), in sub-clause (D), for the words, brackets and letters “in sub-clause (ii)”, the words, brackets and letter “in sub-clause (B)” shall be substituted;

(II) in clause (h),-

(1) in sub-clause (i), in item (E), in the Explanation, for the words, brackets, letters and figure “item (A) or (B) or from one or more retirement or pension funds that meets with the requirements of clauses (e), (f) or (g) of Explanation to clause (1)”, the words, brackets, letters and figure “subclauses (i) or (ii) or from one or more retirement or pension funds that meets with the requirements of clauses (E), (F) or (G) of Explanation to clause (5)” shall be substituted;

(2) in sub-clause (ii), in item (D), in the Explanation, for the words, brackets, letters and figure “item (A) or (B) or from one or more retirement or pension funds that meets the requirements of clauses (e), (f) or (g) of Explanation to clause (1)”, the words, brackets, letters and figure “sub-clauses (i) or (ii) or from one or more retirement or pension funds that meets with the requirements of clauses (E), (F) or (G) of Explanation to clause (5)” shall be substituted.

[F.No.370142/06/2016-TPL]

Dr. T.S. MAPWAL, Under Secy.

Note: It is certified that by giving retrospective effect to the present notification, no one will be adversely effected in this regard.

No.41/2016 Dated: 09-12-2016


Clarifications on Indirect Transfer provisions under the Income Tax Act, 1961

Circular No. 41 of 2016

F.no. 500/43/2012-FT&TR

Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes

(FT&TR-Division)

Clarifications on Indirect Transfer provisions under the Income Tax Act. 1961

Under the indirect transfer provisions contained in section 9(1)(i) of the Income Tax Act, 1961 (‘Act’), all income accruing or arising, whether directly or indirectly, through or from any business connection in India, or through or from any property in India, or through or from any asset or source of income in India or through the transfer of a capital asset situate in India, shall be deemed to accrue or arise in India. Explanation 5 thereof clarifies that an asset or a capital asset being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be and shall always be deemed to have been situated in India, if the share or interest derives, directly or indirectly, its value substantially from the assets located in India. Explanation 6 provides that the said Explanation 5 will be applicable, if on the specified date the value of such assets exceeds the amount of ₹ 10 crore and represents at least 50% of the value of all the assets owned by the company/ entity. Explanation 7, however, provides a carve out from the applicability of Explanation 5 to small investors holding no right of management or control of such company / entity and holding less than 5% of the total voting power/ share capital/ interest of the company/ entity that directly or indirectly owns the assets situated in India. Section 285A of the Act casts a reporting obligation on the Indian concern whose shares are substantially held directly or indirectly by a company or entity registered or incorporated outside India.

2. Queries have been received by the Board about the scope of the indirect transfer provisions. In this regard, the Board constituted a Working Group on 15th June, 2016 to examine the issues raised by stakeholders. The Board has considered the comments of the Working Group on the said issues and the following clarifications are issued:

Question No. 1 : A Fund is set-up in a popular jurisdiction and registered as FPI for undertaking portfolio investment in Indian securities. It pools monies from retail/ institutional investors and invests in shares of Indian listed companies. The value of assets in India i.e. shares of Indian companies held by the Fund constitute more than 50% of its total assets and exceed ₹ 10 crores. The Fund buys and sells shares on the Indian stock market and pay taxes as per section 115 AD of the  Act or applicable tax treaty rates. On the ongoing basis, the Fund, on request of its unit holders/ shareholders, redeems their units/ shares. Does Explanation 5 to section 9(1)(i) of the Act apply to above redemption made by the Fund?

Answer: Explanation 5 to section 9(1)(i) of the Act will be applicable in respect of investors in the Fund also, as their case falls within the ambit of clause (a) of Explanation 6 of the said section. However, the investors  covered under Explanation 7(a)(i) of the Act are excluded.

Question no. 2:  Fund I and Fund II are feeder funds set-up in country X and country Y respectively. Both the feeder funds pool monies from investors and feed that into a Master Fund set-up in country X. None of the investors of the feeder funds have the right of control or management  in the Master Fund or hold voting power or share capital or interest, directly or indirectly, exceeding 5% in the Master Fund. The Master Fund is registered as FPI for undertaking portfolio investment in Indian securities. The value of assets in India i.e. shares of Indian companies held by the Master Fund constitute more than 50% of its total assets and exceed ₹ 10 crores. Will indirect transfer provisions apply to investors in master-feeder structures, where feeder funds are merely used to pool monies from investors, where none of the ultimate investors hold or will hold right of control or management or voting power or share capital or interest, directly or indirectly, exceeding 5% in the fund and a declaration to this effect is furnished by the feeder fund to the Fund registered as FPI.?

Answer:  Since conditions of Explanation 7(a)(ii) to section 9(1)(i) of the Act are, prima facie, fulfilled by the investors in the Feeder Funds I and II, income of such non-resident investors from transfer of their interests in the Feeder Funds would not be deemed to accrue or arise in India.

Question no. 3: ABC Co. acting as nominee/ distributor is engaged in pooling of funds for the Offshore Fund registered as FPI. None of the investors investing through nominees/ distributors have right of control or management in the Offshore Fund or hold voting power or share capital or interest, directly or indirectly, exceeding 5% in the Offshore Fund. ABC Co. is recorded as registered unit holder/ shareholder in the books of Offshore Fund. The value of assets in India i.e. share of Indian companies held by the Offshore Fund constitute more than 50% of its total assets and exceed ₹ 10 crores. Will indirect transfer provisions apply to investors in nominee-distributor type structures, which are merely used to pool monies from investors where none of the ultimate investors hold or will hold right of control or management or voting power or share capital or interest, directly or indirectly, exceeding 5% in the fund and a declaration to this effect is furnished by the nominee or distributor to the Fund registered as FPI?

Answer:  Since conditions of Explanation 7(a)(ii) to section 9(1)(i) of the Act are prima facie fulfilled by the investors in the nominee/ distributor company, income of such non-resident investors from transfer of their interest in the nominee/ distributor would not be deemed to accrue or arise in India.

Question no. 4 : Fund X is an offshore fund set up in country A. It pools monies from investors for undertaking portfolio investments in Asia. It invests 90% of its corpus in shares of companies of country B Fund X has allocated 10% of its corpus for India investments. For this purpose it has set-up an India focused sub-fund domiciled in a tax efficient jurisdiction for investing exclusively in Indian securities. Will indirect transfer provisions apply to Fund X using a separate Indian focused sub-fund for India investments, where none of the ultimate investors hold or will hold right of control or management or voting power or share capital or interest exceeding 5% in the offshore fund.

Answer : Indirect transfer provisions u/s 9(I)(i) of the Act read with Explanation 5 thereto will be applicable in case of Fund X, since the value of shares / units held by it in the sub-fund derives its value substantially from assets located in India, irrespective of shareholding of the ultimate investors.

Question no. 5 : An offshore listed fund is registered as an FPI for undertaking portfolio investment in Indian securities. The value of Indian assets i.e. shares of Indian companies held by the offshore listed fund constitute more than 50% of its total assets and exceed ₹ 10 crores. The investors or unit holders of the offshore listed fund keep on changing on daily basis and settlement of funds for buying and selling is done through stock exchange prescribed settlement mechanism. Will indirect transfer provisions apply on transfer of shares or units of an offshore listed entity?

Answer : Explanation 5 to section 9(1)(i) of the Act will be applicable in respect of investors in the Fund also, as their case falls within the ambit of clause (a) of Explanation 6 of the said section. However, the investors covered under Explanation 7(a)(i) of the Act are excluded.

Question no. 6 : Fund P and Fund Q are formed as Corporate’ entities in Country A . The value of assets in India i.e. shares of Indian companies held by Fund P constitute more than 50% of its total assets. On account of a scheme of amalgamation, Fund P is merged into Fund Q in Country A.  The merger is tax neutral in Country A, Consequent to the merger, investors of Fund P became investors in Fund Q. Will the shareholders or investors of Fund P liable to tax in India on account of indirect transfer provisions, though the amalgamation of Fund P and Fund Q is not regarded as ‘transfer’ under section 47(viab) of the Act?

Answer : Under section 47(viab) of the Act, any transfer in a scheme of amalgamation of a share of an offshore company deriving its value  substantially from the shares of an Indian company, held by the amalgamating foreign company to the amalgamated foreign company is not regarded as transfer, subject to the conditions specified therein. Under the existing provisions, this exemption does not extend to the shareholders/ investors of the amalgamating foreign company. Hence, such shareholders/ investors will be liable to tax in India under section 9(1)(i) of the Act.

Question no.7: Fund X and Fund Y are ‘non-corporate’ entities formed in Country A   Company Z is a SPV formed in a tax efficient jurisdiction exclusively for Indian investments, Fund X holds 100% of shareholding of Company Z. On account of a scheme of amalgamation, Fund X is merged into Fund Y in Country A. The merger is tax neutral in Country A. Consequent to the merger, investors of Fund X became investors in Fund Y. Will indirect transfer provisions apply in case of offshore amalgamation or demerger of foreign ‘non-corporate’ entities?

Answer: The provisions of section 47 of the Act apply only in respect of amalgamation of corporate entities. Consequently, the amalgamation of non-corporate entities will attract the provisions of section 9(1)(i) of the Act.

Question no.8: Fund X is registered as an FPI. As on last date of the preceding accounting period, the value of assets in India i.e. shares of Indian companies held by Fund X constitute more than 50% of its total assets and exceed ₹ 10 crores. However, as on the date of transfer, the value of assets in India held by Fund X is only 47% of its total assets. The book value of assets as on the date of transfer does not exceed by at least 15% of the book value of assets as on the last day of accounting period preceding the date of transfer. Will indirect provisions apply even if the offshore transfer does not fulfill the substantial value test as contemplated under clause (a) to Explanation 6 of section 9(I)(i) of the Act on the date of transfer?

Answer: Under Explanation 6 to section 9(I)(i) of the Act, the value of the asset of an offshore entity deriving its value substantially from assets located in India, will be computed as on the specified date as per clause (d) of the said Explanation. In the illustration, the specified date will be the date on which the accounting period of such entity ends preceding the date of transfer. The indirect provisions will apply since the offshore transfer fulfils the substantial value test as on the specified date.

Question no.9: Company A is an Indian public limited company listed on a recognized stock exchange in India. Many FPIs [including offshore listed funds] invest in Company A under the FPI route. At the offshore level the shares or units of the FPI are bought and sold on daily basis and the investors in the FPI keep on changing frequently. How should Company A in such circumstances determine whether the value of assets in India held by an FPI investor exceed 50% of its total assets? Where FPI has invested in multiple Indian companies, there are practical challenges for Indian concerns to comply with this provision.

Answer: Reporting requirement under section 285A triggers when shares of the foreign company / entity derive their value substantially from assets located in India. Since section 285A and Rule 114DB are recently introduced, their practical implementation should first be seen.

Question no. 10: FPIs are mainly portfolio investors and not strategic investors. The gains earned by FPIs on sale or transfer of Indian securities is liable to tax in India in accordance with provisions of the Income-tax Act 1961 .if indirect transfer provisions are made applicable to these FPIs, then there is a possibility of double taxation of the same income i.e. tax on gains earned on direct transfer of Indian securities by the FPIs and tax on gains earned by investors of the FPIs on redemption of units in the FPIs. Hence, exemption should be provided for FPIs.

Answer : Carve-out is already available for small investors in Explanation 7 to section 9(I)(i) of the Act.

Question no. 11: The 5% threshold for exempting small shareholder should be increased. Additionally, the meaning of the term ‘associated enterprise’ in the context of FPIs should be defined in line with what is reckoned by the Securities and Exchange Board of India for the purpose of ascertaining common beneficial ownership of FPIs i.e. more than 50% common beneficial ownership.

Answer: The 5% threshold is reasonable for excluding small shareholders from the ambit of the indirect transfer provisions. Alignment of the definition of ‘associated enterprise’ with the SEBI definition is not required as the definition of associated enterprise under the Income Tax Act is well-founded and is based on the concept of management, control and capital of an enterprise.

Question no. 12: The monetary value of threshold of INR value of 10 crores of Indian investment for triggering applicability of indirect transfer provisions for FPIs should be increased to INR 100 crores.

Answer: The ₹ 10 crore threshold is reasonable.

Question no. 13: In case of an FPI which is listed on an overseas stock exchange, frequent trading of share or units takes place on the overseas exchange every day. Hence, FPIs that are regulated and listed on the recognized stock exchange should be excluded from the purview of indirect transfer provisions.

Answer: The circumstances to determine taxability under the indirect transfer provisions are provided in Explanation 6 and Explanation 7 of section 9(I)(i) of the Act. In view of the same, carve-out to specifically exclude FPIs regulated and listed on overseas stock exchanges from the ambit of the indirect transfer provisions is not feasible.

Question no. 14 : The benefit of exemption provided for transactions in internal restructuring is currently restricted only to FPIs classified as ‘companies’. Can this benefit be extended to non-corporate FPIs and to the shareholders or unit holders of all the FPIs?

Answer: The benefit under section 47 of the Act does not extend to shareholders/ investors of the amalgamating foreign company. Hence, such shareholders/ investors will be liable to tax in India under  section 9(1)(i) of the Act. Further, the provisions of section 47 of the  Act apply only in respect of amalgamation of corporate entities, subject to certain conditions mentioned therein, As such, the amalgamation of non-corporate entities will attract the provisions of section 9(1)(i) of the Act.

Question no. 15: The rules to determine the fair market value of Indian assets vis-a-vis global assets should be prescribed.

Answer:  Vide notification S.O.2226(E) dated 28th June, 2016, Rule 11UB and Rule 11UC have been inserted in the IT Rules, 1961 to provide for method of determination of the fair market value of assets and apportionment of income for the purposes of section 9(1)(i) of the Act.

Question no. 16: Indirect transfer provisions are to be applied if, on a specified date, the fair market value of Indian assets exceeds a specified threshold. Specified date for this purpose generally means the date on which accounting period of the company or entity ends, preceding the date of transfer of share or an interest. The specified date should be the date of transfer.

Answer: Clause (d) of the Explanation 6 to section of the Act provides for two situations for the determination of the specified date, i.e. the date on which the accounting period of such entity ends preceding the date of transfer and, where the book value of the assets of the entity on the date of transfer exceeds the book value of the assets on the abovementioned accounting period end date by 15%, the date of transfer will be taken as the specified date. Taking the specified date alone as the date of transfer may result in abuse of the provision.

Question no. 17: The rules to determine the fair market value of Indian assets vis-a-vis global assets are to be prescribed in due course. At the time of notifying these rules, it is suggested that manner of determination of cost of acquisition in the hands of the non-resident transferor (including clarity on availment of indexation benefit and benefit of foreign exchange fluctuation) should also be specifically provided to avoid any disputes.

Answer: Vide notification S.O.2226(E) dated 28th June, 2016, Rule 11UB and Rule 11UC have been inserted in the IT Rules, 1961 to provide for the method for determination of the value of assets and apportionment of income for the purposes of section 9(1)(i) of the Act. The availment of indexation benefit / foreign exchange fluctuation will be as per the Act.

Question no. 18: The indirect transfer provisions should be made operational only after a reasonable time of prescribing necessary rules by the Government.

Answer: The indirect transfer law and rules have already been operationalised.

Question no. 19: Given the uniqueness in FPI operational structure and the challenges to comply with indirect transfer tax provisions, it is suggested that FPls should be relieved from the withholding tax requirement. Alternatively, the threshold for enforcing such requirement on the FPIs may be increased. Further, it should be clarified that no interest or penalty for failure to deduct taxes at source will be levied and the FPI will not be treated as an ‘assessee in default’ or the ‘representative assessee’, on account of retrospective application of indirect transfer provisions.

Answer: The provisions of withholding tax, interest and penalty shall apply as per law.

(Supriya Rao)

Under Secretary [FT&TR-IV(2)]

Notification No. SO 4160(E) [F.NO.F.2/250/2006-SEZ], 20-12-2016


SECTION 4 OF THE SPECIAL ECONOMIC ZONES ACT, 2005 – SUZLON INFRASTRUCTURE LTD.

NOTIFICATION NO. SO 4160(E) [F.NO.F.2/250/2006-SEZ]DATED 20-12-2016

Whereas, M/s. Suzlon Infrastructure Limited, a private organization in the State of Tamil Nadu, 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 High Tech Engineering sector at Kittampalayam and Karumathampatti Village, Palladam Taluk, Coimbatore District in the State of Tamil Nadu;

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 Zones Rules 2006, had notified and de-notified the following areas at above Special Economic Zone as per the details given below:—

Sl. No. Notification No. Date Notified Area in Hectares Total Area in Hectares
(i) S.O. 1387 (E) 10th August, 2007 104.60.4 -
(ii) S.O. 2003 (E) 28th November, 2007 46.94.1 151.54.5
(iii) S.O. 1996 (E) 7th August, 2008 0.94.3 152.488

And, whereas, the Central Government, further approved the request of change of name from M/s. Suzlon Infrastructure Limited to M/s. Synefra Engineering and Construction Ltd. vide letter dated 7th September, 2009;

And, whereas, the Central Government, also approved the request of change of name from M/s. Synefra Engineering and Construction Ltd to M/s Aspen Infrastructures Ltd. vide letter dated 12th August, 2014;

And, whereas, M/s. Aspen Infrastructures Ltd SEZ has now proposed for de-notification of 65.7775 hectares at the above Special Economic Zone;

And, whereas, the State Government of Tamil Nadu has given its approval to the proposal vide letter No. 518/MIE.2/2014-9, dated 25th July, 2016;

And, whereas, the Development Commissioner, MEPZ Special Economic Zone has recommended the proposal for de-notification of an area of 65.7775 hectares of the Special Economic Zone;

Now, whereas, the Central Government is satisfied that the requirements under sub-section (8) of section 3 of the said Act and other related requirements are fulfilled;

Now, therefore, in exercise of the powers conferred by second proviso to sub-section (1) of section 4 of the Special Economic Zones Act, 2005 and in pursuance of rule 8 of the Special Economic Zones Rules, 2006, the Central Government hereby de-notifies an area of 65.7775 hectares, thereby making resultant area as 86.7105 hectares, comprising the survey numbers and the area given below in the table, namely:—

TABLE

Sl. No. Survey No. Sub division Name of Village Notified area in Hectare Proposed denotified area in hectares Balance area in hectatres
1. 104 1A(P) Kittampalayam 0.5040 0.0000 0.5040
2. 104 2 Kittampalayam 1.0090 0.0000 1.0090
3. 97 3 Kittampalayam 0.3450 0.0000 0.3450
4. 100 2(P) Kittampalayam 1.0950 0.0000 1.0950
5. 100 2(P) Kittampalayam 1.4230 0.0000 1.4230
6. 89 B Kittampalayam 0.0160 0.0089 0.0071
7. 90 B Kittampalayam 0.1090 0.0970 0.0120
8. 91 B Kittampalayam 1.8940 0.5190 1.3750
9. 92 A1A Kittampalayam 1.0000 1.0000 0.0000
10. 92 A2B Kittampalayam 0.6600 0.3433 0.3167
11. 92 A3 Kittampalayam 0.0080 0.0080 0.0000
12. 93 1 Kittampalayam 3.2550 0.7801 2.4749
13. 94 2B Kittampalayam 0.1610 0.0322 0.1288
14. 94 3 Kittampalayam 1.4700 0.5746 0.8954
15. 94 4 Kittampalayam 0.1650 0.1650 0.0000
16. 95 1A Kittampalayam 1.9000 0.7826 1.1174
17. 95 1B(P) Kittampalayam 0.9200 0.9200 0.0000
18. 95 2(P) Kittampalayam 0.0460 0.0460 0.0000
19. 104 2(P) Kittampalayam 1.0100 0.0000 1.0100
20. 104 1A Kittampalayam 0.5050 0.0000 0.5050
21. 104 2(P) Kittampalayam 1.9750 0.0000 1.9750
22. 97 1 Kittampalayam 2.6150 0.0000 2.6150
23. 94 1A Kittampalayam 0.6510 0.5715 0.0795
24. 94 1B (P) Kittampalayam 0.3643 0.3643 0.0000
25. 96 1(P) Kittampalayam 1.8075 0.0524 1.7551
26. 92 A1B(P) Kittampalayam 0.2510 0.2510 0.0000
27. 92 A2A(P) Kittampalayam 0.1497 0.0000 0.1497
28. 93 2(P) Kittampalayam 0.3481 0.2108 0.1373
29. 94 2A(P) Kittampalayam 0.0323 0.0165 0.0158
30. 96 2(P) Kittampalayam 0.5263 0.0000 0.5263
31. 101 Part Kittampalayam 0.6518 0.0000 0.6518
32. 103 Part Kittampalayam 0.3603 0.0000 0.3603
33. 105 Part Kittampalayam 1.5789 0.0000 1.5789
34. 94 1B(P) Kittampalayam 0.3643 0.2251 0.1392
35. 96 Part Kittampalayam 1.8075 0.0000 1.8075
36. 92 Part Kittampalayam 0.2510 0.0494 0.2016
37. 92 Part Kittampalayam 0.1497 0.0300 0.1197
38. 93 2(P) Kittampalayam 0.3481 0.3481 0.0000
39. 94 2A(P) Kittampalayam 0.0323 0.0000 0.0323
40. 96 2(P) Kittampalayam 0.5263 0.0000 0.5263
41. 101 Part Kittampalayam 0.6518 0.0000 0.6518
42. 103 Part Kittampalayam 0.3603 0.0000 0.3603
43. 105 2 Kittampalayam 1.5789 0.0000 1.5789
44. 100 1 Kittampalayam 0.4210 0.0000 0.4210
45. 95 1B(P) Kittampalayam 1.0640 1.0640 0.0000
46. 95 2 Kittampalayam 0.2180 0.2180 0.0000
47. 97 2 Kittampalayam 0.3560 0.0000 0.3560
48. 880 1 Karumathampatti 0.7550 0.3979 0.3571
49. 880 2 Karumathampatti 0.7000 0.3740 0.3260
50. 878 1H Karumathampatti 1.2990 0.0000 1.2990
51. 878 2A Karumathampatti 2.0240 0.0000 2.0240
52. 878 2C Karumathampatti 1.2750 0.0000 1.2750
53. 877 1B Karumathampatti 2.1740 1.3012 0.8728
54. 876 2B Karumathampatti 1.5450 1.5450 0.0000
55. 876 1B Karumathampatti 0.0350 0.0350 0.0000
56. 881 2 Karumathampatti 0.4400 0.0000 0.4400
57. 882 1(P) Karumathampatti 0.7300 0.7300 0.0000
58. 882 2(P) Karumathampatti 0.0300 0.0300 0.0000
59. 873 2A Karumathampatti 0.6760 0.6760 0.0000
60. 873 2C Karumathampatti 0.6720 0.6720 0.0000
61. 873 1 Karumathampatti 0.8740 0.8740 0.0000
62. 878 1G(P) Karumathampatti 0.8520 0.0000 0.8520
63. 881 1(P) Karumathampatti 0.8820 0.0689 0.8131
64. 878 2B Karumathampatti 1.2350 0.0000 1.2350
65. 878 11 Karumathampatti 1.2140 0.0000 1.2140
66. 877 2A(P) Karumathampatti 0.9200 0.9200 0.0000
67. 904 1 Karumathampatti 1.2710 1.2710 0.0000
68. 891 1 Karumathampatti 1.5220 1.5220 0.0000
69. 888 2(P) Karumathampatti 0.0040 0.0040 0.0000
70. 888 3(P) Karumathampatti 0.0160 0.0160 0.0000
71. 888 5(P) Karumathampatti 0.0860 0.0860 0.0000
72. 888 6 Karumathampatti 0.4170 0.4170 0.0000
73. 888 7 Karumathampatti 0.0490 0.0490 0.0000
74. 889 4(P) Karumathampatti 1.2060 1.2060 0.0000
75. 886 3(P) Karumathampatti 0.4640 0.4640 0.0000
76. 887 Part Karumathampatti 1.3500 1.3500 0.0000
77. 890 2(P) Karumathampatti 0.3830 0.3830 0.0000
78. 883 1(P) Karumathampatti 0.5140 0.5140 0.0000
79. 881 3(P) Karumathampatti 0.1610 0.0000 0.1610
80. 881 4 Karumathampatti 0.7200 0.7108 0.0092
81. 877 1A Karumathampatti 2.2340 0.0000 2.2340
82. 784 1(P) Karumathampatti 1.2060 1.2060 0.0000
83. 784 2(P) Karumathampatti 0.0120 0.0120 0.0000
84. 784 3(P) Karumathampatti 1.0240 1.0240 0.0000
85. 874 1 Karumathampatti 0.6520 0.6520 0.0000
86. 874 2 Karumathampatti 0.6760 0.6760 0.0000
87. 874 3 Karumathampatti 0.6320 0.6320 0.0000
88. 874 4 Karumathampatti 0.5790 0.5790 0.0000
89. 875 P Karumathampatti 2.3000 2.3000 0.0000
90. 879 1 Karumathampatti 1.3720 0.9845 0.3875
91. 884 Part Karumathampatti 2.0560 2.0560 0.0000
92. 885 2(P) Karumathampatti 2.2260 2.0857 0.1403
93. 876 1A Karumathampatti 1.4700 1.4700 0.0000
94. 876 1B(P) Karumathampatti 0.0340 0.0340 0.0000
95. 876 2A Karumathampatti 0.0690 0.0690 0.0000
96. 882 1(P) Karumathampatti 1.3110 1.3110 0.0000
97. 882 2(P) Karumathampatti 0.7930 0.7930 0.0000
98. 883 2 Karumathampatti 0.3400 0.3400 0.0000
99. 873 1 Karumathampatti 0.8740 0.8740 0.0000
100. 877 2B Karumathampatti 1.8500 1.8500 0.0000
101. 881 1(P) Karumathampatti 0.1530 0.0000 0.1530
102. 881 3 Karumathampatti 0.7280 0.6765 0.0515
103. 784 4(P) Karumathampatti 0.8100 0.8100 0.0000
104. 878 1F Karumathampatti 0.7610 0.0000 0.7610
105. 878 1G(P) Karumathampatti 0.0480 0.0000 0.0480
106. 877 2A(P) Karumathampatti 0.9190 0.9190 0.0000
107. 881 1 Karumathampatti 0.0340 0.0000 0.0340
108. 882 2 Karumathampatti 0.0110 0.0110 0.0000
109. 883 3(P) Karumathampatti 0.0360 0.0360 0.0000
110. 888 4 Karumathampatti 0.1460 0.1460 0.0000
111. 888 5(P) Karumathampatti 0.0650 0.0650 0.0000
112. 889 1 Karumathampatti 0.3400 0.3400 0.0000
113. 889 2(P) Karumathampatti 0.0750 0.0750 0.0000
114. 889 3 Karumathampatti 0.1620 0.1620 0.0000
115. 890 3E Karumathampatti 0.2190 0.2190 0.0000
116. 780 1 Karumathampatti 1.2750 0.0000 1.2750
117. 780 2 Karumathampatti 0.6110 0.0116 0.5994
118. 780 3 Karumathampatti 0.5830 0.4676 0.1154
119. 875 (P) Karumathampatti 0.3420 0.3420 0.0000
120. 874 1,4 Karumathampatti 1.0380 1.0380 0.0000
121. 872 1.2,3 Karumathampatti 1.0890 1.0890 0.0000
122. 875 (P) Karumathampatti 0.0220 0.0220 0.0000
123. 871 2 Karumathampatti 0.0280 0.0280 0.0000
124. 871 3 Karumathampatti 1.3440 1.3440 0.0000
125. 872 2 Karumathampatti 1.0910 1.0910 0.0000
126. 881 2(P) Karumathampatti 0.4410 0.0000 0.4410
127. 779 1 Karumathampatti 0.3560 0.3560 0.0000
128. 782 Karumathampatti 1.9350 0.0000 1.9350
129. 784 1(P) Karumathampatti 0.2180 0.2180 0.0000
130. 784 2(P) Karumathampatti 0.0340 0.0340 0.0000
131. 784 4(P) Karumathampatti 1.6360 1.6360 0.0000
132. 886 3A(P) Karumathampatti 0.2470 0.2470 0.0000
133. 886 3B(P) Karumathampatti 0.1700 0.1700 0.0000
134. 886 3C(P) Karumathampatti 0.1780 0.1780 0.0000
135. 883 1A(P) Karumathampatti 0.0680 0.0680 0.0000
136. 883 1B Karumathampatti 0.2190 0.2190 0.0000
137. 887 Part Karumathampatti 1.2610 1.2610 0.0000
138. 890 2(P) Karumathampatti 0.3580 0.3580 0.0000
139. 883 1D Karumathampatti 0.4130 0.4130 0.0000
140. 83 P Kittampalayam 0.1740 0.0000 0.1740
141. 98 2(P) Kittampalayam 0.8870 0.0000 0.8870
142. 99 Kittampalayam 0.1070 0.0000 0.1070
143. 104 1B Kittampalayam 0.9790 0.0000 0.9790
144. 105 1(P) Kittampalayam 1.0530 0.0000 1.0530
145. 108 2(P) Kittampalayam 1.2930 0.0000 1.2930
146. 108 3(P) Kittampalayam 0.9400 0.0000 0.9400
147. 109 1 Kittampalayam 3.9100 0.0000 3.9100
148. 110 1 Kittampalayam 1.7300 0.0000 1.7300
149. 110 2 Kittampalayam 1.8850 0.0000 1.8850
150. 111 (P) Kittampalayam 1.2310 0.0000 1.2310
151. 114 (P) Kittampalayam 1.2740 0.0000 1.2740
152. 115 1 Kittampalayam 3.9170 0.0000 3.9170
153. 115 2 Kittampalayam 0.5460 0.0000 0.5460
154. 115 3 Kittampalayam 0.5340 0.0000 0.5340
155. 115 4 Kittampalayam 0.5780 0.0000 0.5780
156. 115 5 Kittampalayam 0.5540 0.0000 0.5540
157. 116 1 Kittampalayam 0.2380 0.0000 0.2380
158. 116 2 Kittampalayam 0.2220 0.0000 0.2220
159. 116 3 Kittampalayam 0.5090 0.0000 0.5090
160. 116 4 Kittampalayam 0.5180 0.0000 0.5180
161. 116 5 Kittampalayam 0.5700 0.0000 0.5700
162. 116 6 Kittampalayam 0.4040 0.0000 0.4040
163. 116 7 Kittampalayam 0.3600 0.0000 0.3600
164. 116 8 Kittampalayam 0.3230 0.0000 0.3230
165. 116 9 Kittampalayam 0.3680 0.0000 0.3680
166. 304 2A(P)4B(P) Kittampalayam 0.6070 0.6070 0.0000
167. 306 2A Kittampalayam 2.5650 2.5650 0.0000
168. 306 2B Kittampalayam 2.5650 2.5650 0.0000
169. 307 3(P) Kittampalayam 9.3800 2.0710 7.3090
170. 878 1A Karumathampatti 0.3190 0.0000 0.3190
171. 878 1B Karumathampatti 0.3680 0.0000 0.3680
172. 878 1C Karumathampatti 0.4200 0.0000 0.4200
173. 878 1D Karumathampatti 0.5180 0.0000 0.5180
174. 878 1E Karumathampatti 0.8130 0.0000 0.8130
175. 781 Karumathampatti 4.2820 0.0000 4.2820
176. 873 2b Karumathampatti 0.6760 0.6760 0.0000
177. 92A 2A(P) Kittampalayam 0.2550 0.0000 0.2550
178. 92A 1BP Kittampalayam 0.0120 0.0000 0.0120
179. GRAND TOTAL IN HECTARES 152.488 65.7775 86.7105

India’s war on cash needs a very different approach : 20-12-2016


As India continues its scorched-earth campaign against cash, the question baffling many analysts is why a country so unfamiliar with digital payments would outlaw 86 per cent of its currency, the most-favored method of settling transactions.

Sample the following three factoids from a study led by Tufts University researchers:

Fewer than 10 per cent of Indians have ever used any kind of non-cash payment instrument. Less than 3 per cent of the value transacted in the year ending March 2014 used cards. Fewer than 2 per cent of Indians had used a mobile phone to receive a payment, compared with over 60 per cent of Kenyans

Beyond showing the enormity of the challenge facing Prime Minister Narendra Modi, these statistics are of little relevance now. What’s done is done. With Modi asking people to embrace electronic payments as a way of life, investors want to know what shape these digital networks will take, and who’ll own them: banks, or non-banks such as telcos and e-wallet apps? Either party’s dominance will be wholly artificial.

The Tufts researchers see it differently. India, they say, has erred in choosing a bank-led model over a telecoms-led one. “Consumers have been left unaware of how they might use mobile phones for services other than communications, texting, or Facebook.”

It’s true that India doesn’t have anything like China’s Tenpay, controlled by Tencent Holdings, which runs the WeChat social network, or its larger rival Alipay, owned by Alibaba Group Holding’s banking and payments affiliate, Ant Financial. Paytm, the most popular Indian wallet, is tiny versus Ant, which services 450 million customers in China and was valued by CLSA at $75 billion in September.

Although the Indian startup has witnessed explosive growth since the government’s November 8 currency ban, tapping opportunities isn’t proving to be easy. Paytm launched an in-store payment app last month, only to withdraw it amid security concerns.

Paypal-style wallets, which customers fill from their bank accounts, won’t pose too serious a challenge to traditional lenders. But Paytm, as well as mobile operators Bharti AirtelBSE -1.39 % and Reliance IndustriesBSE -0.30 %, are close to establishing so-called payment banks that can accept customer deposits so long as they only invest in government bonds and don’t make loans.

These newer payment systems could have an edge over ATMs and cards from commercial lenders. The latter are simply too smug. Even basic maintenance of infrastructure — like switching ATMs out of Windows XP, which is no longer supported by Microsoft Corp. — is a cost that full-service banks in India avoid incurring, blithely ignoring the security risks.

But with both banks and telcos suffering from a deficit of trust and access, neither should be the No. 1 choice for replacing cash. The only institution whose balance sheet people actually want is the one they’ve always used to settle transactions: the Reserve Bank of India.

That’s not such a bad thing. The government could still meet its goal of a “less-cash” society if physical money were to be gradually replaced by a national digital currency, whose lawful use would be certified by a network of distributed ledgers. It would be an official bitcoin, or BharatCoin, as some commentators have called it.

The central bank’s balance sheet is already available to the butcher, the baker and the candlestick maker, but only via cash. RBI has no idea who owns its currency. With BharatCoin, it would know the identity of owners, though transactions would be scrambled for privacy. As Gadfly’s Tim Culpan and Christopher Langner have noted, the goal of a national digital currency is to take “the banking out of cash.”

Even at the Bank of England, the idea is still just a research project. If Modi had embraced it, the pain of demonetization would have become unnecessary. Given people’s preferences, it’s still not too late to consider.

Source : Financial Express

Evasion of TDS by companies is set to become more difficult : 20-12-2016


Evasion of tax deduction at source (TDS) by companies is likely to become more difficult, with a number of deterrence provisions likely to be recommended by the R V Easwar panel on tax simplification.

The 10-member committee is also likely look at the discretionary powers of tax officials for high value cases, suggesting assessment by a group of officers in these, instead of a single one. Its second report is expected to out by the month-end and seems likely to be incorporated in the Union Budget proposals on February 1. The committee had wide consultations with revenue officers and business chambers in Ahmedabad, Bengaluru and Mumbai. “In discussions with revenue officials, it has emerged they are very sympathetic to the grievances of a taxpayers. A strong view also came out that there is a need for stringent deterrent provisions against evasion of TDS by employers,” said a source. Kingfisher Airlines was found to have done the TDS on salaries but did not deposit the money with the government. The income-tax department demanded Rs 302 crore towards TDS and interest of Rs 70 crore for assessment years 2010-11, 2011-12, and 2012-13. The unpaid TDS cannot be recovered from the employees, came the instruction, after notices were sent to the latter in this regard. “There is a near consensus on it, that there should be very stringent action in such cases against the employer. There is no fault of the employees here,” the source said. No payment also hurts the employer, as the government will not give a credit or refund for that amount.

The committee was set up by Finance Minister Arun Jaitley in October last year, to identify the provisions and phrases in the Income Tax Act, which have given rise to litigation on account of interpretive differences and which impact ease of doing business. It is to suggest alternatives to ensure predictability in tax laws without substantially impacting the tax base or revenue collection.

Source : Business Standard

Transfer pricing may come back to haunt investors from cyprus : 20-12-2016


The government on Monday afternoon clarified that according to the amended Cyprus treaty, investors need to pay only 10% tax with retrospective effect from November 1, 2013, instead of the 30% tax they have already paid. While bringing in clarity on this matter, a lacunae as far as transfer pricing still remains.

The genesis of the problem lies in 2013. The government had, on November 1, 2013, blacklisted Cyprus as an investment destination through a notification. So, investments made through Cyprus attracted 30% tax (TDS) instead of 10% tax under the original India-Cyprus treaty.

The government had blacklisted Cyprus after the island country had refused to share some data related to investors with India.

The government also said that transfer pricing could also apply on returns given to Cyprus investors by Indian companies.

However, the government later amended the treaty (through a notification on December 14, 2016) after Cyprus agreed to co-operate on sharing investor data. Under the amended treaty, the higher taxation part was rescinded. But the transfer pricing portion still remains unclear.

What led to a cause of worry was the fact that many private equity investors had paid 30% tax between 2013 and 2016 on returns from Indian investments. The government clarification on Monday came as many foreign investors were worried that the 10% tax would not be applicable for the three years between 2013 and 2016. However, following Monday’s clarification, they can now claim refunds from the tax department.

Most of the investors used Cyprus as a pooling vehicle to invest in Indian real estate. Most of the investments were in debt vehicles. In some cases, while the equity investment were made either in listed or unlisted companies through Mauritius or Singapore, debt investments were made through Cyprus.

Transfer pricing conundrum
Transfer pricing is normally only applied in cases where two companies— one an Indian and another multinational— do a merger or acquisition. People close to the development said that some of the transfer pricing adjustments could be made in the coming months. In cases where the tax officers have already gone ahead with the transfer pricing procedures, it may not be possible to undo it, say experts.

ET VIEW: Make Clear Tax Rules 
This is absurd, that too after India demonstrated flexibility and lifted the so called sanctions after Cyprus agreed to share information on tax evaders. The reworked tax treaty between India and Cyprus for effective information sharing is also a step towards global cooperation on tax transparency. It will provide relief to genuine investors in Cyprus. But investors loathe uncertainty. The need is for stability and certainty in the tax system, and therefore tax rules must be clear.

Source : Economic Times

GST rollout may be pushed to July, industry needs time: Experts : 19-12-2016


With “turf issue” over tax payer jurisdiction continuing to clog GST Council deliberations, the Goods and Services Tax rollout could be delayed by a quarter to July 1 as industry would require time to prepare itself, experts said.

The Council, chaired by Finance Minister Arun Jaitley, in its six meetings so far has taken unanimous decisions on 10 issues while three more — dual control, list of items in tax bracket and model CGST and IGST laws — are still pending.

PwC India Executive Director Sumit Lunker said the April 1 rollout deadline seems challenging, as the CGST and IGST laws can be passed only in the Budget Session in early February. Thereafter, states will have to pass the SGST law in their assemblies.

“After the law is passed, industry would need at least 3-4 months time to be GST ready, especially on the IT infrastructure front. Most IT companies would come out with their patches and updates after the final law is crystallised. July 1 appears to be a more feasible date for implementation,” he said.

Nangia & Co Director (Indirect Taxation) Rajat Mohan said July 1 looks like the “best case scenario” for GST implementation as by then the industry will also be able to migrate into the new taxation regime.

BMR & Associates LLP Partner Mahesh Jaising said there would be a lot of clockwork needed to meet the April 1 deadline. “The realistic timeline appears July 1. As of today, services sector has some confusion over interpretation of the law and is awaiting clarity from government.”

Jaitley had last week said that certain “turf issues” still remain to be sorted out before GST rollout and the new indirect tax regime can be implemented anytime between April 1 and September 16, 2017.

“GST is a transactional tax and not an income tax. Transactional tax can start in any part of the financial year and therefore, the range of timing when it has to come into force because of constitutional necessity is April 1, 2017 to September 16, 2017. Hopefully, the earlier we do, the better it is for the new taxation system,” Jaitley had said.

As far as the model GST law is concerned, Lunker said, there is no big challenge in passing it as the GST Council has already cleared discussion on 20 chapters and only 7 chapters remain.

“While the issue of dual control remains unresolved till date, state governments across the country are keen to implement GST at the earliest. I am hopeful that the GST Council in its December 22-23 meeting will arrive at a consensus on the pending issues,” he said.

Deloitte Haskins & Sells LLP Partner Prashant Deshpande said practically April 1 deadline “looks unachievable” because of the short window of time that will be available to the industry after the GST related legislations are passed.

“It will be a big tug of war to implement it from April and my advice to industry is that they should keep themselves prepared to ensure business continuity,” he said.

Source : PTI

PF body likely to retain 8.8% interest on EPF deposits for FY17 : 19-12-2016


Retirement fund body EPFO is likely to retain 8.8 per cent rate of interest on EPF deposits for the current fiscal for its over four crore subscribers — same as 2015-16 — at its trustees meeting tomorrow.

“The Employees Provident Fund Organisation’s apex decision making body, the Central Board of Trustees (CBT), may decide to retain 8.8 per cent rate of interest on EPF for the current fiscal tomorrow at its meeting in Bangalore,” said a source.

“Although providing 8.8 per cent rate of interest for the current fiscal will leave a deficit of Rs. 383 crore, the body wants to utilise about Rs. 409-crore surplus with it, which it accrued after providing 8.8 per cent rate of interest for 2015-16,” the source added.

He further said: “Labour Ministry top brass has been pursuing Finance Ministry higher-ups to convince them for retaining 8.8 per cent rate for this fiscal to avoid any embarrassment.”

The Finance Ministry had earlier this year decided to lower interest rates on EPF for 2015-16 to 8.7 per cent from the 8.8 per cent approved by the CBT headed by the Labour Minister.

The government had to roll back the decision and provide 8.8 per cent rate of interest on EPF deposits for 2015-16 following protests by trade unions.

As per the EPFO income projection of Rs. 39,084 crore for the current fiscal, providing 8.8 per cent rate of interest on EPF deposits will leave a deficit of Rs. 383 crore. There would be a surplus of about Rs. 69.34 crore if interest rate is lowered to 8.7 per cent.

The source said the Finance Ministry has been asking the Labour Ministry to align the EPF interest rate with other small saving schemes of the government like Public Provident Fund (PPF).

In September, the government had reduced the interest rates on small savings schemes marginally by 0.1 per cent for the October-December quarter of 2016-17, which resulted in lower returns on PPF, Kisan Vikas Patra, Sukanya Samriddhi Account, among others.

The Labour Ministry, however, wants to retain 8.8 per cent for the current fiscal as well, said the source.

The EPFO trustees will also consider a proposal to reduce the administrative charges to 0.65 per cent of total wage on which contributions are payable from 0.85 per cent at present.

This will result in total annual savings of Rs. 1,000 crore for around six lakh employers covered by the EPFO.

The trustee will also consider the proposal to abolish administrative charges on firms to fund the expenditure in implementing the Employees’ Deposit Linked Insurance Scheme (EDLI), 1976.

Source : Business Standard

President gives assent to Taxation Laws Second Amendment Bill : 19-12-2016


President Pranab Mukherjee has given assent to the Taxation Laws (Second Amendment) Bill 2016 which was passed by Lok Sabha last month as a money bill without discussion amidst opposition uproar over demonetization issue.

Later, the Bill was sent to the Rajya Sabha but it could not take up the legislation following the deadlock between the government and the opposition. Since it was a money bill, it was deemed passed within 14 days from the Rajya Sabha, if the Upper House did not return it.

The Bill has proposed levy of a total tax, penalty and surcharge of 50 per cent on the amount deposited post demonetisation while higher taxes and stiffer penalty of up to 85 per cent in respect of those who are caught. Opposition parties had approached the President against the manner the bill was passed in the Lok Sabha.

Overview of Amendments Proposed

PARTICULARS EXISTING PROVISIONS PROPOSED PROVISIONS
General provision for penalty PENALTY (Section 270A) 

Under-reporting – @50% of tax

Misreporting – @200% of tax

(Under-reporting/ Misreporting income is normally difference between returned income and assessed income)

No changes proposed
Provisions for taxation & penalty of unexplained credit, investment, cash and other assets TAX  (Section 115BBE) 

Flat rate of tax @30% + surcharge + cess

(No expense, deductions, set-off is allowed)

TAX  (Section 115BBE) 

Flat rate of tax @60% + surcharge @25% of tax (i.e. 15% of such income). So total incidence of tax is 75% approx.

(No expense, deductions, set-off is allowed)

PENALTY (Section 271AAC)

If Assessing Officer determines income referred to in section 115BBE, penalty @10% of tax payable in addition to tax (including surcharge) of 75%.

Penalty for search  seizure cases Penalty (271AAB) 

(i) 10% of income, if admitted, returned and taxes are paid

(ii) 20% of income, if not admitted but returned and taxes are paid

(iii) 60% of income in any other case

Penalty (271AAB) 

(i) 30% of income, if admitted, returned and taxes are paid

(ii) 60% of income in any other case

Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016’ (PMGKY) New Taxation and InvestmentRegime Undisclosed income in the form of cash & bank deposit can be declared: 

(A) Tax, Surcharge, Penalty payable

Tax                   @30% of income declared

Surcharge          @33% of tax

Penalty              @10% of income declared

Total                  @50% of income (approx.)

(B)  Deposit

25% of declared income to be deposited in interest

free Deposit Scheme for four years.

India is a refreshing change from what’s happening in rest of the world: FM Arun Jaitley : 17-12-2016


FM Arun Jaitley while speaking at FICCI’s 89th Annual General Meeting (AGM) in the backdrop of the note ban decision of the Narendra Modi government that is still causing a lot of inconvenience to people as the cash crunch continues as there are still not enough currency notes to go around after the Rs 500 and Rs 1000 notes disappeared, took pains to say that the government is working overtime to ensure things return to normal within the 50 day deadline that PM Modi himself gave. While the note ban may be troubling the public, FM Jaitley highlighted the fact that the Indian economy was working well and is placed in a good position to make spectacular progress in the future. He also highlighted the fact that when compared to the global situation, Indian economy is registering some of the best growth figures in the world: Here is what FM Jaitley said to the august gathering at the venue:

1. Amongst the emerging economies, if we look at India, I think its a refreshing change from what’s happening in rest of the world: FM Jaitley

2. India has capacity to take decision on demonetisation; it’s no longer a fragile economy: FM Jaitley.

3. Having passed the constitutional amendment, there are several decisions which the GST Council has to take: FM Arun Jaitley

4. Brexit-vote surprised many. Most people thought that eventually one of the world’s most mature democratic countries will not vote the way it actually did: FM Jaitley

5. Some difficult decisions have to be taken in the long-term interests of the country: FM Jaitley on demonetisation

6. Long-term benefits very clear even if we have to bear short-term inconveniences: FM Jaitley.

7. Legislations which have to be passed by Parliament under Constitutional amendment and state legislatures are currently in process of being drafted: FM Jaitley

8. I don’t see any major difficulty in those legislations being finally approved: FM Jaitley

9. There are about 10 important decisions which have already been taken with consensus: FM Jaitley

10. The process of ReMonetisation is not going to take a lot of time: FM Jaitley

11. As far as the decision with regard to currency is concerned, I think it marks a very important beginning: FM Jaitley

12. Ideally, GST should start from Apr 1, 2017; constitutional necessity for it to come into force between Apr 1 & Sep 16: FM Jaitley

13. On 16 Sept 2017, as far as current mode of taxation is concerned, the curtains will be down: FM Jaitley.

Source : Financial Express

PM Narendra Modi says note ban for country, not party : 17-12-2016


Prime Minister Narendra Modi on Friday evoked former PM Indira Gandhi and a 1971 committee on fiscal policy to justify demonetisation and attack the Opposition, but this indicated how his party might face headwinds in poll-bound states.

Reiterating the government’s resolve to go after benami properties, Modi — addressing a Bharatiya Janata Party (BJP) parliamentary party meeting — said, “Tell me if the party is bigger or the country.”

The PM recalled the 1971 committee led by senior civil servant N N Wanchoo, which had recommended demonetisation. Alluding to a reference in a book, Modi said when then Union finance minister, YB Chavan, approached Indira Gandhi with the proposal, she reportedly asked, “ Only one question: Are no elections to be fought by the Congress party?”

He added the BJP puts the interest of the country over the interest of the party.

The PM’s speech was telecast deferred live on Doordarshan. This is the first time in the two-and-a-half years that the National Democratic Alliance, led by the BJP, has been in power at the Centre that Modi’s address to a party forum, usually in-camera, has been telecast.

Elections to five states, including the key Uttar Pradesh, are due by February-March. Several UP leaders, including its Members of Parliament, are of the view that demonetisation could scupper BJP’s chances. Some of them even conveyed their assessments to party chief Amit Shah at a meeting on Thursday.

The PM also targeted the Left, accusing them of compromising with their ideology as he recalled statements by late communist leaders Jyotirmoy Basu and Harkishan Singh Surjeet in support of demonetisation.

Modi also attacked former prime minister Manmohan Singh, who had called demonetisation “organised plunder and legalised loot”.

Modi quoted his comments, in 1991, to say that he once used “language of threat” against tax evaders but his voice has completely changed now. “Why? Because he is worried about his party not country,” Modi said.

He said the Opposition stalled Parliament earlier as well, but then it was done to protest scams, while now proceedings are being disrupted to protect the dishonest. Modi said the Congress government made a law against benami assets in 1988 but never notified it or framed rules and regulations, ensuring that the legislation never came into force.

He expressed gratitude to Odisha Chief Minister Naveen Patnaik and his Bihar counterpart Nitish Kumar for their “open support” to demonetisation.

Source : Business Standard

Government announces new income declaration scheme ‘PM Garib Kalyan Yojana’; stringent penalties prescribed : 17-12-2016


The government offered a “last window” to people with unaccounted wealth to come clean or face stringent penalties while inviting others to blow the whistle on those suspected to be holding black money as it launched the scheme that had been announced earlier.

Pradhan Mantri Garib Kalyan Yojana (PMGKY), 2016, will start on December 17 and remain open until March 31 next year. Those who declare cash deposits under this will be levied a charge of 50%, which breaks down into 30% tax,  33% surcharge and 10% penalty. In addition to this, 25% of the amount declared will go into the noninterest-bearing Pradhan Mantri Garib Kalyan Deposit Scheme, 2016, for four years.

PM Narendra Modi announced that Rs 500 and Rs 1,000 notes would cease to be legal tender on November 8. Later, the government said it would unveil one more window for black money holders after the Income Disclosure Scheme closed on September 30.

Declarations under PMGKY will be confidential and those taking advantage of it will escape prosecution. “The government has given a long window for the declarations because we want people to voluntarily come forward and make their declarations,” said Revenue Secretary Hasmukh Adhia while notifying the new scheme.

“We do not want inspector raj.” Part of PMGKY’s proceeds will be used for the benefit of the poor. Those who don’t take advantage of the scheme and are caught later will face up to 85% penalty, besides prosecution. Not declaring undisclosed cash or deposits in banks under the scheme now but showing it as income in the tax return form would attract a total of 77.25% in taxes and penalty.

The scheme was notified after the Taxation Laws Second (Amendment) Bill, 2016, came into force on December 15. The Bill was passed by the Lok Sabha but could not be taken up in the Rajya Sabha due to Opposition

Adhia said most banks will have PMGKY scheme forms starting Saturday.“Only after payment of 50% tax and setting aside 25% of the remaining undisclosed amount for four years can a person avail the PMGKY scheme,” he said. In the recent Income Disclosure Scheme and other such plans, disclosures were made first and taxes recovered later.

The revenue secretary warned that the mere deposit of demonetised cash will not make it white, adding that the government was getting data from multiple sources and action will be taken accordingly.

The government has also set up an email address — blackmoneyinfo@ incometax.gov.in — where people can send information on those having black money and are trying to launder it. The email id will be monitored by a cell that will take immediate action based on tips.

CASH, JEWELLERY SEIZED
Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra said the government had seized cash amounting to more than Rs 316 crore, of which new currency was about Rs 80 crore, and jewellery worth Rs 76 crore. “We conducted 291search and seizures, 295 surveys and issued around 3,000 notices on the basis of deposits post-demonetisation,” he said and added that the concealed income is about Rs 2,600 crore based on credible information. In addition,   3,000 open enquiries have been made seeking details.

Chandra said CBDT is collecting information on all bank accounts and correlating this with existing income-tax data.

“So the assessees should know that their deposits in bank accounts are being watched. We are examining whether it is explained money or not. Therefore, they should come very, very clean under this scheme which is the last window available for anyone,” he said.

Adhia said banks will gather the permanent account numbers (PAN) of all accountholders except for Jan Dhan accounts within a month’s time. He said in 12 cases of “unscrupulous conversion” of old notes into new currency, the Central Bureau of Investigation (CBI) has filed first information reports while the Enforcement Directorate has filed 17 cases of money laundering. Common methods of laundering  Common methods of laundering such as purchase of bullion, jewellery, backdating of cash transactions, depositing cash in multiple accounts just below Rs 2.5 lakh, depositing cash in Jan Dhan, dormant and shell company accounts and use of cash for repayment of loans were all under watch, he said.

Source : Economic Times

Notification No. F.No.3(1)-W&M/2016 – SO4061(E) 16-12-2016


Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 – F.No.3(1)-W&M/2016 – SO4061(E)

Government of India Ministry of Finance Department of Economic Affairs

New Delhi, dated the December 16, 2016

Notification

S.O.4061 (E).-In exercise of the powers conferred by clause (c) of section 199B of the Finance Act, 2016 (28 of 2016) (hereinafter referred to as the Act), the Central Government in consultation with the Reserve Bank of India hereby notifies the following Scheme, namely:-

1. Short title, commencement and application.- (1) This Scheme may be called the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016.

(2) It shall come into force from the 17th day of December, 2016 and shall be valid till 31st day of March, 2017.

(3) This Scheme shall be applicable to every declarant under the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016.

2. Eligibility for Deposits.- The deposit under this Scheme shall be made by any person who intends to declare undisclosed income under sub-section (1) of section 199C of the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016.

3. Form of the deposits.- (1) The deposits shall be held at the credit of the declarant in Bonds Ledger Account maintained with Reserve Bank of India.

(2) A certificate of holding the deposit shall be issued to declarant in Form I.

(3)The Reserve Bank of India shall transfer the deposit received under this Scheme into the designated Reserve Fund in the Public account of the Government of India.

4. Subscription and Mode of investment in the Bonds Ledger Account.- (1) The deposits shall be accepted at all the authorised banks notified by Government of India.

(2) The deposits shall be made in multiples of rupees one hundred.

(3) The deposit under sub-section (1) of section 199F by a declarant shall not be less than twenty-five per cent. of the undisclosed income to be declared under sub-section (1) of section 199C of the Act.

(4) The entire deposit to be made under sub-section (1) of section 199F under this Scheme shall be made, in a single payment, before filing declaration under sub-section (1) of section 199C.

(5) The deposit shall be made in the form of cash or draft or cheque or by electronic transfer and shall be drawn in favour of the authorised bank accepting such deposit.

5. Effective date of deposit.- The effective date of opening of the Bonds Ledger Account shall be the date of tender of cash or the date of realisation of draft or cheque or transfer through electronic transfer.

6. Applications.- (1) An application for the deposit under this Scheme shall be made in Form II clearly indicating the amount, full name, Permanent Account Number (hereinafter referred to as “PAN”), Bank Account details (for receiving redemption proceeds), and address of the declarant:

Provided that if the declarant does not hold a PAN, he shall apply for a PAN and provide the details of such PAN application along with acknowledgement number.

(2) The application under sub-paragraph (1) shall be accompanied by an amount which shall not be less than twenty-five per cent. of the undisclosed income to be declared in the form of cash or draft or cheque or through electronic transfer as provided under sub-paragraphs (3) and (4) of paragraph 4.

7. Authorised banks.-(1) Application for the deposit in the form of Bonds Ledger Account shall be received by any banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies.

(2) The authorised bank shall electronically furnish the details of deposit made in Form V to the Department of Revenue, Ministry of Finance, Government of India not later than next working day to enable the Department to verify the information of the deposit before accepting the declaration.

(3) The authorised bank shall upload the details of deposit into Reserve Bank of India’s core banking solution ‘e-kuber’.

(4) The Reserve Bank of India and authorised bank shall maintain the confidentiality of the data received in this regard.

8. Nomination.- (1) A sole holder or a sole surviving holder of a Bonds Ledger Account, being an individual, may nominate in Form III, one or more persons who shall be entitled to the Bonds Ledger Account and the payment thereon in the event of his death.

(2) Where any amount is payable to two or more nominees and either or any of them dies before such payment becomes due, the title to the Bonds Ledger Account shall vest in the surviving nominee or nominees and the amount being due thereon shall be paid accordingly. In the event of the nominee or nominees predeceasing the holder, the holder may make a fresh nomination.

(3) A nomination made by a holder of Bonds Ledger Account may be varied by a fresh nomination, or may be cancelled by giving notice in writing to the Authorised Bank in Form IV.

(4) Every nomination and every cancellation or variation shall be registered at the Reserve Bank of India through the authorised bank and shall be effective from the date of such registration.

(5) If the nominee is a minor, the holder of Bonds Ledger Account may appoint any person to receive the Bonds Ledger Account or the amount due in the event of his death.

9. Transferability.- The transferability of the Bonds Ledger Account shall be limited to nominee or to the legal heir of an individual holder, in the event of his death.

10. Interest.- The deposit under sub-section (1) of section 199F shall not bear any interest.

11. Tradability against Bonds.- The Bonds Ledger Account shall not be tradable.

12. Repayment.- The Bonds Ledger Account shall be repayable on the expiration of four years from the date of deposit and redemption of such Bonds Ledger Account before its maturity date shall not be allowed.

13. Interpretation.- The words and expressions used but not defined in this notification but defined in the Income-tax Act, 1961 (43 of 1961), the Government Securities Act, 2006 (38 of 2006)or the Finance Act, 2016 (28 of 2016) shall have the meanings respectively assigned to them in those Acts.

By Order of the President of India

(Prashant Goyal)

Joint Secretary to the Government of India

[F.No.3(1)-W&M/2016]

New Delhi

Dated 16th December, 2016

Notification No.119/2016 16-12-2016


CORRIGENDUM – NOTIFICATION No. 114 /2016 – 119/2016

MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES)

CORRIGENDUM

New Delhi, the 16th December, 2016

No. 119/2016

S.O. 4082(E).-In the notification of Government of India, in the Ministry of Finance, Department of Revenue, No. 114/2016 dated 14.12.2016 vide S.O. No. 4033(E) and published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), in the last line, for “this”, read “the”.

[Notification No. 119/2016/F. No. 500/02/2015-FT & TR-III]

E. V. BHASKAR, Under Secy.

22 – 16-12-2016


EXCHANGE FACILITY TO FOREIGN CITIZENS

A.P. (DIR SERIES 2016-17) CIRCULAR NO.22DATED 16-12-2016

Attention of Authorized Persons is invited to the A.P. (DIR Series) Circular No. 20 dated November 25, 2016 permitting foreign citizens to exchange foreign exchange for Indian currency notes up to a limit of Rs. 5000/- per week till December 15, 2016.

2. On a review it has been decided that the instructions contained in the A.P. (DIR Series) Circular No. 20 dated November 25, 2016 shall continue to be in force till December 31, 2016.

3. Authorised Persons may follow the above instructions and bring the contents of this circular to the notice of their constituents.

4. 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 are without prejudice to permissions / approvals, if any, required under any other law.

Notification No.118/2016 16-12-2016


Section 138(1)((a)(ii) specifies the Joint Secretary (Marketing), Ministry of Petroleum and Natural Gas, Government of India – 118/2016

Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes

NOTIFICATION NO. 118/2016

New Delhi, the 16th of December, 2016

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 Joint Secretary (Marketing), Ministry of Petroleum and Natural Gas, Government of India, for the purposes of the said clause.

(F.NO. 225/305/2016-ITA.II)

(Rohit Garg)

Director-OTA.II), CBDT

Notification No.117/2016 16-12-2016


Jurisdiction of income-tax authorities – 117/2016

GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE)

NOTIFICATION No. 117/2016

New Delhi, the 16th December, 2016

S.O.4060(E).- In exercise of the powers conferred by section 199G of the Finance Act, 2016 (28 of 2016), the Central Government hereby-

(i) notifies the Principal Commissioner or the Commissioner, as the case may be, who exercises the jurisdiction under section 120 of the Income-tax Act, 1961 (43 of 1961), as the Principal Commissioner or the Commissioner for the purposes of declaration filed manually or electronically under electronic verification code under sub-section (1) of section 199C of the Finance Act, 2016 (28 of 2016); and

(ii) notifies the Principal Commissioner or the Commissioner, as the case may be, who exercises the jurisdiction under section 120 of the Income-tax Act, 1961(43 of 1961) or the Commissioner of Income-tax, Centralised Processing Centre, Bengaluru, as the Principal Commissioner or Commissioner, for the purposes of declaration filed electronically with digital signature under sub-section (1) of section 199C of the Finance Act, 2016 (28 of 2016).

[F.No.142/33/2016-TPL]

(Dr. T.S. Mapwal)

Under Secretary to the Government of India

Notification No.116/2016 16-12-2016


Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana Rules, 2016 – 116/2016

GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE)

NOTIFICATION No. 116/2016

New Delhi, the 16th December, 2016

THE TAXATION AND INVESTMENT REGIME FOR PRADHAN MANTRI GARIB KALYAN YOJANA RULES, 2016

S.O.4059(E).-In exercise of the powers conferred by sub-section (1) and sub-section (2) of section 199R of the Finance Act, 2016 (28 of 2016), the Central Board of Direct Taxes, subject to the control of the Central Government hereby makes the following rules, namely :-

1. Short title and commencement.-(1) These rules may be called the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana Rules, 2016.

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

2. Definitions.- (1) In these rules, unless the context otherwise requires,-

(a) “Act” means the Finance Act, 2016 (28 of 2016);

(b) “Form” means a form appended to these rules;

(2) The words and expressions used and not defined in these rules but defined in the Act, or the Income-tax Act, 1961 (43 of 1961) or the rules made thereunder, shall have the meanings respectively assigned to them in those Acts and rules.

3. Declaration of income in the form of cash or deposit in an account.-

(1) A declaration of income in the form of cash or deposit in an account maintained with a specified entity, under sub-section (1) of section 199C shall be made in Form-1.

(2) The declaration shall be furnished to the Principal Commissioner or the Commissioner, as the case may be, notified under sub-section (1) of section 199G,-

(a) electronically under digital signature; or

(b) through transmission of data electronically under electronic verification code; or

(c) in print form.

(3) If any person, having furnished a declaration under sub-rule (2), discovers any omission or any wrong statement therein, he may furnish a revised declaration on or before the date notified for filing declaration under sub-section (1) of section 199C.

(4) The Principal Commissioner or the Commissioner, as the case may be, shall issue a certificate in Form-2 to the declarant within thirty days from the end of the month in which a valid declaration under sub-section (1) of section 199C has been furnished.

(5) The Principal Director-General of Income-tax (Systems) or Director-General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing the form in the manner specified in sub-rule (2) or sub-rule (3).

Explanation.-For the purposes of this rule “electronic verification code” means a code generated for the purpose of electronic verification of the person furnishing the return of income as per the data structure and standards specified by Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems).

Notification No.115/2016 16-12-2016


Central Government appoints the 17th day December, 2016, as the date on which the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 comes into force – 115/2016

GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE)

Notification No. 115/2016

New Delhi, the 16th December, 2016

S.O. 4058(E).- In exercise of the powers conferred by sub-section (2) of section 199A and sub-section (1) of section 199C of the Finance Act, 2016 (28 of 2016), the Central Government hereby appoints,-

(i) the 17th day December, 2016, as the date on which the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 comes into force; and

(ii) the 31st day of March, 2017 as the date on or before which a person may make a declaration under sub-section (1) of the said section 199C.

[ F.No.142/33/2016-TPL]

(Dr. T.S. Mapwal)

Under Secretary to the Government of India

Supreme Court to pass order on demonetisation soon : 16-12-2016


The Supreme Court on Thursday concluded its hearing on several petitions challenging demonetisation of Rs 500 and Rs 1,000 notes last month after prolonged hearing of the parties. Chief Justice T S Thakur, who presided over the bench, said at the end: “We will examine all issues”. No date was given.

The petitioners had demanded an interim order to ease the pain of the public, who had to stand in long queues. Senior counsel Kapil Sibal, representing some of the petitioners, argued that it was the right of the depositors to get their money.

The government, instead of keeping the promise to withdraw Rs 24,000 a month, has arbitrarily reduced the amount to Rs 2,000. The plight of the cooperative banks was disastrous because of the freeze on receiving and paying their agricultural constituents and members. After three days of the November 8 notification, all transactions were stopped, causing immense agony to the farmers and others.

The Chief Justice asked the government why it could not return part of the money the banks had collected so that the cooperative banks could return to business. He asked whether there was a norm by which a percentage was given back to the banks. He suggested a timeline by which new currency could be provided to them.

The Attorney-General Mukul Rohtagi replied that it was not possible because of currency shortage. The cooperative banks were taking money without proper KYC (Know Your Customer) procedures and audit.

They were being used to hide black money. Moreover, it is difficult to fix a percentage for returning their deposits because the demand and deposits fluctuate in different seasons. He further alleged that the bank managers committed fraud and the government is going after them through raids on the banks.

Source : PTI

India remains one of fastest-growing countries in the world: White House : 16-12-2016


India remains one of the fastest-growing countries in the world, the White House today said even as it underlined that inefficiencies remain in the public sector of the country with the poor population still lacking healthcare coverage and access to financial services.

“India remains one of the fastest-growing countries in the world, with real GDP expanding at 7.3 per cent in the four quarters through 2016:Q3,” said the Economic Report of the President for the year 2017, which was sent to the Congress.

The voluminous report running into nearly 600 pages says that economic growth in India continues at a solid pace of a projected 7.4 per cent over the four quarters of 2016.

“Private consumption has been a major driver in economic growth, contributing 4.3 percentage points to its 7. 3 per cent real GDP growth rate in the four quarters through 2016:Q3,” the report said, adding that lower inflation and fiscal consolidation over the past year has created additional policy space for India to stimulate growth should a crisis occur.

“Macroeconomic risks revolve around inflationary pressure stemming from increasing commodity prices, which could weigh on the current account and fiscal deficit,” it said.

“Inefficiencies remain in the public sector, with India’s poor still lacking healthcare coverage, educational attainment, and access to financial services. Further, inequality in India remains high,” the White House report said.

The report also noted the countries that export to China and the advanced economies have suffered due to the slowdown in those important markets, the report added.

“Economic growth in China has been on a downward trend since a brief rebound after the global financial crisis. China has been attempting to re-balance from an investment- and export-driven economy to an economy driven more by private consumption,” it said.

The White House said as China’s economy grew to 15 per cent of global GDP in 2015, targeted industrial policies have made it the world’s largest manufacturer and the dominant producer of some key goods in the global marketplace, as well as a major source of demand for an array of goods, magnifying the effects of changes in its domestic economy on global prices and growth.

According to the report, more recently, China may be postponing its longer-term goal of rebalancing in order to stabilise growth in the near term after growth fell from 7.2 per cent in the four quarters ended in 2014:Q4 to 6.7 per cent in the four quarters ended in 2016:Q3.

In 2016, credit growth has been rapid, increasing financial risks, with credit to the non-financial sector as a percent of GDP now exceeding that of major emerging market economies, real estate prices hitting record highs, and distressed bank assets rising, it said.

“Against this backdrop, the Chinese renminbi (RMB) has been gradually depreciating since mid-2015 against both the dollar and a weighted basket of currencies,” it said.

Source : Economic Times

Digital transactions not substitute for cash payments: Arun Jaitley : 16-12-2016


Finance Minister Arun Jaitley said digital transactions are a parallel mechanism and not a substitute for cash transactions, clarifying cashless economy means a less cash economy.

Jaitley outlined the government’s digital drive in his opening remarks at the 5th Meeting of the Consultative Committee of Parliament attached to the Ministry of Finance that deliberated “Shift to Digital Transactions”.
“Cashless economy is actually a less cash economy as no economy can be fully cashless,” Jaitley said in his opening remarks according to a statement issued by the finance ministry.

Government had on November 8 demonetised Rs 500 and Rs 1000 currency notes and has since been pushing digital payments. On Thursday, it announced rewards worth Rs 340 crore to encourage people to adopt digital payments. Jaitley said an excessive cash economy has its own social and economic costs and consequences, explaining to the participating Members of Parliament (MPs) the government’s digital push.

Less cash can be gradually substituted to the possible extent through digital transactions, he said. Jaitley said, according to the statement, the government has given lot of incentives to the people to shift to digital mode of payment and the response is quite positive.

Government and the RBI have taken various steps to bring down the cost of digital transactions, he said, mentioning the reduction in MDR charges (transaction charges on card payments) for transactions up to Rs 2,000 on debit cards.

Source : Economic Times

 

1051/39/2016-CX – 15-11-2016


Export warehousing-Extension of facility in Ahmedabad District of Gujarat-reg

 

Circular No. 1051/39/2016-CX

F. NO. 209/10/2013-CX.6

GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

CENTRAL BOARD OF EXCISE AND CUSTOMS

North Block, New Delhi

Dated the 15th of December, 2016

To,

The Principal Chief Commissioners/ Chief Commissioners of Central Excise (All)

The Director General (All)

Sub: Export warehousing-Extension of facility in Ahmedabad District of Gujarat-reg.

Madam/ Sir,

I am directed to refer to Board’s Circular No. 581/18/2001-CX, dated 29th June, 2001 which, inter alia, specifies conditions, procedures, Class of exporters and places under sub-rule (2) of Rule 20 of Central Excise Rules, 2002 for warehousing of excisable goods for the  purpose of export. In paragraph 2(2) of the said Circular, the Board has specified places  where warehouses may be established to store excisable goods for export. The Board has  received representations from the trade to include Ahmedabad District in the State of Gujarat in the list of places mentioned in the said Circular.

2. The matter has been examined. Board is of the View that extension of the facility of export warehousing to Ahmedabad district in the state of Gujarat Would facilitate the trade  and industry. Therefore, it has been decided to amend paragraph 2(2) of the Circular No. 581/18/2001-CX, dated 29th June, 2001 to include Ahmedabad district in the state of Gujarat. Accordingly, the said paragraph shall now read as follows:

“(2)Places : The warehouses may be established and registered in Bangalore, Kolkata, Chennai, Delhi; Hyderabad, Jaipur, Kanpur, Ludhiana, Mumbai, the district of Ahmedabad in the state of Gujarat, the districts of Pune and Raigad in the state of Maharashtra, the district of East Midnapore in the state of West Bengal, the district of Kancheepuram in the  state of Tamil Nadu, the district of Indore in the state of Madhya Pradesh, the taluka Ankleshwar in the district of Bharuch in the state of Gujarat, Navi Mumbai in the district of  Thane in the state of Maharashtra, Sholinghur in the district of Vellore in the state of Tamil Nadu, Bidadi in the Bangalore Rural District, Karnataka, the district of  Thiruvallur in the state of Tamil Nadu, the district of Gautam Budh Nagar in the state of Uttar Pradesh the district of Nagpur in the State of Maharashtra, Tehsil of Tijara of Alwar district in the state of  Rajasthan and Bhuj Taluka of Kutch District in the State of Gujarat.”

3. The field formations may suitably be informed. Receipt of this Circular may please be  acknowledged. Hindi version will follow.

(Shankar Prasad Sarma)

Under Secretary to the Govt. of India

Taxman’s warning: Do not drastically revise Income Tax returns : 15-12-2016


The Central Board of Direct Taxes (CBDT) on Wednesday warned of penal action against those filing “drastically” revised income tax returns by including bank deposits made after demonetisation.

After the November 8 demonetisation announcement, the government had allowed depositing of scrapped R500 and R1,000 notes in bank accounts till December 30. But a provision of the income tax Act that allows assessees to file a revised return or declaration of income for previous years is being misused by some to include the hitherto undeclared wealth and escape by paying a maximum of 30% tax instead of 50% on such deposits, under the new income disclosure scheme, ‘Pradhan Mantri Garib Kalyan Yojana’.

“The provision to file a revised return… has been stipulated for revising any omission or wrong statement made in the original return of income and not for resorting to make changes in the income initially declared so as to drastically alter the form, substance and quantum of the earlier disclosed income,” the CBDT said.

Any instance coming to the notice of the I-T department which reflects manipulation in the amount of income, cash-in-hand, profits etc, and fudging of accounts may necessitate scrutiny of such cases so as to ascertain the correct income of the year and may also attract penalty and prosecution in appropriate cases as per provision of law,” it said.

Tax experts welcomed the CBDT’s move. Amarpal Chadha, tax partner and India mobility leader, EY said: “It is a welcome move by the CBDT so that people do not take advantage of the revision provisions under tax law and revise the return of income filed for earlier assessment years for manipulating the income, cash etc.

“However, this may also concern some of the genuine taxpayers who have a requirement to revise the previous year’s return to incorporate foreign income and take any treaty benefit which they could not do in the original return, due to non-availability of information/foreign country tax return etc. These taxpayers should ensure that they maintain adequate documentation to substantiate the reasons for revision of the return.”

Alok Agrawal, senior director, Deloitte Haskins & Sells LLP, said, “Under the existing tax law, taxpayers can file an amended tax return to correct errors, etc. within two years from the end of the relevant financial year. If additional income earned in such previous year which was inadvertently missed is included by a taxpayer in the amended tax return, tax at the applicable marginal tax rates for that year along with interest amounts have to be paid.

The CBDT has indicated that it would focus on tax returns revised by taxpayers in order to ensure that taxpayers with unaccounted cash do not circumvent the higher tax and penalty provisions by including the unaccounted income as part of the revised tax return for a previous year.”

Source : Financial Express

Demonetisation: India’s crippling cash shortage could completely disappear by February end : 15-12-2016


India’s crippling cash shortage could be mostly resolved by mid-January and completely disappear by the end of February as the demand-supply gap narrows with higher currency printing.

Cash disbursement to the public could touch Rs 9 lakh crore by the second week of January if the government’s printing presses work at the current pace, senior bankers told ET. This would be more than 50% of the amount withdrawn from the system, assuming that almost all of the Rs 15 lakh crore in old Rs 500 and Rs 1,000 notes is deposited with banks by the end of December.

Calculations by ET and cross checked with bankers show that money with the public could rise to over Rs 13 lakh crore by the second week of February based on the printing presses’ current capacity. This would be very close to the amount withdrawn from the system and the cash shorta ge could effectively be over by the end of February, bankers said.

The Reserve Bank of India did not reply to an email on the issue, but data on the regulator’s website show it had disbursed notes worth Rs 4.6 lakh crore in the one month ended December 10. If one assumes that presses will work at the same speed in the coming weeks, the amount disbursed to the public should cross Rs 9 lakh crore by January 10.

A month later, by February 10, the presses would have disgorged close to Rs 14 lakh crore of currency notes, or more than 90% of the entire amount withdrawn from the system.

Prime Minister Narendra Modi’s decision to withdraw legal tender status for Rs 500 and Rs 1,000 notes caused a serious shortage of cash in the system with RBI unable to satisfy the needs of the public. Long queues outside bank branches and automated teller machines (ATMs) and increasing public ire forced the government to focus on currency printing and distribution across the country.

Several experts and political leaders have slammed the government’s move as arbitrary and ill-advised.Economic growth is likely to be hit in the next two quarters and former finance minister P Chidambaram has estimated that it would take seven months for RBI to replace the notes withdrawn from the system.

“There were 1,570 crore notes of one denomination and 530 crore notes of another denomination -a total of 2,100 crore notes. The capacity of printing presses is 300 crore notes per month. If they wanted to replace 2,100 crore notes with the equivalent denomination notes, it would take seven months to print them.That is why they introduced Rs 2,000 notes,“ Chidambaram had said in a television interview recently.

Source : Business Standard

Government officials will not have to file a declaration of their assets in 2016 : 15-12-2016


The enhanced focus on transparency post demonetisation notwithstanding, public servants will not have to file a declaration of their assets and liabilities this year.

This is because the new rules under the Lokpal and Lokayuktas (Amendment) Act, 2016 are not ready yet. As a result, the extension of deadline for submission of declaration of assets and liabilities till December 31 has become infructuous.

“The extension was given under the old Act of 2014, which is now redundant…We are in the process of drafting the final proforma which only will be valid,” a senior government official told ET.

The Lokpal and Lokayuktas (Amendment) Act, 2016 states, “On and from date of commencement of this Act every public servant shall make a declaration of his assets and liabilities in such form and manner as may be prescribed.” Since the filing rules have not been firmed up, there is no requirement for filing of declarations by public servants.

The Lokpal and Lokayuktas (Amendment) Bill, 2016 was passed by Parliament in July. The government had granted an extension for more than five million public sector employees and non-governmental organisations for filing the declaration beyond July 31. The deadline was extended for the fifth time since the Act came into force.

With no fresh deadline fixed yet, the Department of Personnel and Training is consulting the law ministry over the final draft of the form for declaration of assets by public servants.

In a letter sent to secretaries of government departments and chief secretaries of states the department said, “The said rules will be notified in due course to prescribe the form, manner and timelines for filing of declaration of assets and liabilities under the revised provisions of the Act.”

So far no change of rules has been proposed for the filing of such declaration by the NGOs. All NGOs which have received more than Rs 1 crore from government funds of foreign exchange of over `10 lakh will be required to declare their assets and liabilities. All NGOs falling below this limit are exempted from this rule.

As per the amended law, public servants will not be required to provide the details of assets of their spouses and other dependents.

Source : Economic Times

Notification No.114/2016 14-12-2016


Central Government rescinds the Notification Number 86/2013 dated 01/11/2013 – 114/2016

MINISTRY OF FINANCE (Department Of Revenue) (CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION No. 114 /2016

New Delhi, the 14th December, 2016

S. O. 4033 (E). – In exercise of the powers conferred by sub section (1) of section 94A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby rescinds the notification of the Government of India in the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, number 86 of 2013 published in the Gazette of India, Part II, section 3, sub-section (ii) vide S.O. 3307(E) dated 1st November 2013, except as respects things done or omitted to be done before such rescission, with effect from the date of publication of this notification in the Official Gazette.

[F.No. 500/02/2015-FT&TR-III]

GAURAV SHARMA, Under Secy,

Notification No: GSR 1134(E) [F.NO.02/31/CAA/2013-CL-V Dated: 14-12-2016


COMPANIES (COMPROMISES, ARRANGEMENTS AND AMALGAMATIONS) RULES, 2016

NOTIFICATION NO. GSR 1134(E)[F.NO.2/31/CAA/2013/-CL-V]DATED 14-12-2016

In exercise of the powers conferred by sub-sections (1) and (2) of section 469 read with sections 230 to 233 and sections 235 to 240 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules, namely:—

Short Title and Commencement

1. (1) These rules may be called the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

(2) They shall come into force with effect from 15th December, 2016.

Definitions

2. (1) In these rules, unless the context otherwise requires.—

(a) “Act” means the Companies Act, 2013 (18 of 2013);
(b) “Annexure” means the annexure to these rules;
(c) “Form” means a form set forth in annexure “A” to these rules which shall be used for the matter to which it relates, and includes an electronic version thereof;
(d) “Liquidator” means the Liquidator appointed under the Act or under the Insolvency and Bankruptcy Code, 2016 (31 of 2016);

(2) All other words and expressions used in these rules but not defined herein, and defined in the Act or in the Companies (Specification of Definitions Details) Rules, 2014 or in the National Company Law Tribunal Rules, 2016, shall have the same meanings respectively assigned to them in the Act or in the said rules.

Application for order of a meeting

3. (1) An application under sub-section (1) of section 230 of the Act may be submitted in Form no. NCLT-1 (appended in the National Company Law Tribunal Rules, 2016) along with:—

(i) a notice of admission in Form No. NCLT-2 (appended in the National Company Law Tribunal Rules, 2016);
(ii) an affidavit in Form No. NCLT-6 (appended in the National Company Law Tribunal Rules, 2016);
(iii) a copy of scheme of compromise or arrangement, which should include disclosures as per sub-section (2) of section 230 of the Act; and
(iv) fee as prescribed in the Schedule of Fees.

(2) Where more than one company is involved in a scheme in relation to which an application under sub-rule (1) is being filed, such application may, at the discretion of such companies, be filed as a joint-application.

(3) Where the company is not the applicant, a copy of the notice of admission and of the affidavit shall be served on the company, or, where the company is being wound up, on its liquidator, not less than fourteen days before the date fixed for the hearing of the notice of admission.

(4) The applicant shall also disclose to the Tribunal in the application under sub-rule (1), the basis on which each class of members or creditors has been identified for the purposes of approval of the scheme.

Disclosures in application made to the Tribunal for compromise or arrangement.—Creditors Responsibility Statement

4. For the purposes of sub-clause (i) of clause (c) of sub-section (2) of section 230 of the Act, the creditor’s responsibility statement in Form No. CAA. 1 shall be included in the scheme of corporate debt restructuring.

Explanation:— For the purpose of this rule, it is clarified that a scheme of corporate debt restructuring as referred to in clause (c) of sub-section (2) of section 230 of the Act shall mean a scheme that restructures or varies the debt obligations of a company towards its creditors.

Directions at hearing of the application

5. Upon hearing the application under sub-section (1) of section 230 of the Act, the Tribunal shall, unless it thinks fit for any reason to dismiss the application, give such directions as it may think necessary in respect of the following matters:—

(a) determining the class or classes of creditors or of members whose meeting or meetings have to be held for considering the proposed compromise or arrangement; or dispensing with the meeting or meetings for any class or classes of creditors in terms of sub-section (9) of section 230;
(b) fixing the time and place of the meeting or meetings;
(c) appointing a Chairperson and scrutinizer for the meeting or meetings to be held, as the case may be and fixing the terms of his appointment including remuneration;
(d) fixing the quorum and the procedure to be followed at the meeting or meetings, including voting in person or by proxy or by postal ballot or by voting through electronic means;
Explanation.— For the purposes of these rules, “voting through electronic means” shall take place, mutatis mutandis, in accordance with the procedure as specified in rule 20 of Companies (Management and Administration) Rules, 2014.
(e) determining the values of the creditors or the members, or the creditors or members of any class, as the case may be, whose meetings have to be held;
(f) notice to be given of the meeting or meetings and the advertisement of such notice;
(g) notice to be given to sectoral regulators or authorities as required under sub-section (5) of section 230;
(h) the time within which the chairperson of the meeting is required to report the result of the meeting to the Tribunal; and
(i) such other matters as the Tribunal may deem necessary.

Notice of meeting

6. (1) Where a meeting of any class or classes of creditors or members has been directed to be convened, the notice of the meeting pursuant to the order of the Tribunal to be given in the manner provided in sub-section (3) of section 230 of the Act shall be in Form No. CAA.2 and shall be sent individually to each of the creditors or members.

(2) The notice shall be sent by the Chairperson appointed for the meeting, or, if the Tribunal so directs, by the company (or its liquidator), or any other person as the Tribunal may direct, by registered post or speed post or by courier or by e-mail or by hand delivery or any other mode as directed by the Tribunal to their last known address at least one month before the date fixed for the meeting.

Explanation: – It is hereby clarified that the service of notice of meeting shall be deemed to have been effected in case of delivery by post, at the expiration of forty eight hours after the letter containing the same is posted.

(3) The notice of the meeting to the creditors and members shall be accompanied by a copy of the scheme of compromise or arrangement and a statement disclosing the following details of the compromise or arrangement, if such details are not already included in the said scheme:—

(i) details of the order of the Tribunal directing the calling, convening and conducting of the meeting:—
(a) date of the Order;
(b) date, time and venue of the meeting.
(ii) details of the company including:
(a) Corporate Identification Number (CIN) or Global Location Number (GLN) of the company;
(b) Permanent Account Number (PAN);
(c) name of the company;
(d) date of incorporation;
(e) type of the company (whether public or private or one-person company);
(f) registered office address and e-mail address;
(g) summary of main object as per the memorandum of association; and main business carried on by the company;
(h) details of change of name, registered office and objects of the company during the last five years;
(i) name of the stock exchange (s) where securities of the company are listed, if applicable;
(j) details of the capital structure of the company including authorised, issued, subscribed and paid up share capital; and
(k) names of the promoters and directors along with their addresses.
(iii) if the scheme of compromise or arrangement relates to more than one company, the fact and details of any relationship subsisting between such companies who are parties to such scheme of compromise or arrangement, including holding, subsidiary or of associate companies;
(iv) the date of the board meeting at which the scheme was approved by the board of directors including the name of the directors who voted in favour of the resolution, who voted against the resolution and who did not vote or participate on such resolution;
(v) explanatory statement disclosing details of the scheme of compromise or arrangement including:—
(a) parties involved in such compromise or arrangement;
(b) in case of amalgamation or merger, appointed date, effective date, share exchange ratio (if applicable) and other considerations, if any;
(c) summary of valuation report (if applicable) including basis of valuation and fairness opinion of the registered valuer, if any, and the declaration that the valuation report is available for inspection at the registered office of the company;
(d) details of capital or debt restructuring, if any;
(e) rationale for the compromise or arrangement;
(f) benefits of the compromise or arrangement as perceived by the Board of directors to the company, members, creditors and others (as applicable);
(g) amount due to unsecured creditors.
(vi) disclosure about the effect of the compromise or arrangement on:
(a) key managerial personnel;
(b) directors;
(c) promoters;
(d) non-promoter members;
(e) depositors;
(f) creditors;
(g) debenture holders;
(h) deposit trustee and debenture trustee;
(i) employees of the company:
(vii) Disclosure about effect of compromise or arrangement on material interests of directors, Key Managerial Personnel (KMP) and debenture trustee.
Explanation - For the purposes of these rules it is clarified that-
(a) the term ‘interest’ extends beyond an interest in the shares of the company, and is with reference to the proposed scheme of compromise or arrangement.
(b) the valuation report shall be made by a registered valuer, and till the registration of persons as valuers is prescribed under section 247 of the Act, the valuation report shall be made by an independent merchant banker who is registered with the Securities and Exchange Board or an independent chartered accountant in practice having a minimum experience of ten years.
(viii) investigation or proceedings, if any, pending against the company under the Act.
(ix) details of the availability of the following documents for obtaining extract from or for making or obtaining copies of or for inspection by the members and creditors, namely:
(a) latest audited financial statements of the company including consolidated financial statements;
(b) copy of the order of Tribunal in pursuance of which the meeting is to be convened or has been dispensed with;
(c) copy of scheme of compromise or arrangement;
(d) contracts or agreements material to the compromise or arrangement;
(e) the certificate issued by Auditor of the company to the effect that the accounting treatment, if any, proposed in the scheme of compromise or arrangement is in conformity with the Accounting Standards prescribed under section 133 of the Companies Act, 2013; and
(f) such other information or documents as the Board or Management believes necessary and relevant for making decision for or against the scheme;
(x) details of approvals, sanctions or no-objection(s), if any, from regulatory or any other governmental authorities required, received or pending for the proposed scheme of compromise or arrangement.
(xi) a statement to the effect that the persons to whom the notice is sent may vote in the meeting either in person or by proxies, or where applicable, by voting through electronic means.

Explanation- For the purposes of this rule, disclosure required to be made by a company shall be made in respect of all the companies, which are part of the compromise or arrangement.

Advertisement of the notice of the meeting

7. The notice of the meeting under sub-section (3) of section 230 of the Act shall be advertised in Form No. CAA.2 in at least one English newspaper and in at least one vernacular newspaper having wide circulation in the State in which the registered office of the company is situated, or such newspapers as may be directed by the Tribunal and shall also be placed, not less than thirty days before the date fixed for the meeting, on the website of the company (if any) and in case of listed companies also on the website of the SEBI and the recognized stock exchange where the securities of the company are listed:

Provided that where separate meetings of classes of creditors or members are to be held, a joint advertisement for such meetings may be given.

Notice to statutory authorities

8. (1) For the purposes of sub-section (5) of section 230 of the Act, the notice shall be in Form No. CAA.3, and shall be accompanied with a copy of the scheme of compromise or arrangement, the explanatory statement and the disclosures mentioned under rule 6, and shall be sent to.-

(i) the Central Government, the Registrar of Companies, the Income-tax authorities, in all cases;
(ii) the Reserve Bank of India, the Securities and Exchange Board of India, the Competition Commission of India, and the stock exchanges, as may be applicable ;
(iii) other sectoral regulators or authorities, as required by Tribunal.

(2) The notice to the authorities mentioned in sub-rule (1) shall be sent forthwith, after the notice is sent to the members or creditors of the company, by registered post or by speed post or by courier or by hand delivery at the office of the authority.

(3) If the authorities referred to under sub-rule (1) desire to make any representation under sub-section (5) of section 230, the same shall be sent to the Tribunal within a period of thirty days from the date of receipt of such notice and copy of such representation shall simultaneously be sent to the concerned companies and in case no representation is received within the stated period of thirty days by the Tribunal, it shall be presumed that the authorities have no representation to make on the proposed scheme of compromise or arrangement.

Voting

9. The person who receives the notice may within one month from the date of receipt of the notice vote in the meeting either in person or through proxy or through postal ballot or through electronic means to the adoption of the scheme of compromise and arrangement.

Explanation. For the purposes of voting by persons who receive the notice as shareholder or creditor under this rule-

(a) “shareholding” shall mean the shareholding of the members of the class who are entitled to vote on the proposal; and
(b) “outstanding debt” shall mean all debt owed by the company to the respective class or classes of creditors that remains outstanding as per the latest audited financial statement, or if such statement is more than six months old, as per provisional financial statement not preceding the date of application by more than six months.

Proxies

10. (1) Voting by proxy shall be permitted, provided a proxy in the prescribed form duly signed by the person entitled to attend and vote at the meeting is filed with the company at its registered office not later than 48 hours before the meeting.

(2) Where a body corporate which is a member or creditor (including holder of debentures) of a company authorises any person to act as its representative at the meeting, of the members or creditors of the company, or of any class of them, as the case may be, a copy of the resolution of the Board of Directors or other governing body of such body corporate authorising such person to act as its representative at the meeting, and certified to be a true copy by a director, the manager, the secretary, or other authorised officer of such body corporate shall be lodged with the company at its registered office not later than 48 hours before the meeting.

(3) No person shall be appointed as a proxy who is a minor.

(4) The proxy of a member or creditor blind or incapable of writing may be accepted if such member or creditor has attached his signature or mark thereto in the presence of a witness who shall add to his signature his description and address : provided that all insertions in the proxy are in the handwriting of the witness and such witness shall have certified at the foot of the proxy that all such insertions have been made by him at the request and in the presence of the member or creditor before he attached his signature or mark.

(5) The proxy of a member or creditor who does not know English may be accepted if it is executed in the manner prescribed in the preceding sub-rule and the witness certifies that it was explained to the member or creditor in the language known to him, and gives the member’s or creditor’s name in English below the signature.

Copy of compromise or arrangement to be furnished by the company

11. Every creditor or member entitled to attend the meeting shall be furnished by the company, free of charge, within one day on a requisition being made for the same, with a copy of the scheme of the proposed compromise or arrangement together with a copy of the statement required to be furnished under section 230 of Act.

Affidavit of service

12. (1) The Chairperson appointed for the meeting of the company or other person directed to issue the advertisement and the notices of the meeting shall file an affidavit before the Tribunal not less than seven days before the date fixed for the meeting or the date of the first of the meetings, as the case may be, stating that the directions regarding the issue of notices and the advertisement have been duly complied with.

(2) In case of default under sub-rule (1), the application along with copy of the last order issued shall be posted before the Tribunal for such orders as it may think fit to make.

Result of the meeting to be decided by voting

13. (1) The voting at the meeting or meetings held in pursuance of the directions of the Tribunal under Rule 5 on all resolutions shall take place by poll or by voting through electronic means.

(2) The report of the result of the meeting under sub-rule (1) shall be in Form No. CAA. 4 and shall state accurately the number of creditors or class of creditors or the number of members or class of members, as the case may be, who were present and who voted at the meeting either in person or by proxy, and where applicable, who voted through electronic means, their individual values and the way they voted.

Report of the result of the meeting by Chairperson

14. The Chairperson of the meeting (or where there are separate meetings, the Chairperson of each meeting) shall, within the time fixed by the Tribunal, or where no time has been fixed, within three days after the conclusion of the meeting, submit a report to the Tribunal on the result of the meeting in Form No. CAA.4.

Petition for confirming compromise or arrangement

15. (1) Where the proposed compromise or arrangement is agreed to by the members or creditors or both as the case may be, with or without modification, the company (or its liquidator), shall, within seven days of the filing of the report by the Chairperson, present a petition to the Tribunal in Form No. CAA.5 for sanction of the scheme of compromise or arrangement.

(2) Where a compromise or arrangement is proposed for the purposes of or in connection with scheme for the reconstruction of any company or companies, or for the amalgamation of any two or more companies, the petition shall pray for appropriate orders and directions under section 230 read with section 232 of the Act.

(3) Where the company fails to present the petition for confirmation of the compromise or arrangement as aforesaid, it shall be open to any creditor or member as the case may be, with the leave of the Tribunal, to present the petition and the company shall be liable for the cost thereof.

Date and notice of hearing

16. (1) The Tribunal shall fix a date for the hearing of the petition, and notice of the hearing shall be advertised in the same newspaper in which the notice of the meeting was advertised, or in such other newspaper as the Tribunal may direct, not less than ten days before the date fixed for the hearing.

(2) The notice of the hearing of the petition shall also be served by the Tribunal to the objectors or to their representatives under sub-section (4) of section 230 of the Act and to the Central Government and other authorities who have made representation under rule 8 and have desired to be heard in their representation.

Order on petition

17. (1) Where the Tribunal sanctions the compromise or arrangement, the order shall include such directions in regard to any matter or such modifications in the compromise or arrangement as the Tribunal may think fit to make for the proper working of the compromise or arrangement.

(2) The order shall direct that a certified copy of the same shall be filed with the Registrar of Companies within thirty days from the date of the receipt of copy of the order, or such other time as may be fixed by the Tribunal.

(3) The order shall be in Form No. CAA. 6, with such variations as may be necessary.

Application for directions under section 232 of the Act

18. (1) Where the compromise or arrangement has been proposed for the purposes of or in connection with a scheme for the reconstruction of any company or companies or the amalgamation of any two or more companies, and the matters involved cannot be dealt with or dealt with adequately on the petition for sanction of the compromise or arrangement, an application shall be made to the Tribunal under section 232 of the Act, by a notice of admission supported by an affidavit for directions of the Tribunal as to the proceedings to be taken.

(2) Notice of admission in such cases shall be given in such manner and to such persons as the Tribunal may direct.

Directions at hearing of application

19. Upon the hearing of the notice of admission given under rule 18 or upon any adjourned hearing thereof, the Tribunal may make such order or give such directions as it may think fit, as to the proceedings to be taken for the purpose of reconstruction or amalgamation, as the case may be, including, where necessary, an inquiry as to the creditors of the transferor company and the securing of the debts and claims of any of the dissenting creditors in such manner as the Tribunal may think just and appropriate.

Order under section 232 of the Act

20. An order made under section 232 read with section 230 of the Act shall be in Form No.CAA.7 with such variation as the circumstances may require

Statement of compliance in mergers and amalgamations

21. For the purpose of sub-section (7) of section 232 of the Act, every company in relation to which an order is made under sub-section (3) of section 232 of the Act shall until the scheme is fully implemented, file with the Registrar of Companies, the statement in Form No. CAA.8 along with such fee as specified in the Companies (Registration Offices and Fees) Rules, 2014 within two hundred and ten days from the end of each financial year.

Report on working of compromise or arrangement

22. At any time after issuing an order sanctioning the compromise or arrangement, the Tribunal may, either on its own motion or on the application of any interested person, make an order directing the company or where the company is being wound-up, its liquidator, to submit to the Tribunal within such time as the Tribunal may fix, a report on the working of the said compromise or arrangement and on consideration of the report, the Tribunal may pass such orders or give such directions as it may think fit.

Liberty to apply

23. (1) The company, or any creditor or member thereof, or in case of a company which is being wound-up, its liquidator, may, at any time after the passing of the order sanctioning the compromise or arrangement, apply to the Tribunal for the determination of any question relating to the working of the compromise or arrangement.

(2) The application shall in the first instance be posted before the Tribunal for directions as to the notices and the advertisement, if any, to be issued, as the Tribunal may direct.

(3) The Tribunal may, on such application, pass such orders and give such directions as it may think fit in regard to the matter, and may make such modifications in the compromise or arrangement as it may consider necessary for the proper working thereof, or pass such orders as it may think fit in the circumstances of the case.

Liberty of the Tribunal

24. (1) At any time during the proceedings, if the Tribunal hearing a petition or application under these Rules is of the opinion that the petition or application or evidence or information or statement is required to be filed in the form of affidavit, the same may be ordered by the Tribunal in the manner as the Tribunal may think fit.

(2) The Tribunal may pass any direction(s) or order or dispense with any procedure prescribed by these rules in pursuance of the object of the provisions for implementation of the scheme of arrangement or compromise or restructuring or otherwise practicable except on those matters specifically provided in the Act.

Merger or Amalgamation of certain companies

25. (1) The notice of the proposed scheme, under clause (a) of sub-section (1) of section 233 of the Act, to invite objections or suggestions from the Registrar and Official Liquidator or persons affected by the scheme shall be in Form No. CAA.9.

(2) For the purposes of clause (c) of sub-section (1) of section 233 of the Act the declaration of solvency shall be filed by each of the companies involved in the scheme of merger or amalgamation in Form No. CAA.10 along with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014, before convening the meeting of members and creditors for approval of the scheme.

(3) For the purposes of clause (b) and (d) of sub-section (1) of section 233 of the Act, the notice of the meeting to the members and creditors shall be accompanied by -

(a) a statement, as far as applicable, referred to in sub-section (3) of section 230 of the Act read with sub-rule (3) of rule 6 hereof;
(b) the declaration of solvency made in pursuance of clause (c) of sub-section (1) of section 233 of the Act in Form No. CAA.10;
(c) a copy of the scheme.

(4)(a) For the purposes of sub-section (2) of section 233 of the Act, the transferee company shall, within seven days after the conclusion of the meeting of members or class of members or creditors or class of creditors, file a copy of the scheme as agreed to by the members and creditors, along with a report of the result of each of the meetings in Form No. CAA.11 with the Central Government, along with the fees as provided under the Companies (Registration Offices and Fees) Rules, 2014.

(b) Copy of the scheme shall also be filed, along with Form No. CAA. 11 with -

(i) the Registrar of Companies in Form No. GNL-1 along with fees provided under the Companies (Registration Offices and Fees) Rules, 2014; and
(ii) the Official Liquidator through hand delivery or by registered post or speed post.

(5) Where no objection or suggestion is received to the scheme from the Registrar of Companies and Official Liquidator or where the objection or suggestion of Registrar and Official Liquidator is deemed to be not sustainable and the Central Government is of the opinion that the scheme is in the public interest or in the interest of creditors, the Central Government shall issue a confirmation order of such scheme of merger or amalgamation in Form No. CAA.12.

(6) Where objections or suggestions are received from the Registrar of Companies or Official Liquidator and the Central Government is of the opinion, whether on the basis of such objections or otherwise, that the scheme is not in the public interest or in the interest of creditors, it may file an application before the Tribunal in Form No. CAA.13 within sixty days of the receipt of the scheme stating its objections or opinion and requesting that Tribunal may consider the scheme under section 232 of the Act.

(7) The confirmation order of the scheme issued by the Central Government or Tribunal under sub-section (7) of section 233 of the Act, shall be filed, within thirty days of the receipt of the order of confirmation, in Form INC-28 along with the fees as provided under Companies (Registration Offices and Fees) Rules, 2014 with the Registrar of Companies having jurisdiction over the transferee and transferor companies respectively.

(8) For the purpose of this rule, it is clarified that with respect to schemes of arrangement or compromise falling within the purview of section 233 of the Act, the concerned companies may, at their discretion, opt to undertake such schemes under sections 230 to 232 of the Act, including where the condition prescribed in clause (d) of sub-section (1) of section 233 of the Act has not been met.

Notice to dissenting shareholders for acquiring the shares

26. For the purposes of sub-section (1) of section 235 of the Act, the transferee company shall send a notice to the dissenting shareholder(s) of the transferor company, in Form No. CAA.14 at the last intimated address of such shareholder, for acquiring the shares of such dissenting shareholders.

Determination of price for purchase of minority shareholding

27. For the purposes of sub-section (2) of section 236 of the Act, the registered valuer shall determine the price (hereinafter called as offer price) to be paid by the acquirer, person or group of persons referred to in sub-section (1) of section 236 of the Act for purchase of equity shares of the minority shareholders of the company, in accordance with the following rules:—

(1) In the case of a listed company,-
(i) the offer price shall be determined in the manner as may be specified by the Securities and Exchange Board of India under the relevant regulations framed by it, as may be applicable; and
(ii) the registered valuer shall also provide a valuation report on the basis of valuation addressed to the Board of directors of the company giving justification for such valuation.
(2) In the case of an unlisted company and a private company,
(i) the offer price shall be determined after taking into account the following factors:—
(a) the highest price paid by the acquirer, person or group of persons for acquisition during last twelve months;
(b) the fair price of shares of the company to be determined by the registered valuer after taking into account valuation parameters including return on net worth, book value of shares, earning per share, price earning multiple vis-à-vis the industry average, and such other parameters as are customary for valuation of shares of such companies; and
(ii) the registered valuer shall also provide a valuation report on the basis of valuation addressed to the board of directors of the company giving justification for such valuation.

Circular containing scheme of amalgamation or merger

28. (1) For the purposes of clause (a) of sub-section (1) of section 238 of the Act, every circular containing the offer of scheme or contract involving transfer of shares or any class of shares and recommendation to the members of the transferor company by its directors to accept such offer, shall be accompanied by such information as set out in Form No. CAA.15.

(2) The circular shall be presented to the Registrar for registration.

Appeal under sub-section (2) of section 238 of the Act

29. Any aggrieved party may file an appeal against the order of the Registrar of Companies refusing to register any circular under sub-section (2) of section 238 of the Act and the said appeal shall be in the Form No. NCLT.9 (appended in the National Company Law Tribunal Rules, 2016) supported with an affidavit in the Form No. NCLT.6 (appended in the National Company Law Tribunal Rules, 2016).

SCHEDULE OF FEES
S. No. Sections of the Companies Act, 2013 Rule Number Nature of application or petition Fees
1. Sub-section (1) of section 230 3 (1) Application for compromise arrangement and amalgamation. Rs. 5,000/-
2. Sub-section (2) of section 235 Application by dissenting shareholders. Rs. 1,000/-
3. Sub-section (2) of section 238 29 Appeal against order of Registrar refusing to register any circular. Rs. 2,000/-

ANNEXURE A

[See Rule 2(1)(c)]

FORM NO. CAA.1

[Pursuant to section 230(2)(c)(i) and rule 4]

Creditor’s Responsibility Statement

I/ We, . . . . . . . . . . . . . . . . ., the creditors of M/s. . . . . . . . . . for an amount of Rs. . . . . . . . . . . . . . . . . . as on . . . . . . . . . . . . . . . . . do hereby declare that I / we have read and understood the proposed corporate debt restructuring scheme and am / are of the view that it is in my/our best interest to concur with the scheme.

I/ We further declare that the debt is owed to me / us by the company or the liability was created by the company in my/ our favor in good faith and in the ordinary course of business of the company;

I/We believe that the scheme does not give me/us any fraudulent preference at the cost of any secured/unsecured Creditors.

Signature of creditor/s

Date:

Place:

FORM NO. CAA. 2

[Pursuant to section 230 (3) and ruleS 6 and 7)]

Company Petition No. of 20…….

. . . . . . . . . . . . . . . . . Applicant(s)

Notice and Advertisement of notice of the meeting of creditors or members

Notice is hereby given that by an order dated the ….. 20 … the _____ Bench of the National Company Law Tribunal has directed a meeting (or separate meetings) to be held of [here mention 'debenture holders' or 'first debenture holders' or' second debenture holders' or 'unsecured creditors' or 'secured creditors' or 'preference shareholders' or 'equity shareholders' as the case may be whose meeting or meetings have to be held] of the said company for the purpose of considering, and if thought fit, approving with or without modification, the compromise or arrangement proposed to be made between the said company and [here mention the class of creditors or members with whom the compromise or arrangement or amalgamation is to be made] of the company aforesaid.

In pursuance of the said order and as directed therein further notice is hereby given that a meeting of [here set out the class of creditors or members whose meeting has to be held] of the said company will be held at. . . . . on. . . . day. . . . the. . . . day of 20. . . at. . . clock in the noon at which time and place the said [here mention the class of creditors or members] are requested to attend [Where separate meetings of classes of creditors or members are to be held, set them out separately with the place, date and time of the meeting in each case.]

Copies of the said compromise or arrangement or amalgamation, and of the statement under section 230 can be obtained free of charge at the registered office of the company or at the office of its authorized representative Shri. . . . at Persons entitled to attend and vote at the meeting (or respective meetings), may vote in person or by proxy, provided that all proxies in the prescribed form are deposited at the registered office of the company at. . . .. not later than 48 hours before the meeting.

Forms of proxy can be had at the registered office of the Company.

The Tribunal has appointed Shri………….. and failing him, Shri….as chairperson of the said meeting (or several meetings). The above mentioned compromise or arrangement or amalgamation, if approved by the meeting, will be subject to the subsequent approval of the tribunal.

Dated this . . . . .day of …20……

Chairperson appointed for the meeting

(or as the case may be )

FORM NO. CAA.3

[Pursuant to section 230(5) and rule 8]

In the Matter of compromise and/or arrangement of . . . . . . . . . . . . . . . . .

NOTICE TO CENTRAL GOVERNMENT, REGULATORY AUTHORITIES

To,

The Central Government/

The Registrar of Companies/

The Income-Tax Authorities/

[in all cases]

The Reserve Bank of India/

The Securities and Exchange Board of India/

The Stock Exchanges of . . . . . . . . . . . . . . . . . /

The Competition Commission of India/

[as may be applicable]

Other sectoral regulator or authorities

[As required by Tribunal]

Notice is hereby given in pursuance of sub-section (5) of section 230 of the Companies Act, 2013, that as directed by the Bench of the National Company Law Tribunal at . . . . . . . . . . . . . . . . . by an order dated . . . . . . . . . . . . . . . . . under sub-section (1) of section 230 of the Act, a meeting of the members and / or creditors of (Company’s name). . . . . . . shall be held on . . . . . . . . . . . . . . . . . to consider the scheme of compromise and / or arrangement of . . . . . . . . . . . . . . . . . with . . . . . . . . . . . . . . . . . at . . . . . . . . . . . . . . . . .

A copy of the notice and scheme of the compromise or arrangement are enclosed.

You are hereby informed that representations, if any, in connection with the proposed compromise and / or arrangement may be made to the Tribunal within thirty days from the date of receipt of this notice. Copy of the representation may simultaneously be sent to the concerned company(ies).

In case no representation is received within the stated period of thirty days, it shall be presumed that you have no representation to make on the proposed scheme of compromise or arrangement.

Authorized Signatory

Dated this . . . . . . . . . . . . . . . . . day of . . . . . . . . . . . . . . . . . 20. . . . .

Place

Enclosures : (i) Copy of notice with statement as required under section 230(3);

(ii) Copy of scheme of compromise or arrangement

FORM No. CAA. 4

[Pursuant to rule 13(2) and rule 14 ]

Company Petition No of….. of 20….

. . . . . . . . . . . . . . . . . Applicant(s)

Report of result of meeting by Chairperson:

I, …… the person appointed by this Hon’ble Tribunal to act as chairperson of the meeting of (the debenture holders or first debenture holders or second debenture holders or unsecured creditors or secured creditors or preference shareholders or equity shareholders) of the above named company, summoned by notice served individually upon them and by advertisement dated the . . . . day of. . . 20 , and held on the day of. . . 20. . . at. . . , do hereby report to this Hon’ble Tribunal as follows:

1. The said meeting was attended either personally or by proxy by [here state the number of creditors or the class of creditors or the number of members or the class of members as the case may be, who attended the meeting] of the said company entitled together to [here mention the total value to the debts, or debentures, where the meeting was of creditors, and the total number and value of the shares, where the meeting was of members, of those who attended the meeting], representing [. . . . . . . . . . . . . . . . . percentage ] of the total value of debts or debentures or shares . . . . . . . . . . . . . . . . . of the company.

2. The scheme of compromise or arrangement was read out and explained by me to the meeting, and the question submitted to the said meeting was whether the (here state the class of creditors or members as the case may be) of the said company agreed to the compromise or arrangement submitted to the meeting and agreed thereto.

3. The majority of persons representing three-fourths in value of the creditors, or class of creditors or members or class of members, as the case may be, (or such persons unanimously) are of the opinion that the compromise or arrangement should be approved and agreed to. The result of the voting upon the said question was as follows:

The under-mentioned [here mention the class of creditors or members who attended the meeting] voted in favour of the proposed compromise or arrangement being adopted and carried into effect:

Name of creditor or member Address Value of debt (or No. of preference or equity shares held Number of votes

The under-mentioned [here mention the class of creditors or members who attended the meeting] voted against the proposed compromise or arrangement being adopted and carried into effect:

Name of creditor or member Address Value of debt (or No. of preference or equity shares held Number of votes

Dated this . . . . . . . . . . . . . day of . . . . . . 20 . . . . .

Sd/-

Chairperson

**If the compromise or arrangement was approved with modifications, it should be so stated and the modifications made should be set out, and also the particulars of the voting on the modifications.

FORM NO. CAA.5

[Pursuant to section 230 and rule 15(1)]

[HEADING AS IN FORM NCLT. 4]

Petition to sanction compromise or arrangement

The petition of . . . . . . Ltd, (*in liquidation by its liquidator) the petitioner above named is as follows:—

1. The object of this petition is to obtain sanction of Tribunal to a compromise or arrangement whereby (here set out the nature of the compromise or arrangement).

2. The company was incorporated under the [. . . . ] Act …….. with a nominal capital of Rs [. . . .] divided into shares of Rs[. . . .] each of which [. . . .] shares were issued and Rs[. . . .] was paid up on each share issued.

3. The objects for which the company was formed are as set forth in the company’s Memorandum of Association. They are: (Set out the principal objects).

4. [Here set out the nature of the business carried on by the company, its financial position and the circumstances that necessitated the compromise or arrangement and the benefits sought to be achieved by the compromise or arrangement and its effect].

5. The compromise or arrangement was in the following terms:—[Here set out the terms of the compromise or arrangement].

6. By an order made in the above matter on […]the petitioner was directed to convene a meeting of [here set out the class of creditors or members of whom the meeting was to be held] of the company for the purpose of considering and, if thought fit approving with or without modifications. The said compromise or arrangement and the said order directed that […] or failing him […] should act as chairperson of the said meeting and should report the result thereof to this Tribunal.

7. Notice of the meeting was sent individually to the [here mention the class of creditors or members to whom the notice was sent] as required by the order together with a copy of the compromise or arrangement and of the statement required by section 231, 232 read with section 230 of the Act and a form of proxy. The notice of the meeting was also advertised as directed by the said order in (here set out the newspapers).

8. On the [. . . .], a meeting of (here mention the class of creditors or members whose meeting was convened) of the company duly convened in accordance with the said order, was held at . . . .] and the said [. . . .], acted as the chairperson of the meeting.

9. The said [. . . .], has reported the result of the meeting to this Hon’ble Tribunal.

10. The said meeting was attended by (here set out the number of the class of creditors or members, as the case may be, who attended the meeting either in person or by proxy), and the total value of their [here mention debts, debentures or shares, as the case may be] is Rs[. . . .] [in the case of shares, the total number and value of the shares should be mentioned] representing [ . . . . . . . percentage ] of the total value of debts or debentures or shares . . . . . . . . . . . . . . . . . of the company. The said compromise or arrangement was read and explained by the said [. . . .], to the meeting and it was resolved unanimously [or by a majority of [. . . .] votes against [...] votes] as follows:—[Here set out the resolution as passed].

11. The sanctioning of the compromise or arrangement will be for the benefit of the company.

12. Notice of this petition need not be served on any person. The petitioner therefore prays:

(1) That the said compromise or arrangement may be sanctioned by the Tribunal as to be binding on all the [here set out the class of creditors or members of the company on whom the compromise or arrangement is to be binding] of the said company and on the said company.

(2) Or such other order may be made in the premises as to the Tribunal shall deem fit.

Verification etc. Petitioner
[Note: (1) The affidavit in support should verify the petition and prove any matters not proved in any prior affidavit, such as advertisement, holding of meetings, posting of notices, copies of compromise or arrangement and proxies etc., and should exhibit the report of the chairperson and verify the same.]

Note: (2) If the company is being wound-up, say so.

Note: (3) If any modifications were made in the compromise or arrangement, at the meeting, they should be set out in separate paragraph.

* To be inserted where the company is being wound-up.

FORM NO. CAA.6

[Pursuant to section 230(7) and sub-rule (3) of rule 17]

[HEADING AS IN FORM NCLT. 4]

Order on petition

The above petition coming on for hearing on . . . . . . . . . . . . . . . . . upon reading the said petition, the order dated…. whereby the ‘said company (or, liquidator of the said company), was ordered to convene a meeting (or separate meeting) of the creditors/debenture holders/preference shareholders/equity shareholders/ of the above company for the purpose of considering, and if thought fit, approving, with or without modification, the compromise or arrangement proposed to be made between the said company and…… and annexed to the affidavit of….. filed the ……….. day of ….. 20 …. the …….. and the (here mention the newspaper) dated……. each containing the advertisement of the said notice convening the said meeting(s) directed to be held by the said order dated…20………… the affidavit of ………. filed the day of… 20………. , showing the publication and despatch of the notices convening the said meeting(s). the report(s) of the chairperson/ chairpersons of the said meeting(s) (respectively) dated as to the result of the said meeting(s), (and upon hearing Shri …….. advocate for etc.) and it appearing from the report(s) that the proposed compromise or arrangement has been approved (here state whether unanimously or by a majority of not less than three-fourths in value of the creditors or class of creditors or members or class of members as the case may be present and voting in person or by proxy or through postal ballot or through electronic means).

This Tribunal do hereby sanction the compromise or arrangement set forth in para ……..of the petition herein and in the schedule hereto. and doth hereby declare the same to be binding on…(here enter the class of creditors or members on whom it is to be binding) of the above named company and also on the said company (and its liquidator’).

And this Tribunal do further order:—

[Here enter any directions given or modifications made by the Tribunal regarding the carrying out of the compromise or arrangement.]

That the parties to the compromise or arrangement or other persons interested shall be at liberty to apply to this Tribunal for any directions that may be necessary in regard to the working of the compromise or arrangement, and

That the said company [or the liquidator of the said company] do file with the Registrar of Companies a certified copy of this order within thirty days of the receipt of the order.

SCHEDULE

Scheme of compromise or arrangement as sanctioned by the Tribunal

Dated this . . . . . . day of. . . . . 20. . . .,

(By the Tribunal)

Registrar’

To be inserted where the company is being wound-up. Where the compromise or arrangement has been approved with the modifications, it should be so stated

FORM NO. CAA.7

[Pursuant to section 232 and rule 20]

[HEADING AS IN FORM NCLT. 4]

Order under section 232

Upon the above petition [and application'] coming on for further hearing on . . . . . . upon reading etc., and upon hearing etc.

THIS TRIBUNAL DO ORDER

(1) That all the property, rights and powers of the transferor company specified in the first, second and third parts of the Schedule hereto and all other property, rights and powers of the transferor company be transferred without further act or deed to the transferee company and accordingly the same shall pursuant to section 232 of the Act, be transferred to and vested in the transferee company for all the estate and interest of the transferor company therein but subject nevertheless to all charges now affecting the same [other than(here set out any charges which by virtue of the compromise or arrangement are to cease to have effect)]; and

(2) That all the liabilities and duties of the transferor company be transferred without further act or deed to the transferee company and accordingly the same shall pursuant to section 232 of the Act, be transferred to and become the liabilities and duties of the transferee company; and

(3) That all proceedings now pending by or against the transferor company be continued by or against the transferee company; and

(4) That the transferee company do without further application allot to such members of the transferor company as have not given such notice of dissent as is required by clause . . . . of the compromise or arrangement herein the shares in the transferee company to which they are entitled under the said compromise or arrangement; and

(5) That the transferor company shall within thirty days of the date of the receipt of this order cause a certified copy of this order to be delivered to the Registrar of Companies for registration and on such certified copy being so delivered the transferor company shall be dissolved* and the Registrar of Companies shall place all documents relating to the transferor company and registered with him on the file kept by him in relation to the transferee company and the files relating to the said two companies shall be consolidated accordingly; and

(6) That any person interested shall be at liberty to apply to the Tribunal in the above matter for any directions that may be necessary.

SCHEDULE

First Part

(Insert a short description of the freehold property of the transferor company)

Second Part

(Insert a short description of the leasehold property of the transferor company)

Third Part

(Insert a short description of all stocks, shares, debentures and other charges in action of the transferor company)

Dated . . . . . .

(By the Tribunal)

Registrar

* Where the Tribunal directs that the transferor company should be dissolved from any other date, the clause should be altered accordingly.

FORM NO. CAA.8

[Pursuant to section 232(7) and rule 21]

In the Matter of compromise and / or arrangement of . . . . . . . . . . . . . . . . .

Statement to be filed with Registrar of Companies

1. (a) Corporate identity number (CIN) of company:

(b) Global location number (GLN) of company:

2. (a) Name of the company:

(b) Address of the registered office of the company:

(c) E-mail ID of the company:

3. Date of Board of Directors’ resolution approving the scheme

4. Date of Order of Tribunal approving the Scheme under section 232(3)

5. Details regarding:—

(a) Completed actions under the Order
(b) Pending actions under the Order with status

Declaration of compliance of scheme as per the Order of the Tribunal

I, the Director / Company Secretary of . . . . . . . . . . . . . . . . . do solemnly affirm and declare that we are in compliance with the Order of the Tribunal dated …….

A copy of the scheme of the compromise or arrangement is enclosed.

. . . . . . . . . . . . . . . . . . . . . . . .

Director / Company Secretary

. . . . . . . . . . . . . . . . . . . . . . . .

Chartered Accountant in practice / Cost Accountant in practice / Company Secretary in practice

Date:

Place:

Attachments:—

(1) Scheme of Compromise or Arrangement
(2) Details of Compliance of the Scheme
(3) Other Attachments, if any

FORM NO. CAA.9

[Pursuant to section 233(1)(a) and rule 25(1)]

Notice of the scheme inviting objections or suggestions

Notice is hereby given by M/s [. . . ] (transferor / transferee company) that a scheme of merger or amalgamation is proposed to be entered with M/s [. . . ] (transferor / transferee company) and in pursuance of sub-section (1)(a) of section 233 of the Companies Act, 2013, objections or suggestions are invited in respect of the scheme.

A copy of the scheme of merger or amalgamation is enclosed.

Objections or suggestions are invited from -

(i) the Registrar (mention the details of the Registrar of the area where the registered office of the transferor / transferee company is situated);
(ii) Official Liquidator (mention the details of the Official Liquidator of the area where the registered office of the transferor company is situated); and
(iii) [Any person whose interest is likely to be affected by the proposed scheme].

Any person mentioned in (i) , (ii) or (iii) above, desirous of providing objections or suggestions in respect of the scheme should send their objections or suggestions within thirty days from the date of this notice to [. . . ](the Central Government at . . . . . . . . . . . . . . . . . (address) and to Shri …….. (address) being authorised representative of the transferor company).

Date :

Place :

Sd/-(mention the details of the authorised representative of the transferor company).

Enclosure: A copy of the scheme of merger or amalgamation

FORM NO. CAA.10

[Pursuant to section 233(1)(c) and rule 25(2)]

Declaration of solvency

1. (a) Corporate identity number (CIN) of company : (b) Global location number (GLN) of company:

2. (a) Name of the company:

(b) Address of the registered office of the company:

(c) E-mail ID of the company:

3. (a) Whether the company is listed:

□ Yes

□ No

(b) If listed, please specify the name(s) of the stock exchange(s) where listed:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4. Date of Board of Directors’ resolution approving the scheme

Declaration of solvency

We, the directors of M/s . . . . . . . . . . . . . . . . . do solemnly affirm and declare that we have made a full enquiry into the affairs of the company and have formed the opinion that the company is capable of meeting its liabilities as and when they fall due and that the company will not be rendered insolvent within a period of one year from the date of making this declaration.

We append an audited statement of company’s assets and liabilities as at . . . . . . . . . . . . . . . . . being the latest date of making this declaration.

We further declare that the company’s audited annual accounts including the Balance Sheet have been filed upto date with the Registrar of Companies . . . . . . . . . . . . . . . . .

Signed for and behalf of the board of directors

(1) Signature : . . . . . . . . . . . . . .
Date Name : . . . . . . . . . . . . . .
Place Managing Director, if any
(2)  Signature : . . . . . . . . . . . . . .
Name : . . . . . . . . . . . . . .
Director
(3)  Signature : . . . . . . . . . . . . . .
Name : . . . . . . . . . . . . . .
Director

Verification

We solemnly declare that we have made a full enquiry into the affairs of the company including the assets and liabilities of this company and that having done so and having noted that the scheme of merger or amalgamation between . . . . . . . . . . . . . . . . . and . . . . . . . . . . . . . . . . . is proposed to be placed before the shareholders and creditors of the company for approval as per the provisions of sub-section of (1) of section 233 of the Companies Act, 2013, we make this solemn declaration believing the same to be true.

Verified this day the . . . . . . . . . . . . . . . . . day of . . . . . . . . . . . . . . . . . , 20. . . . . .

(1) Signature : . . . . . . . . . . . . . .
Name : . . . . . . . . . . . . . .
Managing Director
(2) Signature : . . . . . . . . . . . . . .
Name : . . . . . . . . . . . . . .
Director
(3) Signature : . . . . . . . . . . . . . .
Name : . . . . . . . . . . . . . .
Director

Solemnly affirmed and declared at . . . . . . . . . . . . . . . . . the . . . . . . . . . . . . . . . . . day of . . . . . . . . . . . . . . . . ., 20. . . . before me.

Commissioner of Oaths and

Notary Public

Attachments:

(a) Copy of board resolution
(b) Statement of assets and liabilities
(c) Auditor’s report on the statement of assets and liabilities

ANNEXURE

Statement of assets and liabilities as at . . . . . . . . . . . . . . . . .

Name of the company . . . . . . . . . . . . . . . . .

Assets

Book Estimated
Value Realisable value
1. Balance at Bank
2. Cash in hand
3. Marketable securities
4. Bills receivables
5. Trade debtors
6. Loans & advances
7. Unpaid calls
8. Stock-in-trade
9. Work in progress
10. Freehold property
11. Leasehold property
12. Plant and machinery
13. Furniture, fittings, utensils, etc.
14. Patents, trademarks, etc.
15. Investments other than marketable securities
16. Other property
…………………… ……………………
Total:
…………………. ……………………

Liabilities

Estimated to rank for payment

(to the nearest rupee)

1. Secured on specific assets
2. Secured by floating charge(s)
3. Estimated cost of liquidation and other expense including interest accruing until payment of debts in full.
4. Unsecured creditors (amounts estimated to rank for payment)
(a) Trade accounts
(b) Bills payable
(c) Accrued expense
(d) Other liabilities
(e) Contingent liabilities
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Total:
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Total estimated value of assets Rs. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities Rs. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated surplus after paying debts in full Rs. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remarks (1) Signature : . . . . . . . . . . . . . . . .
Name : . . . . . . . . . . . . . . . .
Managing Director
(2) Signature : . . . . . . . . . . . . . . . .
Name : . . . . . . . . . . . . . . . .
Director
(3) Signature : . . . . . . . . . . . . . . . .
Name : . . . . . . . . . . . . . . . .
Director

Place : . . . . . . . . .

Date : . . . . . . . . .

FORM NO.CAA.11

[Pursuant to section 233(2) and rule 25(4)]

Notice of approval of the scheme of merger

(To be filed by the transferee company to the Central Government, Registrar and the Official Liquidator)

1. (a) Corporate Identity Number (CIN) :
(b) Global Location Number GLN) :
2. (a) Name of the transferee company:
(b) Registered office address:
(c) E-mail id:
3. Whether the transferor and transferee are:
Small companies
Holding and wholly owned subsidiaries
4. Details of transferor
(a) Corporate Identity Number (CIN) :
(b) Global Location Number GLN) :
Name of the company:
Registered office address:
E-mail id:
5. Brief particulars of compromise or arrangement involving merger:
6. Details of approval of the scheme of merger by the transferee company:
(a) Approval by members
(i) Date of dispatch of notice to members:
(ii) Date of the General meeting:
(iii) Date of approval of scheme in the General meeting:
(iv) Approved by majority of: (members or class of members holding atleast ninety percent of the total number of shares)
(b) Approval by creditors
(i) Date of dispatch of notice to creditors:
(ii) Date of the meeting of creditors:
(iii) Date of approval of scheme in creditors meeting:
(iv) Approved by majority of: (at least nine tenth in value of creditors)
7. Details of approval of the scheme of merger by the transferor company:
(a) Approval by members
(i) Date of dispatch of notice to members:
(ii) Date of the General meeting:
(iii) Date of approval of scheme in the General meeting:
(iv) Approved by majority of: (members or class of members holding atleast ninety percent of the total number of shares)
(b) Approval by creditors
(i) Date of dispatch of notice to creditors:
(ii) Date of the meeting of creditors:
(iii) Date of approval of scheme in such meeting:
(iv) Approved by majority of: (at least nine tenths in value of creditor)

Declaration

I . . . . . . . . . . . . . . . . . the director of the transferee company hereby declares that-

(i) Notice of the scheme as required under section 233(1)(a) was duly sent to the Registrars and Official Liquidators of the place where the registered office of the transferor and transferee companies are situated and to all other persons who are likely to be affected by the scheme and a copy of the same has been attached herewith;
(ii) the objections to the scheme have been duly taken care of to the satisfaction of the respective persons;
(iii) the scheme has been approved by the members and creditors of the transferee and transferor company by the requisite majority in accordance with section 233(1)(b) and (d) respectively;
(iv) all the requirements under section 233 of the Act and the rules made there have been complied with; and
(v) to the best of my knowledge and belief the information given in this application and its attachments is correct and complete;

Date:

Place:

Signature

Attachments:

1. Copy of the scheme approved by both creditors and members;
2. Notice sent in accordance with section 233(1)(a);
3. Optional attachments, if any.

FORM NO. CAA.12

[Pursuant to section 233 and rule 25(5)]

Confirmation order of scheme of merger or amalgamation between

Ms . . . . . . . . . . . . . . . . . and Ms . . . . . . . . . . . . . . . . .

Pursuant to the provisions of section 233, the scheme of compromise, arrangement or merger of M/s . . . . . . . . . . . . . . . . . (transferor company) with M/s . . . . . . . . . . . . . . . . . (transferee company) approved by their respective members and creditors as required under section 233(1)(b) and (d), is hereby confirmed and the scheme shall be effective from the . . . . . . . . . . . . . . . . . day of . . . . . . . . . . . . . . . . . 20. . . . .

A copy of the approved scheme is attached to this order.

Signature with seal

Date

Place

FORM NO.CAA.13

[Pursuant to section 233(5) and rule 25(6)]

Application by the Central Government to the Tribunal

[HEADING AS IN FORM NCLT. 4]

(Name and address of the applicant)

State the name and address of the persons who should be given opportunity of being heard in disposing of this reference. (Note: Please enclose as many additional copies of the reference application as there are persons as above named.) On the basis of the information available from the documents annexed hereto-

1. The applicant hereby makes reference to the National Company Law Tribunal, …… , Bench, under section . . . . . . . . . . . . . . . . . of the Companies Act, 2013
2. The applicant states as follow :
(Here set out the brief facts of the case)
3. The submission of the applicant is as follows :
(Submission)
4. The applicant has annexed hereto the documents or copies thereof as specified below:

Place:

Date:

Signature of the applicant

List of Document

1.

2.

3.

FORM NO. CAA.14

[Pursuant to section 235(1) and rule 26]

Notice to dissenting shareholders

To

. . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . .

Notice for acquiring . . . . . . . . . . . . . . . . .shares held by you in M/s. . . . . (hereinafter called ‘the transferor company’)

Notice is hereby given by M/s . . . . . . . . . . . . . . . . . (hereinafter called ‘the transferee company’) that an offer made by the transferee company on . . . . . . . . . . . . . . . . . to all the shareholders of the transferor company for acquisition of the shares or class of shares at the price of . . . . . . . . . . . . . . . . . has been approved by the holders of . . . . . . . . . . . . . . . . . in value of the shares, being not less than nine-tenth in value of the said shares (other than shares already held at the date of the offer by the transferee company either by itself or by its nominees or subsidiaries).

In pursuance of the provisions of sub-section (1) of section 235 of the Companies Act 2013, notice is further given that the transferee company is desirous of acquiring . . . . . . . . . . . . . . . . . shares held by you in the transferor company at a price of Rs . . . . . . . . . . . . . . . . . being the price paid to the approving shareholders.

Take further note that if you are not in favour of such acquisition of your shares by the transferee company, then you may apply to the Tribunal within one month hereof. Unless an application is made by you as aforesaid or unless on such application the Tribunal orders otherwise, the transferee company will be entitled and bound to acquire the aforesaid shares held by you in the transferor company on the terms of the above mentioned offer.

Date:

Place:

Signature

(On behalf of transferee company)

FORM NO.CAA.15

[Pursuant to section 238(1)(a) and rule 28]

Information to be furnished along with circular in relation to any scheme or contract involving the transfer of shares or any class of shares in the transferor company to the transferee company

Details of the transferee company

1. (a) Corporate Identity Number :
(b) Global Location Number :
2. (a) Name of the company:
(b) Registered office address:
(c) E-mail id:
3. Whether the company is
Public company
Private company
OPC
4. (a) Whether the shares of the company are listed on a recognized stock exchange:
Yes
No
(b) If yes, name of the stock exchanges where shares are listed:
5. Main objects/ principal business of the company:
6. Capital structure of the company:
Authorized share capital:
Issued share capital:
Subscribed share capital:
Paid up share capital:
7. Debt structure of the company:
8. Details of the promoters, key managerial personnel, directors of the company:
9. Material interest and effect of the scheme on such interest of:
(i) Key Managerial Personnel
(ii) Promoters
(iii) Directors
(iv) Debenture trustees
(v) Deposit trustees
(vi) Auditors
10. (a) Extent of shareholding of directors, Key Managerial Personnel, promoters, managers, managing directors of the transferee company
Shareholder’s name —
Status (whether a director, Key Managerial Personnel, etc.)—
Share type—
Number of shares—
Value per share (Rs.)—
(b) Extent of shareholding of directors, Key Managerial Personnel, promoters, managers, managing director in the transferor company
Shareholder’s name-
Status (whether a director, Key Managerial Personnel, etc.)—
Share type —
Number of shares —
Value per share (Rs.)—
11. (a) Offer made by any other person on behalf of the company:
Yes
No
(b) State the interest of the other person in the company:
Details of the transferor company
12. (a) Corporate Identity Number :
(b) Global Location Number :
13. (a) Name of the company:
(b) Registered office address:
(c) E-mail id:
14. Whether the company is
Public company
Private company
One Person Company
15. (a) Whether the shares of the company is listed on a recognized stock exchange:
Yes
No
(b) If yes, name of the stock exchanges where shares are listed:
16. Main objects/ principal business of the company:
17. Capital structure of the company:
Authorized share capital:
Issued share capital:
Subscribed share capital:
Paid up share capital:
18. Debt structure of the company:
19. Details of the promoters, key managerial personnel, directors of the company:
20. Material interest and effect of the scheme on such interest of:
(i) Key Managerial Personnel
(ii) Promoters
(iii) Directors
(iv) Debenture trustees
(v) Deposit trustees
(vi) Auditors
21. (a) Extent of shareholding of directors, Key Managerial Personnel, promoters, managers, managing directors of the transferee company
Shareholder’s name-
Status (whether a director, Key Managerial Personnel, etc.)—
Share type —
Number of shares —
Value per share (Rs.)—
(b) Extent of shareholding of directors, Key Managerial Personnel, promoters, managers, managing director in the transferor company
Shareholder’s name—
Status (whether a director, Key Managerial Personnel, etc.)—
Share type—
Number of shares—
Value per share (Rs.)—
22. Any relation that subsists between transferor and transferee company:
Details of the scheme
23. Reasons for which the offer has been recommended by director of the transferor company:
24. Form of consideration
Total consideration . . . . . . . . . . . . . . . . .
□ Cash . . . . . . . . . . . . . . . . .
□ Other than cash  . . . . . . . . . . . . . . . . .
25. if consideration is other than cash, particulars thereof:
26. if consideration involves the allotment of shares in the transferee company,
(a) Share exchange ratio:
(b) basis of valuation of shares of transferee company:
(c) Full particulars of the shares and the rights attached thereto:
27. Sources from which the transferee company proposes to pay for the acquisition of the said shares, if the consideration is cash:

Declaration

I/We, . . . . . . . . . . . . . . . . . directors of the transferor company do solemnly declare that the information given in this statement and enclosures is correct and complete to the best of my/our knowledge.

Date:

Place:

Signature

Enclosures:

1. Details of transfer of shares in the transferor company by its directors, Key Managerial Personnel, promoters, manager, managing director in the two years preceding the offer;
2. Statement of valuation of shares by a registered valuer;
3. Auditor’s certificate regarding the offer;
4. Offer document shall contain a statement by or on behalf of transferee company disclosing the steps it has taken to ensure that necessary cash will be available;
5. Details of change of name, registered office and objects of the transferee company;
6. Details of change of name, registered office and objects of the transferor company.

GST: Narendra Modi government is facing ‘problems’, says Home Minister Rajnath Singh : 14-12-2016


Union Home Minister Rajnath Singh on Wednesday said that the Narendra Modigovernment was facing ‘some problems’ in introducing the Goods and Services Tax (GST) from April 1, 2017 even as he asserted that those issues will be ‘solved’. Allaying comprehensions about the outcome of the pan-India tax regime, the Home Minister said, “Once introduced, tax collection will increase, there’ll be 1.5-2% increase in GDP.” Speaking at the at ASSOCHAM National Conference on ‘Defence Production: Self Reliance & Beyond.’, Singh said that it will bring ‘transparency in taxation system’ of the country. He is also underlined that the central government “is working towards reducing dependencies on other countries in security area.” With the Centre and states again failing on Sunday to sort out contentious issue of dual control of assesses, the Goods and Services Tax (GST) rollout from April 1 next year is now looking virtually impossible. The 6th meeting of the all-powerful GST Council was slated to decide on dual control of assesses but the two-day meeting was curtailed to half and even Sunday that issue couldn’t be discussed because all the time was lost in going clause by clause of the voluminous draft legislations. While Finance Minister Arun Jaitley did not categorically said that the April 1 target date would be missed, states like Kerala and Tamil Nadu said that meeting the deadline was not possible and GST could be rolled out from September.

Earlier, it was decided earlier that in order to compute the states’ revenues losses from GST, a 14% annual growth over their 2015-16 revenue base (from relevant taxes) would be assumed. Although the states say they are worried about revenue losses due to demonetisation, it is not relevant to the GST compensation talks as 2015-16 was adopted as the base year, analysts said. “States don’t have anything to lose on the revenue front,” said Pratik Jain, partner and leader, indirect tax, PwC.

While industry in general is worried about an enabling non-profiteering clause in the model GST law and e-commerce firms fret about the retention of the tax collected at source obligation on them, both the Centre and states are inclined to endorse both. The anti-profiteering provision — which could be implemented only with the setting up of a designated authority — compels businesses to pass on the benefits from any reduction in output tax and rise in input tax credit as a result of GST roll-out. Analysts are also concerned about the likely compliance burden on large players in services sector in the GST regime. Even though the GST principle that tax will be paid where the consumption takes place is welcome, more clarity is required on the place of supply rules, they felt.

Source : Financial Express

GST Council to look at solutions to turf war : 14-12-2016


The Goods and Services Tax (GST) Council will look at a slew of options to iron out the differences between statesand the Centre over administrative control over assessees.

The next meeting of the GST Council is scheduled on December 22 and 23. Disagreement over this issue is threatening to derail the indirect tax reform, which the government plans to roll out from April 1 next year. One of the options that the Council will look at is the random choosing and division of five per cent assessees between the Centre and the states, using a computer programme.

The parameters on which the assessees will be chosen would be in-built in computer software, written for this purpose.

“The draft laws have provided for some options to implement cross-empowerment. There is also near unanimity between the Centre and states on cross-empowerment,” said an officer aware of the development.

The Centre is likely to recommend dividing randomly chosen five per cent assessees, picked by a system for audit and scrutiny in the beginning of the year, instead of a turnover-based division, which is technically called horizontal division.

“In income tax, the assessees do not know who the assessing officer is. There could be something similar in GST as well,” the officer added.

While the Centre and states agree that there should be no dual control, there are differences over division of powers between them. States want sole administrative control over assessees with an annual turnover of up to Rs 1.5 crore and division of control or cross-empowerment over that. The Centre is pressing for cross-empowerment for all assesses. It will be recommending a division of just five per cent assessees to be scrutinised.

“There should be no human interface. Only five per cent assessees will be picked randomly for scrutiny or audit by a computer-based GST network, which could be divided between the Centreand the states,” another senior government officer said.

The GST Bill has provided to do away with dual control over the same assessee: “Under this, a central officer or state official will carry out assessment, scrutiny, audit and pass order under SGST and IGST as well for an assessee along with CGST.”

Satya Poddar, tax partner, policy advisory group, EY, said that differences over the administrative turf between the Centre and states were basically a job security issue.

Under GST, the Central and state officials would need to help of each other. The former do not have wherewithal to deal with small dealers; state officials have not dealt with service tax, Poddar said.

Also, there would be automatic checks in GST, as there is system of input credits on the basis of which a trail could be established, he added.

Administrative control has proved to be the most contentious issue in GST, delaying the finalisation of legislations. While the sixth meeting of the GST Council on Sunday did not discuss the contentious issue, it is likely to be taken up in the next meeting.

Finance Minister Arun Jaitley said he has a few options in mind to resolve the issue. The roll-out of GST from April 1 seems impossible now as the Centre will not be able to table it in the winter session of Parliament. If the GST Council reaches a consensus in the next meeting, it will be tabled in the Budget session.

States, including Kerala and Tamil Nadu, are now pitching for a September roll-out. Demonetisationhas also taken a toll on GST. Kerala Finance Minister Thomas Isaac said on Sunday there has been an erosion of mutual trust between the Centre and states after the high-value currency notes were suddenly banned on November 8.

Source : Business Standard

FM Jaitley hints at tax rate cut; says demonetisation will increase taxation base : 14-12-2016


Finance Minister Arun Jaitley on Tuesday hinted that tax rates might be brought down as demonetisation is likely to bring in higher tax revenues from unaccounted wealth. In a statement released to the media, Jaitley said that a substantial quantum of future transactions would be digital as India moves towards a less-cash society.

“Once they are substantially digital, they get caught in tax net. Therefore, the future taxation level would be much higher than what is currently being collected. This would also enable the government at some stage to make taxes more reasonable, which will apply to both direct and indirect taxes,” he said.

The statement came roughly one-and-a-half months before the Budget 2017-17, which is expected to be tabled in Parliament on February 1.

While Jaitley did not refer to the Budget, it is widely expected that the central government might announce a number of direct tax sops for individuals as well as the corporate sector in the Union Budget for 2017-18 to soften the ‘pain’ of demonetisation.

The Budget might have revisions of the tax slabs, reductions in the corporate tax rate, and more tax exemptions or rebates in certain cases.

The government recently gave a number of incentives and discounts to promote digital payments.

Jaitley also warned of a “heavy price” that unscrupulous elements will have to pay for amassing large amounts of cash unlawfully, saying agencies were keeping a close eye on them.

Meanwhile, the initial public support to Prime Minister Narendra Modi’s demonetisation move is likely to face the law of diminishing returns.

But, senior government advisors said the worst of the currency scarcity would soon be over and the PM would announce tax breaks for the middle class and schemes for the poor in the new year, to correct the negative perception. The contours of these schemes are being worked out in consultation with senior leaders of the Bharatiya Janata Party (BJP), the Rashtriya Swayamsevak Sangh (RSS) and key ministers.

Officials said signs of a turnaround in the availability of currency notes would be evident by December 20 and the situation would ease significantly by January 10. This will largely be because sufficient new Rs 500 currency notes will be available.

According to Jaitley, the currency situation will improve in the next three weeks.

The PM is expected to announce a slew of sops for farmers, small traders and owners of micro, small and medium enterprises, and the youth. The first of these could be announced at a public rally in Lucknow on January 2, the first working day of 2017. The January 2 public rally was scheduled on December 24, when the BJP’s Parivartan Yatra across Uttar Pradesh (UP) would culminate. But, it was postponed because of the December 31 deadline to exchange old currencynotes. Elections to UP and four other Assemblies are slated in February-March.

The government was exploring options to see if it should ask the income-tax (I-T) department to target only the “big fish” and not antagonise traders. It could ask the I-T department to only scrutinise bank accounts that have seen deposits above a certain limit between November 9 and December 31. The department is also studying if this cut-off should be fixed at Rs 8 lakh or Rs 12 lakh.

A selective waiver of interest on crop loans in identified areas and cash transfers to youth as unemployment dole are also in the offing, to immediately change the anti-note ban discourse. The Sangh Parivar also wants the government to reach out to its traditional support base of small traders and business.

On Wednesday, Minister of State for Finance Arjun Ram Meghwal would address an event organised by the Laghu Udyog Bharati, an RSS affiliate, and speak on ‘The Impact Of Demonetisation On Small Industries: Its Causes & Remedies’.
BJP chief Amit Shah also dropped enough hints of the sops to come. At a BJP workers’ rally in Chhattisgarh on Tuesday, Shah reiterated that the black money recovered would be used for the benefit of the poor, youths, Dalits, tribals and women.

Source : Economic Times

Demonetisation: Government to notify scheme for taxing black money holders this week : 13-12-2016


Government is likely to notify this week the scheme giving tax dodgers another chance to come clean by paying 50 per cent of tax on junked currency deposited in banks post demonetisation. The Pradhan Mantri Garib Kalyan Yojana (PMGKY) provides for 50 per cent taxes and surcharge on declarations of unaccounted cash deposited in banks. Declarants also have to park a quarter of the total sum in a non-interest bearing deposit for four years.

The Department of Revenue will by the end of the week notify PMGKY 2016, which was a part of ‘The Taxation Laws (Second Amendment) Bill, 2016’ and was approved by the Lok Sabha on November 29.

“The notification will provide details as to how declarations are to be made (format) and the manner of paying taxes, whether in instalments or in full. It will also provide an end date to the PMGKY scheme,” an official said.

‘The Taxation Laws (Second Amendment) Bill, 2016’ was introduced in the Lok Sabha as a Money Bill which necessarily does not require assent of the Upper House of Parliament.

Constitution provides that that the Rajya Sabha is required to return a Money Bill passed by Lok Sabha within a period of 14 days from the date of its receipt. The period of 14 days is computed from the date of receipt of the Bill in the Rajya Sabha Secretariat, which is November 30 in this case.

“The 14 day period comes to an end on December 14. After that it will be presented to the President for his assent and thereafter, will be notified this week,” the official added.

The notification is also likely to specify that the disclosures in PMGKY scheme will ensure that no questions will be asked about the source of fund and there would be immunity from Wealth Tax, civil laws and other taxation laws. But there is no immunity from FEMA, PMLA, Narcotics and foreign Black Money Act.

In a major assault on black money, Prime Minister Narendra Modi had on November 8 announced demonetisation of 500 and 1,000 rupee notes and asked holders to deposit such notes in banks. Since then. people have been queueing up before the banks to deposit junked currencies.

Since November 10, Rs 11.85 lakh crore in form of old 500 and 1,000 rupee notes have returned into the banking system. It was estimated that the now defunct notes constituted 86 per cent, or Rs 14.5 lakh crore, in circulation

Source : Financial Express

Options before government if GST not implemented by September 2017 : 13-12-2016


Even as Arun Jaitley on Sunday said that the last possible day to pass GST is September 16, many are discussing of what would happen in a worst case scenario, if government were to miss even this deadline?

The government is required to implement the Goods and Services Tax (GST) by September 16, or there would be no tax law altogether after that since the validity of the recently passed GST bill lapses by then, point out experts.

The Parliamentary logjam, with the opposition being relentless in its attack on demonetisation, has impacted government’s planned timeline on GST. “If the GST doesn’t come into force by September 16, there is one view that existing specified tax legislations would cease to have effect. Hence, the government is working towards ensuring that GST is implemented before 16th September. It needs to be seen that if the same is not achieved whether the Government has an alternative plan,” said Dharmesh Panchal, India – West Indirect Tax leader, PwC. Experts say that the government may not be in a position to levy any indirect taxes as the current taxes would cease to exist while its replacement GST would not have come into force.

“It is imperative that the GST is implemented at the earliest, else post mid-Sept 2017 there would be an issue that in absence of legislative backing, taxes could not be levied. The issues arising from demonetisation should be short lived, and in the long term it should act as an enabler for the GST regime with more and more businesses becoming part of the formal supply chain, thereby helping government achieve the twin objectives of bringing in more transparency and increase the overall  tax base,” said Vikas Vasal, partner, Grant Thornton India.

Although there could be a way around this, say industry trackers. Theoretically, point out experts, there are two ways if the government is unable to implement GST by Sept 16. It will have to go back to Parliament for status quo ante or seek a presidential extension. In both cases the government will have to prove beyond doubt that there is a “genuine problem” in implementing the GST. “This (two ways to postpone GST) is just an interpretation of how the GST rules read. This is just in theory,” a  tax lawyer emphasised. Industry trackers also point out that many companies especially the smaller ones are still not ready for GST.

“Companies, mainly medium and small ones, are tackling the impact their businesses have faced due to demonetisation. Even the biggest of the companies have put GST on their low priority list. Everyone is expecting that it (GST) would be postponed,” said a senior tax expert.

Industry trackers point out that many medium and small industries may not be able to comply with the GST even by next year. “Mid and small size companies in sectors like transport, logistics, chemical manufacturing, salt manufacturing, iron and steel manufacturing are finding it hard to comply with GST,” the tax expert pointed out.

Many big companies and conglomerates were helping vendors, suppliers and distributors to be GST ready before the demonetisation, say experts. Some of these large companies have also provided specialised chartered accountants and technology experts to their vendors, distributors and suppliers.

However, many small companies that do not directly deal with big companies may have to handle the tax complexity and technology part all by themselves.

“The dilemma the government faces is that whether to go ahead with GST and deal with the further impact on the economic growth or postpone the GST and tackle the blushes,” a tax law expert said.

Source : Business Standard

Consumer Protection Bill to be tweaked : 13-12-2016


With the winter session of Parliament unlikely to see the passage of the Consumer Protection Bill, the Consumer Affairs Ministry is tweaking key portions of the bill to bring more aspects like ecommerce and anti-smuggling procedures under its purview.

The Consumer Protection Bill, which was to be presented in the winter session of Parliament, is likely to be taken up during the next session, Consumer Affairs Secretary Hem Pande has said. The bill, which will provide for protection of consumer interest and prevention of unfair trade practices, makes provisions for the establishment of Consumer Protection Councils for better administration and timely settlement of consumer disputes .

The ministry is ‘fine tuning’ the new bill to include specific provisions on smuggling, counterfeiting etc, the secretary said on the sidelines of a conference on illicit cross-border trade in goods.

“We are trying to bring all those engaged in it (smuggling), those who facilitate it and those who use it (under its purview), and depending on the kind of charges, there will be layers of punishments,” he added. With ecommerce slowly providing a leeway to smuggling of illegal goods, it must be ensured that parallel illegal route should not gain, for which, the ministry has also laid out a proper definition of ecommerce in the amended Act.

“In the new Consumer Protection Act, we have included ecommerce,” he said. The secretary added that the government should provide more teeth to law enforcers, while maintaining a holistic approach towards implementation of the law.
Source : Economic Times

Notification No: GSR 1127(E) [F.NO.17/60/2012-CL-V Dated: 09-12-2016


COMPANIES ACT, 2013 – AMENDMENT IN SCHEDULE II OF SAID ACT – CORRIGENDUM TO NOTIFICATION NO. GSR 1075(E) [F.NO.17/60/2012-CL-V], DATED 17-11-2016

NOTIFICATION NO. GSR 1127(E) [F.NO.17/60/2012-CL-V]DATED 9-12-2016

In the notification of the Government of India in the Ministry of Corporate Affairs number G.S.R. 1075(E), dated the 17th November, 2016 published in the Gazette of India, Extraordinary, Part II, section 3, sub section (i) dated the 17th November, 2016 at page 2, in line 13, for “2006.” read “2006″.

AST INSTRUCTION NO.142 – 9-12-2016


Functionality for processing of returns for AY 2007-08 to 2011-12 having refund claims which were not processed within the time allowed u/s 143(1) due to certain technical or other reasons. – Order-Instruction

Government of India Ministry of Finance Department of Revenue (Central Board of Direct Taxes)

AST INSTRUCTION NO.142

DATED 9-12-2016

Consequent to CBDT Instruction No. 18/2013 dated 17-12-2013, functionality for processing of returns for AY 2007-08 to 2011-12 having refund claims which were not processed within the time allowed u/s 143(1) due to certain technical or other reasons was made available to field formations vide AST Instruction No. 120.

2. Now, in exercise of the power u/s 119 of the I.T. Act, 1961, CBDT vide order dated 25-10-2016 has relaxed the time-frame prescribed in second proviso to sub-section(1) of section 143 for the returns-of-income having ‘claim of refund’ for AY 2014-15, 2013-14 and 2012-13 which were filed either u/s 139 or 142(1) of the Act. The cases for the above mentioned AYs may now be processed by 31-03-2017.

3. In pursuance of this, functionality to process such unprocessed returns has been made available in AST. Following are the validations for processing the returns under this functionality.

(i) Return is valid and filed under permitted time limit u/s 139 or 142(1).

(ii) Assessee has claimed refund in return of income.

(iii) On computation, the resultant outcome is refund.

(iv) Return processing has got time barred by limitation of time.

(v) The returns pertain to AY 2012-13 to 2014-15.

4. To process such cases, AO has to fetch the requisite return through the path “AST–> Processing –> Returns”. Thereafter, AO has to choose the functionality u/s 119(2) and has to select check box of 119(2)(a) and then enter requisite details.

5. The complete procedure is elaborated in the user manual for the functionality which is available on ITD and i-Taxnet for the convenience of the users. This may be circulated amongst all officers working in your charge. With this, the various representations received from field formations in this regard stand disposed off.

6. In case of any technical difficulty faced, officers can immediately contact the ITBA helpdesk.

A. URL of helpdesk – http://itbahelpdesk.incometax.net

B. Help desk number – 0120-2772828 – 42

C. Email ID – helpdesk_messaging@incometax.gov.in

D. Help desk Timings – 8.30 A.M. – 7.30 P.M. (Monday to Friday)

[F.NO.AST INST.NO.142/119(2)(a)/21/2017-17],

No.40/2016 Dated: 09-12-2016


Directions under section 119 of the Income-tax Act, 1961 – Circular – Dated 9-12-2016

Circular No. 40/2016

Government of India Ministry of Finance Department of Revenue (CBDT)

North Block, New Delhi, the 9th of December, 2016

Subject: – Directions under section 119 of the Income-tax Act, 1961-regd.

Recent initiatives of the Government to curb the black economy in the country has encouraged people to shift towards digital mode of payment while making financial transactions. By adopting digital mode of payment, no financial transactions would remain undisclosed and consequently an enhanced turnover of business might get reflected in the books of accounts. Under the circumstances, an apprehension has been raised that increased turnover in the current year may lead to reopening of earlier years’ cases involving lower turnover u/s 147 of the Income-tax Act, 1961 (‘Act’) by the Assessing Officer causing undue harassment to tax payers.

2. It is hereby clarified that reopening of cases u/s 147 of the Act is feasible only when the Assessing Officer “has reason to believe that any income chargeable to tax has escaped assessment for any assessment year” and not merely on the basis of any reason to suspect. Mere increase in turnover, because of use of digital means of payment or otherwise, in a particular year cannot be a sole reason to believe that income has escaped assessment in earlier years. Hence, Assessing Officers are advised not to reopen past assessments in cases merely on the ground that the current year’s turnover has increased.

3. The above may be brought to the notice of all for necessary and strict compliance.

4. Hindi version to follow.

(F. No. 225/326/2016/ITA.II)

(Rohit Garg)

Director-ITA.II, CSDT

No. F.No 137/155/2012 ST(Part-I) Dated: 09-12-2016


CURBING OF BLACK MONEY – GOVERNMENT’S INITIATIVES TO ENCOURAGE PEOPLE TO SHIFT TOWARDS DIGITAL MODE OF PAYMENT WHILE MAKING FINANCIAL TRANSACTIONS – CBEC’S CLARIFICATION ON NON-REOPENING OF PAST ASSESSMENTS MERELY BECAUSE OF INCREASED TURNOVER DUE TO USE OF DIGITAL MEANS OF PAYMENT

INSTRUCTION F.NO.137/155/2012-ST (PART-I)DATED 9-12-2016

Recent initiatives of the government to curb black economy in the country encourage people to shift towards digital mode of payment while making financial transactions. By adopting a digital mode of payment, no financial transaction would remain undisclosed and consequently an enhanced turnover might get reflected in the books of accounts. Under the circumstances an apprehension has been raised that increased turnover on account of use of digital means of payment may lead to demands for the earlier period. It is hereby clarified that in indirect taxes, past assessments will not be reopened for this reason alone.

Is PM Modi’s 50-day note ban plan working? : 09-12-2016


Announcing the government’s decision to demonetise old Rs 500 and Rs 1000 currency notes on November 8, Prime Minister Narendra Modi had asked 50 days of “temporary hardship” from the citizens for the “festival of integrity and credibility”.

“There comes a time in the history of a country’s development when a need is felt for a strong and decisive step. For years, this country has felt that corruption, black money and terrorism are festering sores, holding us back in the race towards development… Let us ignore the temporary hardship, let us join this festival of integrity and credibility,” PM Modi had said.

Justifying the removal of so much cash from Indian Economy, the PM had said, “The magnitude of cash in circulation is directly linked to the level of corruption. Inflation becomes worse through the deployment of cash earned in corrupt ways.”

It has been over 30-days since that “historic” decision. Surprisingly, a majority of people in the country have suffered the “pain” silently, nullifying the opposition’s threats of cash riots and chaos. Yet, for scores of people, the note ban has resulted in unexpected hardships.

According to the opposition parties, over 80 people have died due to demonetisation. However, there is no official data on the total number of deaths. Thousands of daily wagers and migrant workers have lost their jobs in the country. In the absence of any credible data, one cannot yet ascertain the exact negative effect of demonetisation on urban and rural employment.

Several media reports have documented how people are struggling to get their hands on cash, adversely affecting their monthly payments and businesses. The government certainly cannot take people’s silence for granted for long.

Economists like ex-PM Manmohan Singh have predicted around 2% dip in GDP of the country. But there are several others who claim the negative impact of demonetisation on GDP growth would be minimal or only for a short period of time. The loss would be covered soon when the money presently deposited with banks would come out in the market.

The government, however, doesn’t intend to flood the market with the same amount of cash as earlier. For this reason, Modi government is pushing digital transactions and, almost in a mission mode, forcing the citizens towards a cashless economy.

Finance minister Arun Jaitley on Thursday said, “Dealing in cash has economic costs, so the government is promoting payment by credit, debit cards and e-wallets.”

On November 8, PM Modi didn’t say the government aims to make cash-abundant Indian economy cashless on a short notice. But he did mention the cost of over dependence on cash. Jaitley said: “Dealing in cash has economic costs, so the government is promoting payment by credit, debit cards and e-wallets.”

The overwhelming mood in the country is still in support of demonetisation. A number of experts are expecting positive changes. However, it seems highly unlikely that all ATMs will become cash-abundant like earlier by the end of PM Modi’s 50-day target.

The urgency with which the government is promoting digital transactions is a sufficient hint in this regard. Second, as said earlier, the government doesn’t intend to print the same amount of cash as it used to do earlier.

Queues at ATMs may, however, ease up to some extent soon, if more people start doing digital transactions.

Source : Financial Express

No service tax on credit, debit card transactions up to ₹2,000 : 09-12-2016


The Government will waive service tax on debit and credit card transactions of up to Rs. 2,000 to promote digital transactions amid cash crunch following the withdrawal of old Rs. 500 and 1,000 banknotes.

The Government has decided to “exempt services by an acquiring bank to any person in relation to settlement of an amount up to Rs. 2,000 in a single transaction through credit, debit card or other payment card service”, sources said.

A notification to this effect will be tabled by Finance Minister Arun Jaitley in Parliament.

Following demonetisation of old high value notes, there has been a cash crunch in the country as people have been making a beeline for banks and ATMs to withdraw new currency.

The Government has been taking steps to promote cashless or digital transactions to take India towards a less-cash economy.

Recently, the Government asked banks to install additional 10 lakh PoS terminals by March 31 in different parts of the country.

The service tax notification of June 2012 will be amended to include exemption on credit and debit cards, the sources added.

As of now, services provided by organisations such as United Nations and other international bodies are exempt from tax.

A range of other services provided by arbitral tribunals, testing of newly developed drugs, educational institutions, trade unions, general insurance business and sports bodies, among others, too are exempt from the levy.

Source : Times of India

GST: Finance Minister believes ‘political logjams’ will be resolved : 09-12-2016


Using the concluding session of Petrotech 2016 as a venue to allay any concerns on the implementation of the Goods and Services Tax regime in the country, Finance Minister Arun Jaitley said: “In politics, logjams exist only to be resolved, and in this case, we have a calendar deadline.” He was giving the valedictory address at the three-day international oil and gas conference.

Talking point

Introduction of GST has become a focal point of all international rating agencies as well as world at large, when talking about ease of doing business here.

Jaitley, who also heads the GST Council, said: “We are hoping that all (issues) will be resolved, and we should be able to do so by April 1, 2017. But the flexibility of time or the luxury of time is very inadequate.

“The Constitutional amendment, which was passed earlier this year, clearly says that the old taxation system can continue for a year. This means that on September 15, 2017, with regard to the old taxation system, curtains will be down…”

The Finance Minister expressed confidence that since most of the issues have been resolved on GST and the final draft is being worked upon, the issue of empowerment, which is essentially an administrative issue, is possible to resolve.

“Our supporting officers have been trying to work out a consensus. There is only one major issue pending — since taxes such as the VAT, Central Excise, Services Tax and some other local taxes in States are going to be merged into one principal tax, how do you reconcile with the parallel machinery? How can we use the potential of the administrative machinery of both the Centre and the States? And how can we cross empower them so that all these taxes that are merged into one, only have to be assessed once?… I’m quite certain it could get resolved in the near future,” he elaborated

Source : Economic Times

Notification No. SO 4085(E) [F.NO.F.1/8/2016-SEZ], 08-12-2016


SECTION 4 OF THE SPECIAL ECONOMIC ZONES ACT, 2005 – INFOSYS LTD. – CORRIGENDUM TO NOTIFICATION NO. SO 3564(E), DATED 26-11-2016

NOTIFICATION NO. SO 4085(E) [F.NO.F.1/8/2016-SEZ]DATED 8-12-2016

In the notification bearing number S.O. 3564(E), dated 26th November, 2016 of Sector Specific SEZ for information technology and information technology enabled services at Plot No. I-3, IT City, Sector-83, Alpha, SAS Nagar, Mohali in the State of Punjab by M/s. Infosys Limited, the word “State Government of Uttar Pradesh” at Serial No. 7 of Para-4 may be read as “State Government”.

21 – 08-12-2016


EXIM BANK’s GoI SUPPORTED LINE OF CREDIT OF USD 35.00 MILLION TO GOVERNMENT OF REPUBLIC OF GUINEA

A.P. (DIR SERIES 2016-17) CIRCULAR NO.21DATED 8-12-2016

Export-Import Bank of India (Exim Bank) has entered into an Agreement dated September 9, 2015 with the Government of the Republic of Guinea for making available to the latter, a Government of India supported Line of Credit (LOC) of USD 35.00 million (USD Thirty Five million) for construction and up gradation of regional hospitals at Kankan and Nzerekore in Guinea. The goods, machinery, equipment, 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% of the contract price shall be supplied by the seller from India and the remaining 25% goods and services may be procured by the seller for the purpose of the eligible contract from outside India.

2. The credit agreement under the LOC is effective from November 21, 2016 and the date of execution of agreement is September 9, 2015. Under the LOC, the last date for opening of Letter of Credit and Disbursement will be 48 months for Project Export Contracts from the schedule completion date(s) of contract(s) and 72 months for supply contracts, from the date of execution of the Agreement.

3. Shipments under the LOC will have to be declared on EDF/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) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.

Notification No : 53/2016 Dated: 08-12-2016


Seeks to amend Service Tax Rules, 1994 so as to allow a person located in non taxable territory providing online information and database access or retrieval services to a non-assesse online recipient to issue online invoices not authenticated by means of a digital signature for a period upto 31st January, 2017 – 53/2016

GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE)

NOTIFICATION No. 53/2016-Service Tax,

New Delhi, the 19th December, 2016

G.S.R….. (E). - In exercise of the powers conferred by sub-section (1), read with sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994,namely:-

1.  (1) These rules may be called the Service Tax (Fifth Amendment) Rules, 2016.

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

2. In the Service Tax Rules, 1994, in rule 4C, in sub-rule (1), the following proviso shall be inserted, namely:-

‘Provided that a person located in non-taxable territory providing online information and database access or retrieval services to a non-assesse online recipient located in taxable territory may issue online invoices not authenticated by means of a digital signature for a period upto 31st January, 2017’

[F. No.354/149/2016 -TRU]

(Anurag Sehgal)

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) vide notification No. 2/94-SERVICE TAX, dated the 28th June, 1994 vide number G.S.R. 546 (E), dated the 28th June, 1994 and last amended vide notification No. 48/2016-Service Tax, dated the 9th November, 2016 vide number G.S.R. 1057 (E), dated the 9th November, 2016.

Notification No.12/2016 08-12-2016


Procedure for the purposes of furnishing and verification of Form 27BA for removing of default of Short Collection and/or Non Collection of Tax at Source – Reg. – 12/2016

F. No. DGIT(S)/CPC(TDS)/NOTIFICATION/2016-17

Government of India Ministry of Finance Central Board of Direct Taxes

Directorate of Income-tax (Systems)

New Delhi.

Notification No. 12/2016

          New Delhi, 8th December, 2016

Subject: – Procedure for the purposes of furnishing and verification of Form 27BA for removing of default of Short Collection and/or Non Collection of Tax at Source – Reg.

1.  As per first proviso to sub-section (6A) of section 206C of Income-tax Act, 1961, any person, other than a person referred to in sub-section (1D), responsible for collecting tax in accordance with the provisions of this section, who fails to collect the whole or any part of the tax on the amount received from a buyer or licensee or lessee or on the amount debited to the account of the buyer or licensee or lessee shall not be deemed to be an assessee in default in respect of such tax if such buyer or licensee or lessee-

(i) has furnished his return of income under section 139;

(ii) has taken into account such amount for computing income in such return of income; and

(iii) has paid the tax due on the income declared by him in such return of income,

and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed.

2.  As per sub-rule (1) of Rule 37J of Income-tax Rules, 1962, the certificate from an accountant under the first proviso to sub-section (6A) of section 206C shall be furnished in Form 27BA to the Director General of Income-tax (Systems) or the person authorised by the Director General of Income-tax (Systems) in accordance with the procedures, formats and standards specified under sub-rule (2), and verified in accordance with the procedures, formats and standards specified under sub-rule (2).

3.  In exercise of the powers delegated by the Central Board of Direct Taxes (Board) under sub-rule (2) of Rule 37Jof Income-tax Rules, 1962 the Principal Director General of Income-tax(Systems) hereby authorizes the Income-tax authorities mentioned at Col. No. 1 to receive the form-type mentioned in Col. No. 2 to be filed in the mode specified at Col. No. 3 for the assessment years mentioned at Col. No. 4 and pertinent to defaults under Sections of the Act mentioned at Col. No. 5:

1

2

3

4

5

Authorised A.O.

Form Type Mode of furnishing Form A.Y.

To be used exclusively for defaults under Section

Field Assessing Officers (TDS)[1] 27BA Paper Up to & including 2016-17 206(6A)
CPC-TDS 27BA Electronic[2] Up to & including 2016-17 206CB
CPC-TDS 27BA Electronic[2] Including & from 2017-18 206CB and/or 206(6A)

[1] The AO should ensure that interest on non-collection of the whole or any part of the tax or failure in payment after collection as required by or under this Act shall be paid before furnishing the statement in accordance with the provisions of the Act.

[2] Furnishing of Form 27BA in electronic shall be enabled with effect from 15.01.2017.

4.  The procedure for electronic filing of Form 27BA is as follows:

1.1 Role of Collector:

STEPS

PLACE OF ACTION

ACTION

1

TRACES Portal Get Details of Short Collection: Collector needs to submit request to get details of short collection.

2.

TRACES Portal Enter No Collection transactions: Collector needs to enter details of Non-Collection transaction at TRACES, if any and submit transaction details at TRACES in the rows provided for this purpose.

3.

TRACES Portal Submit Request: On submitting request, a Unique Request Number will be generated for further reference. The Short- Collection and/or Non- Collection request so submitted will be processed by TRACES and the successful transaction will be displayed to the Collector after certain time. A unique DIN will be generated by TDSCPC for unique Short Collection transaction. Similarly a unique Alpha-Numeric String (combination of TAN, PAN and F.Y.) will be generated for No- Collection transaction. Both of these unique numbers and strings will be displayed after successful processing by TRACES. These unique DINS and Alpha-Numeric Strings will be communicated electronically to E-Filing Portal and available for further action by Collector.

4.

Offline The Collector will communicate the DINs and/or Alpha-Numeric Strings generated in step no. 3 for each of the Short- Collection and/or Non- Collection transactions to the accountant identified for certifying Annexure A and obtain the membership no. of such accountant to be used in step no. 5.

5.

E-Filing Portal (Login as Collector)

 

Locate DIN on which Form 27BA effect is to be given: Locate and select relevant DIN in menu driven option for which request for Form 27BA is to be submitted.

Locate No Deduction Transactions on which Form 27BAeffect is to be given: Locate and select No- Collection transaction for which request for Form 27BA is to be submitted.

6.

E-Filing Portal

 

Authorize Membership Number of Accountant[4] : Collector, after ascertaining the membership number of the accountant who is to certify Annexure A of Form 27BA, needs to authorize such accountant by entering his membership number in respect of each of the Short- Collection and Non- Collection transactions(in one or more sessions) and submit these authorizations.

7.

E-Filing Portal

 

Certification from Authorized Accountant: On successful authorization by Collector, the Accountant so authorized on E-Filing Portal may fill in the relevant details in Annexure A to Form 27BA with respect to the Buyer in question and certify by digitally signing Annexure A. The details of unique DINs and Alpha-Numeric Strings will become visible to the authorized accountant(when he logs into his own account as a registered accountant on E-Filing Portal) only when Collector has authorized such an accountant with respect to any Short- Collection and/or Non- Collection transaction.

8.

E-Filing Portal

 

Submit Digitally signed Form 27BA: Once registered Accountant/Accountants certify DINs and/or Alpha-Numeric Strings, Collector needs to digitally sign the form and submit its final request. Consequently, these submitted records will be shared with the FAOs concerned.

9.

TRACES Portal View Modified Status of default: Once request has been processed, short Collection will be re-calculated and Late Collection Interest will be generated accordingly, which can be viewed by Collector.

10.

NSDL\TRACES Portal Make payment for Modified Late Collection Interest:Collector needs to pay Late Collection Interest amount, according to the modified computation.

[3]  DIN is unique identification number of single buyer row.

[4] Accountant shall have meaning assigned to it in the Explanation to sub-section (2) of section 288 of the I.T. Act, 1961.

4.2 Role of Accountant at E-Filing:

1. Accountant has to get himself registered at E-Filing Portal and share his membership number with the collector desiring to authorize him with respect to Short- Collection and/or Non- Collection.

2. Receive DINs and/or Alpha-Numeric Strings with respect to each of the Short- Collection and/or Non- Collection from the Collector.

3. After being so authorized by Collector and upon receiving DINs and/or Alpha-Numeric Strings from Collector; login to E- Fling Portal with Accountant credentials.

4. Use DINs and/or Alpha-Numeric Strings to identify the buyer rows which are to be verified.

5. Complete Annexure A to Form 27BA with respect to the concerned Buyer.

6. Submit the Annexure A so completed by digitally signing it.

4.3    Role of e-filing:

For Collector

Validations

TRACES

1. Provide view of Short- Collection and/or Non- Collection transactions to Collector as communicated to E-Filing Portal electronically by CPC-TDS.

2. Allow Collector to locate and select Short- Collection and/or Non-Collection transactions and authorize Accountant(s) with respect to each of these transactions by entering membership number of Accountant(s).

3. Allow Accountants so authorized to view Annexure A to Form 27BA on the basis of DIN and/or Alpha-Numeric String; complete the Annexure; and submit it by digitally signing it.

4.  Allow Collector to view Form 27BA including Annexure A to Form 27BA so submitted by authorized Accountant(s) and submit this Form 27BA by digitally signing it.

Check mandatory Compliance: ITR of buyer (PAN) should have been filed u/s 139 and no demand should be payable at the time of assessment. Share digitally signed Form 27BA with CPC-TDS.

4.4    Role of TRACES:

For Collector

Backend Processing

1. Display identified Short- Collection transactions for viewing of Collector.

2. Provide option of adding Non-Collection transactions to Collector.

3. Provide DIN and/or Alpha-Numeric String for each transaction after submission by Collector as per Step 3 of Para 4.1.

4. Display updated status of submitted Form 27BA as received from E-Filing Portal.

Processing the request: Once Collector submits request of Form 27BA, TDSCPC will reprocess the statement and Short Collection will be modified.

 

(Ps. Thuingaleng)

Dy. Commissioner of Income Tax (CPC-TDS)

O/o The Pr. Director General of Income-tax (Systems)

Notification No.113/2016 08-12-2016


Corrigendum – Notification Number 97/2016 dated the 25th October, 2016 – 113/2016

MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES)

Notification No.113/2016

CORRIGENDUM

New Delhi, the 8th December, 2016

INCOME-TAX

S.O. 3681(E).-In the notification of the Government of India, Ministry of Finance, Department of Revenue (Central Board of Direct Taxes), number 97/2016, published vide number S.O. 3288(E) dated the 25th October, 2016, in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), at page 2, in the line 9, for “established under” read “referred to in”.

[F. No. 149/144/2015 –TPL (Part-II)]

ABHISHEK GAUTAM, Under Secy. (TPL-II)

Notification No : 52/2016 Dated: 08-12-2016


Seeks to amend exemption notification No. 25/2012-ST dated 20.06.2012 so as to exempt services by an acquiring bank, to any person in relation to settlement of an amount upto two thousand rupees in a single transaction transacted through credit card, debit card, charge card or other payment card service – 52/2016

 

GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE)

NOTIFICATION No. 52/2016-Service Tax

New Delhi, the 8th December, 2016

G.S.R.1122(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 20thJune, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 467 (E), dated the 20thJune, 2012, namely:-

In the said notification, in the opening paragraph, after entry 63, the following entry shall be inserted, namely,-

“64. Services by an acquiring bank, to any person in relation to settlement of an amount upto two thousand rupees in a single transaction transacted through credit card, debit card, charge card or other payment card service.

Explanation. - For the purposes of this entry, “acquiring bank” means any banking company, financial institution including non-banking financial company or any other person, who makes the payment to any person who accepts such card.”

[F. No. 356/21/2016-TRU]

(Anurag Sehgal)

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 the 20th June, 2012, vide number G.S.R. 467 (E), dated the 20thJune, 2012 and last amended vide notification number 47/2016 – Service Tax, dated the 9th November, 2016 vide number G.S.R. 1056 (E), dated the 9th November, 2016.

Notification No: GSR 1119(E) [F.NO.01/05/2016-CL-V Dated: 07-12-2016


COMPANIES (TRANSFER OF PENDING PROCEEDINGS) RULES, 2016

NOTIFICATION NO. GSR 1119(E) [F.NO.1/5/2016-CL-V]DATED 7-12-2016

In exercise of the powers conferred under sub-sections (1) and (2) of section 434 of the Companies Act, 2013 (18 of 2013) read with sub-section (1) of section 239 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016) (hereinafter referred to as the Code), the Central Government hereby makes the following rules, namely:—

Short title and Commencement

1. (1) These rules may be called the Companies (Transfer of Pending Proceedings) Rules, 2016.

(2) They shall come into force with effect from the 15th December, 2016, except rule 4, which shall come into force from 1st April, 2017.

Definitions

2. (1) In these rules, unless the context otherwise requires—

(a) “Code” means the Insolvency and Bankruptcy Code, 2016 (31 of 2016);`
(b) “Tribunal” means the National Company Law Tribunal constituted under section 408 of the Companies Act, 2013.

(2) Words and expressions used in these rules and not defined, but defined in the Companies Act, 1956 (1 of 1956) (herein referred to as the Act), the Companies Act, 2013 (18 of 2013) or the Companies (Court) Rules, 1959 or the Code shall have the meanings respectively assigned to them in the respective Act or rules or the Code, as the case may be.

Transfer of pending proceedings relating to cases other than Winding up

3. All proceedings under the Act, including proceedings relating to arbitration, compromise, arrangements and reconstruction, other than proceedings relating to winding up on the date of coming into force of these rules shall stand transferred to the Benches of the Tribunal exercising respective territorial jurisdiction:

Provided that all those proceedings which are reserved for orders for allowing or otherwise of such proceedings shall not be transferred.

Pending proceeding relating to Voluntary Winding up

4. All applications and petitions relating to voluntary winding up of companies pending before a High Court on the date of commencement of this rule, shall continue with and dealt with by the High Court in accordance with provisions of the Act.

Transfer of pending proceedings of Winding up on the ground of inability to pay debts

5. (1) All petitions relating to winding up under clause (e) of section 433 of the Act on the ground of inability to pay its debts pending before a High Court, and where the petition has not been served on the respondent as required under rule 26 of the Companies (Court) Rules, 1959 shall be transferred to the Bench of the Tribunal established under sub-section (4) of section 419 of the Act, exercising territorial jurisdiction and such petitions shall be treated as applications under sections 7, 8 or 9 of the Code, as the case may be, and dealt with in accordance with Part II of the Code:

Provided that the petitioner shall submit all information, other than information forming part of the records transferred in accordance with Rule 7, required for admission of the petition under sections 7, 8 or 9 of the Code, as the case may be, including details of the proposed insolvency professional to the Tribunal within sixty days from date of this notification, failing which the petition shall abate.

(2) All cases where opinion has been forwarded by Board for Industrial and Financial Reconstruction, for winding up of a company to a High Court and where no appeal is pending, the proceedings for winding up initiated under the Act, pursuant to section 20 of the Sick Industrial Companies (Special Provisions) Act, 1985 shall continue to be dealt with by such High Court in accordance with the provisions of the Act.

Transfer of pending proceedings of Winding up matters on the grounds other than inability to pay debts

6. All petitions filed under clauses (a) and (f) of section 433 of the Companies Act, 1956 pending before a High Court and where the petition has not been served on the respondent as required under rule 26 of the Companies (Court) Rules, 1959 shall be transferred to the Bench of the Tribunal exercising territorial jurisdiction and such petitions shall be treated as petitions under the provisions of the Companies Act, 2013 (18 of 2013).

Transfer of Records

7. Pursuant to the transfer of cases as per these rules the relevant records shall also be transferred by the respective High Courts to the National Company Law Tribunal Benches having jurisdiction forthwith over the cases so transferred.

Fees not to be paid

8. Notwithstanding anything contained in the National Company Law Tribunal Rules, 2016, no fee shall be payable in respect of any proceedings transferred to the Tribunal in accordance with these rules.

Notification No: GSR 3677(E) [F.NO.02/31/CAA/2013-CL-V Dated: 07-12-2016


SECTION 1 OF THE COMPANIES ACT, 2013 – ACT – ENFORCEMENT OF – NOTIFIED DATE ON WHICH SPECIFIED PROVISIONS OF SAID ACT SHALL COME INTO FORCE

NOTIFICATION NO. SO 3677(E) [F.NO.2/31/CAA/2013-CL-V-PT]DATED 7-12-2016

In exercise of the powers conferred by sub-section (3) of section 1 of the Companies Act, 2013 (18 of 2013), the Central Government hereby appoints the 15th day of December, 2016 as the date on which the following provisions of the said Act shall come into force, namely :—

Sl.No. Section
1. Clause (23) of section 2
2. Clause (c) and (d) of sub-section (7) of section 7
3. Sub-section (9) of section 8
4. Section 48
5. Section 66
6. Sub-section (2) of section 224
7. Section 226
8. Section 230 [except sub-sections (11) and (12)], and sections 231 to 233
9. Sections 235 to 240
10. Sections 270 to 288
11. Sections 290 to 303
12. Section 324
13. Sections 326 to 365
14. Proviso to section 370
15. Sections 372 to 373
16. Sections 375 to 378
17. Sub-section (2) of section 391
18. Clause (c) of sub-section (1) of section 434

Notification No: GSR 3676(E) [F.NO.16/61/2016-CL-V Dated: 07-12-2016


COMPANIES (REMOVAL OF DIFFICULTIES) FOURTH ORDER, 2016 – AMENDMENT IN SECTION 434 OF THE COMPANIES ACT, 2013

NOTIFICATION NO. SO 3676(E) [F.NO.16/61/2016-LEGAL]DATED 7-12-2016

Whereas clause (c) of sub-section (1) of section 434 of the Companies Act, 2013 (hereinafter referred to as the 2013 Act) provides that on a date which may be notified by the Central Government for the purpose of transfer of pending proceedings, all proceedings under the Companies Act, 1956 (hereinafter referred to as the 1956 Act) including proceedings relating to arbitration, compromise, arrangements and reconstruction and winding up of companies, pending immediately before such date before any District Court or High Court, shall stand transferred to the Tribunal and the Tribunal may proceed to deal with such proceedings from the stage before their transfer;

And, whereas, the proviso thereof further provides that only such proceedings relating to the winding up of companies shall be transferred to the Tribunal that are at a stage as may be prescribed by the Central Government;

And, whereas, clause (c) of sub-section (1) of section 434 of the 2013 Act shall come into force from the 15th December, 2016;

And, whereas, provisions of sections 6 to 32, 60 to 67 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the Code) have been brought into force on 1st December, 2016 and sections 33 to 54 of the Code and the provisions of Chapter XV and Chapter XX of the 2013 Act shall be notified to come into force from 15th December, 2016;

And, whereas, it has been decided that (i) proceedings under the 1956 Act with High Courts on all cases other than winding-up as on 15th December, 2016 shall stand transferred to the Benches of the Tribunals exercising respective territorial jurisdiction and (ii) all cases of winding up under the 1956 Act which are pending before the High Courts as on 15th December, 2016 and wherein petitions have not been served to the respondents as per rule 26 of Companies (Court) Rules, 1959 shall be transferred to Tribunal, and all remaining cases of winding up pending on that date would continue with the respective High Courts;

And, whereas, difficulties have arisen regarding continuation of provisions of the 1956 Act for (i) those proceedings relating to cases other than winding-up that are reserved for orders for allowing or otherwise and (ii) those winding up cases which would not be transferred to Tribunal and be proceeded with by High Courts on account of commencement of the corresponding provisions under the 2013 Act or under the Code;

And, whereas, difficulties have also arisen regarding transfer of proceedings relating to cases other than winding-up where hearings have been completed and only pronouncement of order is pending or is reserved since their transfer to Tribunal may result into delay and rights of parties to the proceedings are likely to be affected prejudicially;

Now, therefore, in exercise of the powers conferred by sub-section (1) of section 470 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following Order to remove the above said difficulties, namely:—

Short title and commencement

1. (1) This Order may be called the Companies (Removal of Difficulties) Fourth Order, 2016.

(2) It shall come into force with effect from the 15th December, 2016.

2. In the Companies Act, 2013, in Section 434, in sub-section (1), in clause (c), after the proviso, the following provisos shall be inserted, namely:—

“Provided further that only such proceedings relating to cases other than winding-up, for which orders for allowing or otherwise of the proceedings are not reserved by the High Courts shall be transferred to the Tribunal: Provided further that—

(i) all proceedings under the Companies Act, 1956 other than the cases relating to winding up of companies that are reserved for orders for allowing or otherwise such proceedings; or
(ii) the proceedings relating to winding up of companies which have not been transferred from the High Courts;

shall be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959″.

 

Notification No. 381/2016-RB 07-12-2016


FEM (TRANSFER OR ISSUE OF SECURITY BY A PERSON RESIDENT OUTSIDE INDIA) (EIGHTEENTH AMENDMENT) REGULATIONS, 2016 – AMENDMENT IN SCHEDULE 1

NOTIFICATION NO. FEMA 381/2016-RB/GSR 1118(E)DATED 7-12-2016

In exercise of the powers conferred by clause (b) of sub-section (3) of section 6 and section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India hereby makes the following amendments in the Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 (Notification No. FEMA. 20/2000-RB dated 3rd May 2000) (hereinafter referred to as ‘the Principal Regulations’), namely:—

Short Title & Commencement

1. (i) These Regulations may be called the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Eighteenth Amendment) Regulations, 2016.

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

Amendment to Schedule 1

2.In Annex B to Schedule 1 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, (Notification No. FEMA. 20/2000-RB dated 3rd May 2000), the following paragraphs shall be substituted with the following, namely:

SL. No Sector/Activity Foreign Investment Cap (% ) Entry Route
Agriculture
1. Agriculture & Animal Husbandry
(a) Floriculture, Horticulture and Cultivation of Vegetables & Mushrooms under controlled conditions;
(b) Development and production of seeds and planting material;
(c) Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture, Apiculture; and
(d) Services related to agro and allied sectors.

Note: Other than the above, foreign investment is not allowed in any other agricultural sector/activity

100% Automatic
1.1 Other Conditions
The term ‘under controlled conditions’ covers the following:

(i) ‘Cultivation under controlled conditions’ for the categories of floriculture, horticulture, cultivation of vegetables and mushrooms is the practice of cultivation wherein rainfall, temperature, solar radiation, air humidity and culture medium are controlled artificially. Control in these parameters may be effected through protected cultivation under green houses, net houses, poly houses or any other improved infrastructure facilities where micro-climatic conditions are regulated anthropogenically.
5 Manufacturing 100% Automatic
Subject to the provisions of these Regulations, foreign investment in `manufacturing’ sector is under automatic route. Further, a manufacturer is permitted to sell its products manufactured in India through wholesale and/or retail, including through e-commerce without Government approval. Notwithstanding the foreign investment policy provisions on trading sector, 100% foreign investment under Government approval route is allowed for trading, including through e-commerce, in respect of food products manufactured and/or produced in India. Applications for foreign investment in food products retail trading would be processed in the Department of Industrial Policy & Promotion before being considered by the Government for approval.
6. Defence
6.1 Defence Industry subject to Industrial license under the Industries (Development & Regulation) Act, 1951; and Manufacturing of small arms and ammunition under the Arms Act, 1959 100% Automatic route up to 49%

Government route beyond 49% wherever it is likely to result in access to modern technology or for other reasons to be recorded.

6.2 Other Conditions
i. Infusion of fresh foreign investment within the permitted automatic route level, in a company not seeking industrial license, resulting in change in the ownership pattern or transfer of stake by existing investor to new foreign investor, will require Government approval.
ii. Licence applications will be considered and licences given by the Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, in consultation with Ministry of Defence and Ministry of External Affairs.
iii. Foreign investment in the sector is subject to security clearance and guidelines of the Ministry of Defence.
iv. Investee company should be structured to be self-sufficient in areas of product design and development. The investee/joint venture company along with manufacturing facility, should also have maintenance and life cycle support facility of the product being manufactured in India.
Services Sector
Information Services
7. Broadcasting
7.1 Broadcasting Carriage Services
7.1.1
(1) Teleports (setting up of up-linking HUBs/Teleports);
(2) Direct to Home (DTH);
(3) Cable Networks (Multi System Operators (MSOs) operating at National or State or District level and undertaking upgradation of networks towards digitalization and addressability):
(4) Mobile TV;
(5) Headend-in-the Sky Broadcasting Service (HITS)
100% Automatic
7.1.2 Cable Networks (Other MSOs not undertaking upgradation of networks towards digitalization and addressability and Local Cable Operators (LCOs)). 100% Automatic
Note: Infusion of fresh foreign investment, beyond 49% in a company not seeking license/permission from sectoral Ministry, resulting in change in the ownership pattern or transfer of stake by existing investor to new foreign investor, will require Government approval
9. Civil Aviation
9.2 Airports
(a) Greenfield projects
(b) Existing projects
100%

100%

Automatic

Automatic

16.3 Single Brand Retail trading (SBRT) 100% Automatic up to 49%. Government route beyond 49%
(1) Foreign Investment in Single Brand product retail trading is aimed at attracting investments in production and marketing, improving the availability of such goods for the consumer, encouraging increased sourcing of goods from India, and enhancing competitiveness of Indian enterprises through access to global designs, technologies and management practices.
(2) Foreign investment in Single Brand product retail trading would be subject to the following conditions:
(a) Products to be sold should be of a ‘Single Brand’ only.
(b) Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India.
(c) ‘Single Brand’ product retail trading would cover only products which are branded during manufacturing.
(d) A non-resident entity or entities, whether owner of the brand or otherwise, shall be permitted to undertake ‘single brand’ product retail trading in the country for the specific brand, directly or through a legally tenable agreement with the brand owner for undertaking single brand product retail trading. The onus for ensuring compliance with this condition will rest with the Indian entity carrying out single brand product retail trading in India. The investing entity shall provide evidence to this effect at the time of seeking approval, including a copy of the licensing/franchise/sub-licence agreement, specifically indicating compliance with the above condition. The requisite evidence should be filed with the RBI for the automatic route and SIA/FIPB for cases involving approval.
(e) In respect of proposals involving foreign investment beyond 51%, sourcing of 30% of the value of goods purchased, will be done from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors. The quantum of domestic sourcing will be self-certified by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts which the company will be required to maintain. This procurement requirement would have to be met, in the first instance, as an average of five years’ total value of the goods purchased, beginning 1st April of the year of the commencement of the business i.e. opening of the first store. Thereafter, it would have to be met on an annual basis. For the purpose of ascertaining the sourcing requirement, the relevant entity would be the company, incorporated in India, which is the recipient of foreign investment for the purpose of carrying out single brand product retail trading.
(f) Subject to the conditions mentioned in this Para, a single brand retail trading entity operating through brick and mortar stores, is permitted to undertake retail trading through e-commerce.
(3) Application seeking permission of the Government for foreign investment exceeding 49% in a company which proposes to undertake single brand retail trading in India would be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy & Promotion. The applications would specifically indicate the product/product categories which are proposed to be sold under a ‘Single Brand’. Any addition to the product/product categories to be sold under ‘Single Brand’ would require a fresh approval of the Government. In case of foreign investment up to 49 %, the list of products/product categories proposed to be sold except food products would be provided to the RBI.
(4) Applications would be processed in the Department of Industrial Policy & Promotion, to determine whether the proposed investment satisfies the notified guidelines, before being considered by the FIPB for Government approval.

Note:

i. Conditions mentioned at Para (2) (b) & (2) (d) above will not be applicable for undertaking Single Brand Retail Trading (SBRT) of Indian brands.
ii. An Indian manufacturer is permitted to sell its own branded products in any manner i.e. wholesale, retail, including through e-commerce platforms.
iii. Indian manufacturer would be the investee company, which is the owner of the Indian brand and which manufactures in India, in terms of value, at least 70% of its products in-house, and sources, at most 30% from Indian manufacturers.
iv. Indian brands should be owned and controlled by resident Indian citizens and/or companies which are owned and controlled by resident Indian citizens.
v. Sourcing norms will not be applicable up to three years from commencement of the business i.e. opening of the first store for entities undertaking single brand retail trading of products having ‘state-of-art’ and ‘cutting-edge’ technology and where local sourcing is not possible. Thereafter, provisions of Para (2) (e) above will be applicable.
17. Pharmaceuticals
17.1 Greenfield 100% Automatic
17.2 Brownfield 100% Automatic up to 74%

Government route beyond 74%

17.3 Other Conditions
(i) ‘Non-compete’ clause would not be allowed in automatic or government approval route except in special circumstances with the approval of the Foreign Investment Promotion Board (FIPB).
(ii) The prospective investor and the prospective investee are required to provide a certificate along with the FIPB application as given at Para 17.4.
(iii) Government may incorporate appropriate conditions for foreign investment in brownfield cases, at the time of granting approval.
(iv) foreign investment in brownfield pharmaceuticals, under both automatic and government approval routes, is further subject to compliance of following conditions:
(a) The production level of National List of Essential Medicines (NLEM) drugs and/or consumables and their supply to the domestic market at the time of induction of foreign investment, being maintained over the next five years at an absolute quantitative level. The benchmark for this level would be decided with reference to the level of production of NLEM drugs and/or consumables in the three financial years, immediately preceding the year of induction of foreign investment. Of these, the highest level of production in any of these three years would be taken as the level.
(b) Research and Development (R&D) expenses being maintained in value terms for 5 years at an absolute quantitative level at the time of induction of foreign investment. The benchmark for this level would be decided with reference to the highest level of R&D expenses which has been incurred in any of the three financial years immediately preceding the year of induction of foreign investment.
(c) The administrative Ministry will be provided complete information pertaining to the transfer of technology, if any, along with induction of foreign investment into the investee company.
(d) The administrative Ministry (s) i.e. Ministry of Health and Family Welfare, Department of Pharmaceuticals or any other regulatory Agency/Development as notified by Central Governemnt from time to time, will monitor the compliance of conditionalities.

Note :

i. foreign investment up to 100% under the automatic route is permitted for manufacturing of medical-devices. The above mentioned conditions will, therefore, not be applicable to greenfield as well as brownfield projects of this industry.
ii. Medical device means :—
(a) Any instrument, apparatus, appliance, implant, material or other article, whether used alone or in combination, including the software, intended by its manufacturer to be used specially for human beings or animals for one or more of the specific purposes of :—
(aa) Diagnosis, prevention, monitoring, treatment or alleviation of any disease or disorder;
(ab) diagnosis, monitoring, treatment, alleviation of, or assistance for, any injury or handicap;
(ac) investigation, replacement or modification or support of the anatomy or of a physiological process;
(ad) supporting or sustaining life;
(ae) disinfection of medical devices;
(af) control of conception;
and which does not achieve its primary intended action in or on the human body or animals by any pharmacological or immunological or metabolic means, but which may be assisted in its intended function by such means;
(b) an accessory to such an instrument, apparatus, appliance, material or other article;
(c) a device which is reagent, reagent product, calibrator, control material, kit, instrument, apparatus, equipment or system whether used alone or in combination thereof intended to be used for examination and providing information for medical or diagnostic purposes by means of in vitro examination of specimens derived from the human body or animals.
iii. The definition of medical device at Note (ii) above would be subject to the amendment in Drugs and Cosmetics Act, 1940, as amended from time to time.
17.4 Certificate to be Furnished by the Prospective Investor as well as the Prospective Recipient Entity

It is certified that the following is the complete list of all inter-se agreements, including the shareholders agreement, entered into between foreign investor(s) and investee brownfield pharmaceutical entity

1. . . . . . . . . . . . . . . .

2. . . . . . . . . . . . . . . .

3. . . . . . . . . . . . . . . .

(copies of all agreements to be enclosed)

It is also certified that none of the inter-se agreements, including the shareholders agreement, entered into between foreign investor(s) and investee brownfield pharmaceutical entity contain any non-compete clause in any form whatsoever.

It is further certified that there are no other contracts/agreements between the foreign investor(s) and investee brownfield pharma entity other than those listed above.

The foreign investor(s) and investee brownfield pharma entity undertake to submit to the FIPB any inter-se agreements that may be entered into between them subsequent to the submission and consideration of this application.

Notification No.112/2016 07-12-2016


Section 10(46) of the Income-tax Act, 1961 Central Government notifies Petroleum and Natural Gas Regulatory Board , a Board constituted by the Government of India, in respect of the specified income arising to that Board – 112/2016

MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 112/2016

New Delhi, the 7th December, 2016

S.O. 3674(E).-In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purpose of the said clause, “Petroleum and Natural Gas Regulatory Board”, a Board constituted by the Government of India, in respect of the following specified income arising to that Board, namely :-

(i) Grant received from Central Government

(ii) All other grants, fees, penalty charges received

(iii) All sums received from such other sources as may be approved by the Central Government as per section 38 and 39 of the Petroleum and Natural Gas Regulatory Board Act. 2006 and

(iv) Interest earned on deposits

2. This notification shall be applicable for the assessment year 2014-15, 2015-16, 2016-17, 2017-18 and 2018-19.

3. The notification shall be subject to the conditions that Petroleum and Natural Gas Regulatory Board:-

(a) Shall not engage in any commercial activity;

(b) its activities and the nature of the specified income remain unchanged throughout the financial year; and

(c) it files return of income in accordance with the provision of clause (g) of sub-section (4C) of Section 139of the said Act.

[F. No.196/19/2013-ITA-I)]

DEEPSHIKHA SHARMA, Director

CBDT points out at cases with serious irregularities detected post demonetisation to ED, CBI : 07-12-2016


The Income Tax Department on Tuesday carried out swift investigations in more than 400 cases since the de-monetisation of Old High Denomination (OHD) currency announced by the Government on November 8th, 2016.

More than Rs. 130 crore in cash and jewellery has been seized and approximately Rs. 2000 crore of undisclosed income has been admitted by the taxpayers. Detecting serious irregularities beyond the Income-tax Act, the CBDT decided to refer such cases to the ED and the CBI, enabling them to examine the criminal conduct for immediate necessary action. More than 30 such references have already been made to the ED, and are being sent to the CBI.

The Bengaluru Investigation Unit of the Income Tax Department has sent maximum references (18) to ED, where the cases undisclosed cash in new high denomination notes was seized by the Department. The Mumbai unit has referred a case where Rs. 80 lakh in new high denomination currency notes were seized. Ludhiana Unit has referred two cases, where seizures of USD 14000 and Rs. 72 lakh in cash were made.

Hyderabad, shared a case involving seizure of Rs. 95 lakh cash from person persons travelling in a Tata Indica. Pune’s reference stems from a seizure of Rs. 20 lakh cash, including 10 lakh in new currency notes from an un-allotted locker of urban cooperative bank, the key of which was in the possession of the CEO of the bank.

Two cases referred by the Bhopal unit are of jewelers against whom evidence of large scale pre-dating of bills and flouting of PAN reporting norms were detected during searches conducted.

The cases referred from the Delhi unit include the Axis Bank, Kashmiri Gate in which complicity of officers of the bank in the malpractices was detected. The concerted and coordinated enforcement action of the Income Tax Department, ED and CBI in detecting the malpractices and taking swift action is going to continue in the coming days.

Source : Financial Express

Demonetisation impact on various sectors: Government needs to inject positive sentiment, led by tax cuts : 07-12-2016


Team ET scours data, talks to dozens of pundits and industry insiders to assess the impact of demonetisation on the economy, jobs and key sectors. The key learning: GoI needs to inject a massive dose of positive sentiment, led by tax cuts and other demand-boosting measures:

ECONOMY

IMPACT: Demonetisation torpedoed India’s economy just when it was getting into a cruise mode, fired by good monsoon-led rural demand and Seventh Pay Commission-enabled urban buying. The 8% growth that looked within grasp in FY17 is beyond horizon now. Only about a quarter of currency cancelled is back in circulation, and that too is being stashed away for emergency. Lower denomination notes are not available to facilitate transactions. The fall in demand will further dent already weak investments. The sharpest crash in services PMI since November 2008 in the aftermath of the global financial crisis underscores the risks. Ambit sees growth falling to a low of 3.5% in FY17. Others are not so pessimistic, pencilling in about 7%.

CURRENT VERDICT: Strongly negative

SOLUTION: Boost sentiments big time. Cut corporate tax to 25% to stimulate demand. Raise income tax slabs to reduce effective tax on income tax payers. Offer low interest rate loans for housing through interest subvention. Urgently plough back income from demonetisation into public investments. Budget will determine economy’s near future.

JOBS
IMPACT: 
Hiring experts say jobs at senior levels are not and won’t be impacted. But overall hiring is down right now, as managers seek to protect revenue/profit targets. No job cut plans as of now. Variable pay/increment amounts may be impacted. Job numbers are difficult to estimate, experts say, but sectors where hiring is most hit are retail, consumer goods, real estate, infrastructure, logistics (for ecommerce especially), auto consumables, and building products. Hiring by mobile wallet and fintech companies are CURRENT VERDICT: Mildly negative, and may improve in future.

SOLUTION: Everything depends on how temporary the pain in. Experts say fundamentals are good for jobs, provided normality returns fast. One change may be generation of more formal sector jobs as informal jobs are hit worst by cash-crunch. Of 60 crore Indians employed, only 6 crore have formal jobs. That may go up to 10 crore in the next 2-3 years.

CONSUMER SPEND 


IMPACT: 
Consumption, a big GDP contributor, will take a hit for at least two quarters, say companies and analysts. Two main problems: Low circulation of lower denomination notes, which may be temporary, and wealth erosion, that is impacting big ticket purchases. FMCG sales dropped 20-30% in November. At store levels, impulse buys like snacks, biscuits were hard hit, as were personal care items, Nielsen data shows. December can be worse than November, since last month consumer spend in the beginning of the month was unaffected. Nine million retailers who buy from wholesalers are worst hit, and will feel the pain for a while. Big, organised retail is doing well. Annual growth rate is around 4.4%. Some big FMCG companies have cut production. Supply chains are hit as cash fuels many transactions. Full impact will show up in a month’s time, and can be severe.

CURRENT VERDICT: Negative, can get worse in short term

SOLUTION: Depends on how many consumers can shift to cashless transactions, which partly depends on how many retailers do – an uncertain process at best. Some consumer sector experts say GoI should consider giving a boost to shopping, like Western governments do in tough times. Shopping vouchers to Jan Dhan account holders is one idea. Consumers need to feel good again, tax cuts would be a huge help.

REAL ESTATE 


IMPACT: 
Insiders say there’s a 40%-plus drop in enquiries and sales across key markets of Mumbai, Delhi, Bengaluru and Pune. Deals in secondary market have come to a standstill. In Bengaluru, drop in deal closings is as much as 60%. Most homebuyers are waiting for big price reductions. With fear of black money transactions and cash crunch added to an already slumping real estate sector, near future is bleak.

CURRENT VERDICT: Strongly negative, can get worse

SOLUTION: Big rate cut will help, as will tax concessions on home purchases. RBI policy and budget are key. But sentiment improvement will be a very long process.

E-COMMERCE 


IMPACT: 
Mostly bad, some good. For the online retail market, gross merchandise value (GMV) of players fell by 40-50% in first few weeks after demonetisation, in the middle of their biggest quarter for sales. Things may remain bleak till March. Even high-value items like expensive smartphones are selling less. Products returned are up by 50%. And experts feel consumer sentiment won’t improve quickly. But the boost to digital payments (100% jump in transactions) has led industry to hope for a bright medium term. Also, grocery and food delivery set-ups are doing better since they sell essential items. Some saw new customer orders jump to 25%, from the usual 15-16%.

CURRENT VERDICT: Negative, can get worse in short term

SOLUTION: Measures like tax cuts will improve sentiment. Sector specific innovations like card or mobile wallet payment on delivery will help.

TOURISM

IMPACT: Peak tourism period of November-December badly hit. For tourist destinations beyond metros, business may be down by as much as 40%. Tourism business in metros may go down by 10%. Cash shortage at airports and hotels are a big problem. And many national monuments entry points don’t have card payments facilities. Western countries have issued advisories on cash crunch in India.

CURRENT VERDICT: Strongly negative, peak season may be badly hit

SOLUTION: Provide more cash at various critical points in tourist destinations as most vendors don’t have cashless payment systems at tourist spots, or have a massive drive to spread cashless transactions.

AUTOS

IMPACT: Post-demonetisation, there was some cushion at wholesale level for Maruti Suzuki, Toyota Kirloskar Motor and Tata Motors from dealer demand for new models or new variants like Baleno, Brezza, Fortuner, Innova and Tiago. Hyundai India, Honda Cars India and Mahindra & Mahindra have seen some short-term impact on sales. At the retail level, sales for cars without waiting period is down 30-50%. Two-wheeler and commercial vehicles have been hit harder. Sixty to 65% of entry level motorcycle sales happen in rural markets where cash is king. Two-wheeler sales may have gone down by 5% last month. Tata Motors posted a 17% decline in commercial vehicle sales in November.

CURRENT VERDICT: Negative, but not yet bleak

SOLUTION: Car-makers are promoting use of cashless transactions. But upgrade in consumer sentiment is the key to avoiding deep negative impact.

AVIATION 


IMPACT: 
In world’s fastest growing aviation market, passenger traffic growth will fall below 20% from an average 23-24% growth recorded in previous years. Flight bookings dropped drastically in days after demonetisation. Recovered somewhat later. Offline travel agents, who took cash, badly hit. Flights to small towns, where cash payments are the norm, are also badly hit, may post negative growth.

CURRENT VERDICT: Somewhat negative, not alarming yet

SOLUTION: Discount offers from airlines. Making sure small operators take online payments.

TELECOM 


IMPACT: 
Mobile phone shipments fell by 26% in November, compared to the previous month. Smartphone shipments are down by 23%. Inventory pile up with retailers. Big sellers who do card and online transactions less badly hit. IDC analysts expect sales for feature phones to drop by 25% in the quarter, and smartphones to fall by 17.5%.

CURRENT VERDICT: Strongly negative

SOLUTION: Zero cost EMI offers from brands, retailers, buy now pay later plans, among other offers can boost demand. But future of cash purchase by low-end consumers still dim.

GOLD 


IMPACT: 
Scared by government warnings, sale of gold against old currency notes fell drastically. NRI customers have fled. Sales are down sharply, and it was already a bad year for gold.

CURRENT VERDICT: Strongly negative

SOLUTION: No immediate solution, a long wait for sentiments to turn around, and fundamental change in terms of fewer cash transactions can have big impact.

AGRICULTURE 


IMPACT: 
Interestingly, villages have adapted in some ways better than cities. GoI allowing tax free deposits of any amounts for farmers have led to many of them getting 20% premium from traders when transacting. Informal credit for daily purchases and use of old notes for key inputs and selling produce have kept rural economy going. Crop planting increased 20-35% every week after demonitisation and remained higher than last year in all weeks after November 8. But a lot depends on cash supply improving quickly in the new year.

CURRENT VERDICT: Neutral to positive

SOLUTION: Rural India is hoping the new year will mean back to normality on cash supply, if not, major disruption possible.

METALS 


IMPACT: 
Real estate slowdown has hit steel, and may hit further. Aluminium, copper, zinc also hit since they are raw materials in building industry products. If auto sales are hit badly, metals business will do worse.

CURRENT VERDICT: Negative, can get worse

SOLUTION: Massive government spend on infrastructure till sentiments and cash supply improve. Budget will be key.

Demonetisation to hurt economy in long term: Experts : 06-12-2016


The demonetisation move was going “to damage the economy in long term” and cash-less digital payment system “may not be helpful as being thought”, experts said on Monday.

In a discussion on ‘State of the Indian Economy’, organised by India International Centre and Working Group on Alternative Strategies, the experts expressed serious concerns over efficacy of the demonetisation move in bringing black money back into the system.

The speakers were Jayan Jose Thomas and Reetika Khera, both Associate Professors of Economics, IIT Delhi; Kaustav Banerjee, Assistant Professor, Centre for the Study of Discrimination and Exclusion, JNU; Ajay Dandekar, Director, School of Humanities and Social Sciences and Centre for Public Affairs and Critical Theory, Shiv Nadar University; Surajit Mazumdar, Professor of Economics, JNU; Partha Sen, former Professor of Economics, Delhi School of Economics; and R. Kavita Rao, Professor, National  Institute of Public Finance and Policy.

Rao said: “On average, all economists will believe that the demonetization will damage the economy. Business that are running on black income will re-invest it the business itself or it will be lent to some in the unorganised sector. Demonetisation will be painful in long term.”

Experts further said that the poor people will be impacted badly due to demonetization decision.

“Everyone thinks cashless is not great. It is regressive in some ways. Poor will bear higher cost because of going cashless. I do not use digital payment on my phone since I do not understand the security infrastructure. Not just in India but there are some problem with it in US as well,” said Khera.

Raising concerns over demonetisation and cashless economy, Majumdar added that the biggest beneficiary of the growth in last two decades was the corporate sector.

The experts also cautioned the government to go slow on execution of cashless economy and implantation of Goods and Service Tax (GST) slowly in order to check possible damages to poor people and the economy.

“Element of surprise, some people are seating on the large stack of black money. Demonetisation could have been done on three months’ notice. Surprise was not necessary,” Sen said.

On GST, Rao said: “… the catch in that as you bring back cash in some form, it is possible to remain outside the GST story. The whole economy being in substantial squeeze, huge chunk of population will be hit adversely if GST is implemented now. First, the GST will get bad name and second economy will be worst hit.”

Source : PTI

Govt panel on audit firms gets more time to submit report : 06-12-2016


A government appointed three-member panel looking into various issues related to audit firms has been given more time till January 15 to submit its report.

The group, headed by TERI Chairman Ashok Chawla, was set up by the Corporate Affairs Ministry in September following representations from several domestic audit firms about the negative impact on them due to various practices that lead to circumvention of regulations.

Initially, the panel was given two months time to submit report to the Ministry.

RBI Deputy Governor N S Vishwanathan and Jubilant Life SciencesBSE -0.27 %’ Co-Chairman and Managing Director Hari S Bhartia are also part of the group. It is chaired by Chawla, who is former Finance Secretary and had also served as Competition Commission of India (CCI) Chairman .

Among others, the panel would look at whether there is an adverse impact on Indian audit firms from restrictive shareholder covenants and through the manner in which audit rotation is being implemented by companies.

“The time period provided to the expert group constituted for looking into the issues related to audit firms and submitting its report is extended till January 15, 2017,” the Ministry said in a communication dated December 2.

The panel would also examine whether joint audit could be introduced in cases where there are restrictive covenants and other specified cases where there is a multinational audit firm as the auditor.

In case a joint audit is to be implemented, then the legal and regulatory steps towards the same would be looked into.

“Several audit firms have represented about adverse impact on Indian audit firms due to the structuring of certain audit firms leading to circumvention of various regulations and imposition of restrictive conditions by foreign investors with regard to auditor appointment by companies,” the Ministry had said while announcing constituting the panel in September.

Source : Business Standard

Finance Ministry takes a great digital leap with lowering threshold for procurements : 06-12-2016


The finance ministry has asked all government departments to make electronic payments to suppliers, contractors or institutions if the order value exceeds Rs 5,000, marking another step towards cashless transactions post demonetisation.

To attain the goal of complete digitisation of government payments, the ministry has lowered the threshold for making such payments from Rs 10,000 to Rs 5,000, an official statement said on Monday.

“All the ministries and departments of the government of India have been now directed by the ministry of finance to ensure with immediate effect that all payments above Rs 5,000 to suppliers, contractors, grantee and loanee institutions etc are made by issue of payment advises only,” the statement said.

Separately, the finance ministry has also asked all ministries or departments to encourage their employees to make use of debit cards for personal transactions instead of cash.

It said that given the progress made in banking technology, it is assumed that each employee would be in possession of a debit/ATM card linked to his/her bank account.

“Ensuring and encouraging government employees to maximise the usage of debit cards for personal related transactions instead of cash would go a long way, with the employees serving as ‘ambassadors’ for the digital push, and also motivate, encourage the general public in taking up the cause,” the ministry added.

While the finance ministry has instructed PSU and private banks to waive the transaction cost for all payments made through debit cards, the road transport ministry has asked vehicle manufacturers to provide a digital tag on all new cars for e-payments at toll plazas and checkposts.

Economic Affairs secretary Shaktikanta Das had last month said all government offices have been asked to use only digital payment method for making payments to stakeholders, contractors and employees.

“Government organisations, PSUs and other government authorities have been advised to use only digital payment methods such as Internet banking, unified payment interface, cards and Aadhaar-enabled payment systems to make payment to all stakeholders and their employees,” he had said.

Following the announcement of demonetisation of Rs 500 and Rs 1,000 notes on November 8, the government has been taking a slew of measures to promote digital transactions.

Source : Economic Times

Forecasters say India may still be the fastest-growing economy : 05-12-2016


India could hang on to the tag of world’s fastest-growing economy going by forecasts based on the strength of first-half expectations despite shocks emanating from the cancellation of high-value notes.

GDP could still expand faster than the 6.6 per cent at which China is expected to grow by the IMF. Forecasters across the board have reduced their FY17 growth estimates on account of demonetisation.

To be sure, there’s little data related to the impact of the November 8 demonetisation to back up the estimates. Among the numbers available is the Purchasing Managers’ Index for November, which fell to 52.3 from a 22-month high of 54.4 in October.

The RBI’s commentary along with its monetary policy statement on December 7 should provide more clarity. The central bank had previously estimated growth at 7.6 per cent.

Indian economy expanded 7.2 per cent in the first half and 7.3 per cent in the September quarter, data released on November 30 showed .

Growth shocks

The decline in growth estimates from near 8 per cent for FY17 to below 7 per cent in most cases stems from the shock to consumption from the note withdrawal and its spillover effect on investment, which fell 5.6 per cent in the July-September period from a year ago, the third successive quarter of contraction

Private consumption rose 7.6 per cent in the September quarter and was seen driving the economy higher with rural demand driven by a good monsoon topping up the lift in urban consumption from the seventh pay commission income bump.

“The construct has changed with as much as Rs 16 lakh crore worth of currency now being demonetised leading to severe shortage of currency and thus expected to lead to a dip in consumption demand,” said Indranil Pan, chief economist at IDFC Bank.

He expects construction, manufacturing, electricity and mining activity to be sharply lower from earlier estimates. The lack of cash may hit genuine demand while the move against black money could slash demand for mobiles, luxuries, dining, travel, tourism and real estate. Cash accounted for 86 per cent of consumer payments in 2013, said ICRA .

“While ongoing investments might not slow down, fresh investment plans may be put on ice if private consumption doesn’t pick up and uncertainty continues, which, in turn, would further delay the much-needed recovery in India’s private investment cycle,” said the rating agency, pointing to the “disruption in the flow of money, verily the economy’s lifeblood.”

India Ratings made the same point. “Investment, particularly private investment, which is already down and out due to various reasons, will face the brunt of the de-legalisation,” it said, pegging FY17 growth at 6.8 per cent.

HSBC expects 5 per cent growth in the December quarter and 6 per cent in the January-March period, two percentage points lower than estimated earlier. It’s one of the few forecasts that expects India to slip below China, putting FY17 growth at 6.3 per cent.

Recovery timeline

The impact on the economy and its duration will depend on how quickly remonetisation occurs, the government takes policy action to deal with the cancelled currency and budget initiatives.

IDFC Bank expects the economy to normalise from the first quarter of FY18, suggesting a two-quarter disruption in activity. The demonetisation is expected to further dent inflation, building the case for a rate cut in the December 7 monetary policy.

A reduction in interest rates is expected to spur demand for housing when married with the expected correction of up to 30 per cent in prices due to the cancellation of high-value notes.

“We expect GDP growth to rebound next fiscal — over the weak base of fiscal 2017 — and assuming a normal monsoon,” Crisil said. HSBC said recovery could be faster depending on the speed at which demonetised money returns.

“What has taken many by surprise is the rapid pace by which old notes are returning to the banking system,” it said in a report.

“If this pace carries on for the next few days, the negative wealth effect (proxied by the amount that never returns, because it was black money), may not be as high as some were initially fearing.”

Long-term gain

Over the longer term, demonetisation is expected to yield significant gains for the economy, providing a shock that could alter consumer behaviour for good.

“Demonetisation has spawned the largest and fastest shift to a ‘less-cash’ economy,” the benefits of which will be felt over a period of time, Crisil said.

Source : PTI

ESIC Hikes Wage Limit To Bring More Workers Under Net : 05-12-2016


 In a bid to bring more workers from unorganised sector under the health insurance scheme, the Employees State Insurance Corporation has increased the monthly wage limit to Rs 21,000, Labour Minister Bandaru Dattatreya said here today.

“Earlier coverage under ESIC scheme was enhanced to Rs 15,000 in 2010. Now, government has taken a decision to hike the coverage from Rs 15,000 to Rs 21,000,” he told PTI.

He said that the government is also strengthening the health infrastructure for the benefit of workers. 

 The upward increase in revision would add about 35 lakh new members to the ESIC pool, Dattatreya said.

At present, 2.14 crore persons are enrolled under this scheme. A notification in this regard has been issued on October 6, 2016 and invites suggestions and objections from all stakeholders.

The government is also strengthening the health infrastructure by upgrading dispensaries into six-bedded hospitals, the minister said.

10-bedded hospitals would also be upgraded into 30-bedded depending on the strength of the insured persons, Dattatreya said, adding, now ESIC and ESI both have 1,450 dispensaries.

The Union minister said he has written to all Chief Ministers to provide land for construction of six-bedded hospitals.

Source : Business Standard

Direct tax incentives likely in Budget ‘FEEL-GOOD’ BUDGET ON THE CARDS : 05-12-2016


To soften the “pain” of demonetisation, the central government might announce a number of direct tax sops for individuals as well as the corporate sector in the Union Budget for 2017-18, which is likely to be presented on February 1 — earlier than usual.

The Budget might have revisions of the tax slabs, reductions in the corporate tax rate, and more tax exemptions or rebates in certain cases. While a clearer picture is emerging, nothing is likely to be finalised till mid-January.

Policymakers have stated — publicly and off the record — that the Prime Minister’s Office and Union finance ministry are working on certain “populist” measures on taxes. This would fit in with the now expected “feel-good” Budget.

Minister of State for Finance Arjun Ram Meghwal had told Business

Standard earlier that there was scope for reduction in direct taxes in the Budget. “There is a likelihood of reduction in direct taxes next financial year. That will be a part of ‘ease of doing business’. This will be deliberated on in pre-Budget consultations.”

An official aware of the pre-Budget deliberations said, “We are still in the process of finalising the Budget. However, there is room for direct tax sops. Any potential loss in revenue could PMO, FinMin mulling tax sops for individuals and corporate entities Corporate tax cut of up to 2% possible Budget makers examining revision of tax slabs be offset with the expected proceeds of the new income-disclosure scheme.”

The latest disclosure scheme, Pradhan Mantri Garib Kalyan Yojana, allows those depositing money in the old series ~500 and ~1,000 notes to enjoy | | Further tax exemptions and rebates for middle class possible Measures part of a “feel-good”, populist Budget to beat demonetisation blues immunity from certain taxation laws by paying a 50-per cent tax on the undisclosed income. However, they would have to deposit a fourth of the undisclosed income for a four-year lock-in. >

Another government official said the Centre could look at reduction in the corporate tax rate of up to two percentage points from 30 per cent in the next financial year.

“While it is too early to talk about direct tax reduction, there will be discussions on the feasibility of relooking at the tax slabs. Corporate tax will definitely see an across-the-board cut this time of up to two per cent,” said the official.

For general taxpayers, the current income tax exemption ceiling is ~2.5 lakh per annum. Salaries from this limit to ~5 lakh per annum attract 10 per cent tax; up to ~10 lakh attract 20 per cent tax; and above ~10 lakh attract 30 per cent tax. Budget-makers are looking at tweaking tax rates as well as slabs.

Part-B of Union Finance Minister Arun Jaitley’s Budget speech, which presents taxation proposals, might only have announcements related to direct tax and customs announcements as indirect tax measures under the goods and services tax (GST) will be decided by the GST Council.

Of course, all this hinges upon GST being rolled out by April 1, which seems unlikely with the Centre and states being unable to reach a consensus in the council meeting on Saturday. The council is going to meet again on December 11 and 12 and try to break the deadlock.

Experts, too, are expecting a revision in tax slabs and rates. “I am expecting something positive on the tax front in the Budget to compensate people for the hurt caused by demonetisation. Fear and tax uncertainty seem to be back on the table. The government may increase some tax slabs to compensate people or come out with some incentives to save taxes. It might do to couple that with stricter and stringent enforcement provisions for non-compliance,” said Neeru Ahuja, partner, global business tax, Deloitte.

In the 2015-16 Budget, Jaitley had promised a reduction in corporate tax rates to 25 per cent by 2019. Towards that, the government has laid down a road map to simultaneously phase out exemptions given to the corporate sector to reduce the tax rate, simplify administration and improve India’s competitive edge globally.

While corporate tax is 30 per cent, the effective rate of taxation is close to 23 per cent on account of a large number of exemptions. The revenue forgone in 2012-13 on account of tax deduction stood at ~68,000 crore. In the next financial year, the corporate rate might hover around 28 per cent after the corporate tax cut. With this, the government is looking at aligning Indian taxation levels to global standards.

Confederation of Indian Industry President Naushad Forbes said corporate tax should be reduced to 18 per cent by withdrawing exemptions of all sorts.

“There is no need to have exemptions. In 2014-15, as per our calculations, the effective tax rate for corporate was 19.4 per cent after all exemptions. So basically, we have pitched for a reduction to 18 per cent in the Budget,” he said. Forbes added it would make the tax structure much simpler. “The intention is to go for a complete exemption-free system right away and make it more attractive for foreign investors.”

In the past Budget, the corporate tax rate for companies with a turnover of ~5 crore or less was lowered to 29 per cent, plus surcharge and cess, from 30 per cent, plus surcharge and cess. Besides, a lower corporate tax rate of 25 per cent was also announced for all new manufacturing companies incorporated from March 1, 2016, given that they do not claim any exemptions. The revenue forgone in 2015-16 on account of exemptions stood at ~62,000 crore.

Source : PressReader

No proposal to cut import duty on gold: Government : 03-12-2016


The government on Friday said there is no proposal under consideration to reduce import duty on gold.”There is no such proposal under consideration at present,” Minister of State for Finance Santosh Kumar Gangwar said in a written reply to the Lok Sabha.

Gems and jewellery exporters have demanded cut in the import duty to boost exports.

In a separate reply, the minister said, representations were received from the Confederation of Indian Textile Industry (CITI) and from the Federation of India Art Silk Weaving Industry to increase customs duty on import of fabrics, in general, from 10 per cent to 20 per cent.
“The same was examined and it was decided not to make any changes in customs duty on fabrics,” he said.
Replying to a separate question on devaluation of rupee to boost exports, Minister of State for Finance Arjun Ram Meghwal said that the exchange rate of the rupee by and large market is determined and the government and the RBI are closely monitoring the emerging external situation.
During April-October 2016-17, he said, exports declined marginally by 0.2 per cent and the exchange rate of the rupee against the US dollar depreciated by 3.8 per cent.

Source : Times Of India 

 

Consensus eludes Day 1 of GST Council meeting : 03-12-2016


Consensus eluded on the model GST law on Day 1 of the meeting of the all-powerful GST Council, which will deliberate again tomorrow the issue and also try to resolve the contentious point of dual control of assessees under the new indirect tax regime.

The fifth meeting of the Goods and Services Tax (GST) Council, headed by Union Finance Minister Arun Jaitley and comprising state finance ministers, will also deliberate on impact of demonetisation on revenue.

The Centre plans to implement the GST from April 1. Due to Constitutional compulsion, the GST has to be rolled out by September 16 next year as the existing indirect taxes will come to an end, and it would not be possible for either Centre or the states to collect indirect taxes.

Some state finance minister exuded confidence that it was still possible to implement GST from April 1, 2017, though the Centre is running on a tight time schedule.

“On duel control there is no consensus so far. It will be taken up tomorrow,” Jammu and Kashmir finance minister Haseeb Drabu told reporters after the meeting, and also expressed hope that April 1 target for the GST roll out is possible.

He said the finance ministers discussed State GST law and in tomorrow meeting “we would be able to clear large chunks of model GST law”.

Kerala Finance Minister Thomas Isaac said that the meeting was inconclusive as “we had to spend nearly two hours to decide upon the agenda itself”.

“Many states wanted the cross empowerment agenda to be taken up first but officially it was the agenda that GST law should to be taken first. So lot of debate time was spent on this…,” he said.

The GST Council has to finalise the model GST law, Integrated GST (IGST) law and compensation law at their meeting tomorrow.

Source : Economic Times

Notification No.11/2016 02-12-2016


Procedure for the purposes of furnishing and verification of Form 26A for removing of default of Short Deduction and/or Non Deduction of Tax at Source- Reg. – 11/2016

F. No.  DGIT(S)CPC(TDS)/NOTIFICATION/2016-17

Government of India Ministry of Finance Central Board of Direct Taxes Directorate of Income-tax (Systems) New Delhi.

Notification No. 11/2016

New Delhi,  02 December, 2016

Subject: – Procedure for the purposes of furnishing and verification of Form 26A for removing of default of Short Deduction and/or Non Deduction of Tax at Source- Reg.

1.  As per first proviso to sub-section (1) of section 201 of Income-tax Act, 1961, any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident-

(i)  has furnished his return of income under section 139;

(ii)  has taken into account such sum for computing income in such return of income; and

(iii)  has paid the tax due on the income declared by him in such return of income,

and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed.

2.  As per sub-rule (1) of Rule 31ACB of Income-tax Rules, 1962, the certificate from an accountant under the first proviso to sub-section (1) of section 201 shall be furnished in Form 26A to the Principal Director General of Income-tax (Systems) or the person authorised by the Director General of Income-tax (Systems) in accordance with the procedures, formats and standards specified under sub-rule (2), and verified in accordance with the procedures, formats and standards specified under sub-rule (2).

3.  In exercise of the powers delegated by the Central Board of Direct Taxes (Board) under sub-rule (2) of Rule 31ACB of Income-tax Rules, 1962 the Principal Director General of Income-tax(Systems) hereby authorizes the persons mentioned at Col. No. 1 to receive the form-type mentioned in Col. No. 2 to be filed in the mode specified at Col. No. 3 for the assessment years mentioned at Col. No. 4 and pertinent to defaults under Sections of the Act mentioned at Col. No. 5:

1

2

3

4

5

Authorised A.O. Form Type Mode of furnishing Form

A.M.

To be used exclusively for defaults under Section

Field Assessing Officer(TDS) 26A Paper Up to & including 2016-17 201(1) and/or 40(a)(ia)
CPC-TDS 26A Electronic[2] Up to & including 2016-17 200A
CPC-TDS 26A Electronic[2] Including & from 2017-18 200A; 201(1) and/or 40(a)(ia)

[1] The AO should ensure that interest on non-deduction of the whole or any part of the tax or failure in payment after deduction as required by or under this Act shall be paid before furnishing the statement in accordance with the provisions of the Act.

[2] Furnishing of Form 26A in electronic shall be enabled with effect from 15.01.2017.

4.  The procedure for electronic filing of Form 26A is as follows:

4.1      Role of Deductor:

STEPS PLACE OF ACTION

ACTION

1 TRACES Portal Get Details of Short Deduction: Deductor needs to submit request to get details of short deduction.
2. TRACES Portal Enter No Deduction transactions: Deductor needs to enter details of No Deduction transaction at TRACES, if any and submit transaction details at TRACES in the rows provided for this purpose.
3. TRACES Portal Submit Request: On submitting request, a Unique Request Number will be generated for further reference. The Short-Deduction and/or Non-Deduction request so submitted will be processed by TRACES and the successful transaction will be displayed to the Deductor after certain time. A unique DIN [3] will be generated by TDSCPC for unique Short deduction transaction. Similarly a unique Alpha-Numeric String (combination of TAN, PAN and F.Y.) will be generated for No-deduction transaction. Both of these unique numbers and strings will be displayed after successful processing by TRACES. These unique DINS and Alpha-Numeric Strings will be communicated electronically to E-Filing Portal and available for further action by Deductor.
4. Offline The deductor will communicate the DINs and/or Alpha-Numeric Strings generated in step no. 3 for each of the Short-Deduction and/or Non-Deduction transactions to the accountant identified for certifying Annexure A and obtain the membership no. of such accountant to be used in step no. 5.
5. E-Filing Portal

(Login as Deductor)

 

Locate DIN on which Form 26A effect is to be given: Locate and select relevant DIN in menu driven option for which request for Form 26A is to be submitted.

Locate No Deduction Transactions on which Form 26A effect is to be given: Locate and select No-Deduction transaction for which request for Form 26A is to be submitted.

6.

E-Filing Portal

 

Authorize Membership Number of Accountant : Deductor, after ascertaining the membership number of the accountant who is to certify Annexure A of Form 26A, needs to authorize such accountant by entering his membership number in respect of each of the Short-Deduction and Non-Deduction transactions(in one or more sessions) and submit these authorizations.
7.

E-Filing Portal

 

Certification from Authorized Accountant: On successful authorization by Deductor, the Accountant so authorized on E-Filing Portal may fill in the relevant details in Annexure A to Form 26A with respect to the Deductee in question and certify by digitally signing Annexure A. The details of unique DINs and Alpha-Numeric Strings will become visible to the authorized accountant(when he logs into his own account as a registered accountant on E-Filing Portal) only when Deductor has authorized such an accountant with respect to any Short-Deduction and/or Non-Deduction transaction.
8. E-Filing Portal Submit Digitallv signed Form 26A: Once registered Accountant/Accountants certify DINs and/or Alpha-Numeric Strings, deductor needs to digitally sign the form and submit its final request. Consequently, these submitted records will Consequently, these submitted records will be shared with the FAOs concerned.
9. TRACES Portal View Modified Status of default: Once request has been processed, short deduction will be re-calculated and Late Deduction Interest will be generated accordingIy, which can be viewed b Deductor.
10. NSDL\TRACES portal Make payment for Modified Late Deduction Interest: Deductor needs to pay Late deduction Interest amount, according to the modified computation.

[3]  DIN is unique identification number of single Deductee row.

[4]  Accountant shall have meaning assigned to it in the Explanation to sub-section (2) of section 288of the I.T. Act, 1961.

4.2      Role of Accountant at E-Filing:

1.  Accountant has to get himself registered at E-Filing Portal and share his membership number with the Deductor desiring to authorize him with respect to Short-Deduction and/or Non-Deduction.

2.  Receive DINs and/or Alpha-Numeric Strings with respect to each of the Short-Deduction and/or Non-Deduction from the Deductor.

3. After being so authorized by Deductor and upon receiving DINs and/or Alpha-Numeric Strings from Deductor; login to E- Fling Portal with Accountant credentials.

4. Use DINs and/or Alpha-Numeric Strings to identify the Deductee rows which are to be verified.

5. Complete Annexure A to Form 26A with respect to the concerned Deductee.

6. Submit the Annexure A so completed by digitally signing it.

4.3      Role of e-filinq:

For Deductor

Validations

TRACES

1 . Provide view of Short-Deduction and/or Non-Deduction transactions to Deductor as communicated to E-Filing Portal electronically by CPC-TDS.

2. Allow Deductor to locate and select Short-Deduction and/or Non-Deduction transactions and authorize Accountant(s) with respect to each of these transactions by entering membership number of Accountant(s).

3. Allow Accountants so authorized to view Annexure A to Form 26A on the basis of DIN and/or Alpha-Numeric String; complete the Annexure; and submit it by digitally signing it.

4. Allow Deductor to view Form 26A including Annexure A to Form 26A so submitted by authorized Accountant(s) and submit this Form 26A by digitally signing it.

Check mandatory Compliance: ITR of Deductee(PAN) should have been filed u/s 139 and no demand should be payable at the time        of assessment. Share digitally signed Form 26Awith CPC-TDS.

4.4      Role of TRACES:

For Deductor Backend Processing
1. Display identified Short-Deduction transactions for viewing of Deductor.

2. Provide option of adding No-Deduction transactions to Deductor.

3. Provide DIN and/or Alpha-Numeric String for each transaction after submission by Deductor as per Step 3 of Para 4.1.

4. Display updated status of submitted Form 26A as received from E-Filling Portal.

Processinq the request: Once Deductor submits request of Form 26A, TDSCPC will reprocess the statement and Short deduction will be modified.

(Ps. Thuingaleng)

Dy. Commissioner of Income Tax (CPC-TDS)

O/o The Pr. Director General of Income-tax (Systems)

In the Narendra Modi demonetisation drive, who is the real cash crunch hero? Find out here : 02-12-2016


t the time when the Government is busy justifying its move regarding demonetisation and the opposition has occupied itself with shouting slogans in the parliament and organising protests, Bharatiya Reserve Bank Note Mudran Pvt. Ltd has emerged as the real hero for the country. Most of us only know about Reserve Bank of India and have not heard about BRBNMPL. This is a subsidiary bank of RBI and is located in Mysuru. The bank is being hailed as a saviour because its workers have literally folded up their sleeves and got to work – printing the currency notes. The president of the subsidiary bank former president, SA Ramadas said that to solve the nationwide problem it has its workers working 24 hours a day, reports The Hindu.

In his letter written to Prime Minister Narendra Modi, Ramadas said that the workforce of the bank is aiming towards maximising production with the available workforce. Narendra Modi on the 8th of November has announced that the then existing Rs 500 and Rs 1,000 notes would no longer be considered legal tender and the people who have these notes would have to exchange the notes before 31st of December. Since the announcement, the country is in a complete state of chaos, dozens of people have lost their life; struggling tourists are performing on the streets for cash and a black market for the exchange of notes is already in place.

Although Ramadas had claimed that the facility is printing both Rs 2,000 and Rs 500 notes, it was later clarified that only Rs 2,000 notes are being printed by the subsidiary bank. The officials of BRBNML refused to discuss the issue due to security and confidentiality issue.

Source : Financial Express

GST, currency change to be game changers for economy: Arun Jaitley : 02-12-2016


Rejecting apprehensions that the Indian economy would suffer due to demonetisation, Finance Minister Arun Jaitley today termed as “game changers” the pulling out of high-value old notes as well as Goods and Services Tax, which is proposed to be rolled out from April 1.

“I do believe that both (GST and demonetisation) will be game changers. This is because GST will ensure higher taxation as far as the Centre is concerned and also higher taxation for states. It is an efficient system. It blocks leakages. It will certainly help the consuming states like Odisha,” he said. Jaitley was speaking at the “Make in Odisha” conclave here.

On the hue and cry over the demonetisation exercise, he said: “As far as currency changes are concerned, once the demonetisation process is completed and the economy gets back to full stream, the size of the GDP will significantly expand, tax base will expand.”

He added, “More money will come to the banks which will be used fruitfully for the betterment of the economy.”

Source : Economic Times

Corporate defaulters may lose much protection under new code : 02-12-2016


 Legislative changes are combining with the stress of the shock demonetising of high value notes to corner corporate defaulters, cozy after declaring themselves as sick units, because they are finally finding themselves within a striking distance of their creditors, with the disbanding of the Board of Industrial and Financial Reconstruction (BIFR).

Cases listed before the panel include those of Uttam Galva, Zenith Computer, Moser Baer, Lilliput Kidswear and Avaya Industries, among a list of more than hundred cases.

“This will give more teeth to settle negotiations because the comfort of interminable delay will go,” said SBI chairman Arundhati Bhattacharya. Several thousand crores of loans have been stuck in the long drawn process that works to the defaulters’ advantage .

On November 30, the government ended protection under the Sick Industrial Companies Act (SICA) and replaced it with an new insolvency code. Alok Dhir, founding member, Dhir & Dhir, said a corporate insolvency resolution process (CIRP) regulation under the newly notified bankruptcy code would replace the earlier protection. His firm is one of the most active in bankruptcy protection. The process for it was notified by the government on Thursday.

This time around, though, the default protection of assets will not come as easy. The process of liquidation has not been approved yet, but even protected companies will have only 180 days to find a solution.

“Lawsuits against defaulting borrowers will be on the rise with the repealing of SICA because there isn’t an automatic moratorium, and lenders want to initiate action,” said Aditi Bagri, senior associate at Juris Corp. Bagri has been handling a large lender stuck in the BIFR process.

As of Thursday all of these companies are left vulnerable to challenges. A senior PSUbanker said that while some of the accounts in BIFR are listed because it was part of a regulatory process, there was an equally large number in default and banks would file or liquidation suits to recover their money.

Source : Business Standard

Notification No. : 36/2016 Dated: 01-12-2016


Seeks to further amend notification No. 12/2012-Central Excise dated 17th March, 2012, in respect to the excise duty exemption on branded gold coins of purity 99.5 and above. – Central Excise – Tariff

GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE)

Notification No. 36/2016 – Central Excise

New Delhi, the 1st December, 2016

G.S.R. 1110 (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, 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, in the Table, for serial number 200 and the entries relating thereto, the following serial number and entries, shall be substituted, namely:-

(1)

(2)

(3)

(4)

(5)

“200 7114 (I) Articles of goldsmiths‟ or silversmiths‟ wares of precious metal or of metal clad with precious metal, bearing a brand name;

(II) Gold coins of purity 99.5% and above, bearing a brand name when manufactured from gold on which appropriate duty of customs or excise has been paid;

(III) Silver coins of purity 99.9% and above, bearing a brand name when manufactured from silver on which appropriate duty of customs or excise has been paid.

Explanation. – For the purposes of this exemption,-

(1) “brand name” means a brand name or trade name, whether registered or not, that is to say, a name or mark, such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to a product, for the purpose of indicating, or so as to indicate, a connection in the course of trade between the product and some person using such mane or mark with or without any indication of the identity of that person;

(2) an identity put by a jeweller or the job worker, commonly known as „house mark‟ shall not be considered as a brand name.”.

   

[F. No. 354/122/2016 –TRU]

(Anurag Sehgal)

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 last amended vide notification No. 35/2016 -Central Excise, dated the 28th November, 2016 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 1097(E), dated the 28th November, 2016.

Notification No.111/2016 01-12-2016


Section 10(46) of the Income-tax Act, 1961 Central Government notifies Bureau of Indian Standards (BIS), set up by the Bureau of Indian Standards Act, 1986 (63 of 1986) in respect of the following specified income arising to that Bureau – 111/2016

 

MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION No. 111/2016

New Delhi, the 1st December, 2016

S.O. 3607(E).-In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961) the Central Government hereby notifies for the purposes of the said clause, the Bureau of Indian Standards (BIS), set up by the Bureau of Indian Standards Act, 1986 (63 of 1986) in respect of the following specified income arising to that Bureau, namely:-

(i) Certification fee;

(ii) Sale of standards, provided there is no profit involved; and

(iii) Income from interest.

2. This notification shall be applicable for the Assessment years 2017-18, 2018-19, 2019-20, 2020-21 and 2021-22.

3. The notification shall be effective subject to the following conditions, namely:-

(a) the Bureau of Indian Standards (BIS) does not engage in any commercial activity;

(b) the activities and the nature of the specified income of the Bureau of Indian Standards (BIS) remain unchanged throughout the financial year’; and

(c) the Bureau of Indian Standards (BIS) files return of income in accordance with the provision of clause (g) of sub-section (4C) section 139 of the Income-tax Act, 1961.

[F. No.196/23/2015-ITA-I]

DEEPSHIKHA SHARMA, Director

Notification No.110/2016 01-12-2016


Section 10(46) of the Income-tax Act, 1961 Central Government notifies the Maharashtra Electricity Regulatory Commission , a Commission constituted by the State Government of Maharashtra, in respect of the following specified income arising to that Commission – 110/2016

 

MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION No. 110/2016

New Delhi, the 1st December, 2016

S.O. 3605(E).-In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, the ‘Maharashtra Electricity Regulatory Commission’, a Commission constituted by the State Government of Maharashtra, in respect of the following specified income arising to that Commission, namely:-

1. Fees for Annual Licence;

2. Interest on Fixed Deposit and Savings Account;

3. Fees for Application / Petition filed;

4. Grants from Government of Maharashtra;

5. Fees for Documents;

6. Penalty for delayed payment of Annual Licence Fees;

7. Fees for RTI;

8. Sale of scrap.

2. This notification shall be applicable for the above specified income of the Maharashtra Electricity Regulatory Commission for the financial years 2015-16 to 2019-20.

3. This Notification shall be effective subject to the following conditions, namely:-

(a) the ‘Maharashtra Electricity Regulatory Commission’ does not engage in any commercial activity;

(b) the activities and the nature of the specified income of ‘Maharashtra Electricity Regulatory Commission’ remain unchanged throughout the financial years; and

(c) the ‘Maharashtra Electricity Regulatory Commission’ files returns of income in accordance with the provision of clause (g) of sub-section (4C) of section 139 of the Act, Income-tax Act, 1961.

[F. No.196/38/2015-ITA-I]

DEEPSHIKHA SHARMA, Director

Notification No. : 37/2016 Dated: 01-12-2016


SECTION 5A OF THE CENTRAL EXCISE ACT, 1944 – EXEMPTION FROM DUTY OF EXCISE – POWER TO GRANT – AMENDMENT IN NOTIFICATION NO.74/93-C.E., DATED 28-2-1993 ETC.

NOTIFICATION NO.37/2016-C.E.DATED 31-12-2016

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 directs that each of the notifications of the Government of India in the Ministry of Finance (Department of Revenue), specified in column (2) of the Table below shall be amended in the manner specified in the corresponding entry in column (3) of the said Table, namely:—

S. No. Notification Number and date Amendments
(1) (2) (3)
1. Notification No. 74/93-Central Excise, dated the 28th February, 1993 [G.S.R number 243(E) dated the 28th February,1993] In the said notification, in the Table, against serial number 2, in the entry in column (2),—

(i) after the word and figures “headings 2853″, the brackets and words “(excluding Phosphides, whether or not chemically defined, except Ferrophosphorus)” shall be inserted;
(ii) for the words and figures “and 9406″, the figures, words and brackets ” 9406 and 9620 (Monopods, Bipods, and Tripods made of iron & steel and aluminium)” shall be substituted.
2. Notification 10/96- Central Excise, dated 23rd July,1996[ G.S.R number 308(E) , dated the 23rd July, 1996] In the said notification, in the Table, against serial number 6, for entry in column (2), the entry “2853 90 30″ shall be substituted.
3. Notification 49/2003-Central Excise, dated 10th June, 2003[G.S.R number 471(E) dated 10th June, 2003] In the said notification, in the Schedule,—

(i) against serial number 4, for the entry “2202 90 20″ in column (3), the entry “2202 99 20″ shall be substituted;
(ii) against serial number 13, for the entries, “8528 41 00 or 8528 51 00″ in column (3), the entries “8528 42 00 or 8528 52 00″ shall be substituted;
4. Notification 50/03-Central Excise dated 10th June, 2003[G.S.R number 472(E) dated 10th June, 2003] In the said notification, in Annexure-I, against serial number 4, for the entry “2853 00 30″ in column (2), the entry “2853 90 30″ shall be substituted.
5. Notification 30/2004 –Central Excise dated 9th July, 2004[ G.S.R. number 421(E) dated 9th July, 2004] In the said notification, in the Table,—

(i) against serial number 7, in the entry in column (2), for the figures “5402 59 10, 5402 61 00, 5402 69 30″, the figures “5402 53 00, 5402 61 00, 5402 63 00″ shall be substituted;
(ii) against serial number 11, in the entry in column (3) the brackets, words and figure “(except 5601 10 00)” shall be omitted;
6. Notification 1/2011-Central Excise, dated 1st March, 2011[G.S.R. number 116(E) dated 1st March, 2016] In the said notification, in the Table,—

(i) against serial number 10, in the entry in column (3), after the word “goods” the word ” for infant use” shall be inserted;
(ii) against serial number 23, for the entry in column (2), the entry “2202 99 10″ shall be substituted;
(iii) against serial number 24, for the entry in column (2), the entry “2202 99 20″ shall be substituted;
(iv) against serial number 25, for the entry in column (2), the entry “2202 99 30″ shall be substituted;
(v) against serial number 26, for the entry in column (2), the entry “2202 99 90″ shall be substituted.
7. Notification 2/2011-Central Excise, dated 1st March, 2011[G.S.R. number 117(E) dated 1st March, 2011] In the said notification, in the Table,—

(i) against serial number 12, for the entry in column (2), the entry “2202 99 30″ shall be substituted;
(ii) against serial number 13, for the entry in column (2), the entry “2202 99 90″ shall be substituted.
8. Notification 7/2012 Central Excise, dated 17th March, 2012 [G.S.R. number 158(E) dated 17th March, 2012] In the said notification, in the Table, against serial number 2, in the entry in column (2) the brackets, word and figures “(except 5601 10 00)” shall be omitted.
9. Notification No. 12/2012-Central Excise, dated 17th March, 2012[G.S.R. number 163(E) dated 17th March 2012] In the said notification in the Table,—

(i) against serial number 154, for the entries in column (2), the entries “401150, 40119000, 40132000 or 40139050″ shall be substituted;
(ii) against serial number 345, for the entries in column (2), the entries “84(except 84244100, 84244900,84248200, 8432, 8433, 8436, 8437, 84521012, 84521022, 845230, 845290, 84729093, 84729094,84798992)” shall be substituted;
(iii) against serial number 349, for the entries in column (2), the entries “8702 10 21 to 8702 10 29, 8702 20 21 to 8702 20 29, 8702 30 21 to 8702 30 29,8702 4021 to 8702 40 29, 8702 90 21 to 8702 90 29″ shall be substituted.

2. This notification shall come into force on the 1st day of January, 2017.

Notification No.109/2016 01-12-2016


Section 10(46) of the Income-tax Act, 1961 Central Government notifies the Chandigarh Building and Other Construction Workers Welfare Board , a board constituted by the Administrator, Union Territory, Chandigarh in respect of the following specified income arising to the said board – 109/2016

MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION No. 109/2016

New Delhi, the 1st December, 2016

S.O. 3606(E).-In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961) the Central Government hereby notifies for the purposes of the said clause, the ‘Chandigarh Building and Other Construction Workers Welfare Board’, a board constituted by the Administrator, Union Territory, Chandigarh in respect of the following specified income arising to the said board, as follows :-

i) Proceeds of the Cess collected under the Building & Other Construction Workers Welfare Cess Act, 1996 (28 of 1996) and rules thereunder.

ii) Interest income received from investment.

2. This notification shall be applicable for the above specified income of the Chandigarh Building and Other Construction Workers Welfare Board for the financial year 2015-16 to 2019-20.

3. The Notification shall be effective subject to the following conditions, namely:-

(a) the ‘Chandigarh Building and Other Construction Workers Welfare Board’ does not engage in any commercial activity;

(b) the activities and the nature of the specified income of ‘Chandigarh Building and Other Construction Workers Welfare Board’ remain unchanged throughout the financial year ; and

(c) the ‘Chandigarh Building and Other Construction Workers Welfare Board’ files return of income in accordance with the provision of clause (g) of sub section (4C) of section 139 of the said Act.

[F. No.196/17/2015-ITA.I]

DEEPSHIKHA SHARMA, Director

Finance Ministry invites suggestions for Budget 2017-18 : 01-12-2016


In order to encourage public participation and bring in greater transparency, the Finance Ministry has invited suggestions from public for Budget 2017-18.

People can submit their suggestions by December 15.

To promote Jan Bhagidari, citizens from all walks of life are welcome to be a part of the budget making process, said a post on myGov portal.

People can submit suggestions either directly in the comments box or attach a PDF document, it said, adding that this has been a regular feature on the portal for the last two years.

“Last year we had an overwhelming response with over 40,000+ suggestions for Union/ Railway budget. Several of the suggestions received on myGov were incorporated in the last year’s budget,” it said.

Citing various suggestion incorporated in the current year Budget, myGov portal said, these included announcement about Direct Benefit Transfers (DBT) on fertilisers, creation of separate irrigation fund, Price Stabilisation Fund for pulses and introduction of special agricultural cess.

“We seek your valuable ideas to continue the tradition of the Union Budget incorporating the citizens’ aspirations,” it said.

The Budget is expected to unveiled on February 1.

Meanwhile, Finance Ministry also informed that media entry will be restricted from December 1 as work for preparation of General Budget 2017-18 has already commenced.

Source : Business Standard

I-T Act amendments upset calculations of cash hoarders : 01-12-2016


There was unusual rush at income tax offices in the capital on Tuesday, soon after a bill was passed by Lok Sabha clearing amendments to the Income Tax (I-T) Act+ which proposed enhanced tax liability of 82.5% of the total unaccounted amount.

The anxiety is easy to understand. For, the proposed amendments shut out one attractive option that holders of undeclared income had — of declaring the cash with them as income for the year and get away by paying 35.5% of tax. That most of thedeclarations under the Income Disclosure Scheme+ (IDS), which closed in September, were about assets rather than cash only enhanced the appeal of the option which will be extinguished when the amendments enter the statute book. Not surprisingly, the last few days have seen many turning up at I-T offices across the country to persuade tax officials to let their hitherto undeclared income be included among their declaration under the IDS.

The tax department, it is learnt, refused to entertain such requests. The amendments passed on Tuesday will shut out the room for the exercise of discretion+ . According to a chartered accountant, one among the several bookkeepers who had been queuing up at the I-T office in the wake of the demonetisation decision on November 8, people did not declare their cash under IDS because they did not suspect that the government could change the I-T Act immediately after closure of the IDS.

As cash is a movable asset, holders have the leeway to declare the undeclared amount as windfall income in the current financial year, said chartered accountant Vivek Jain when approached by TOI to explain why the amendments might not be welcomed by those with undeclared cash. Disclosure of unaccounted income, under Section 115BBE of the unamended I-T Act, as sudden surge income during the year would have invited a flat tax rate of 30%. With cess and surcharge, the total liability would have come to a maximum of 35.54% of the total disclosed amount.

In fact, Jain said many hoarders of cash, clueless about PM Modi’s November 8 bombshell, had planned to pay advance tax in December on their hoard. Even after being forced by demonetisation to bring out their cash, they had hoped to get away by paying 35.5%. The amendments have put paid to the plan. For, the changes in Section 115BBE of I-T Act for such disclosure of cash would now invite a total tax of 82.5% — a flat tax of 60% in addition to surcharge of 25% of tax i.e. 15% of such income. So, the total tax on such cash disclosure would be 75%.

In addition, the new amendment, according to the press statement issued by the government, provides for a penalty of 10% of this 75% tax. Thus, the total tax outgo would be 82.5%. As the window of Section 115BBE has now become hugely punishing, the only option available to hoarders of black money is to opt for the PM’s ‘Garib Kalyan Yojana’, under which a flat 49.9% tax is paid upfront and 25% of all such deposits go into the PM’s welfare fund for the poor. In case the hoarders try to under-report or misreport, their tax liability will go up to 50.54% and 95.54% respectively, if caught in assessment.
The penalty on uncovered income also increased to upward of 60.90% up to 95.54% from 40.9% earlier.
Source : PTI

 

New income declaration scheme raises doubts : 01-12-2016


Revenue Secretary Hasmukh Adhia has said that the disclosures will enjoy immunity from wealth tax, civil and other taxation laws, but there will be no immunity from foreign exchange violations, narcotics and black money laws. But, the Taxation Laws (Second Amendment) Bill, 2016, does not contain any such provisions. Unlike the earlier Income Declaration Scheme, 2016, which explicitly covered immunity, this Bill does not have any such provisions, says Preeti Khurana, a CA and chief editor of ClearTax.

According to the proposal, the government will also notify forms that individuals will need to fill up and submit when declaring unaccounted money. These forms will be available once the Bill is notified. Many are also concerned if they could receive income tax notice before the forms become available. Even if there is a notice, one should not worry, says Rajeev Jain, a Mumbai-based CA. One can go online in his income tax account and reply to the notice accordingly.

 Before the new income declaration scheme, there was a loophole in the Income Tax Act. Since the demonetisation drive started, some tax experts have suggested that the tax laws offer immunity from penalty if a person discloses his unaccounted income voluntarily and pays tax on it. The view was that a person should declare income under Sections 69(A), 69(B) and 69(C) that deal with certain unexplained cash credits, investment, expenditure, etc in the current financial year. Pay tax on it and become compliant. The assessee can, then, include this when filing tax for the current financial year. The new norms actually plug this loophole.

 They allow individuals to deposit money in banned Rs 500 and Rs 1,000 notes by paying 50% tax on the undisclosed income. However, the declarants will have to deposit a fourth of the undisclosed income with a four-year lock-in. The break-up works like this: the declarant declares undisclosed income, pays a tax of 30%, a penalty of 10% on the undisclosed income, and a surcharge called Pradhan Mantri Garib Kalyan Cess of 33% on the tax.

 In addition, the declarant will have to deposit 25% of undisclosed income in a zero-interest deposit scheme that will be called Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016. This money will be utilised for developmental activities such as irrigation, housing, construction of toilets and infrastructure, primary education and primary health.

 There are also concerns whether the individual depositing unaccounted money would get the 25% portion invested in PMGKDS back after four years or some new amendments could be made. CAs don’t see any issue here and feel that people would get their money back as declared by the government.

 Key concerns:

 People are worried whether the tax department will open up previous years’ returns for reassessment

 The latest income disclosure Bill does not have clear provisions on immunity

 People are worried whether they may get a notice from the tax department even before they have been able to fill up the specified form for income declaration

 People are also worried if the government will return the 25% deposited with i

Notification No: SO 3591(E) [F.NO.A-4501/14/2016 Dated: 30-11-2016


SECTION 419 OF THE COMPANIES ACT, 2013, READ WITH SECTION 5 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 – TRIBUNAL – BENCHES OF – DESIGNATED BENCHES OF NCLT TO EXERCISE JURISDICTION, POWERS AND AUTHORITY OF ADJUDICATING AUTHORITY CONFERRED BY OR UNDER PART II OF SAID CODE

NOTIFICATION NO. SO 3591(E) [F.NO.A-45011/14/2016-AD-IV]DATED 30-11-2016

In exercise of the powers conferred by sub-section (4) of section 419 of the Companies Act, 2013 (18 of 2013), read with clause (1) of section 5 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016) (hereinafter referred to as the Code), the Central Government hereby designates Benches of the National Company Law Tribunal constituted vide notification number S.O. 1935(E), dated the 1st day of June, 2016 to exercise the Jurisdiction, powers and authority of the Adjudicating Authority conferred by or under Part II of the Code.

2. This notification shall come into force from 1st December, 2016.

Notification No : 51/2016 Dated: 30-11-2016


Seeks to amend Place of Provision of Services Rules, 2012 so as to exclude online information and database access or retrieval services from the definition of telecommunication services – 51/2016

GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE)

Notification No. 51/2016-Service Tax

New Delhi, the 30th November, 2016

G.S.R.—(E).- In exercise of the powers conferred by sub-section (1) of section 66C and clause (hhh) of sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules to further amend the Place of Provision of Services Rules, 2012, namely :-

1. (1) These rules may be called the Place of Provision of Services (Second Amendment) Rules, 2016.

(2) They shall come into force on the 1st day of December, 2016.

2. In the Place of Provision of Services Rules, 2012, in rule 2, in clause (q), after the words “include broadcasting”, the words “and online information and database access or retrieval” shall be inserted.

[F. No. 354/149/2016-TRU]

(Mohit Tiwari)

Under Secretary to the Government of India

Note:- The principal rules were published in the Gazette of India, Extraordinary, vide notification No. 28/2012 – Service Tax, dated the 20th June, 2012 vide number G.S.R. 470 (E), dated the 20th June, 2012 and last amended by notification No.46/2016 – Service Tax, dated the 9th November, 2016 vide number G.S.R. 1055 (E), dated the 9th November, 2016.

Smart cities: Digital solutions alone will not deliver results India hopes to achieve : 30-11-2016


As Indian cities start work towards becoming ‘smart’, there is a yawning gap in electricity supply and mobile phone penetration—crucial to becoming smart—compared to global peers. In its report, Building Smart Cities in India, Brookings India has taken a hard look at three cities—Allahabad, Ajmer and Vishakapatnam—where the US is involved and stated that digital solutions alone will not deliver the results India hopes to achieve. It has made a series of policy recommendations to improve implementation. This includes creating customised solutions, getting urban local bodies to monetise their overall governance approach and elevate the financial standing to make urban areas attractive for future investment. It suggested creating a municipal bond market like in the US as a significant source of capital.

Doing this is important as over the next 15 years, over 200 million Indians will shift to cities, taking the country’s urban population to 40% from the current 31%. It is here that the role of Special Purpose Vehicles (SPVs) is critical, but for that to happen, their long-term role needs to be clearly defined. Each city needs to have an SPV with 50:50 shareholding between the state government and urban local bodies. It also points out that despite the 74th Constitutional Amendment Act being passed in 1992, progress on the 18 functions under the Twelfth Schedule regarding devolution of responsibilities, and governance across Indian cities remains uneven. Till now, 82% of legislative functions have been devolved.

Source : Business Standard

Demonetisation silently changing the way the country does financial transactions : 30-11-2016


Sundara Pandiyan, a manager at Chandra Transport in Sivaganga in Tamil Nadu for years has been repaying his company’s truck loan instalment to Shriram Transport FinanceBSE 0.32 % Ltd in cash. The scramble for cash after Prime Minister Narendra Modi demonetised Rs 500 and Rs 1000 notes did turn his life upside down, for the better. He now has downloaded the MYSTFC app and his banker has taught him how to do net banking, and after initial hiccups, he feels liberated.

Millions of citizens are being put through the hardship of waiting endlessly in front of ATMs and bank branches. But the struggle for cash may also be silently changing the way the country transacts as the dematerialisation of shares did to stock trading in the mid-90s.

From Sivaganga to Jaisalmer in Rajasthan, businesses are adapting to the new reality that cash may no more be the king. The adoption of digital banking is accelerating and some of those who are reluctant are hoping for those good old days to return even as they lean on neighbours to take payments on their behalf by swiping the plastic cards at their businesses. “When I did it for the first time, I found it a bit difficult and strange, but now I guess it is going to be easy,” says Pandiyan. “I think that this move is going to be beneficial for us.”

Shriram Transport Finance, which gets about half of its payments and disbursals in cash, has also realised that life may not be the same and has come to recognise that digital is the way to go. And for the first time in 35 years, customers are keen to buy the theory. “We have created the MYSTFC app and expect a number of people to go up during such times,” said Umesh Revankar, managing director of Shriram Transport Finance Company. “Big operators were using online payment gateways to repay their loans.”

Restaurants and tourist guides in the remote desert town of Jaisalmer are coming up with indigenous ways to overcome the cash crunch. Narendra Purohit, a tourist guide, didn’t even blink when a tourist said he did not have cash to pay for his services. “Don’t worry sir, the guy who is running the handloom shop is my friend and you can swipe your card there,” said Purohit. “I would get my money. We all trust each other.”

An increasing number of people have been turning to digital payment solutions in order to overcome the cash shortage. Various finance institutions have been on the lookout for ways to increase repayments through use of plastic money and digital wallets.

The Reserve Bank of India and the government have been pushing digital payments and fees on debit card usage has been waived.

Banks have been promoting point of sales and pre-paid cards. Ordeal has been the order of the day and even seasoned businessmen did not know what hit them.

“The whole thing did not sink in and I could not comprehend it at first,” said Samit Ghosh, managing director of Ujjivan Financial Services. “We went to office and informed our employees that Rs 500 and Rs 1000 would not be legal tender.”

MFIs with different repayment cycles have given leeway to its customers. Ujjivan had deferred its centre meeting and asked all its customers to take time to pay.

It asked all its senior people to talk to people in branch and gauge their reaction. It only started collection from November 14 and was better than anticipated.

But they have come to grips with the reality. “We visited branches in Delhi and rural Haryana,” said Ghosh. “Surprisingly, people were happy. They felt this is the sacrifice that they are making for the country even if people were queued up for 14-18 hours.”

Businesses plunged and there were temptations for some workers to find out novel ways to circumvent.

There are stories of how people are working overtime to convert their ill-gotten wealth into legitimate wealth. But there are others who resisted the temptation.

“We said business may get affected, but we will not accept any old note,” said George Anthony, managing director of UAE Exchange. “It turned out to be a very good decision. The Enforcement Directorate raided our 10 offices across the country. Over the next four days, our business went to zero.”

Professor JR Varma of the Indian Institute of Management, Ahmedabad, and a former member of Sebi board has argued that it is credit that matters for the economy and not cash. As long as credit flows, economy should be able to overcome the cash crunch, he wrote in his blog.

Abdul Gani, a taxi driver in Udaipur, did not hesitate to comfort his potential customer about the cash crunch. “Don’t worry sir, just land here. You can transfer funds to my bank account, or if you can’t, I can take even a cheque.”

But the transformation from a predominantly cash society to digital world may not necessarily be a long way off, given the need to adopt due to the crunch, say experts such as PN Vasudevan, founder of Equitas Holdings, which began its small bank  business.

“Attitudes and behaviour are changing,” says Vasudevan. “My cook did not know that debit cards could be used in shops and there is no charge on that. Things will change,” he said.

Source : Economic Times

Demonetisation – Income-Tax Amendment Bill tabled in LS : 29-11-2016


The Modi-led Government on Monday sought to bring to tax all unaccounted money that was flowing into the banking system following the demonetisation announcement on November 8.

Finance Minister Arun Jaitley introduced a Bill in Lok Sabha for this purpose.

The Centre has now come out with Pradhan Mantri Garib Kalyan Yojana 2016 to enable people with undisclosed income to come clean.

However, they would have to fork out a tax of 30 per cent and penalty of 10 per cent. A surcharge in the form of cess of 33 per cent will have to be paid on the tax.

In addition to tax, surcharge and penalty, the declarant will have to deposit 25 per cent of undisclosed income in a deposit scheme to be notified by the Centre in consultation with the RBI.

This amount is proposed to be utilised for programmes of irrigation, housing, toilets, infrastructure, primary education, primary health, livelihood etc, so that there is justice and equality.

A 75 per cent tax and 10 per cent penalty in case Income Tax authorities detect undisclosed wealth deposited post demonetisation.

The current provisions of penalty on under-reporting of income at 50 per cent of the tax, and misreporting (200 per cent of tax) will remain and no changes are being made to them.

Under-reporting/misreporting income is normally difference between returned income and assessed income.

The Taxation Laws (Second Amendment) Bill, 2016 proposes to amend Section 115BBE of the Income Tax Act to provide for a punitive tax, surcharge and penalty on unexplained credit, investment, cash and other assets.

Against current provision of 30 per cent flat tax rate plus surcharge and cesss, a steep 60 per cent tax will be levied on such income together with 25 per cent surcharge of tax (15 per cent of such income). So total incidence of tax will be 75 per cent with no expense, deductions or set-off allowed.

Also, the assessing officer can levy an additional 10 per cent penalty, taking the total tax incidence to 85 per cent.

The current provisions for penalty in cases of search and seizure are proposed to be amended to provide for a penalty of 30 per cent of income if it is admitted, returns filed and taxes paid. In all other cases, 60 per cent will be the penalty.

Currently, the penalty is 10 per cent of the income, if the income is admitted, returned and taxes are paid. Penalty is at 60 per cent in all other cases.

Under the new Pradhan Mantri Garib Kalyan Yojana, besides 50 per cent tax, surcharge and penalty, a quarter of the declared income will be to be deposited in interest free deposit scheme for four years.

Revenue Secretary Hasmukh Adhia said the deterrent provisions were necessary so that people have the fear of hoarding black money.

“The disclosures in PMGKY scheme will ensure that no questions will be asked about the source of fund. It would ensure immunity from wealth tax, civil laws and other taxation laws. But there is no immunity from FEMA, PMLA, Narcotics, and black money act,” he said.

Deposits which have been already made from November 10 will be covered under PMGKY. “Last date we will notify after the bill is passed but it is likely to be December 30. PMGKY will come in as a new Chapter 9 in Finance Act 2016,” he said.

Source : Financial Express

Excise duty exemption for PoS devices : 29-11-2016


In what is seen as yet another big push of the Modi-led government towards digital economy, the Centre has provided excise duty exemption on Point-of-Sale (PoS) devices manufactured in the country.

This excise duty exemption has also been extended to all goods for manufacture of POS. However, the excise duty exemption in both cases will be available only till March 31, 2017, according to a Finance Ministry notification.

As on date, the total PoS machines in use is only about 1.2 million. There has been very tepid growth in the PoS universe.

‘A big step forward’

Reacting to the Finance Ministry move, AP Hota, Managing Director & CEO, National Payments Corporation of India, said that removal of excise duty on PoS manufacturing is a big step forward.

“The country took five years to add last one million terminals. The government now plans to bring one million terminals in the next three months. It would certainly accelerate usage of cards on PoS,” Hota added.

Source : Business Standard

No.39/2016 Dated: 29-11-2016


Transport, Power and Interest subsidies received by an Industrial Undertaking – Eligibility for deduction under sections 80-IB, 80-IC etc., of the Income-tax Act, 1961 - Reg.

CIRCULAR NO. 39/2016

F.No.279/Misc./140/2015/ITJ

GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES

NEW DELHI Dated 29th November, 2016

Subject: Transport, Power and Interest subsidies received by an Industrial Undertaking – Eligibility for deduction under sections 80-IB, 80-IC etc., of the Income-tax Act, 1961- Reg.

The issue whether revenue receipts such as transport, power and interest subsidies received by an Industrial Undertaking/ eligible business are part of profits and gains of business derived from its business activities within the meaning of sections 80-IB/80-IC of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) and thus eligible for claim of corresponding deduction under Chapter VI-A of the Act has been a contentious one. Such receipts are often treated as ‘Income from other sources’ by the Assessing Officers.

2. The Hon’ble Supreme Court in its judgment dated 9.3.2016 in the case of Meghalaya Steels Ltd in CA No. 7622 of 2014 (NJRS citation 2016-LL-0309-15) and other cases has held that the subsidies of transport, power and interest given by the Government to the Industrial Undertaking are receipts which have been reimbursed for elements of cost relating to manufacture/ sale of the products. Thus, there is a direct nexus between profit and gains of the industrial undertaking/ business and reimbursement of such business subsidies. Accordingly, such subsidies are part of profits and gains of business derived from the Industrial Undertaking and are not to be included under the head ‘Income from other sources’. Therefore, deduction is admissible under section 80-IB/80-ICof the Act on such revenue receipts derived from the Industrial Undertaking.

3. In view of the above, it is a settled position that revenue subsidies received from the Government towards reimbursement of cost of production/manufacture or for sale of the manufactured goods are part of profits and gains of business derived from the Industrial Undertaking / eligible business, and are thus, admissible for applicable deduction under Chapter VI-A of the Act.

4. Accordingly, henceforth, appeals may not be filed by the Department on the above settled issue, and those already filed may be withdrawn/not pressed upon.

5. The above may be brought to the notice of all concerned.

(K Vamsi Krishna)

ACIT(OSD)(ITJ)

CBDT, New Delhi

How Narendra Modi’s demonetisation is weighing on sectors : 29-11-2016


The government’s decision on November 8 to immediately ban Rs 500 and Rs 1,000 notes that account for 86% of all currency in circulation has impacted a raft of sectors. Consumers have turned frugal, causing a sharp drop in demand for goods and services. While farmers and small industries will bear the brunt and sectors like transport and real estate will visibly be in pain, several other industrial sectors will have to scale back services or production.

AUTOMOBILES: Life in the slow lane 
POSITIVE IMPACT: Interest rate and tax cuts soon

NEGATIVE IMPACT: Fall in sales of two-wheelers, commercial vehicles and luxury cars

NUMBER GAME: In November, utility vehicles sales expected to be down 40-50%, commercial vehicle sales down by 50-60% and two-wheelers 20-40%

Sales of commercial vehicles, two wheelers and  luxury cars are the worst hit by the demonetisation move. Carmakers are skimping on production to streamline inventory and have reduced dealer (wholesale) targets by up to 40%.

While footfalls at dealerships across the country have dropped by 50-60%, bookings have fallen equally by 50%. Gautam Modi, a Mumbai-based Audi dealer, says sales fell by more than 45% in November. Even rural markets, which account for nearly two-thirds of entry-level motorcycle sales in the country, are in pain because vehicle purchases are done by cash.

To offset the impact, manufacturers through dealers and finance companies have started offering lower interest rates and zero down payment to push sales. RC Bhargava, chairman of Maruti Suzuki, the country’s largest car maker, however sees this as a blip. The impact on small car sales may be minimal as most of the transactions occur through bank financing or loans. “We have advance bookings and the waiting period for several models which will help us tide through this phase.”

HOSPITALITY/TRAVEL: The trip can wait 
POSITIVE IMPACT: Use of credit cards at national monuments, rise in digital payments

NEGATIVE IMPACT: Cancellation and no show rate increased by 33% in fi ne dining restaurants, drop in inbound tourism; airline bookings drop, cancellations increase

NUMBER GAME: Restaurant reservations in Delhi NCR dropped by 28%, in Mumbai by 7% and in Bengaluru  by 2%

Demonetisation is weighing heavily on the tourism sector, already under stress due to the sharp escalation in pollution n India. The number of inbound tourists visiting national monuments have dropped significantly after the note ban. Almost all these places only accept cash, which leaves no option for these travellers, says Rajeev Kohli , Senior VP, Indian Association of Tour Operators.

“This ban has almost choked the tourism industry forcing many travellers to postpone or cancel travel,” he says. Airlines too are seeing a drop in bookings and occupancy and increase in cancellations. On Monday, SpiceJet CMD Ajay Singh told a business channel that there is a visible impact of demonetisation on airlines.

Popular tourist destinations of Indian travellers such as Thailand, Singapore, Malaysia, Maldives, Hawaii, Vietnam, Sri Lanka, Nepal, China, Indonesia and Dubai have all seen a drop in bookings. The currency ban has caused huge uncertainty and disrupted transactions for smaller hotels, restaurants and food and beverage operations, which accept cash. Restaurant reservations dropped the highest in Delhi NCR, followed by Mumbai and Bengaluru, according to an EazyDiner report.

FMCG: Demand intact, but where is the money?
POSITIVE IMPACT: 
Pending dues fl owing in from wholesalers (using old currencies)

NEGATIVE IMPACT: Rural buying power reduced

NUMBER GAME: 35–40% drop in sales expected in the interim

FMCG companies are already staring at a 20– 30% fall in sales post the note ban — and much of it is coming from rural India. Rural markets account for 40– 45% of revenue for all major FMCG/retailfocused companies.

While most analysts expect sales of essential items like soap and toothpastes to continue unhindered, categories like body cream, special body oils, deodorants, high-end shampoos, snacks and fries, chocolates, special enriched food items and ice-creams may log lower sales  in the interim.

“There’s demand for these products, but people do not have enough liquidity (money) to buy them,” says Abneesh Roy, senior VP & FMCG-retail analyst at Edelweiss Securities.

“People mostly use cash in rural India; they don’t use cards like the way people in cities do. Since most FMCG companies have a large rural portfolio, we may see some dip in their earnings over the next two-three quarters.” Most equity analysts, whom ET consulted, expect FMCG sales to drop 35 – 40% over the next two quarters. The only silver lining being the fact that many FMCG companies have managed to collect “pending pay-ins” (collection dues) from powerful wholesalers in old Rs 500 and Rs 1,000 notes.

BANKS–NBFCs: No time for money-spinners at this rate
POSITIVE IMPACT: 
Increase in CASA deposits for most banks; lending rates to drop further

NEGATIVE IMPACT: MFIs, NBFCs miss collection cycles

NUMBER GAME: Banks have received deposits in excess of Rs 6 trillion since the note ban The government’s demonetisation drive may puncture the earnings of most banks this quarter. With most staffers handling the Rs 500 and Rs 1000 note deposits, exchange and withdrawals, “revenue-yielding” operations such as vending loans and cross-selling investment products have taken a backseat in most banks.

“The earnings of banks may take a hit in the third and fourth quarter,” says Siddharth Purohit, senior banking analyst at Angel Broking, a retail stock brokerage. “We may not see loan book growth as most banks are busy facilitating the demonetisation process. They’re not aggressively selling a lot of credit products now. That apart, the SME and real estate sectors, to which most banks lend a significant part of their book – are in a state of lull.”

Demonetisation will help most banks improve their CASA (current account, saving account) deposit counters, albeit not many analysts expect this money to remain in the bank for long. Flushed with cash, most banks would now be forced to cut rates – on both deposits and lending – over the next few weeks. This, in turn, may spur credit offtake in the banking sector – towards the first quarter of next fiscal.

NBFCs and microfinance institutions (MFIs) are under severe stress as their collection cycles (mostly in cash) have gone awry post November 8. Most NBFCs and MFIs have announced ‘collection holidays’ till such time there’s sufficient money in the system.

E-COMMERCE: Fewer clicks
POSITIVE IMPACT: 
Good for unit economics as Cash on Delivery down and returns drop

NEGATIVE IMPACT: All companies hit; niche players worse off

NUMBERS GAME: Sales down 60-70%

Of the 1 million items shipped daily from e-commerce companies, 60% are on cash-ondelivery (CoD). “These are not getting placed. Suddenly priority for shopping is low,” says Sreedhar Prasad, partner, ecommerce and startups, KPMG India.

While sellers say their business is down in the dumps, e-commerce companies are playing down the post-demonetisation impact. “Customers are adopting electronic payments at delivery and this has seen 10X growth,” says an Amazon India spokesperson

Snapdeal says its digital wallet Freecharge has helped. A day after the decision to ban Rs 500 and Rs 1,000 notes, e-commerce companies capped CoD orders to below Rs 1,000 with all purchases above this amount to be carried out by digital wallets or cards.

Sellers have a dif ferent view. Deepak Chopra, founder of Softek Surya, a seller based in Nehru Place, Delhi, says daily shipments to portals are down to 700 from 4,000. “I have 60 employees and monthly costs of Rs 20 lakh. My sales have dropped to less than Rs 5 lakh. How will I pay them?” Hyderabad based seller Redlily and Jaipur based jewellery brand Dhora have also seen sharp decline in online sales.

The worse hit among e-commerce companies are the niche sellers— selling a single category like lingerie, eyewear, fashion— whose sales have dropped 60-70%. “People are buying only essentials. Besides, the large companies are equipping their logistics staff with card readers to ease payments in delivery. Smaller companies can’t afford that,” says Prasad of KPMG.

LUXURY MARKET: Bling goes out of fashion
POSITIVE IMPACT: 
Huge, immediate spike in sales. Long-term sales depend on rise in dispoable income

NEGATIVE IMPACT: Layoffs in short term; Could take longer to stabilise as buyers wait for impact of GST & any budget proposals as well

NUMBER GAME: Overall market drops by 50-60%

The luxury goods market already reeling under the impact of global and local issues — from weak outlook to mandatory PAN requirement for purchases topping Rs 2 lakh — got another hard knock due to demonetisation. The exception was the window between 8 pm and the wee hours of November 9 when buyers flocked to pick up expensive perfumes, scarves, watches, jewellery, smartphones (mainly iPhones) with the discontinued currency notes.

“The immediate impact is severe,” says Anurag Mathur, partner and retail expert, PricewaterhouseCoopers (PwC) India. Rajat Wahi, partner and head of consumer markets, KPMG India, believes there could be layoffs and the pain could last for six months. “After two quarters, pent-up demand will push sales,” says Wahi.

Luxury buyers could also go into hiding as they wait for the implications of GST and budget proposals. “Some drop (in luxury sales) might be permanent even, as buyers wait to get clarity,” says Wahi.

GOLD: The shine is lost for now
POSITIVE IMPACT: 
Gold prices may fall post December

NEGATIVE IMPACT: Gold sales reduced to a trickle

NUMBER GAME: Price may drop below Rs 28,000 per-ten-grams post December

Zaveri Bazaar, the famed gold market of Mumbai, registers business worth Rs 125 crore on an average day. Post the noteban, this has dropped to a mere Rs 13 crore worth of sales per day. “We don’t have buyers now… all that we get are people dealing in recycled gold and some minor wedding purchases,” says Kumar Jain, vice-chairman of the Mumbai Jewellers Association.

The jewellers of Zaveri Bazaar were hoping to make a killing this wedding season as some 29,000 marriages are slated to take place across India in November and December. To meet the demand head on, wholesale jewellers of Zaveri Bazaar had imported and stocked close to 70 tonnes of gold (as against their quarterly import average of 30 tonnes).

“Now we’re left with only stock and no buyers… People have even started rescheduling marriages – or holding simple ceremonies in courts and temples.” The demonetisation drive is expected to depress gold prices significantly. Currently trading at Rs 28,750 (per ten grams), gold prices are expected to drop below Rs 28,000 (per ten grams) post December.

Jewellers are also worried about tax raids as there are widespread reports of black money hoarders using gold to clean up their cash-in-hand (in the initial days of demonetisation).

ENTERTAINMENT: Show goes on, albeit a little slowly
POSITIVE IMPACT: 
More card spending, online booking now

NEGATIVE IMPACT: Nearly a dozen studios have delayed their (film) releases

NUMBER GAME: Average viewership dropped to just 55 people per show in the first week of demonetisation

Entertainment sector (mostly cinema houses) could be the first one to wriggle out of hardships caused by the demonetisation drive. After two weeks of “low business days”, things are looking up for most cinema houses as people have started using “plastic money” to get their weekly celluloid fix.

“Our card-based sales of tickets and food & beverages have doubled since the noteban,” says Siddharth Jain, director, INOX Leisure. “For the first two weeks, people didn’t have enough time to come and watch a movie as they were standing in bank queues… that period is behind us now.”

To increase footfalls, multiplex chains like Inox have set up POS machines on their premises to facilitate withdrawal of cash up to Rs 2,000 a card every day. That said, nearly a dozen studios (mostly regional banners) have delayed their film releases indefinitely, awaiting the return of cash in the patrons’ wallets.

Source : Economic Times

Notification No.108/2016 29-11-2016


Income-tax (34th Amendment) Rules, 2016 – 108/2016

MINISTRY OF FINANCE (DEPARTMENT OF REVENUE)(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION 108/2016

New Delhi, the 29th November, 2016

G.S.R. 1100(E).-In exercise of the powers conferred by clause (ii) of Explanation 1 to clause (42A) of section 2, read with 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 (34th Amendment) Rules, 2016.

(2) They shall come into force from the 1st day of June, 2016.

2. In the Income-tax Rules, 1962, in rule 8AA, after sub-rule (2), the following sub-rule shall be inserted, namely:-

“(3) In the case of a capital asset, declared under the Income Declaration Scheme, 2016,-

(i) being an immovable property, the period for which such property is held shall be reckoned from the date on which such property is acquired if the date of acquisition is evidenced by a deed registered with any authority of a State Government; and

(ii) in any other case, the period for which such asset is held shall be reckoned from the 1st day of June, 2016.”.

[F. No.142/01/2016-TPL]

Dr. T. S. MAPWAL, Under Secy.

Note: The principal rules were published vide Notification S.O. 969 (E), dated the 26th March, 1962 and last amended vide Notification S.O. 3573(E), dated the 28th November, 2016.

 

Notification No. : 35/2016 Dated: 28-11-2016


Seeks to exempt Point of Sale (POS) devices and goods required for its manufacature from central excise duty till 31st March, 2017 – 35/2016 – Central Excise – Tariff

GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE)

Notification No. 35/2016 – Central Excise

New Delhi, the 28th November, 2016

G.S.R. 1097 (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 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 opening paragraph, after the seventh proviso, the following proviso shall be inserted, namely:-

“ Provided also that nothing contained in this notification shall apply to goods specified against serial number 256 A and 256 B of the said Table after the 31st day of March, 2017;” ;

(B) in the Table, after serial number 256 and the entries relating thereto, the following serial number and entries shall be inserted, namely:-

(1)

(2)

(3)

(4)

(5)

256A 8470 Point of Sale (POS) Devices

Nil

-

256B Any Chapter All goods for manufacture of Point of Sale (POS) Devices

Nil

2

[F. No. 354/213/2016-TRU]

(Anurag Sehgal)

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 last amended vide notification No.34/2016-Central Excise, dated the 8th September, 2016 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R.874(E), dated the 8th September, 2016.

Notification No.107/2016 28-11-2016


Income-tax ( 33rd Amendment) Rules, 2016 – 107/2016 – Dated 28-11-2016

MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION No. 107/2016

New Delhi, the 28th November, 2016

INCOME-TAX

S.O. 3573(E).-In exercise of the powers conferred by section 295 read with sub-section (4) of section 115TCA 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 ( 33rd Amendment) Rules, 2016.

(2) It shall be deemed to have come into force from the 1st day of June, 2016.

2. In the Income-tax Rules, 1962, (hereinafter the said rules), after rules12CB, the following rule shall be substituted, namely:-

“12CC. Statement under sub-section (4) of section 115TCA. (1) The statement of income distributed by a securitisation trust to its investor shall be furnished to the Principal Commissioner or the Commissioner of Income-tax within whose jurisdiction the principal office of the securitisation trust is situated, by 30th day of November of the financial year following the previous year during which such income is distributed:

Provided that the statement of income distributed shall also be furnished to the investor by 30th day of June of the financial year following the previous year during which the income is distributed.

(2) The statement of income distributed shall be furnished under sub-section (4) of section 115TCA by the securitisation trust to-

(i) the Principal Commissioner or the Commissioner of Income-tax referred to in sub-rule (1), in Form No. 64E, duly verified by an accountant in the manner indicated therein and shall be furnished electronically under digital signature;

(ii) the investor in Form No. 64F, duly verified by the person distributing the income on behalf of the securitisation trust in the manner indicated therein.

(3) The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems), as the case may be, shall specify the procedure for filing of Form No. 64E and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to the statements so furnished.”

3. In the said rules, in Appendix-II, after the Form No. 64D, the following Forms shall be inserted, namely:–

“FORM NO. 64E

[See rule 12CC (2)(i)]

Statement of income paid or credited by a securitisation trust to be furnished under section 115TCA of the Income tax Act, 1961

1. Name of the securitisation trust:

2. Address of the registered office:

3. Legal status:

4. Permanent Account Number:

5. Previous year ending:

6. Name and address of the Trustees/ Directors/ Partners of the securitisation trust:

S. No

Name

PAN

Aadhar, if any

Address

(1)

(2)

(3)

(4)

(5)

7.  (i) Status of Securitisation Trust:

(please mention applicable sub-clause of the clause (d) of the Explanation below section 115TCA)

(ii) Registration number:

(Please also indicate Act/Regulation under which registered)

(iii) Date of registration:

8. Details of income of Securitisation Trust:

(i) Total income of securitisation trust (in Rs):

(ii) Income under the head ‘Income from house property’:

S. No.

Amount

Proportion [Column 2/Amount at 7(i) above]

(1)

(2)

(3)

1.

(iii) Income under the head ‘Profits and gains of business or profession’:

S. No.

Amount

Proportion [Column 2/Amount at 7(i) above]

(1)

(2)

(3)

1.

(iv) Income under the head ‘Capital gains’:

S. No.

Category

Amount

Proportion

[Column 3/Amount at 7(i) above]

(1)

(2)

(3)

(4)

1

Long Term Capital Gain referred to in Section 10(38)

2

Long Term Capital Gain [Others]

3

Short Term Capital Gain [To whichSection 111A applies]

4

Short Term Capital Gain [Others]

(v) Income under the head ‘Income from other sources’:

S. No.

Category

Amount

Proportion

[Column 3/Amount at 7(i) above]

(1)

(2)

(3)

(4)

1

Dividends [referred to in Section 115-O]

2

Others

9. Details of person being an Investor, referred to in sub-section (1) of section 115TCA by whom the income is received or in whose name it has been credited:

S.

N

o.

Name ofInvestor AddresS PAN Totalamount

paid/

credited/

Deemed

to be

credited

Income underthe head

‘Business or

Profession

[Column 5 ×

Column 3(1)

of Table at

s.no. 7(ii)]

Income fromHouse

Property

[Column 5 ×

Column 3(1)

of Table at

s.no. 7(iii)]

Income under the head ‘LongTerm Capital Gains’ Income under the head ‘ShortTerm Capital Gains’ Income under the head ‘OtherSources’
Referred toin Section

10(38)

[Column 5 ×

Column 4(1)

of Table at

s.no. 7(iv)]

Others[Column 5 ×

Column 4(2)

of Table at

s.no. 7(iv)]

To whichSection

111A

applies

[Column 5 ×

Column 4(3)

of Table at

s.no. 7(iv)]

Others[Column 5 ×

Column 4(4)

of Table at

s.no. 7(iv)]

‘Dividend’[referred to in

Section 115-O] [Column 5 ×

Column 4(1) of

Table at s.no.

7(v)]

Others[Column 5 ×

Column 4(2)

of Table at

s.no. 7(v)]

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)

Attach a copy of the certificate of registration under the applicable Act/ Regulations, viz., in case of securitisation trust, under the Securities and Exchange Board of India (Public Offer and Listing of Securities Debt Instruments) Regulations, 2008; in case of Special Purpose Vehicle regulated by the guidelines of Standard Assets issued by the Reserve Bank of India; and in case of Securitisation Company or a Reconstruction Company, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Attach audited accounts including balance sheet, annual report, if any, with certified copies of income and appropriation towards payment of income or credit of income [including amount deemed to have been credited in accordance with provisions of sub-section (3) of section 115 TCA].

I, _________________________________________ (Name in full and in block letters) son/daughter* of _____________________________do hereby solemnly declare that to the best of my knowledge and belief what is stated above and in the Annexure(s), including the documents accompanying such Annexure(s), is correct and complete. I further declare that I am furnishing such statement in my capacity as__________________ (designation) and that I am competent to furnish this statement and verify it.

Verified today the ________________ day of ________________.

Place ___________________                                                  Signature _________________

Verification

I/We* ____________________________________ have examined the books of account and

other documents showing the particulars of income earned and the income paid / credited [including amount deemed to have been credited in accordance with provisions of sub-section (3) of section 115TCA] to the investor by the_________________________________ (name of the Securitisation Trust) for the previous year ending _________________.

2. I/We* declare that the above particulars are true and correct to the best of my/our knowledge and belief.

__________________________________

(Signature with name of the Accountant)

Membership No._______________________

Place _________________

Date __________________

Notes: 1. “Accountant” means the accountant as defined in the Explanation below sub-section (2) of section 288 of the Income-tax Act, 1961.

2. All amount to be mentioned in Indian Rupees

* Strike out whichever is not applicable

FORM NO. 64F

[See rule 12CC (2)(ii)]

Statement of income distributed by a securitisation trust to be provided to the investor under section 115TCA of the Income-tax Act, 1961

1. Name of the investor:

2. Address of the investor:

3. Permanent Account Number of the investor:

4. Previous year ending:

5. Name and address of the securitisation trust:

6. Permanent Account Number of the securitisation trust:

7. Details of the income paid or credited by the securitisation trust to the investor during the previous year:

(In Rs.)

S.

No.

Amount

paid or

credited/

Deemed

to be

credited

Date of

payment or

credit/

Deemed to

be credited

Breakup of Amount paid/credited under Heads of Income

Income from House Property’

‘Business or Profession’

‘Long Term Capital

Gain’

‘Short Term Capital Gain’

‘Other Sources’

Referred to in section 10(38) Others To which section 111A applies Others ‘Dividend’ [referred to in section 115O] Others

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

I, _______________________________(Name in full and in block letters) son/ daughter* of ______________________________________________do hereby solemnly declare that to the best of my knowledge and belief what is stated above and in the Annexure(s), including the documents accompanying such Annexure(s), is correct and complete. I further declare that I am furnishing such statement in my capacity as ____________________(designation)

Verified today the ____________________ day of ___________

Place ___________

* Strike out whichever is not applicable.

Signature

________________________”.

[F.No. 370142/28/2016-TPL]

NIRAJ KUMAR, Under Secy. (Tax Policy and Legislation)

Note:- The principal rules were published in the Gazette of India Extraordinary, Part II, Section 3, Sub-section (ii), vide notification number S.O. 969(E), dated the, 26th March, 1962 and last amended vide notification number S.O. No.3498(E) dated the 21st November, 2016.

Allocation of resources to social sector increasing: Arun Jaitley : 28-11-2016


Emphasising that inclusive growth is high on government’s priority, Finance Minister Arun Jaitley today said the allocation of resources to the social sector is increasing.

The government wants to make an extensive social welfare system with focus on better education system and effective healthcare especially for the children, women and senior citizens of the country, he said at pre-Budget consultations with the representatives of different Social Sector Groups here today.

As the allocation of resources to the Social Sector is increasing, the need of the hour is to bring substantial changes through better policies and timely implementation, he said, as per a Finance Ministry statement.

Jaitley further said that the inclusive growth is high on the priority and the Government will take adequate measures to ensure social security for all especially for the vulnerable section of society including the children, women and senior citizens of the country.

Most of the Social Sector representatives gave different suggestions to the Finance Minister for the forthcoming Union Budget 2017-18 including higher allocation to social sector schemes and a mechanism be established to monitor proper implementation of all such schemes.

It was suggested to monitor to ensure that the schools have access to safe drinking water & sanitation and allocation for healthcare for the workers especially those working in mining sector etc should be increased.

Various suggestions came about increasing allocation on education and healthcare sectors in the upcoming General Budget 2017-18.

It was also suggested that all the tobacco products should be highly taxed primarily because of health concerns.

Source : Business Standard

Will the demonetisation story change by December 30? : 28-11-2016


A strong central government and a weak central bank are, perhaps, equally overwhelmed by our money laundering capability as a nation. Of the Rs 14.5 lakh crore worth banned currency notes, about Rs 8 lakh crore has come back as deposits into banks. Chances are more currency – declared as well as undeclared – may transform into legitimate bank deposits in the coming weeks. This probably wasn’t the calculation with which they embarked upon the mammoth demonetisation drive. The arithmetic then was simple: around Rs 4-5 lakh crore that would not return to banks could be showcased as black money isolated by the government and later taken out from RBI’s balance sheet — which accounts the currency under circulation as liability– to recapitalise banks, sponsor affordable housing projects and lower fiscal deficit. While some of the currency may never eventually turn into deposits, New Delhi possibly fears the number could shrink with every passing day.

For the government it’s not a happy outcome of demonetisation. If indeed, a predominant part of the Rs 14.5 lakh crore is converted into deposits, it would either mean a mountain of undisclosed cash has been laundered, or much of the black money is not really in the form of cash. This would be like waving a red flag to the Opposition. Despite the pathetic standard of debate in Parliament, members of the Congress and Left are unlikely to miss the point .

Sensing this, the government is now considering a quasi-amnesty offer – similar to the Income Declaration Scheme (IDS). Under this scheme those with unexplained cash can escape prosecution and harassment by paying a higher tax and blocking a chunk of the post-tax amount into interest-free bonds. With the Parliament in session, such a scheme has to be placed before a noisy house — which could turn more turbulent if Mr Yechury and his friends suspect that IDS-2 is like opening an exit route for  cash hoarders. After all, no one with hidden cash would park the money in bank account until the finance ministry promises that they would not be hounded by officials of Income tax Department and Enforcement Directorate. The Opposition could argue that if the fallout of Demonetisation is just another IDS, was it necessary to precipitate a 50-day cash crisis?

If IDS-2 is aimed at salvaging the government from a tricky terrain, the Reserve Bank of India (RBI)’s crude monetary action reflects the confusion within the central bank and how it may have run out of choice following an unexpected surge in bank deposits. The monetary authority has directed banks to keep aside deposits garnered between September 16 and November 11 with the central bank. Triggered by shooting bond prices and falling returns to savers, the sudden measure, aimed to mop up extra  funds from banks, can make markets more volatile this week.

The quantum of currency that finds its way to banks by December 30 could slightly change the narrative on demonetisation. If most of it moves into banks, the prime aim of demonetisation would appear to be financial inclusion instead of killing black money. Indeed, if more and more people open bank accounts and more and more shops accept plastic money, banks would soon have financial history of thousands credit-worthy new account holders. We don’t know how the story would unfold. As of now it’s moving at blinding speed.

Source : Economic Times

Demonetisation: Unaccounted deposits to attract 50% tax : 26-11-2016


Those who deposited their black money in banks, disclosing it to be untaxed wealth, since the governmentannounced demonetisation will now have to pay income tax at 50% and a quarter of the portion of the unaccounted income would remain with the government for four years, as per amendments planned to the Income Tax Act by the Centre.

The amendments will be tabled in Parliament for approval by Monday or Tuesday, a top government official said on Friday.

According to the amendments planned, those who deposit their unaccounted income in banks till the last date would have to pay a 50% tax and will have to forgo 25% of the deposited amount for four years. Those who do not disclose their black money and are caught by income tax (I-T) officer would have to pay 60% tax and 30% penalty, the official said.

The government announced demonetisation of the old series Rs 500 and Rs 1,000 currency notes on November 8. Those who possess money in these denominations were allowed to exchange it for new notes at banks till Thursday, or deposit the sum in their accounts till December 30.

The amendments to the I-T Act were approved by the Union Cabinet on Thursday. The sum that a black money holder will have to forgo for four years may be invested in zero-rated bonds, sources said. But there was no clarity about this yet.

Responding to reports, sources in the government also clarified it had no intention of imposing any limit of holding of gold.

Black money holders who availed of the recent window had to pay 45% of the money to the government, comprising 30% income tax, 7.5% penalty and surcharge each. The tax is to be paid in three instalments — 25% of the total tax, cess and penalty by November 30, an equivalent amount by March 30 next year and 50%^by September 30.

So, those who did not avail of the window will now have to pay a higher rate.

Amit Maheshwari, managing partner, Ashok Maheshwary & Associates, said money was never parked in bonds in any of the previous income-disclosure schemes. However, there are bonds to escape capital gains.

He said the government does not need people to declare their black money, but is wary of black money holders trying to convert these into white through Jan Dhan and other accounts.

This was because if all the Rs 14 lakh crore in circulation in old Rs 500 and Rs 1,000 currency notes returned to banks, the Reserve Bank of India’s  (RBI’s) outstanding liabilities would remain the same and it would have to issue this amount to banks in new currency notes.

If part of this money was held in black, say Rs 3 lakh crore, did not come into the system, these would be wasted and RBI have to issue only Rs 12 lakh crore to the banks in new currency notes.

The remaining Rs 3 lakh crore was its gain, which could be transferred to the government at the end of RBI’s financial year in June.

“But,” he said, “the government does not want those converting black money into white through dubious means getting away. Besides, their money will remain in the system for specified period and could be deployed for productive purposes.”

Since November 10, when people were allowed to deposit their money in old currency notes at banks, Jan Dhan accounts saw a surge of Rs 20,000 crore, almost 50% of total deposits in these accounts in over two years since the launch of the scheme. Sources said the government was keen to root out benami deposits, particularly in Jan Dhan accounts.

The step was also significant since the current provision of 30% tax and 200% of tax as penalty could be circumvented by those who might deposit black money but pay tax in advance. In that case imposing a penalty could become a vexed issue under the current I-T Act.

Source : Economic Times

20 – 25-11-2016


EXCHANGE FACILITY TO FOREIGN CITIZENS

A.P. (DIR SERIES 2016-17) CIRCULAR NO.20DATED 25-11-2016

Attention of Authorized Persons is invited to the A.P. (DIR Series) Circular No. 16 dated November 9, 2016 giving certain exemptions to foreign tourists visiting India. In supersession of instructions issued therein, it has been decided that foreign citizens (i.e. foreign passport holders) can exchange foreign exchange for Indian currency notes up to a limit of Rs. 5000/- per week till December 15, 2016 subject to the tenderer submitting a self-declaration that this facility has not been availed of during the week. The Authorized Person shall keep the passport details and the above declaration on record. Authorized Person may also ensure that the total value of such exchange to Indian currency notes does not exceed Rs. 5000/- during the week.

2. The Instruction in respect of issue of prepaid instruments by Authorized Dealer Category I Bank shall continue.

3. Authorised Persons may follow the above instructions and bring the contents of this circular to the notice of their constituents.

4. 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 are without prejudice to permissions/approvals, if any, required under any other law.

Notification No. GSR 1089(E) [F.NO.1/3/EM/2016] 25-11-2016


FEM (TRANSFER OR ISSUE OF SECURITY BY A PERSON RESIDENT OUTSIDE INDIA) (SECOND AMENDMENT) REGULATIONS, 2016 – AMENDMENT IN REGULATIONS 2, 14, SCHEDULE 1, SCHEDULE 9 AND SUBSTITUTION OF SCHEDULE 11 – CORRIGENDUM TO NOTIFICATION [NO.FEMA.362/2016-RB]/GSR 166(E), DATED 15-2-2016

NOTIFICATION NO. GSR 1089(E) [F.NO.1/3/EM/2016]DATED 25-11-2016

In the Notification of Reserve Bank of India, Foreign Exchange Department No. FEMA. 362/2016-RB dated February 15, 2016 bearing G.S.R.No. 166(E) and published in the Official Gazette of Government of India – Extraordinary – Part-II, section 3, sub-section (i) (hereinafter referred as Gazette Notification)

2. In paragraph 2(C) (iv), S. Nos. 9.3 and 9.3.1 shall be substituted as under:

9.3 Air Transport Services
(1)(a) Scheduled Air Transport Service/Domestic Scheduled Passenger Airline(b) Regional Air Transport Service 49% (100% for NRIs) Automatic
(2) Non-Scheduled Air Transport Service 100% Automatic
(3) Helicopter services/seaplane services requiring DGCA approval 100% Automatic
9.3.1 Other Conditions
(a) Air Transport Services would include Domestic Scheduled Passenger Airlines; Non-Scheduled Air Transport Services, helicopter and seaplane services.(b) Foreign airlines are allowed to participate in the equity of companies operating Cargo airlines, helicopter and seaplane services, as per the limits and entry routes mentioned above.

(c) Foreign airlines are also allowed to invest in the capital of Indian companies, operating scheduled and non-scheduled air transport services, up to the limit of 49% of their paid-up capital. Such investment would be subject to the following conditions:

(i) It would be made under the Government approval route.
(ii) The 49% limit will subsume FDI and FII/FPI investment.
(iii) The investments so made would need to comply with the relevant regulations of SEBI, such as the Issue of Capital and Disclosure Requirements (ICDR) Regulations/ Substantial Acquisition of Shares and Takeovers (SAST) Regulations, as well as other applicable rules and regulations.
(iv) A Scheduled Operator’s Permit can be granted only to a company:
(a) that is registered and has its principal place of business within India;
(b) the Chairman and at least two-thirds of the Directors of which are citizens of India; and
(c) the substantial ownership and effective control of which is vested in Indian nationals.
(v) All foreign nationals likely to be associated with Indian scheduled and non-scheduled air transport services, as a result of such investment shall be cleared from security view point before deployment; and
(vi) All technical equipment that might be imported into India as a result of such investment shall require clearance from the relevant authority in the Ministry of Civil Aviation.

Note: (i) The FDI limits/entry routes, mentioned at paragraph 9.3(1) and 9.3(2) above, are applicable in the situation where there is no investment by foreign airlines.

(ii) The dispensation for NRIs regarding FDI up to 100% will also continue in respect of the investment regime specified at paragraph 9.3.1(c) (ii) above.

(iii) The policy mentioned at 9.3.1(c) above is not applicable to M/s Air India Limited

3. The other contents of the Gazette Notification shall remain unchanged.

Core committee formed to promote cashless transactions in rural areas : 25-11-2016


A high-level committee has been set up to facilitate creation of necessary infrastructure for implementation of cashless economy. This follows a directive from the Prime Minister’s Office (PMO) to Ravi Shankar Prasad, Minister of Electronics and Information Technology (MeitY) and Piyush Goyal, Minister of State (Independent Charge) for Power, Coal, New and Renewable Energy and Mines, to work on measures that would reduce the impact of demonetisation, particularly in rural India.

The purpose of the committee is to expedite ‘National strategy to transfer India into a cashless economy’ and the committee includes Secretary,MeitY, Disinvestment Secretary and Chief Executive of NITI Aayog. According to the strategy, the members are asked to see how to create necessary infrastructure across the country and who all (which departments) can be involved in the programme. “As a preparatory measure, the IT Ministry had called a meeting today (Thursday) where Heads of Common Service Centres (CSCs), National Institute of Electronics & Information Technology (NIELIT), Aadhaar, Software Technology Parks of India (STPI) and National Informatics Centre participated,” a government official told BusinessLine.

The PMO had a meeting with Minister of IT and Law & Justice, Ravi Shankar Prasad on Wednesday and in return Prasad has told the committee members to start working on the strategy immediately in a meeting held on Thursday.

In the meeting, everyone gave their version on how their services are well equipped to perform the task of universalising cashless economy in the country and how, the official said.

“For example, Aadhaar Head said if biometrics is used for transactions, things could be done in a quicker way and may reduce the long queues. Similarly, STPI has said it can train the trainers in the rural areas,” the official said.

The official said, Prasad was also of the view that as the number of CSCs (more than two-lakh centres) has grown exponentially over the recent past, they can be used extensively for the transactions as the CSCs have banking licences too.“For rural areas, there are 30,000 village level entrepreneurs in CSCs who are doing banking transactions and 9,000 outlets for NIELIT. So, they hire at least 10 people each under them, they can create additional workforce of manifold,” said another government official.

Source : Financial Express

Cabinet approves IT Act amendment, 60% tax on undisclosed deposits : 25-11-2016


Late on Thursday night, the Union Cabinet approved to an amendment to the Income Tax Act, which will substantially reduce the penalty levied on high-value deposits made.

According to the latest reports, a new tax rate of 60% may be levied on previously undisclosed deposits.

The Modi government had, while announcing the demonetisation policy on 8 November, also announced that any mismatch between the deposited sum and income declared would attract up to 30% income tax and 200% of tax liability as penalty.

  The announcement of 200% tax liability was soon put into question, as it was argued that there was no such provision in the Income Tax Act if the income had been declared and filed under the IT return norms.

It was also argued that there was no provision under the act which barred people from making high-value deposits during the demonetisation period, as long as the tax for the same was paid.

News reports about deposits made after the demonetisation drive suggested that not even 10% of the Rs 500 and Rs 1000 notes were deposited into the formal banking system, as the high tax penalty terrified people from putting their cash savings into their accounts.

More details about the amendment may be announced either by the Finance Minister or by the Prime Minister himself on Friday.

The other significant development from the Cabinet meeting, which was reportedly called at short notice, was that the government refused to change its stand on stopping the exchange of Rs 500 and Rs 1000 currency notes at banks from midnight on Thursday, 24 November.

The Cabinet meeting, held at the Parliament Library Hall at 8 pm, was called to review the status of these recently banned currency notes, and to review the government’s stand on the issue in Parliament, which hasn’t been functioning over this issue for nearly a week now.

There were also reports of the Cabinet discussing the results of survey on demonetisation conducted by PM Modi through his private mobile app. The survey has been overwhelmingly in favour of demonetisation.

NO MORE NOTE EXCHANGE 

The other significant development from the Cabinet meeting, which was reportedly called at short notice, was that the government refused to change its stand on stopping the exchange of Rs 500 and Rs 1000 currency notes at banks from midnight on Thursday, 24 November.

The Cabinet meeting, held at the Parliament Library Hall at 8 pm, was called to review the status of these recently banned currency notes, and to review the government’s stand on the issue in Parliament, which hasn’t been functioning over this issue for nearly a week now.

There were also reports of the Cabinet discussing the results of survey on demonetisation conducted by PM Modi through his private mobile app. The survey has been overwhelmingly in favour of demonetisation.

The government could decide to publicise and fight the ongoing war of words over the currency ban in Parliament through results of this survey.

Pass new law or amend RBI Act to enjoy fruits of currency swap : 25-11-2016


In order to reap fiscal bonanza from the demonetisationprocess, the National Democratic Alliance (NDA) government would need to pass a new law or amend the existing Reserve Bank of India (RBI) Act.

The fiscal bonanza for the government would arise out of the Rs 500 and Rs 1,000 denomination notes that people do not deposit in the bank by the end date.

The government expects that some people holding black money, unable to account for it against their declared incomes, would destroy the currency notes rather than deposit them in banks and face the threat of income-tax queries. Reports of Rs 500 and Rs 1,000 notes being burnt have emerged from different parts of the country.

But it is only through a legislative process that the government can gain from the Rs 500 and Rs 1,000 that are not deposited with banks or the RBI at the end of deadline the government has set.

Observers have argued back and forth about how the government and the RBI treat the value of the destroyed currency on their books. Questions have been raised about the legality of the government appropriating an equal value onto its books and using it as it so pleases.

But the previous demonetisation exercise that was carried out by the Morarji Desai government in 1978 shows the legal steps the NDA government would need to take.

This is how it would happen.

The circulation of a note goes through two legal steps. When the RBI prints and issues a note it is called a ‘bank note’. Every bank note circulated by the RBI into the economy is called ‘legal tender’ and is guaranteed by the government. These two steps together give legal mandate to what people generally called a note.

On November 8, the NDA government passed a notification to withdraw the ‘legal tender’ status of all Rs 500 and Rs 1,000 notes. This was done under Section 26 (2) of the RBI Act. But even after the withdrawal of the legal tender status, the Rs 500 and Rs 1,000 notes continue to be legally classified as ‘bank notes’.

Under the law, if a person is to take a Rs 500 or Rs 1,000 note to RBI, the central bank is obliged to exchange it for other bank notes, even if it has been declassified as ‘legal tender’.

This is provided under section 39 of the RBI Act. So, technically the RBI would continue to be liable to give back currency equivalent, if someone was to take the Rs 500 and Rs 1,000 note to it.

In other words, even if say black money hoarders were to destroy Rs 1 lakh crore worth of Rs 500 and Rs 1,000 denomination notes, the RBI’s issue department would continue to show the amount as a liability on its account books.

The method to delete this liability from the books of RBI’s issue department is to somehow ensure RBI’s obligation of exchanging these Rs 500 and Rs 1,000 denomination bank notes is done away with as well.

That can only be done through a new law or an amendment to the RBI Act, as the latter, in its current shape, remains silent on it.

Additionally Article 300A of the Constitution lays down that no person can be deprived of his/her property, except by the passage of a law. It cannot be done by a notification.

India has gone through demonetisation before in 1978 and this is how the liability of the RBI was done away at that time.

The then government passed the High Denomination Bank Notes (Demonetisation) Act, 1978. Through Section 3 of the Act, it took away the legal tender status of the particular denomination currency. Then through Sections 7 and 8 of the law, it also put a deadline till when RBI was obliged to exchange the particular bank notes, even if they were not ‘legal tender’.

Since RBI was no more obliged to exchange the bank notes after a certain date, it’s standing liability against those notes got extinguished in its account books.

This time, the government has done away with the legal tender status by notification but the next step to do away with RBI’s obligation to exchange the bank notes will have to necessarily be done by either a new law or an amendment to the existing RBI.

This law or amendment would have to specify the date till when RBI will exchange Rs 500 and RS 1,000 denomination notes.

Once the liability on RBI books against the destroyed or unreturned notes is deleted, it could then sell the assets it holds against the equivalent liability – in this case, largely US treasury bills. The income it receives from the sale of the US treasury bills would be booked as profits in its profit and loss account.

Excluding costs, the profit booked could then be transferred either to the general reserve of RBI or be transferred to the government as surplus or dividend. This would require an approval of RBI board. Once the dividend equal to the demonetised money not deposited is sitting on the government’s books, it could possibly use this credit to wipe out some of its fiscal deficit and expend more in the upcoming Budget.

In 1978, the government first brought an Ordinance to extinguish RBI’s liabilities and later the Ordinance was passed by Parliament. The NDA government, too, could take the Ordinance route after the current session of Parliament ends.

It is also being contended by experts if the government could introduce it in Parliament as a money Bill and bypass the Rajya Sabha where it does not have the numbers.

But others contend it may not legally pass muster as a money Bill because once the currency ceases to be a legal tender, the government’s guarantee against the particular currency ends and it would no more be a charge on the Consolidated Fund of India.

Source : Economic Times

Political divide over demonetisation force GST Council meet postponement : 24-11-2016


A key meeting of the GST Council to approve three draft laws — Model Goods & Service Tax; Integrated Goods and Service Tax (IGST) and Goods & Service Tax (Compensation to the States for Loss of Revenue) — has been put off to December 2-3 from November 25 scheduled earlier.

Though the finance ministry said the postponement is because another meeting of the law sub-committee comprising officials of the states and the Centre has been now scheduled for November 25, analysts felt that the deeper political divide following the banknotes crisis was also a reason for slowing of the process.

Sources said some states want changes in the integrated-GST and compensation Bills. The draft Bills are likely to be put in public domain shortly. Meanwhile, finance minister Arun Jaitley proposes to introduce these as Money Bills to ensure they are not stuck in the Rajya Sabha where the ruling NDA does not have a majority.

“The states have suggested certain changes relating to return procedures in the model GST law. Also, they have asked for changes in wordings in compensation law. We will finalise the three draft laws at the November 25 meeting,” a source added.

A meeting of the Union finance minister with the state FMs here on Sunday on bifurcating administrative powers of the Centre and states in the GST regime had failed to break the deadlock over the issue. States had alleged that the Centre, which wanted a vertical split of the 10-million indirect tax assessee base, had turned more adamant.

States like West Bengal, Kerala, Uttarakhand, Uttar Pradesh and Tamil Nadu insist on exclusive control over small taxpayers who earn less than R1.5 crore in annual revenue for both goods and services. They feel states have the infrastructure deployment at the grassroots level and small taxpayers are familiar with local authorities. The central government, on the other hand, is not in favour of the demand as it wants a single-registration regime for ease to service taxpayers. Instead of horizontally splitting the taxpayers — those with R1.5-crore revenue with states and those above with Centre — it proposes to divide the entire taxpayer base vertically wherein the taxpayers are divided between the Centre and the states in a fixed proportion.

As a compromise, the Centre is willing to give states an administrative power over two/third of the taxpayer base if service tax continues to be administered by the Centre.

State tax officers’ strike disrupts work

Work was affected in some commercial tax offices across the country on Wednesday due to a day-long pen-down strike by tax officers of various state governments. The strike call was given by the All India Confederation of Commercial Taxes Association (AICCTA), which claims to represent over 36,000 gazetted officers and about 2 lakh Class-III and IV employees in support of their demand of having a fair share in the administration of taxes under the GST regime.

Source : Financial Express

Cabinet nod for protocol amending double tax pact with New Zealand : 24-11-2016


The Union Cabinet on Wednesday gave its approval for ratification and entry into force of the third protocol to the existing double taxation avoidance convention (DTAC) between India and New Zealand.

This protocol — which was signed on October 26 this year — provides for among other things a revamped framework of exchange of information in line with international standard, an official release said.

It is also expected to enable assistance in collection of tax revenue claims between both countries.

Merchant Shipping Bill

The Cabinet also approved the Merchant Shipping Bill, 2016 for introducing it in Parliament.

The Merchant Shipping Bill, 2016 is a revamped version of the Merchant Shipping Act, 1958. The Bill provides for repealing of Merchant Shipping Act, 1958 as well as for the repealing of the Coasting Vessels Act, 1838.

The Cabinet Committee on Economic Affairs (CCEA) has approved opening of one Jawahar Navodaya Vidyalaya (JNV) in each of the 62 uncovered districts with an outlay of ₹2,871 crore.

A full fledged JNV provide employment to 47 persons and accordingly 62 JNVs will provide direct permanent employment to 2,914 individuals.

The expenditure for this purpose during the 12th Plan will be ₹109.53 crore with a spill over amount of ₹2,761.56 crore from 2017-18 to 2024-25.

Source : Business Standard

Demonetisation: PM Modi likely to attend Rajya Sabha today, may seek to end jogjam : 24-11-2016


As the government attempts to find a truce with a united opposition, which has disrupted both the Houses of Parliament since the beginning of the winter session, Prime Minister Narendra Modi is likely to attend the Rajya Sabha on Thursday and participate in the discussion on demonetisation.

Since the first day of the ongoing session, the Opposition leaders have been calling for the prime minister to speak on the issue.

Even though most of them support the government’s move on fight against black money, they are protesting against the way it was implemented; even after third week of the announcement on November 8, long queues can be seen outside ATMs and banks, with people looking to either exchange or deposit old notes.

Rejecting the demand of the Opposition parties to roll back the decision on demonetisation, Union Minister M Venkaiah Naidu had on Wednesday said the nation has supported the government’s step to unearth black money and added that the decision has been taken keeping in view of the welfare of the farmers and the marginalised sections of society.

He said that Prime Minister Modi took a bold decision to curb black money by invalidating the currency notes of 500 and 1,000 denominations.

For the fifth day yesterday, Parliament could not transact any substantial business due to uproar on demonetisation issue as both the Lok Sabha and the Rajya Sabha witnessed repeated adjournments amid allegations and counter-allegations by the members of opposition and treasury benches.

Earlier, Congress’s Anand Sharma alleged that the government has created financial anarchy in the country by demonetisation.

Sharad Yadav of the Janata Dal (United) reiterated his demand for payment of compensation to the kith and kin of those who have reportedly died of trauma while queuing outside banks and ATMs.

Bahujan Samaj Party (BSP) chief Mayawati said the situation in the country is grim and the absence of the Prime Minister in the House is an “insult”.

Sitaram Yechury of the Communist Party of India (Marxist) said the government is answerable to the House and Parliament is answerable to the people.

Source :Economic Times

Cash disclosed in ITR may not incur 200 per cent fine : 23-11-2016


The devil is always in the fine print, especially when it comes to the Income Tax (I-T) Act and its rules. Following demonetisation, tax experts are examining whether penalty under section 270A of the I-T Act (which is 200 per cent of the I-T payable on misreported or under-reported income) can be levied if an individual deposits unaccounted money, but pays advance tax on the same and also declares it in his I-T return (ITR).

Prima facie, it appears that in a scenario where income has been declared in the ITR, this penalty cannot be imposed unless the I-T Act is amended.

To illustrate: A person has deposited cash in excess of Rs 10 lakh in his bank accounts up to December 31. He has paid advance tax against these sums deposited by December 15 and March 15. Further, he declares such deposits as his income in his ITR for the fiscal year 2016-17. The moot issue is can penalty under section 270A be imposed on the grounds that the income was misreported or under-reported?

This issue came up during an in-house panel discussion at the Bombay Chartered Accountants’ Society (BCAS). According to Ameet Patel, chairperson of the taxation committee at BCAS, “As per the existing provisions of the I-T Act, section 270A cannot be applied in such a situation as the income has been voluntarily offered for tax. So it cannot be construed as a case of under-reporting or misreporting. The problem, however, would be in terms of explaining the source of the income. But that in itself may not be enough for levying penalty.”

A series of tweets by the ministry of finance (@FinMinIndia), which were retweeted by revenue secretary Hasmukh Adhia on November 9, stated that if cash above Rs 10 lakh is deposited in a bank account and is not matching with declared income (which is the income declared in the ITR), the same will be treated as ‘tax evasion’. In such a case, the I-T plus a penalty of 200 per cent of the I-T payable would be levied as per section 270(A) of the I-T Act. “This does not seem to be in line with the law as it stands today,” adds Patel who, however, admitted that an amendment cannot be ruled out.

Gautam Nayak, former president of BCAS, adds, “While no penalty can be levied if one discloses the amount in one’s ITR, the issue is not so simple. There are other risks besides a likely amendment (especially since the tax rate under the recently concluded Income Disclosure Scheme was higher). There could also be possible litigation regarding the year of taxation with resultant penalty and prosecution.”

I-T penalty is just one aspect, people should also be aware of the consequences of other laws, such as the Benami Property Act and the Prevention of Money Laundering Act, adds Nayak

Continuing with the same illustration, if the depositor is not able to prove the source of his income, can the I-T officials treat it as income of an earlier year and reopen assessment? “They could, but reopening is a lengthy process that requires approval of higher officials. Also, the I-T department is currently not adequately staffed to cope with so many more cases,” adds Patel.

Source : PTI

GST: IRS officers body wants Centre’s control on service tax assessees : 23-11-2016


An association representing thousands of revenue service officers today sought Centre’s control over service tax assessees under Goods and Services Tax (GST) having turnover of less than Rs 1.5 crore and raised concern over demand from few states, including West Bengal, of controlling them.

In a letter to Finance Minister Arun Jaitley, the Indian Revenue Service (Customs and Central Excise) officers’ association apprehended rise in black-money and tax evasion if states are given control over such assessees.

Other than West Bengal, Kerala, Tamil Nadu, Bihar, Delhi, Odisha, commercial tax officers working across the country under the state governments jurisdiction have also supported demands for control over service tax payers having less than Rs 1.5 crore turnover

“The move towards GST is aimed at simplifying the tax structure, widening the tax base, reducing tax-evasion and incentivising the honest tax payers. It is supposed to be a win-win situation for all the stakeholders viz the taxpayers, Central and state government.

“The proposal for having divided control over the assessees with all assessee having revenue less than Rs 1.5 crore being monitored only by state government is in conflict with the very root and premise of having GST. It will lead to rampant tax evasion, confusion and chaos amongst assesses due to different interpretations of issues by different states from J&K to Kerala,” it said.

Source : PTI

Demonetisation: Service charge on use of debit cards waived off : 23-11-2016


Modi government’s latest move to ease woes of common man due to the ongoing demonetisation drive is bound to make you happy! The government has decided that no service charge will now be levied for use of debit cards. Department of Economic Affairs Secretary Shaktikanta Das has said that till December 31, 2016, no service charges will be levied on debit cards and that the move is meant to ensure greater penetration of digital transaction. Meanwhile, to encourage digital transactions, the RBI has increased the doubled the limit on the balance that one can keep in e-wallets. The limit has been enhanced from Rs 10,000 to Rs 20,000.

The Narendra Modi government has come under severe criticism from the Opposition for its move to demonetise old Rs 500 and Rs 1000 notes. The reaction on the ground has, however, been mixed. While most people have lauded the move to check black money and corruption, many have said that the implementation, especially when it comes to availability of currency, should have been much better.

Struggling to deal with growing anger among the public over cash crunch, the Modi government is issuing new guidelines every few days. These are based on public feedback and are aimed at reducing the problems that common man is facing, following the massive demonetisation drive. The government has also warned that those who are using other people’s bank accounts to convert their black money will be severely punished. Not only that, those who allow their accounts to be misused for this purpose will also face prosecution.

Meanwhile, ATMs are progressively getting recalibrated. As and when they are recalibrated, the cash limit of such ATMs will stand enhanced to Rs 2500 per withdrawal. This will enable dispensing of lower denomination currency notes for about Rs 500 per withdrawal. Other ATMs which are yet to be recalibrated, will continue to dispense Rs 2000 till they are recalibrated. Various news reports suggest that queues outside banks and ATMs are getting shorter, and the situation is expected to further ease in the coming days.

 Source : Economic Times

No.38/2016 Dated: 22-11-2016


Admissibility of expenditure incurred by a Firm on Keyman Insurance Policy in the case of a Partner- Reg.

CIRCULAR NO. 38/2016

F.No.279/Misc./140/2015-ITJ

GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES

NEW DELHI Dated 22nd November, 2016

Subject: Admissibility of expenditure incurred by a Firm on Keyman Insurance Policy in the case of a Partner- Reg.     

The issue relating to admissibility of expenditure incurred by a firm on Keyman Insurance Policy premium in the case of a partner has been a contentious one.

2. CBDT Circular no. 762/1998 dated 18.02.1998 clarifies that the premium paid on the Keyman Insurance Policy is allowable as business expenditure. However, in case of such expenditure incurred on a partner of a firm, the general approach of the assessing officers was to treat the expenditure as not incurred for the purpose of business and disallow the same.

3. High Courts have upheld the admissibility of the expenditure incurred by the firm in the case of the partners (High Court of Bombay – CIT vs. B.N. Exports, ITA No. 2714 of 2009 dated 31.03.2010-NJRS citation 2010-LL-0331-10, CIT vs. Aggarwal Enterprises, ITA No. 1701 of 2012 dated 07.01.2015 -NJRS citation 2015-LL-0107-4. High Court of Gujarat- CIT vs. Gem Arts, ITA No. 1739 of 2009 dated 13.03.2012-NJRS citation 2012-LL-0313 High Court of Punjab & Haryana-CIT vs. Laj Exports, ITA No. 251 of 2012 dated 08.11.2013-NJRS citation 2013-LL-1108-72) Taking into account the Explanation to Clause (10D) of Section 10 of the Income-tax Act, 1961 and the CBDT Circular no. 762/1998 dated 18.02.1998, Courts have held that a Keyman Insurance Policy is not confined to a policy taken for an employee but also extends to an insurance policy taken with respect to the life of another person who is connected in any manner whatsoever with the business of the subscriber (assessee).

4. The High Court of Punjab and Haryana in the case of M/s Ramesh Steels, ITA No. 437 of 2015, vide judgement dated 2.2.2016 (NJRS citation 2016-LL-0505-68), reiterating the above view held that, “the said policy when obtained to secure the life of a partner to safeguard the firm against a disruption of the business is equally for the benefit of the partnership business which may be effected as a result of premature death of a partner. Thus, the premium on the Keyman Insurance Policy of partner of the firm is wholly and exclusively for the purpose of business and is allowable as business expenditure”.

5. The above view has been accepted by CBDT and the judgment has not been further contested.

6. In view of this, it is a settled position that in case of a firm, premium paid by the firm on the Keyman Insurance Policy of a partner, to safeguard the firm against a disruption of the business, is an admissible expenditure under section 37 of the Act.

7. Accordingly, henceforth, on this settled issue, appeals may not be filed by the department and those already filed, may be withdrawn/not pressed upon.

8. The above may be brought to the notice of all concerned.

(K Vamsi Krishna)

ACIT (OSD)(ITJ),CBDT, New Delhi

Notification No : 50/2016 Dated: 22-11-2016


Seeks to amend notification No. 20/2014-ST dated 16th September, 2014 so as to provide exclusive jurisdiction to LTU-Bangalore with respect to online information and database access or retrieval services provided or agreed to be provided by a person located in non-taxable territory and received by a non-assesse online recipient . – 50/2016

GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE)

NOTIFICATION No. 50/2016-Service Tax

New Delhi, the 22nd November, 2016

G.S.R.1082 (E).- In exercise of the powers conferred by clause (b) of section 2 of the Central Excise Act, 1944 (1 of 1944), read with clause (55) of section 65B of the Finance Act 1994 (32 of 1994), rule 3 of the Central Excise Rules, 2002 and rule 3 of the Service Tax Rules, 1994, the Central Board of Excise and Customs hereby makes further amendments in the notification No. 20/2014-Service Tax, dated the 16th September, 2014, published vide G.S.R. number (E), 648 dated the 16th September, 2014, namely :-

In the said notification, after the proviso, the following shall be inserted, namely:-

“Provided further that in case of online information and database access or retrieval services provided or agreed to be provided by a person located in non-taxable territory and received by a non-assesse online recipient, no officer specified in column (2) of the Table 3 and no officer subordinate to him, other than the officer specified in column (2) against S.No (23) of the said Table and all the officers subordinate to him, shall have the powers under Chapter-V of the Finance Act, 1994 (32 of 1994) and the rules made thereunder.

Explanation.- For the purposes of this notification,-

(a) “online information and database access or retrieval services” has the same meaning as assigned to it in clause (ccd) of sub-rule (1) of rule 2 of the Service Tax Rules, 1994;

(b) “non-assesse online recipient” has the same meaning as assigned to it in clause (ccba) of sub-rule (1) of rule 2 of the Service Tax Rules, 1994.”

[F. No. 354/149/2016-TRU]

(Anurag Sehgal)

Under Secretary to the Government of India

Note:-The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 20/2014 – Service Tax, dated the 16th September, 2014, vide number G.S.R. 648 (E), dated the 16th September, 2014 and last amended vide notification No. 1/2015 – Service Tax, dated the 20th January, 2015 vide number G.S.R. 44 (E), dated the 20th January, 2015.

Notification No. GSR 1094(E) [F.NO.D.12/24/2016-SEZ], 21-11-2016


SPECIAL ECONOMIC ZONES (AMENDMENT) RULES, 2016 – AMENDMENT IN FORM H AND ANNEXURE-I

NOTIFICATION NO. GSR 1094(E) [F.NO.D.12/24/2016-SEZ]DATED 21-11-2016

In exercise of the powers conferred by section 55 of the Special Economic Zones Act, 2005 (28 of 2005), the Central Government hereby makes the following rules further to amend the Special Economic Zones Rules, 2006, namely:—

(1) These rules may be called the Special Economic Zones (Amendment) Rules, 2016.
(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Special Economic Zones rules, 2006, (hereinafter referred to as the principal rules) in Form H, in Condition 7 for the words “ninety days”, the words “one hundred eighty days” shall be substituted.

3. In the principal rules, in Annexure-I, in item (1) for the words “first quarter”, the words “second quarter” shall be substituted.

Notification No.106/2016 21-11-2016


Income-tax ( 32nd Amendment) Rules, 2016. – 106/2016

MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION No. 106/2016

New Delhi, the 21st November, 2016

INCOME-TAX

S.O. 3498(E).-In exercise of the powers conferred by section 295 read with section 9A 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. These rules may be called the Income-tax ( 32nd Amendment) Rules, 2016.

2. In the Income-tax Rules, 1962, in rule 10V,-

(i) in sub-rule (1), in clause (c), after the words “has been entered into”, the words “or is established or incorporated or registered in a country or a specified territory notified by the Central Government in this behalf” shall be inserted with effect from the date of their publication in the Official Gazette;

(ii) after sub-rule (10), the following sub-rules shall be inserted, and shall be deemed to have been inserted with effect from the 15th day of March, 2016, namely:-

“(11) For the purposes of clause (a) of sub-section (4) of section 9A, a fund manager shall not be considered to be a connected person of the fund merely for the reason that the fund manager is undertaking fund management activity of the said fund.

(12) For the purposes of clause (d) of sub-section (4) of section 9A, any remuneration paid to the fund manager, by the fund, which is in the nature of fixed charge and not dependent on the income or profits derived by the fund from the fund management activity undertaken by the fund manager shall not be included in the profits referred to in the said clause, if the conditions specified in clause (m) of sub-section (3) of section 9A are satisfied and such fixed charge has been agreed by the fund manager in writing at the beginning of the relevant fund management activity .”.

[F. No. 142/15/2015-TPL]

NIRAJ KUMAR, Under Secy. (Tax Policy & Legislation)

Note: The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii) vide number S.O. 969(E), dated 26th March, 1962 and was last amended by notification number G.S.R.1073(E), dated 16th November, 2016.

Here’s why an entry tax may not solve states’ past problems : 21-11-2016


The Supreme Court last week upheld the levy of entry tax by states. A nine-judge Constitution Bench headed by Chief Justice TS Thakur in a majority verdict of 7:2 ruled that the freedom of trade under Article 301 of the Constitution was not free from tax, and a non-discriminatory levy of tax is not violative of Article 304(a). It held that states have the right to levy taxes as long as these are not discriminatory. States fighting these cases in the apex court included Haryana, Bihar, Tamil Nadu, Kerala, Rajasthan, Odisha, Uttar Pradesh, Jharkhand, Chattisgarh, Assam and Madhya Pradesh.

Laying down a 10-point framework for the regular benches to decide the legality of such state laws, CJI Thakur, who penned down the judgment for judges AK Sikri and AM Khanwilkar, said “the compensatory tax theory evolved in Automobile Transport case and subsequently modified in Jindal’s case has no juristic basis and is therefore rejected”.

As the SC endorsed entry tax, companies will have to pay arrears of over R30,000 crore plus interest and future taxes till it is abolished under the GST regime. Over 2,000 cross-appeal cases were filed by several companies and states on levying entry tax.

While judges SA Bobde, Shiva Kirti Singh, NV Ramana and R Bhanumathi also concurred with the findings of CJI, 2 out of 9 judges—Justice DY Chandrachud and Justice Ashok Bhushan—disagreed with the majority view. Justice Bhanumathi preferred to write a separate judgment, saying she had difference of opinion on one or two points only. She was of the view that the term ‘local area’ implied the entire territory of the state.

Justice Chandrachud noted that a tax can impose restriction where its direct and “inevitable effect is to restrict the freedom of trade, commerce and intercourse.” He also held that a local area is not the entire state.

The other dissenting judge on the bench Justice Ashok Bhushan dismissed states’ arguments of holding entry tax as compensatory in nature by saying that the concept is not compatible with the Constitution.

While attorney general Mukul Rohatgi had told the court that all future entry tax issues will be resolved with the passage of the GST, legal experts say that will not solve the states’ past problems.

Senior advocate KK Venugopal pointed out that if the GST Bill is passed it will impact only future transactions. If the GST is not passed, then states will be entitled to collect such tax arrears based on accounts maintained by them.

Welcoming the SC’s judgement, the Odisha government said that it would earn balance R1,500 crore from different companies as some dealers have paid 50% of entry tax pursuant to the apex court’s interim orders.

The provisions of Article 301 of the constitution were first examined in the case, Atiabari Tea Company Ltd vs State of Assam, in 1960 by a five-judge bench that emphaised on the need for economic unity and ruled against entry tax. After doubts arose over the Atiabari ruling, the issue was referred to a larger bench of seven judges in the Automobile Transport (Rajasthan) Company Ltd vs State of Rajasthan (1962). The bench then ruled in favour of tax.

Jindal Steels Ltd then challenge the levy by Haryana in 2002. Later, other manufacturing companies including Vedanta, Reliance, SAIL and Hindalco followed. The case was eventually referred to a larger bench of five judges for more clarity. In 2006, the five-judge bench directed hearing of all related cases following which, in 2008, a two-judge bench framed 10 questions for consideration by the larger bench.

Later in 2010, the issue was referred to a 9-judge Bench by a Constitution Bench led by Justice SH Kapadia. After a six-year hiatus, CJI Thakur then finally heard the matter overruling previous apex court decisions in Atiabari and The Automobile Transport. The assessees had relied upon these cases for assailing entry taxes while the states have sought for overruling the two decisions.

Senior Advocate Harish Salve batted for the companies, arguing it was beyond the power of the states to impose such tax on goods entering their territory. However, states refuted these arguments by saying their sovereign powers should not be diluted as the right to levy and entry tax is essential to the division of tax powers between the Centre and states.

Source : PTI

GST will help India Inc go digital : 21-11-2016


The newly introduced goods and services tax (GST) is India’s most significant tax reform in decades. It is expected to usher in a harmonised national market for goods and services and lead to a simplified, assessee-friendly tax administration system. But getting GST compliant for businesses may mean significant re-thinking of business processes and systems. What does this mean for IT teams? Two key executives from German enterprise software maker, SAP—Neeraj Athalye, head of SAP S/4HANA, Indian subcontinent and Arun Subramanian, vice president, globalisation services, SAP India—speak to Sudhir Chowdhary on the transition challenges and road map for implementation during this digital transformation. Excerpts:

What are some of the major challenges for the industry while adopting GST?

Neeraj Athalye: There are two basic challenges. The first is getting clarity on GST, which is an ongoing challenge and is expected to be addressed as we progress towards a successful transition. The second challenge is making the businesses GST compliant. As a technology organisation, it is important to know where businesses stand. Businesses need help on the road map to move to GST compliant systems. As SAP’s solutions cut across 26 industries, we understand that each company has different needs depending on the industry it belongs to.

How can IT companies such as SAP support India Inc, especially SMEs, to be prepared to move onto the new GST regime?

Athalye: SMEs have always been a very strategic customer base for SAP. We have launched various solutions to meet their requirements and have multiple solutions depending on their size and scale. For GST, it is critical for us to help them through this journey towards achieving compliance. We have recently announced a knowledge platform available at sap.com/India/SimpleGST, with Assocham as industry partner, where all the GST related information is available to businesses, irrespective of their size. Large enterprises have access to a whole bunch of consultants, advisors and others for getting requisite information on GST. Since SMEs may not have the same kind of access, we have taken a three-pronged approach—connect, engage and transform to enable them for this.

Engage: For engaging or reaching out to enterprises across the country, we have a large set of partners that we work with across diverse industries. We enable the partners to take the message and process forward to businesses. Additionally, we are available on a 24×7 SAP support line.

Transform: We have various tools today that help businesses with their transformation journey. Be it the S/4HANA digital core road map or how companies go about adopting it, all such information is available through blogs/white papers/e-learning sessions. We conduct wide web learning/ training sessions and seminars as well.

Arun Subramanian: We started this journey of reaching out to businesses and the ecosystem sometime back in December 2014, when the white paper for GST was ready. In addition to webinars and regular sessions, industry work groups, we are also going to put our solution proposal on the knowledge platform along with sound bytes from senior executives, consulting notes and other prerequisites. Additionally, SAP is reaching out not just to businesses, but partners as well. We want to give as much information as possible to ensure that everyone is crossing the line on April 1, 2017, because if even one company misses the deadline, the chain will break.

Do you see GST to be a catalyst of growth for the Indian enterprise application industry?

Athalye: Absolutely. If a retail company has to be GST compliant, all its suppliers need to be GST compliant as well. A big ripple effect of digitisation is to be expected out of this implementation. This will be followed by optimisation. As I said, GST will have an implication on the number of warehouses every company has.

GST is not just a taxation exercise. Isn’t there a huge amount of IT technology infusion that is going into the whole business landscape?

Subramanian: Absolutely. First, the tax follows the goods because it is a tax on supply. Second, look at how the government has announced the law. It says upload all your supply invoices electronically onto the GSTN system. So, if everyone with a tax base of R20 lakh is going to upload their supplies, this will include any business that makes R6,500 earning per day, which could be a pav bhaji vendor or panwalla as well. That is how wide the tax base is going to be. They are saying every supply invoice has to be in the system.

The GSTN is not just going to hoard data, it is going to act as a clearing house mechanism. Interstate supply will do the transfer of SGST (state GST) from state A to state B where the goods are moving. That’s how the tax is moved with them electronically. If you look at it, everything is getting tagged into the system. So IT enablement is going to be pivotal as everyone is going live. Everyone is going to have to learn and then take it forward from there. We will be going paperless. IT is going to be a key driver.

GST may translate into processing of 300 to 500 crore (3-5 billion) invoices every month. How can the SAP system help to deal with the volumes?

Subramanian: According to our understanding, about 4-5 billion invoices will be uploaded onto the GSTN system on a monthly basis. I can safely say 30-40% of this number would come from an SAP system. The question is on the line of connectivity to GSTN. We are looking at building solutions with SAP HANA as the database to help even those businesses who probably are not on SAP S/4HANA or the digital core to process large volumes of data.

Each organisation is estimated to process 50,000 to seven lakh invoices a month. With HANA as the database, our solutions will specifically be able to cater to each and every size and segment of the businesses that we support today. For those who cannot afford S/4HANA or those who are looking at S/4HANA a little later down the line, we have an interim solution as well. So from a compliance point of view, businesses will not be affected.

We have handled several legal changes in the past—those that were part of Yashwant Sinha’s budget, VAT, service tax, the NFE going automatic in Brazil, and the digital agenda of the European Union. In Brazil, for example, you cannot issue an invoice to your customer. It goes to the government system, the tax is verified, and then you send your invoice to your customer. The electronic invoicing in Russia also follows a similar process where it doesn’t go directly to the government, but it goes to a registered tax authority and through the registered tax authority the invoice is directed to the customer.

What have been the key learnings from other markets where GST was implemented?

Subramanian: Let me take the example of Canada. There are three levels of taxes, exactly as in India— federal, provincial and inter-state. It has an integrated GST with one rate, hence, it was simpler. Prior to GST it had VAT, which had two rates, so it was an easier transition. However, in terms of industry and practices it was a mature market. So the enterprises that transitioned were able to do it probably in a much efficient manner.

A recent example is Malaysia, where the industry and the enterprises are not as mature as that in Canada. There were teething problems, coupled with strikes by traders against the increase of the tax net, even though it went with one single tax across the country. So we have had varied experiences. For India, I think it is very important that from a policy perspective, while we have a draft model in place today, the business of business should be business, it should not be compliance.

Source : Financial Express

GST faces deadlock over administrative control on assessees : 21-11-2016


Most issues related to the proposed Goods and Services Tax (GST) taken up by the GST Council have been resolved. But administrative control over assessees has become a prickly matter, dividing the Centre and states.

Even an informal meeting between Finance Minister Arun Jaitley and state finance ministers failed to resolve the matter on Sunday, five days ahead of when the GSTCouncil is slated to take up the issue.

While the states and central finance officials are set to meet on Monday, the lack of consensus has the potential to cast a shadow on the planned GST rollout by April 1, 2017.

States, including West Bengal, Uttar Pradesh and Tamil Nadu, also took the opportunity to raise the issue of demonetisation and its impact on their treasuries with the finance minister.

After Sunday’s three-hour meeting, Jaitley said: “The meeting has remained incomplete. Discussions will continue on November 25.”

Trinamool Congress-ruled West Bengal remained a hurdle in building a consensus on the issue. The Trinamool had made implementation of GST a part of its manifesto for the Assembly polls, which it won earlier this year. However, the Assembly has not ratified the constitutional amendment Bill.

But there are practical difficulties as well. Entry-level taxes imposed by the Centre and the state have not been resolved. Who will collect these taxes? If the state ceases to collect these, how will the compensation mechanism work? West Bengal asked these questions. The state also objected to the Centre’s close monitoring of fund usage in social development schemes, calling it a “serious infringement” of the federal structure.

Kerala and Tamil Nadu are also citing jurisdictional issues and two sets of tax collection agencies as their objections. The objections of these three states suggests that the rollout of GST will miss its deadline.

In initial meetings of the GST Council in October, the issue was stated to be resolved amicably between the Centre and states. According to that agreement, the states were to have sole control in matters of sending notices, scrutinising and auditing accounts of assessees if their annual turnover was up to Rs 1.5 crore in case of goods. Over this threshold, both the Centre and states were to have control, but they were to avoid dual control over the same assessee.

In case of services, it was agreed the Centre would have sole control over assessees in case of service tax till the time state officials get enough skills to monitor this levy. Under the current tax system, only Centre can impose service tax, at least most of them.

However, this agreement, technically called horizontal model, broke down later even before the minutes of the agreement could be written. States argued that they also levy some service taxes such as entertainment tax. As such, they should be given power to monitor these.

The Centre then proposed a vertical model under which both the Centre and states will have control over assessees in goods and services, but would avoid dual control. The Centre was willing to give more number of assesses — two-thirds — to states. This was not agreed to by many states.

As the GST Council meeting could not break the deadlock, an informal meeting was convened by Jaitley. Most bureaucrats were not part of the meeting. However, this meeting could not resolve the issue.

Any disagreement at the next meet could derail the rollout of the GST from the targeted April 1, 2017. Jaitley had earlier this month stated that the GST has to be rolled out by September 16, 2017, before the validity of the constitutional amendment brought in by Centre and ratified by states expired.

On Sunday, West Bengal, Kerala, Uttarakhand, Uttar Pradesh and Tamil Nadu insisted on exclusive control over taxpayers earning less than Rs 1.5 crore in annual revenue, for both goods and services.

Uttarakhand Finance Minister Indira Hridayesh said: “The Centre is agreeable on goods, but is not yielding on services. States are looking at their interest to safeguard their revenue. The Centre will have to yield to states to get the CGST and IGST Bills passed. A middle ground on the issue has to be worked out politically.”

Kerala Finance Minister Thomas Issac said his state was unwilling to compromise as it had virtually given up its taxation rights.

At present, the estimated indirect taxpayer base, including value-added tax, service tax and excise, is around 10 million, of which around 0.4 million are common to the centre and the states. This leaves around 9.6 million tax payers of which around 6.6 million are value-added tax assessees, 2.6 million are active service tax assessees and around 0.4 million assesses are registered under excise.

The next GST Council meeting, on November 25, will also work to finalise four supplementary Bills dealing with CGST, SGST, IGST and the compensation law.

Source : Economic Times

Revised Double Taxation Avoidance and Prevention of Fiscal Evasion Agreement : 19-11-2016


India and Cyprus signed a revised agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion (DTAA) with respect to taxes on income, along with its Protocol, in Nicosia today.
The agreement will replace the existing DTAA that was signed by the two countries on 13th June 1994.
The protocol was signed by Mr. Ravi Bangar, High Commissioner of India to Cyprus on behalf of India and Mr. Harris Georgiades, the Minister of Finance on behalf of Cyprus.
An official press release said the new DTAA provides for source based taxation of capital gains arising from alienation of shares, instead of residence based taxation provided under the existing DTAA.
However, a grandfathering clause has been provided for investments made prior to 1st April, 2017, in respect of which capital gains would continue to be taxed in the country of which taxpayer is a resident.
The new agreement provides for assistance between the two countries for collection of taxes. The new agreement also updates the provisions related to Exchange of Information to accepted international standards, which will enable exchange of banking information and allow the use of such information for purposes other than taxation with the prior approval of the Competent Authorities of the country providing the information.
The new agreement expands the scope of ‘permanent establishment’ and reduces the tax rate on royalty in the country from which payments are made to 10% from the existing rate of 15%, in line with the tax rate under Indian tax laws. It also updates the text of other provisions in accordance with the international standards and consistent policy of India in respect of tax treaties.
Provisions of the new DTAA will enter into force after the completion of necessary internal procedures in both countries and is expected to come into effect in India in respect of income derived in fiscal years beginning on or after 1st April, 2017, the release added.
Source : Financial Express

Realty Awaits Clarity on GST : 19-11-2016


While the goods and services tax (GST) tax structure has been announced, the real estate sector is waiting with bated breath to see which tax rate gets applied to the real estate and construction sector.

Anuj Puri, Chairman & Country Head, JLL India — a leading real estate consultancy firm in India — said, “Given the Finance Minister Arun Jaitley’s clarification that the highest tax slab will be applicable to ‘sin’ items and other categories that are currently taxed at around 30 percent, it can be assumed that this rate will not apply to the real estate and construction industry. Similarly, the lowest tax rate of 5 percent will apply on common use items and is highly unlikely to be applied to housing. That leaves us with two probable scenarios: the tax rate either being set at 12 percent or 18 percent,” adding, “Clarification would also be needed on whether credit for input tax would be allowed by the Government if the composition scheme has been availed by developers. Only after these clarifications have been issued in coming days will the real estate industry understand the implications of the upcoming GST regime.”

Elaborating upon 18 percent tax bracket may put the input cost on the higher bottle neck Manoj Gaur, President CREDAI-NCR said, “There are few chances of the input costs going up as the cumulative taxes which are charged as of now might end up being on the higher side than the rate which is decided for the sector. In such cases, say there are 7 industries which are prime contributors to the sector and few of them have the GST rate on the higher side than for the sector and others have lower rates.” The Managing Director of the Gaursons India further added, “This will mean net increase in the input costs fractionally by a percent or two but eventually the costs are bound to go down for the end user as the final delivery charges will have much lower taxes than the ones already persistent resulting in the final costs going down.”

Standing in sync with Anuj Puri of the JLL Deepak Kapoor, President CREDAI-Western UP chapter said, “There have been various issues which the government still needs to address like deciding on the overall rate which would be applicable for the real estate sector. Speculations are still high as to what rate would be assigned to the sector but a final assessment can be made only when the final rates are announced. The Director, Gulshan Homz further added, Till that time, everyone needs to work around the structure of GST and better understand it’s applicability which will ensure smooth operations post that.”

Demanding different brackets for tier-2 and tier-3 cities Kushagr Ansal, Director, Ansal Housing said, “Rather than deciding some exceptional tax brackets for markets like Mumbai and Delhi NCR, there should considerations towards incorporating these brackets for tier – 2 and tier – 3 cities as there are massive infrastructure plans for them which are in the pipeline and various initiatives like the Smart India Mission and Housing for All 2022 which will ensure more benefit for the buyers which are being targeted through these schemes.”

Batting in favour of the 12 percent tax regime for the real estate sector Anuj Puri of the JLL India said, “A higher rate of 18 percent, however, could end up increasing the cost of homes, especially in projects which are under construction, unless the Government offers more clarity on the composition scheme (i.e. abatements for cost of land) as well as on service tax and value added tax (VAT) already paid by developers on under-construction properties.” Puri said that under the service tax regime, developers and home buyers can obtain benefits under the abatement scheme. In the case of buying an under-construction flat, an abatement of 75 percent was allowed, subject to the flat being less than 2,000 sft and sold for less than Rs 1 crore, taking the effective tax rate from 15 percent to 3.75 percent. If these two conditions are not met, the abatement was reduced to 70 percent and the effective tax rate to be borne by the home buyer increased to 4.5 percent.

As most houses in Mumbai are priced above INR 1 crore, an end-user buying an under-construction apartment would currently pay both service tax (4.5 percent) and VAT (1 percent in Maharashtra, varies from state to state). Besides, there are other taxes applicable such as excise duty, customs duty, central sales tax, octroi, etc., which are paid by the developer during procurement and passed on to the home buyer. Stamp duty, which is payable on property transfers, will not be subsumed into the GST.

“Now, assuming that the same rules of abatement apply under the GST regime, properties under construction will attract a tax rate of 4.5 percent (after 75 percent abatement on a tax rate of 18 percent), which is the same as today. However, if the abatement rules do not apply, the applicable tax rate would shoot up drastically. Moreover, developers would have already paid service tax and VAT for procurement of goods and services for their properties currently under construction. Will they be allowed to claim credits for input tax paid,” asked Puri of the JLL India?

However, either 12 percent or 18 percent there are builders who believe would be enough to scale down the realty prices in India. Speculating prices of the house properties going down post GST implementation, Vikash Bhagat, Director, Airwil Infra said, “Either of the two remaining brackets would be both beneficial for the sector as in the current scenario there are multiple taxes and this cumulates to a much higher tax than the speculated 12  percent or 18  percent.” Bhagat said that there have been high bids on the prices of properties going up post GST is implemented but this might not be the scenario in real time. It might end up reducing the major tax burdens on the real estate developers hence resulting in the final prices going down.

Source : Business Standard

Demonetisation: Analysts warn of speed bumps before GDP growth rebound : 19-11-2016


The scrapping of Rs 500 and Rs 1,000 notes, which comprised about 86% of all cash in circulation, will put a dent in India’s growth. How big is a matter of speculation — some analysts pegged the setback at a few tenths of a percentage point, others slashed estimates by half. The most pessimistic view would possibly see India slipping back behind China and losing its title of fastest growing major economy in the world.

Brace for a slowdown in the remaining five months of FY17 as demand dries up in response to the lack of liquidity, but expect an equally strong rebound in a few quarters when the expected benefits of the move kick in, was the predominant view among analysts.

“The economy has had a heart attack this quarter,” said Indranil Sen Gupta, chief India economist at Bank of America-Merrill Lynch. “We expect the impact of this to resonate for at least two quarters, impacting GDP by 50 basis points for the fiscal year.”

Most put the revised number at around 7% against earlier estimates of near 8%, an optimism that had been bolstered by good monsoons and a pay commission-led consumption boost. The Indian economy expanded 7.6% in FY16. The International Monetary Fund had put FY17 growth at the same level. China is likely to grow at 6.6% in 2016 and is expected to slow to 6.2% in 2017.

HDFC Bank expects India’s GDP to grow at 7.3% versus the earlier estimate of 7.8%. CARE Ratings slashed its projection for gross value added (GVA) to 7.1-7.3% from 7.6%. Services will get hit the most in the December quarter on account of losses in trade, hotels and transport due to the volume of cash transactions involved in these activities.

“Agriculture is expected to be least impacted with the major shock being absorbed in the first two-three weeks itself as there have been issues in sales at mandis due to the cash crunch presently,” CARE Ratings said in a report.

ICRA cut its growth forecast by 40 basis points. It had earlier forecast GDP and GVA to grow 7.9% and 7.7%, respectively. One basis point is one hundredth of a percentage point.

“Consumption-oriented sectors, particularly those which witness a sizable magnitude of cash transactions, such as real estate, construction, jewellery, retail, travel and tourism and trade are likely to be most affected. Cash-based transactions in the unorganised sector would also get disrupted, particularly in rural areas,” said Aditi Nayar, senior economist at ICRA.

Investment bank Ambit Capital took a far bleaker view. It cut GDP growth estimates for FY17 to 3.5% from 6.8% earlier and for FY18 to 5.8% from 7.3%, even penciling in the possibility of a contraction in the ongoing third quarter.

Ambit said the cash crunch will paralyse economic activity in the short term. “Hence, we expect GDP growth to decelerate from 6.4% in the first half of FY17 (as per Ambit estimates) to 0.5% year on year in the second half of FY17 with a distinct possibility of GDP growth contracting in the third quarter FY17.”

An economist at one of the large private Indian banks said GVA growth could be as low as 7.1% with discretionary consumption to suffer a major blow due to the cash crunch. “It will be a drag especially in this quarter but we expect things to normalise in the fourth quarter,” the economist said.

Credit ratings firm Crisil earlier projected GDP to grow 7.5% but now expects a downside risk emanating from demonetisation.

“Though we are still waiting and watching, it is almost certain that demonetisation will shave off some percentage points from the GDP,” said Sunil Kumar Sinha, principal economist at India Ratings & Research, a Fitch Group company. HSBC expects an impact of up to one percentage point on growth. “Using the cash elasticity of GDP, we estimate that over a year, economic growth can fall by 0.7-1.0 ppt (percentage point), with the maximum impact in the immediate two quarters, which will see  a large contraction in ‘effective’ money supply,” it said in a note.

Economic Affairs Secretary Shaktikanta Das said it was too early to assess the impact of demonetisation. “It is too early to assume GDP will go down just because of this. The situation will ease out in next 10 to 15 days,” he said at an ET Now function, while pointing out that things were improving. The deceleration will push the government’s ambitions of achieving 8% growth further out of reach.

“Consumption has been hit hard. Agriculture has done better this year but it will not be able to make up for this impact,” said DK Joshi, chief economist at Crisil. Consumption has about a 56% weightage in GDP.

Sen Gupta said the economy can at best grow at the same pace as last year, though it is more likely it will grow somewhere around 7.4%, slower than the 7.6% registered in the fiscal year ended March 2016. The biggest blow will be borne by services sector as people conserve cash rather than spend on travel, consumption or leisure activities. Since the sector dominates the economy, this will lead to some job losses and pull GDP lower.

While the short-term view is negative, most experts have a bullish view a year down the line from the boost to taxes and potentially lower interest rates and inflation. Ambit expects a 25-50 basis point reduction in interest rates in the second half of the current fiscal.

“Since government’s fiscal situation is likely to improve (with higher tax collection), GDP growth is likely to improve over time – we expect FY18 GDP growth of around 8.2% (revised up) from 8%,” said Tushar Arora, senior economist at HDFC Bank.

Small and medium enterprises (SMEs), which are also big contributors to GDP, will be hit because both payments and receipts are in cash, said Madan Sabnavis, chief economist at Care Ratings.

“Overall GDP would be affected by 0.3% to 0.5%,” Sabnavis said. Care had expected India’s GDP to grow at 7.8% before the monetisation was announced.

Expectations are that the sowing for the winter rabi crop will also be affected, though it is unclear on what impact the demonetisation will have on prices of foodstuff.

Source : Economic Times

Don’t mislead Parliament: Oppn punches hole in govt’s claims on bad loans, black money : 18-11-2016


The Congress and Communist Party of India (Marxist) questioned the Narendra Modi government’s claims on a crackdown on ‘black money’ and also highlighted its poor record on recovering bad loans, or non-performing assets (NPAs), of the banking sector.

Arun Shourie, a former Bharatiya Janata Party (BJP) member, told news channel NDTV thee government failed to anticipate the distress its decision would cause in remote areas. Asked if demonetisation was a bold move, Shourie said jumping into a well or committing suicide is also radical. A minister in the Atal Bihari Vajpayee-led government, Shourie said a beginning could have been made by reforming the tax administration.

Opposition punches hole in govt's claims on bad loans, black money

CPI (M) chief Sitaram Yechury said Finance Minister Arun Jaitley’s clarification in the Rajya Sabha on Wednesday about NPAs was incorrect and accused him of having “misled” Parliament. On reports that the State Bank of India had written off bad loans worth Rs 7,000 crore, including Rs 1,200 crore of industrialist Vijay Mallya, the minister had said it was incorrect to term it a “loan waiver”.

Jaitley had said the bad loans continued to be on the books of the bank, which would continue to make efforts to recover it. But Yechury, quoting former Reserve Bank deputy governor K C Chakrabarty, said there was no incentive for banks to pursue recovery of a bad loan if it was no longer on the balance sheet. The CPI (M) chief advised Jaitley to read RBI guidelines on the issue.

Yechury said the Modi government’s efforts to recover bad loans were poor. The conviction rate for loan defaulters was a mere 1.45% in 2014-15, which further declined to 1.14% in 2015-16.

Congress Rajya Sabha member Jairam Ramesh said the government move would impact the rural economy for the next 12 months. He said the Modi government, according to a reply to a question in Parliament, had recovered Rs 1.25 lakh crore of black money in the past two years. Ramesh said the Congress-led UPA government’s record was better; it unearthed Rs 1.31 lakh crore in its last two years.

Ramesh also questioned the government claim that demonetisation is largely aimed at checking fake currency.

He said fake currency was not more than Rs 500 crore or 0.02 per cent of total black money. The two parties also said the government had mismanaged the situation. Its confusion was apparent in the way it had repeatedly changed the exchange limit of currency notes and its failure to recalibrate ATMs.

Shourie said the PM was carried away by a big idea and got into a self-image that he needed some or the other ‘surgical strike’. “They have got into this cycle of surgical strike business,” he said. Earlier also a Modi government critic, he said demonetisation was akin to wielding an axe to remove a mosquito on your nose. “You have to do a lot more on black money…I am all for it but this is not the way to go about it,” he said.

Source : Financial Express

Solving tax woes: India, US strike deal on advance pricing agreement : 18-11-2016


India and the US have reached a deal for the first bilateral advance pricing agreement, opening the doors for US multinationals here to ascertain their tax liabilities beforehand. The two countries have also resolved 108 tax disputes involving a tax of about `5,000 crore through the Mutual Agreement Procedure (MAP).

“The two competent authorities reached an agreement on the terms and conditions of the firstever Bilateral APA involving India and the USA,” a finance ministry statemen  said on Thursday. At a meeting held in the last week of October, the two countries resolved 66 transfer pricing disputes and 42 cases related to treaty interpretation.

MAP, under the Double Taxation Avoidance Agreement (DTAA), is an alternative dispute settlement mechanism available to authorities and foreign investors. “The total amount that was locked up in dispute in these cases is approximately `5,000 crore and these cases were related to Assessment Years ranging from AY 1999-2000 to AY 2011-12,” it added.

The resolved cases pertain to various issues like transfer pricing adjustments made to the international transactions in the nature of payment of royalty, management fees, cost contribution arrangements, engineering design services, contract R&D services, investment advisory services, Marketing Support Services and Software Development Services.

The treaty interpretative issues were in the nature of presence of permanent establishment in India and profit attribution to such PEs, disputes pertaining to royalty income v/s business income of foreign companies.

Advance pricing provides certainty to taxpayers in respect of cross-border sales among related entities by specifying the methods of transfer pricing and determining the arm’s length price of international transactions in advance for usually a maximum of five years ahead

Though India started its Bilateral APA process with the US by accepting applications from the Indian taxpayers from FY 2012-13, the US started its bilateral process with India only in February 2016 by way of accepting applications from US taxpayers. Within a short span of eight months, the agreement has been reached upon in the first ever bilateral APA involving India and the US.

“The speedy resolution of cases and agreement on Bilateral APA due to effective mechanism of development of mutual trust and cooperation between the Competent Authorities of two countries would really be a positive factor in creating a conducive atmosphere for investments and business by US Companies in India,” the finance ministry statement said.

Source : PTI

Ban on old notes just a beginning, more such curbs for Aam Aadmi & cos in offing : 18-11-2016


n the government’s determined push against the parallel economy, the next step after the disruptive overnight ban on high value notes could be a cap on cash withdrawal, transactions and amounts that can be held by individuals and companies, people in the know said.

Recently some senior tax officials and experts were asked their opinion about such a step. The senior government officials seeking feedback or opinion on the issue is one of the main reasons why industry trackers say  that such a step could be in the offing, said two people who spoke to ET.

“What was asked was whether SIT proposal on reducing cash transactions was feasible. They wanted to know what could be the pushback or problems of implementing such a step,” a person who refused to be identified said. The Supreme Court-constituted Special Investigation Team (SIT) in July this year that had recommended a cap of Rs 3 lakh on cash transactions and Rs 15 lakh on cash holdings.

The government may not implement the SIT’s proposal as it is and could change the threshold on the cash transactions and cash holdings, industry trackers said.

“The demonetisation and a cap on cash withdrawal is a very positive step as this can just end the parallel economy as almost no black money would be generated. I see this step as a logical extension of government strategy to attack the black money, and it could have huge positive implications on Indian economy,” said Rakesh Nangia, Managing Partner, Nangia and Co.

Experts say that such a step could mean that the war on black money will open up another flank and combined with GST, such a proposal could go a long way.

“As it is, black money would be highly hit due to GST and if the government goes ahead with the SIT recommendation it would be very good. Also, I think the government may allow some exceptions for holding more cash than prescribed and charge tax in some situations,” said Uday Ved, a senior tax expert.

Industry trackers said the government could be looking to introduce such a step in the budget next year. The government can also announce such a change through a CBDT or an RBI circular. A questionnaire mailed to CBDT and the finance secretary on Wednesday did not elicit any response. “There could a probability that such a step could just come in by budget because the government is leaving no stones unturned to attack the black money economy. This would mean that the income tax officers can scrutinise those who hold cash above the limit,” said Amit Maheshwari, Partner, Ashok Maheshwary & Associates LLP.

While seeking opinions of people outside Narendra Modi’s core team means that the government has factored in the risk that the information could leak out, it could also be a strategy to avoid a blowback that demonetisation unleashed, experts said.

The government may be looking at preparing and gauging the impact of such a step in detail by roping some consultants and senior tax officials.

Source : Economic times

Notification No: SO 3464(E) [F.NO.01/12/2009 CL-I Dated: 17-11-2016


SECTION 435 OF THE COMPANIES ACT, 2013 – SPECIAL COURTS – NOTIFIED SPECIAL COURT

NOTIFICATION NO. SO 3464(E) [F.NO.01/12/2009-CL-I (VOL.IV)]DATED 17-11-2016

In exercise of the powers conferred by sub-section (1) of section 435 of the Companies Act, 2013 (18 of 2013), the Central Government, with the concurrence of the Chief Justice of the High Court of Meghalaya, hereby designates the following Court as Special Court for the purposes of providing speedy trial of offences punishable with imprisonment of two years or more under the Companies Act, 2013, namely:—

TABLE

Sl. No. Existing Court Jurisdiction as Special Court
(1) (2) (3)
1 Court of District and Sessions Judge, Shillong. State of Meghalaya

2. The aforesaid Court mentioned in column number (2) shall exercise the jurisdiction as Special Court in respect of jurisdiction mentioned in column number (3).

Notification No: G.S.R 1075(E) [F.NO.17/60/2012 CL-V Dated: 17-11-2016


COMPANIES ACT, 2013 – AMENDMENT IN SCHEDULE II OF SAID ACT

NOTIFICATION NO. GSR 1075(E) [F.NO.17/60/2012-CL-V]DATED 17-11-2016
(AS CORRECTED BY NOTIFICATION NO. GSR 1127(E) [F.NO.17/60/2012-CL-V], DATED 9-12-2016)

In exercise of the powers conferred by sub-section (1) of section 467 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following further amendments to amend Schedule II to the said Act, namely:—

1. In the Companies Act, 2013, in Schedule II, under Part ‘A’, in para 3, in sub-paragraph (ii), for the brackets, letters and words starting with “(ii) For intangible” and ending with the words “force shall apply”, the following brackets, letters and words shall be substituted, namely:—

“(ii) For intangible assets, the relevant Indian Accounting Standards (Ind AS) shall apply. Where a company is not required to comply with the Indian Accounting Standards (Ind AS), it shall comply with relevant Accounting Standards under Companies (Accounting Standards) Rules, 2006″

2. This notification shall be applicable for accounting period commencing on or after 1st April, 2016.

18 – 17-11-2016


FOREIGN EXCHANGE MANAGEMENT (INSURANCE) REGULATIONS, 2015 – SUITABLE MODIFICATION IN MEMORANDUM OF FOREIGN EXCHANGE MANAGEMENT REGULATIONS RELATING TO GENERAL/HEALTH INSURANCE (GIM) AND LIFE INSURANCE CORPORATION (LIM)

A.P. (DIR SERIES 2016-17) CIRCULAR NO.18[(1)/12(R)]DATED 17-11-2016

Attention of Authorised Dealers (ADs) is invited to A.D (M.A. Series) Circular No. 11 dated May 16, 2000 in terms of which ADs were advised of various Rules, Regulations, Notifications/Directions issued under the Foreign Exchange Management Act, 1999 (hereinafter referred to as the Act). On a review, it is felt necessary to revise the regulations issued under the Foreign Exchange Management (Insurance) Regulations, 2000 notified videNotification No. FEMA. 12/2000 – RB dated May 03, 2000 c.f. G.S.R. No. 395(E) dated May 03, 2000. Accordingly, the said Regulations have been repealed in consultation with the Government of India and superseded by the Foreign Exchange Management (Insurance) Regulations, 2015 notified videNotification No. FEMA. 12(R)/2015-RB dated December 29, 2015 c.f. G.S.R. No. 1007(E) dated December 29, 2015. The revised notification has come into force with effect from December 29, 2015.

2. The Memorandum of Foreign Exchange Management Regulations relating to General/Health Insurance (GIM) and Life Insurance (LIM) in India have also been suitably modified and are annexed at Annex I and Annex II, respectively.

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

4. The Master Direction No. 9 dated January 01, 2016 on Insurance, is being updated to reflect the changes.

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

ANNEX I

Major changes effected in the revised General/Health Insurance Manual (GIM)

Sl. No Subject matter Changes
1. Policies allowed to be placed in foreign exchange. All general/health insurance policies permitted by IRDAI are allowed to be placed in foreign exchange. No RBI permission is required for issuance/renewal of any insurance policy.
2. Payment of insurance premium by Indian Resident Payment of insurance premium in foreign currency by Indian Resident is no longer required irrespective of currency for settlement of claim.
3. Payment of insurance premium by Resident outside India Resident outside India may obtain general/health insurance policy on payment of insurance premium in foreign currency irrespective of currency for settlement of claim. However, if the premium is paid in INR, settlement of claim will be in INR.
4. Health insurance policy by resident going abroad.
(i) Resident going abroad for employment purpose may also take health insurance policy on payment of premium in INR.
(ii) Claims settlement under cashless international health insurance policies to hospitals providing treatment or through Third Party Administrator arrangements allowed.
5. Investments abroad Overseas investment by Insurance companies enabled.
6. Quarterly report by insurance companies on settlement of claims of policies issued with permission of RBI. Quarterly Report discontinued.

GIM Memorandum of Foreign Exchange Management Regulations Relating to General /Health Insurance in India

Definitions

1. (i) “Person resident in India” and “Foreign Currency” will have the same meaning as defined under Foreign Exchange Management Act, 1999.

(ii) “Insurers” means the Indian Insurance Companies as defined in section 3(9) of The Insurance Laws (Amendment) Act, 2015 and registered with Insurance Regulatory and Development Authority of India (IRDAI) to carry out general/health insurance/reinsurance business in India.

Payment of insurance premium in foreign exchange.

2. Payment of premium in foreign exchange means and includes payment of premium in foreign exchange and/or payment of premium in INR derived by sale of foreign exchange to an authorised dealer or an authorised money changer. Appropriate documentary evidence may be insisted upon at the time of accepting payment.

General/Health Insurance policies from Insurers outside India.

3. (i) A person resident in India may take or continue to hold a health insurance policy issued by an insurer outside India provided aggregate remittance including amount of premium does not exceed the limits prescribed by RBI under the Liberalised Remittance Scheme (LRS) from time to time.

(ii) Units located in SEZs may take or continue to hold general/health insurance policies from insurers outside India subject to IRDAI Guidelines and Central Government rules provided the premium is paid by the units out of their foreign exchange balances.

(iii) No person shall take out or renew any policy of insurance in respect of any property in India or any ship or other vessel or aircraft registered in India with an insurer whose principal place of business is outside India without permission of Insurance Regulatory and Development Authority of India (IRDAI).

(iv) A person resident in India may take or continue to hold a general /health insurance policy other than the ones referred in (i) to (iii) above, issued by an insurer outside India, provided that, the policy is held, under a specific or general permission of the Central Government.

(v) A person resident in India may continue to hold any general/health insurance policy issued by an insurer outside India when such person was resident outside India. In case the premium due on a general/health insurance policy has been paid by making remittance from India, the policy holder shall repatriate to India through normal banking channels, the maturity proceeds or amount of any claim due on the policy, if any, within a period of seven days from the receipt thereof.

All risk insurance policies

4. Insurance on Indian marine hulls covering All Risks against war and other allied risks (arising out of civil commotion, political or labour disturbances etc.) is required to be obtained only from the Insurers in India.

General/Health Insurance policies by Indian Residents

5. Resident of India may take general/health insurance policy permitted by IRDAI from Indian insurer on payment of premium in INR, where claims arising under the policies outside India are to be settled in foreign currency.

General/Health Insurance policies by Residents outside India.

6. Resident outside India may take general/health insurance policy as permitted by IRDAI from Indian Insurers. Claims arising under the policies are to be settled in INR if payment of premium is in INR and in any currency if payment of premium is in foreign currency. However, Insurance cover on risks inside India (including All Risks Insurance) on assets in India owned by Indian branches/offices of foreign companies, banks, etc., may be issued only in INR.

Transaction in Nepal and Bhutan

7. Indians, Nepalese and Bhutanese resident in Nepal and Bhutan as well as offices and branches of Indian, Nepalese and Bhutanese firms, companies or other organizations in these two countries are treated as resident in India for purpose of transactions in INR. Payment of claims to such persons against general/health insurance policies may be freely made in INR. Payments in foreign currency towards claims under general/health insurance policies will require prior approval of Reserve Bank, except where premium thereon was also collected in foreign currency.

Settlement of claims in foreign currency

8. A.D. Banks may allow foreign currency remittance for claims under IRDAI permitted general/health insurance policies issued by Indian insurers where settlement of claims is assured in foreign currency subject to following conditions.

(i) The claim has been admitted by the competent authority of the insurer;
(ii) The claim has been settled as per the surveyor’s report wherever applicable, and other substantiating documents;
(iii) Claims on account of reinsurance are being lodged with the reinsurers and will be received as per reinsurance agreement;
(iv) The remittance is being made under the policy to the beneficiary who is resident outside India. For resident beneficiaries the claim may be settled in INR equivalent of foreign currency due. Under no circumstances payment in foreign currency be made to a resident beneficiary;
(v) In case of settlement of claims of import into India, Insurance company is satisfied that:—
(a) Remittance in foreign exchange is not already made by Importer and
(b) If Import is made against Import Licence, the amount of insurance policy premium is endorsed on the import licence;
(vi) In case of settlement of insurance claims of export from India, Insurance company is satisfied that the payment is received in foreign exchange by the Indian exporter;
(vii) In case of settlement of insurance claims in respect of assets located outside India owned by residents of India, permission of Reserve Bank of India for holding the property had been obtained, (wherever necessary);
(viii) Claims arising outside India against policies issued under Employers’ Liability Act and Merchant Shipping Act may be paid in appropriate foreign currency. Remittances will be allowed for meeting specific claims on application by the Insurers furnishing full details of the claims;
(ix) In case of cashless international health insurance products remittances may be allowed to the hospital which has provided the treatment/Third Party Administrator with which the insurer or the hospital has entered into a contractual arrangement in accordance with applicable IRDAI regulations or to the insured person resident outside India.

Note:

(a) Where original documents are not available for any reason, photo copies may be accepted with reasons for non-availability of the original documents. This provision does not apply to remittances for replenishment of foreign currency balances which will require specific approval of Reserve Bank of India.
(b) Claims may be settled in INR in favour of Indian exporters even in cases where title to the goods has passed to foreign buyer, if a request to that effect has been made by the claimant resident outside India. A certificate indicating full particulars of the transaction including number of relative EDF form (wherever applicable) and amount paid in settlement of claim should be issued to the exporter to enable the latter to obtain necessary approval from Reserve Bank for making replacement shipments;
(c) Authorised dealers have been permitted to open revolving letters of credit in favour of established claims-settling agents abroad and reimburse claims under the credit on verification of the necessary documentary evidence viz. statement of claim, survey report or other documentary evidence of loss/damage, original policy or certificate of insurance etc.

Re-Insurance

9. Reinsurance arrangements of the insurers registered with IRDAI are to be decided by the companies themselves on an annual basis, which is to be approved by the respective insurer’s Board in compliance with IRDAI Regulations. Authorised dealer, designated by these insurers may allow remittances falling due under such approved reinsurance arrangements by the insurers in accordance with the terms and conditions laid down by their Boards.

Remittance of Reinsurance Premium by IRDAI licensed brokers

10. Wherever IRDAI licensed brokers arrange the reinsurance on behalf of insurers, brokers may remit the premium through the branch of the authorised dealer designated by the insurer in terms of para 9 above subject to the production of undernoted documents:

(i) Relative debit notes from overseas insurance company and/or Broker.
(ii) Detailed statement of premium settled by the individual insurer, along with a certificate to the effect that the amount of reinsurance business is within the overall limit approved by the insurer’s Board and that the risks covered under the reinsurance arrangements are within the scope of the Reinsurance Programme, approved by the insurer’s Board in compliance with IRDAI Regulations.
(iii) A certificate from the Chartered Accountant of the broker, prepared on the basis of certificates and statements obtained from the insurers, to the effect that the proposed remittance of reinsurance premium sought, is in agreement with the various statements/certificates obtained from the insurer/s.
(iv) Copy of approval letter from IRDAI for placing business outside India by direct insurance brokers.

Foreign Currency Accounts Abroad

11. Insurers may open, hold and maintain with a bank outside India foreign currency accounts for facilitating transactions and expenses relating/incidental to general/health insurance /reinsurance business undertaken in foreign countries in accordance with regulations laid down. Insurers should endeavour to keep in their foreign currency accounts only the minimum balances required for normal business and transfer to India regularly all surplus funds held at foreign centres.

Investments Abroad

12. General/health insurers may invest freely, out of their funds abroad, without prior approval of Reserve Bank of India subject to the following conditions:

(i) Statutory requirement of host country concerned; and,
(ii) IRDAI guidelines, if any, and in accordance with applicable FEMA regulations relating to investment abroad.

ANNEX II

LIM

Memorandum of Foreign Exchange Management Regulations Relating to Life Insurance in India

A. Definitions

(i) “Person resident in India”, “Person resident outside India” and “foreign currency” will have the same meaning as defined under Foreign Exchange Management Act, 1999 (42 of 1999).
(ii) “Person of Indian Origin” will have the same meaning as defined in Notification FEMA 5(R)/2016-RB dated April 1, 2016.
(iii) ‘Not permanently resident’ means a person resident in India for employment of a specified duration (irrespective of length thereof) or for a specific job or assignment, the duration of which does not exceed three years.
(iv) “Insurer in India” means Life insurers registered with Insurance Regulatory and Development Authority of India (IRDAI) to carry out Life insurance business in India.

B. Life insurance policy from insurer outside India by Residents

(i) A person resident in India may take or continue to hold a life insurance policy issued by an insurer outside India, provided that the policy is held under a specific or general permission of the Reserve Bank of India.
(ii) A person resident in India may continue to hold any life insurance policy issued by an insurer outside India when such person was resident outside India. If the premium due on a life insurance policy has been paid by making remittance from India, the policy holder shall repatriate to India through normal banking channels, the maturity proceeds or amount of any claim due on the policy, within a period of seven days from the receipt thereof.

C. Life insurance policies by insurer in India.

1. Issuance of policies and collection of premium.

(a) Residents

(i) Policies may be issued in foreign currency to resident persons of Indian nationality or origin who have returned to India after being resident outside India, provided the premium are paid out of remittances from foreign currency funds held by them abroad or from their Resident Foreign Currency (RFC) account with authorised dealers in India.
(ii) Policies denominated in foreign currency or rupees may be issued to foreign nationals not permanently resident in India provided the premium is paid out of foreign currency funds or from their income earned in India or repatriable superannuation/pension fund in India.
(iii) Conversion of Rupee policies on the lives of persons resident in India into foreign currency or transfer of records of such policies to a country outside India is not permitted without prior approval of Reserve Bank.

(b) Residents outside India

(i) Insurer in India may issue policies denominated in foreign currency through their offices in India or abroad to residents outside India provided the premium are collected in foreign currency from abroad or out of NRE/FCNR accounts of the insured or his family members held in India.
(ii) For policies denominated in rupees issued to residents outside India, funds held in NRO accounts can be accepted towards payment of premium.
(iii) Policies issued to Indian nationals and persons of Indian origin resident abroad by overseas offices of Insurer in India may be transferred to Indian register, together with the actuarial reserves held against the policies, on the policy holders’ return to India. Foreign currency policies in such circumstances shall be converted into rupee policies except in cases where the policy has been in force for at least 3 years prior to policy holder’s return to India and the policy holder wishes to retain and continue the foreign currency policy. Requests received for payment in foreign currency towards premium on such policies may be permitted by authorised dealers provided the policy holder undertakes to repatriate to India the maturity proceeds or any claim amounts due on the policy through normal banking channels with in a period of seven days from the receipt thereof.

Settlement of claims

2. (i) The basic rule for settlement of claims on rupee life insurance policies in favour of claimants resident outside India is that payments in foreign currency will be permitted only in proportion in which the amount of premium has been paid in foreign currency in relation to the total premium payable.

(ii) Residents outside India who are beneficiaries of insurance claims/maturity/surrender value settled in foreign currency may be permitted to credit the same to NRE/FCNR account, if they so desire.

(iii) (a) Resident beneficiaries of the insurance claims/maturity/surrender value settled in foreign currency may be permitted to open and credit the proceeds thereof to their RFC (Domestic) Account.

(b)The Policy holder Indian residents who were outside India, and are the beneficiaries of insurance claims/maturity or surrender value settled in foreign currency in respect of policies issued by Insurer in India may be permitted to credit the proceeds to the RFC Account opened by them on their becoming residents.

(iv) Claims/maturity proceeds/surrender value in respect of rupee life insurance policies issued to Indians resident outside India for which premium have been collected in non-repatriable rupees may be paid only in rupees by credit to NRO account of the beneficiary. This would also apply in cases of death claims being settled in favour of resident outside India assignees/nominees.

(v) Claims/maturity proceeds/surrender value in respect of rupee policies issued to foreign nationals not permanently resident in India may be paid in rupees or may be allowed to be remitted abroad, if the claimant so desires.

Commission to overseas Agents

3. Insurer in India may pay commission to their agents who are permanently resident outside India regardless of the fact that part of the business booked by them may be on the lives of persons resident in India and relative premium are paid in rupees in India. Remittances of commission from India to such agents abroad will be governed by instructions contained in Government Notification No.G.S.R. 381(E) dated May 3, 2000 relating to Current Account transactions as amended from time to time.

Reinsurance

4. In terms of the existing instructions, reinsurance arrangements for the insurance companies registered with IRDAI are to be decided by the companies themselves on an annual basis which is to be approved by the respective insurance company’s Board in compliance with IRDAI Regulations. Authorised dealers, designated by these insurance companies may allow remittances falling due under such approved reinsurance arrangements by the insurer in accordance with the terms and conditions laid down by their Boards.

Foreign Currency accounts

5. Insurer in India may open, hold and maintain with a bank outside India foreign currency accounts for facilitating transactions and expenses relating /incidental to life insurance business undertaken in foreign countries in accordance with the above guidelines. Insurer in India should transfer to India regularly all surplus funds held at foreign centres and endeavour to keep in their foreign currency accounts only minimum balances required for normal business.

Investments abroad

6. Insurer in India invest freely, out of their funds abroad without prior approval of Reserve Bank subject to

(i) Statutory requirement of host country concerned and
(ii) IRDAI guidelines if any and in accordance with applicable FEMA regulations relating to investment abroad.

Utilisation of Foreign Currency Funds

7. (i) Insurer in India may freely use its foreign currency balances for meeting all the normal expenses of its overseas offices inclusive of taxes and other dues in connection with maintenance and upkeep of buildings and properties held by insurers in foreign countries as well as purchase of cars for official use.

(ii) Insurer in India may also freely use their overseas funds for settlement of provident fund, gratuity and other retirement benefits to retiring employees of overseas offices.

(iii) Insurer in India may grant loans, without prior permission of Reserve Bank, to employees of their overseas offices (other than Indian nationals who had been deputed or posted from India) against provident fund balances held in the country concerned provided loan recoveries will be made in foreign currency

Stormy winter session begins today: All the Bills you should know about : 17-11-2016


Expecting firework during the winter session of Parliamentscheduled to take place between November and December 16, the Opposition is planning to put the government in dock over several issues, including thedemonetisation policy.

The Bharatiya Janata Party-led Centre likely to push its legislative agenda that includes passage of pending legislations for rollout of the Goods and Services Tax (GST) and the surrogacy regulation bill.

The Centre is likely to see a united Opposition confronting the problems faced by people following the move to demonetise Rs 500 and Rs 1,000 currency notes, with issues concerning farmers and one rank one pension (OROP) also likely to be taken up.
Opposition parties including Congress, Bahujan Samaj Party, Trinamool Congress, Aam Aadmi Party and Samajwadi Party have been vociferous in attacking the government over the war against black money and the strategy it is following its demonetisation move.
The agenda for legislation includes ten Bills for consideration and passing. Nine Bills are listed for introduction, consideration and passing and two are listed for withdrawal. Here is the complete list:

Nine Bills to be introduced, consideration and passing are:

 

Title Objectives
The Central Goods and Services Tax (CGST)  Bill, 2016    Facilitates levy of tax on intra-state supply of  goods or services.
     The Integrated GST Bill, 2016 Facilitates levy of tax on inter-state supply of  goods or services.
     The GST (Compensation for loss of revenue)   Bill, 2016 Facilitates payment of compensation to states for loss of revenue arising on account of  implementation of GST.
The Indian Institute of Management Bill, 2016 Declares the Indian Institutes of Management (IIMs) to be Institutions of National Importance
and enables them to award degrees.
The Surrogacy (Regulation) Bill, 2016 Constitutes the National Surrogacy Board, State Surrogacy Boards and regulates the practice and process of surrogacy.
The Divorce (Amendment) Bill, 2016 Amends the Divorce Act, 1869 with regard to dissolution of marriage and mandatory period of separate residence.
The Collection of Statistics (Amendment) Bill, 2016 Extends the jurisdiction of the 2008 Act to Jammu and Kashmir in respect of statistical matters falling in the Union List and Concurrent List applicable to the state.
The Constitution Scheduled Tribes (Order) Amendment Bill, 2016 Revises the list of Scheduled Tribes in the states of Assam, Chhattisgarh, Jharkhand, Tamil Nadu and Tripura.
The Admiralty (Jurisdiction and Settlement of Maritime Claims), 2016 Consolidates laws related to jurisdiction, claims, arrest of vessels and related issues for maritime issues and claims.

Two Bills for withdrawal are:

Title                          Objectives
In Lok Sabha: The High Court (Alteration of Names) Bill, 2016 Changes the names of Bombay, Calcutta and Madras High Courts to Mumbai, Kolkata and Chennai High Courts, respectively.
In Rajya Sabha: The Participation of Workers in Management Bill, 1990 Provides for participation of workers in management at shop floor, establishment and board of management levels.

Four Bills for passing that are already introduced in Lok Sabha are:

Title                                        Objectives
 
The Mental Healthcare Bill, 2016

 

Replaces the Mental Health Act, 1987 to protect the rights of persons with mental illness and promote their access to mental health care.
The Maternity Benefit (Amendment) Bill, 2016 Increases the maternity leave to 26 weeks, grants leave to adopting and commissioning mothers and requires establishments with 50 employees to provide nursery facilities.
The Consumer Protection Bill, 2015 Replaces the 1986 Act. Provides for redressal of consumer complaints, recall of goods, action against misleading advertisements, and product liability claims.
The Citizenship (Amendment) Bill, 2016 Proposes that illegal migrants from Afghanistan, Bangladesh and Pakistan from specified religious groups (Hindu, Sikh, Buddhist, Jain, Parsi and Christian) will be eligible to apply for Indian citizenship.

Six Bills for passing that are already introduced in Rajya Sabha:

Title Objectives
The HIV and AIDS (Prevention and Control) Bill, 2014 Seeks to prevent the spread of HIV and AIDS, prohibit discrimination against persons with HIVand AIDS.
The Employees Compensation (Amendment) Bill, 2016 Requires an employer to inform the employee of his right to compensation under the 1923 Act and imposes a penalty for failure to inform.
The Factories (Amendment) Bill, 2016 Enhances the limit of overtime work hours and empowers central government to make exempting rules related to overtime hours.
The Whistleblowers Protection (Amendment) Bill, 2015 Specifies grounds under which disclosures related to corruption may not be made.
The Prevention of Corruption (Amendment) Bill, 2013 Makes giving a bribe an offence and modifies the definition of taking a bribe. Requires prior sanction to prosecute former officials.
The Enemy Property (Amendment and Validation) Bill, 2016 Vests all rights, titles and interests over enemy property in an office of the central government.

Source: Ministry of Parliamentary Affairs

Reduce Corporate Tax To 25%, ASSOCHAM To Government : 17-11-2016


In its pre-Budget presentation with the Finance Ministry, the ASSOCHAM has sought immediate reduction in the corporate tax to 25% to attract more investment in the country while for driving the consumption led demand, income tax for individuals should also be reduced along with upward revision in the exemption limit upto Rs 5 Lakhs.

The Associated Chamber of Commerce and Industry of India (ASSOCHAM) in its Pre-budget meeting with the Revenue Secretary Dr. Hasmukh Adhia made some important suggestions. The proposed multiple Good Service Tax (GST) rate structure could increase classification disputes. Therefore, the categorisation of products under each duty slab should be carefully done.

Corporate tax needs to be reduced to 25% to attract more investment in the country. The income tax rate for individuals to be reduced and threshold limit should be increased in view of the current situation prevailing in the country at the pre-budget meeting with the Revenue Secretary.

The Associated Chamber of Commerce and Industry of India (ASSOCHAM) in its Pre-budget meeting with the Revenue Secretary today made some important suggestions. The proposed multiple Good Service Tax (GST) rate structure could increase classification disputes. Therefore, the categorisation of products under each duty slab should be carefully done.

It said the committed investment link tax incentive for specifies period should be grant fathered under GST for the un-expired period of committed incentives.

During the initial period of two year after implementation of the GST penal provision should not be made applicable unless there are frauds cases, the chamber. The tax administrative provision under the draft GST law are quite harsh and may leave to Inspector Raj and this need to modify in the final GST law.

Inverted Duty structure under excise on pharmaceutical products needs to be corrected. The basic custom duty rate on some of the products like aluminium, copper, steel and polymer need to be reduced in the current scenario. ASSOCHAM further suggested that corporate tax needs to be reduced to 25% to attract more investment in the country. The income tax rate for individuals to be reduced and threshold limit should be increased in view of the current situation prevailing in the country.

Demonetisation of currency notes of Rs. 500/1000 will have a short term adverse impact on demand on items for mass consumption hence duty rates for such products should be reduced in the next budget to revive the demand.

Source : Economic Times

Notification No.105/2016 16-11-2016


Income tax (31st Amendment) Rules, 2016 – Prescribes Income Tax Authority to issue notice u/s 143(2) for scrutiny / regular assessment. Assessment officer (AO) is already authorized to issue notice u/s 143(2) – 105/2016

MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION No. 105/2016

New Delhi, the 16th November, 2016

G.S.R. 1073(E).-In exercise of the powers conferred by section 295 read with sub-section (2) of section 143 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 (31st Amendment) Rules, 2016.

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

2. In the Income-tax Rules, 1962, after rule 12D, the following rule shall be inserted, namely:-

12E. Prescribed authority under sub-section (2) of section 143.-The prescribed authority under sub-section (2) of section 143 shall be an income-tax authority not below the rank of an Income-tax Officer who has been authorised by the Central Board of Direct Taxes to act as income-tax authority for the purposes of sub-section (2) of section 143.”.

[F. No. 142/8/2014-TPL]

Dr. T. S. MAPWAL, Under Secy.

Note : The principal rules were published vide Notification S.O. 969(E), dated 26th March, 1962 and last amended vide Notification G.S.R. 1068(E), dated 15th November, 2016.

India’s tryst with Demonetisation: PM Narendra Modi goes back to the future; here’s how : 16-11-2016


Prime Minister Narendra Modi’s ‘historic’ decision to demonetise Rs 500 and Rs 1000 currency notes has raised many eyebrows. But this was not the first time that the country witnessed such economic reform. A few months after the NDA government led by the then Prime Minister Atal Bihari Vajpayee came to power in May 1998, Finance Minister Yashwant Sinha had to address concerns relating to the growing demand for fresh currency notes. High value notes of Rs 1,000, 5,000 and 10,000 had been demonetised in 1978 by the Morarji Desai government, and given the growth of the economy since then, there was a feeling in the government that high denomination notes would have to be re-introduced. The Reserve Bank of India was sounded out, and the plan received backing from some of the big industry chiefs on the bank’s board. That’s when the government decided to go ahead with a law to bring back the Rs 1,000 note. Sinha told Lok Sabha on December 9, 1998, that he was certain that lawmakers would share his view that the root cause of illegal transactions lay not in notes of high denomination, but elsewhere — he didn’t specify where. But the interesting part was the Finance Minister’s argument that the purchasing power of the rupee had gone down considerably since 1978, when high value notes were junked.

The value of Rs 1,000 in 1998, compared to the movement of the Consumer Price Index taking 1982 as the base year, was only Rs 160. This meant the average consumer now needed notes of a higher face value for normal cash transactions. This — and taking into account the fact that other methods of payment were yet to take root — was why the government was, in the public interest, re-introducing the Rs 1,000 note, according to a report by the Indian Express.

As many Opposition members attacked the move, the government provided some interesting data. According to Sinha, by 1998, the demand for fresh currency notes was growing at 15% to 20% annually, making it incumbent on the government to increase their production. The government modernised the currency printing presses at Nashik and Dewas and got the RBI to do the same at the two new presses under its control at Mysore and Salboni. To ease pressure on Rs 100 notes, it stepped up production of Rs 500 notes, and imported 3,600 million pieces of printed notes (2,000 million piece of Rs 100 notes and 1,600 million of Rs 500 denomination) of a total face value of Rs 100,000 crore. And yet, Sinha said, the demand-supply gap in fresh notes was expected to go up to 12,680 million pieces by 2004-05, which made it imperative to print Rs 1,000 notes to improve supply. Soon after the government got the law approved, work began in consultation with RBI on policy measures to move towards electronic forms of payments such as Real Time Gross Settlement (RTGS), and National Electronic Funds Transfer (NEFT), the report said.

The problem of ensuring an adequate supply of notes was an issue in the 70s and also in the run-up to the demonetisation of January 1978. For, two months before the decision to do away with Rs 1000, 5000 and 10,000 notes, the central bank had told the government to consider replacing old machines at the currency press in Nashik. When H M Patel, Finance Minister in the Janata government and a former Principal Secretary, Finance, himself, informed RBI Governor I G Patel of the decision to demonetise high denomination notes, the Governor was not in favour. He told the Finance Minister that such exercises hardly produced any striking results, I G Patel has written in his autobiography.

The government went ahead and issued an ordinance on January 16, 1978, giving effect to its decision. And, just like it happened last week, it directed all banks and treasuries to be shut the following day — January 17 — for all transactions. The RBI History volumes detail how long, winding queues started to form in front of banks, confusion reigned, and working hours were extended. The volumes also record pessimistic views of the potential impact of the move, expressed by economists such as P R Brahmananda and C N Vakil. But a month later, in his Budget speech of 1978-79, Finance Minister H M Patel said the demonetisation of high value currency notes was aimed primarily at controlling illegal transactions, and was part of a series of measures that the government had taken — and was determined to take — against anti-social elements. Patel, also an economist who had been instrumental in the nationalisation of life insurance companies, then referred to the smuggling of gold, which he said helped sustain black moneyoperations. The Finance Minister announced the sale of gold from stocks held by the government as one of the measures aimed at preventing smuggling of the precious metal.

Source : Financial Express

State tax officers demand fair share in GST : 16-11-2016


In a unique way of protest, about 2.36 lakh officers and employees working with commercial and sales tax departments of various states will work on Sunday to press for their demand of having a fair share in the administration of taxes under the proposed Goods and Services Tax (GST).

The All India Confederation of Commercial Taxes Association (AICCTA) said its members will also go on day-long pen down strike on November 23 if their demands are not accepted by the government.

The confederation has decided that all its members will work on November 20, which is Sunday, to protest the way the administration of GST has been planned by the Centre.

“It is a positive form of protest by working on a general holiday,” the employees’ body said.

Union Finance Minister Arun Jaitley has called an informal meeting of state finance ministers to discuss the matters of dual control and cross empowerment on Sunday.

Earlier this week, different delegations of the confederation met finance ministers of various states to seek their support.

The confederation claims to represent over 36,000 Gazetted officers and about two lakh employees of Class-III and -IV categories.

The confederation has sought complete authority relating to monitoring, audit, assessment and enforcement activities provided either under the GST Act or under the Integrated Goods and Services Tax — to be levied on all inter-state supplies of goods and services.

“It is also demanded that the state authorities should also be empowered under IGST Act to administer matters relating to interstate transactions,” as per a memorandum submitted to the Finance Ministry.

The officers’ body has sought representation of officers from the states in GST council secretariat.

“It is demanded that the GST council provide sufficient funds to the states to establish a uniform infrastructural and networking system,” it said.

The confederation has said that they would not work on November 23 to protest against non-implementation of its demands and for a just and fair tax administration under the GST regime.

The proposed GST is a single tax on supply of goods and services, right from the manufacturer to the consumer.

Source : PTI

House business: 3 GST bills on government’s ‘to do’ list : 16-11-2016


Amid indications of a stormy winter session in Parliament, the government has listed its legislative agenda which includes bills for rollout of goods and services tax (GST), maternity benefit (amendment) and the surrogacy regulation.

The government is keen to push the passage of the three legislations related to the main GST bill early on in the session. Parliamentary nod for these bills will facilitate GST roll-out from the target date of April 1, 2017.

The government has listed nine bills for introduction, consideration and passage, while it has also listed 10 pending bills in both houses.

The key bills include the Central Goods and Services Tax Bill, the Integrated Goods and Services Tax Bill, the Goods and Services Tax (Compensation for Loss of Revenue) Bill and the Surrogacy (Regulation) Bill.

The ruling dispensation also wants early passage of im portant pending bills which include the Mental Health Care Bill, the Maternity Benefit (Amendment) Bill and the Consumer Protection Bill.

Bills pending in Rajya Sabha include the HIV and AIDS (Prevention and Control) Bill, the Employees Compensation (Amendment) Bill, the Factories (Amendment) Bill and legislations aimed at checking corruption such as the Whistle Blowers Protection (Amendment) Bill and the Prevention  of Corruption (Amendment) Bill, 2013.

The Enemy Property (Amendment and Validation) Bill has also been included in the government’s agenda.

Source : Economic Times

Notification No.104/2016 15-11-2016


Income tax (30th Amendment) Rules, 2016 – Specifies the limit for deposit of Cash without PAN and Issues Direction to banks for Submission of information for deposit of cash in excess of specified limit for the period from 9.11.2016 to 30.12.2016 – 104/2016

MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION No. 104/2016

New Delhi, the 15th November, 2016

INCOME-TAX

G.S.R 1068(E). - In exercise of the powers conferred by section 285BA, read with 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 (30th Amendment) Rules, 2016.

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

2. In the Income-tax Rules, 1962 (hereinafter referred to as the said rules), in rule 114B, in the Table, for serial number 10 and entries relating thereto the following serial number and entries shall be substituted, namely:-

Sl. No.

Nature of transaction

Value of transaction

(1)

(2)

(3)

“10. Deposit with,-

(i) a banking company or a cooperative bank to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act);

(ii) Post Office.

Cash deposits,-

(i) exceeding fifty thousand rupees during any one day; or

(ii) aggregating to more than two lakh fifty thousand rupees during the period 09th November, 2016 to 30th December, 2016.”.

3. In the said rules, in rule 114E, -

(i) in sub-rule (2), in the Table, after serial number 11 and entries relating thereto the following serial number and entries shall be inserted, namely:-

Sl. No.

Nature and value of transaction

Class of person (reporting person)

(1)

(2)

(3)

“12. Cash deposits during the period 09th November, 2016 to 30th December, 2016 aggregating to -

(i) twelve lakh fifty thousand rupees or more, in one or more current account of a person; or

(ii) two lakh fifty thousand rupees or more, in one or more accounts (other than a current account) of a person.

(i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);

(ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).”;

(ii) in sub-rule (5), the following proviso shall be inserted, namely:-

“Provided the statement of financial transaction in respect of the transactions listed at serial number (12) in the Table under sub-rule (2), shall be furnished on or before the 31st day of January, 2017.”.

[F.No.370142/32/2016-TPL]

(Dr T S Mapwal)
Under Secretary to the Government of India

Note:- The principal rules were published vide notification S.O. 969 (E), dated the 26th March, 1962 and last amended vide notification S.O.3399(E), dated 07th November, 2016.

Income Tax officials unsure how to slap 200% penalty on income mismatch : 15-11-2016


As India struggles with demonetization, individuals and businesses are using old currency notes to settle debts while income tax officials are at a loss how to go about imposing 200% penalty — as announced by a senior finance ministry official — on such funds flowing into banks.

Firms are clearing dues to suppliers, depositing cash in bank accounts to repay old loans, and buying memberships of clubs, SPAs and gyms; in all these cases their books would show that cash changed hands  before Tuesday evening when demonetization of 500 and 1000 rupee bills was announced. On the other hand, taxmen in several cities have told their superiors that there is no provision in the law to automatically slap penalty on such cash being deposited in banks, according to I-T officials, tax practitioners and bankers ET spoke to.

“There can be penalty on escaped income. But what do you do if someone deposits a crore with bank, pays 33% tax, and discloses the amount as income in his tax return filed for the assessment year ’17-18? Even if it’s driven by demonetization, this is technically voluntary declaration and shown as `income from other source’. This has been discussed in our meetings over the past few days… To impose penalty on this money, there has to be retrospective amendment of the income tax law,” said a senior tax official.

A 200% penalty would mean the entire declared amount going into the state coffer.

The questions troubling those with large, unexplained cash deposits are: Will the I-T office come after them if they are unable to spell out the fund source? Even if i-T spares them, will the service tax and other indirect departments chase them? And finally, will the I-T office share the information with Enforcement Directorate who in turn can invoke the harsh anti-money laundering law?

“If the source of the fund relates to an admitted activity which is subject to levy of indirect tax, then even if the IT department accepts the source there is always the possibility that other agencies may step in,” said senior chartered accountant Dilip Lakhani.

Indeed, the swelling bank deposits could pose challenge for the I-T department. Several small and mid-sized businesses, traders and individual borrowers in the farm sector have deposited cash to resolve their non-performing loans and initiate one-time settlements. “These are typically small borrowers with loan liability ranging from Rs 5-10 lakhs to Rs 5-10 crores. We have also had an instance of an individual borrower depositing cash of Rs 20 crore to clear his dues,” said the CEO of a southern bank. “As part of our compliance, we are filing suspicious transaction report on such deposit beyond permissible limits,” said the compliance head of a Mumbai-based private sector bank.

It is not just banks which are witnessing inflows. “Many companies have undertaken prepaid sales for a year; health centres, SPAs, and hotels have offered prepaid packages — all have been sold without discounts but using earlier currency notes. NGOs and trusts are receiving calls for anonymous donations. Some are in a dilemma whether to accept,” said Mitil Chokshi, senior partner at audit firm Chokshi & Chokshi.

On Friday, income tax officials surveyed large bullion dealers to assess their respective cash in hand and make a note of the last bill number. This was done to stop the transfer of cash to bullion dealers and jewelers that began since Tuesday evening. But it’s impossible to keep a track of all establishments which are accepting cash. Such cash  transfers are easier in case of retail outlets and jewelers where the names of buyers are not mentioned, but more difficult in transactions where the identity of the cash giver is revealed – such as club and holiday membership deals. While government authorities may not be able to prove that the cash transfer took place post Nov 7, they can always question the fund source.

Source : PTI

Will the law change to tax unexplained cash? : 15-11-2016


The Prime Minister’s grim message that the state will check “records since independence and spare no one” has sparked fears that the law could be changed to tax `unexplained’ cash.

Today, the law lacks the teeth to penalise those who fork out tax after parking a mountain of such cash as deposits with a bank.

Here, the rules of the game are simple: as long as such persons pay the maximum rate of income tax – of about 36% (including surcharge and cess) – they can keep the taxman at bay; even if they are unable to convince tax officials about the sudden loan or gift that is credited in their books of accounts, there is very little the tax office can do other than treating the amount as ‘income’ that would be taxed at the highest rate. It cannot slap a penalty.

All an assesse has to do to escape penalty is state that the amount has been received in the current financial year and tax has been paid on it. This business of taxing the unexplained  is spelt out in section 115BBE of the Income Tax Act.

However, the burden of penalty falls on those whose income as stated in the tax return is less than the income assessed by the tax officer. This is described as misreporting or underreporting of income under Section 270A of the Act. But depositors of cash – particularly in the present environment where many are believed to have dumped their undeclared funds in bank accounts and many more planning to do – would be untouched  by the penal provision of Section 270A. That’s because they would declare the amount as `income’ in this year’s IT return to make sure that income stated in the return does not exceed the number arrived by the assessing officer.

Thus, there is no way the IT department can invoke Section 270A to impose 200% penalty – as stated by a senior bureaucrat – on deposits of cash whose source the account holder is unable to explain. A government, seemingly obsessed to clamp down on black  money and go ahead with a penalty, can do so only if Section115BBE of the Act is amended. Such an amendment could incorporate the provision that anyone taxed under this Section — where the person cannot offer any satisfactory explanation of the cash source – would be asked to cough up penalty (and thus end up losing almost the entire pile of cash).

Will the government push through a change in the law? Will it antagonise a section of its vote bank? If so, how soon? And will it open the pandora’s box of a retrospective change to catch those who deposited cash since last Wednesday?

It has certainly struck the revenue authorities that there is a multitude of cash hoarders who did not come clean in earlier quasi-amnesty schemes (where the tax charged was 45%) and may now wriggle out by paying a lesser tax of 36%. But the timing of any such change in the statute would perhaps depend on the fallout of what till now has been the government’s biggest policy gamble.

Source : The Hindu

State tax officers demand fair share in GST : 15-11-2016


In a unique way of protest, about 2.36 lakh officers and employees working with commercial and sales tax departments of various states will work on Sunday to press for their demand of having a fair share in the administration of taxes under the proposed Goods and Services Tax (GST).

The All India Confederation of Commercial Taxes Association (AICCTA) said its members will also go on day-long pen down strike on November 23 if their demands are not accepted by the government.

The confederation has decided that all its members will work on November 20, which is Sunday, to protest the way the administration of GST has been planned by the Centre.

“It is a positive form of protest by working on a general holiday,” the employees’ body said.

Union Finance Minister Arun Jaitley has called an informal meeting of state finance ministers to discuss the matters of dual control and cross empowerment on Sunday.

Earlier this week, different delegations of the confederation met finance ministers of various states to seek their support

The confederation claims to represent over 36,000 Gazetted officers and about two lakh employees of Class-III and -IV categories.

The confederation has sought complete authority relating to monitoring, audit, assessment and enforcement activities provided either under the GST Act or under the Integrated Goods and Services Tax — to be levied on all inter-state supplies of goods and services.

“It is also demanded that the state authorities should also be empowered under IGST Act to administer matters relating to interstate transactions,” as per a memorandum submitted to the Finance Ministry.

The officers’ body has sought representation of officers from the states in GST council secretariat.

“It is demanded that the GST council provide sufficient funds to the states to establish a uniform infrastructural and networking system,” it said.

The confederation has said that they would not work on November 23 to protest against non-implementation of its demands and for a just and fair tax administration under the GST regime.

The proposed GST is a single tax on supply of goods and services, right from the manufacturer to the consumer.

Source : Economic Times

Denial of ITC on construction of ‘immovable property’ under GST – a wholly unjustified move – 14-11-2016


Taxindiaonlinelogo-jpg                        

   By S Sivakumar, LL.B., FCA, FCS, MBA, ACSI, Advocate & R Vaidyanathan, M.Com., M.Phil, Consultant

 

RULE 2(l) of the Cenvat Credit Rules, 2004, reads:

2(l) “input service” means any service,-

(i) used by a provider of output service for providing an output service; or

(ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal

and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal;

but excludes

(A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for -

(a) construction or execution of works contract of a building or a civil structure or a part thereof; or

(b) laying of foundation or making of structures for support of capital goods,

except for the provision of one or more of the specified services…

In effect, due to the above referred ‘exclusion clause, cenvat credit of the service tax paid is not available except when the input construction or input works contract service is used to provide an output construction/works contract service. Thus, cenvat credit is not available when the input works contract/construction service is used in the construction of an immovable property that is not sold off as works contract/(s). Thus, credit is denied in respect of construction buildings, corporate offices, commercial buildings like malls which are let out, etc. As we know, the Board had issued Circular No.98/1/2008-ST dated January 4, 2008 seeking to deny credit on input construction/works contract services on construction of immovable property which is rented out.

The relevant portions of the issue and the clarification issued by the Board, in this Circular, are reproduced below

Issue:

Commercial or industrial construction service [section 65(105)(zzq)] or works contract service [section 65(105)(zzzza)] is used for construction of an immovable property. Renting of an immovable property is leviable to service tax [section 65(105)(zzzz)].

Whether or not, commercial or industrial construction service or works contract service used for construction of an immovable property, could be treated as input service for the output service namely renting of immovable property service under the CENVAT Credit Rules, 2004?

Clarification:

Right to use immovable property is leviable to service tax under renting of immovable property service.

Commercial or industrial construction service or works contract service is an input service for the output namely immovable property. Immovable property is neither subjected to central excise duty nor to service tax.

Input credit of service tax can be taken only if the output is a ‘service’ liable to service tax or a ‘goods’ liable to excise duty. Since immovable property is neither ‘service’ or ‘goods’ as referred to above, input credit cannot be taken

Luckily, the Hon’ble High Court of AP had in CCE v Sai Samhita Storages Pvt Ltd, reported in2011-TIOL-863-HC-AP-CX, read down this Circular, a decision that was followed by many CESTAT Benches. In order to get over the challenge to its 2008 Circular, the Government amended Rule 2(l) and 2(k) of the Cenvat Credit Rules, 2004, with effect from 1-4-2011, to specifically deny cenvat credit in respect of input works contract/construction services used for creating an immovable property, which is let out or used internally. Of course, capital goods used in the creation of immovable property would be entitled to credit, even under the existing law.

Be that at is may…….from the Realty Sector’s perspective, the denial of credit in respect of creating of immovable property that is let out as contrasted to the availability of credit in respect of immovable property that is sold off as works contract, seems bizarre and illogical, as the very decision whether to let out the property or to sell the property or a part thereof, is driven purely by commercial considerations. It is a common practice for Developers who develop commercial malls, to look for buyers at the construction stage itself and when, this does not happen due to reasons beyond the control of the Developer, the Developer completes the construction and lets out the property, which is purely, a business decision. To say that credit would be allowed when the property is sold off and credit would not be allowed when the property is retained and let out reflects the complete lack of understanding on the part of the Babus, as to how the Realty Sector works. Talking specifically of a commercial mall with many commercial outlets/shops, it is common for the Developer to retain some shops and to sell off other shops in the course of construction and under the current law, credit is denied in respect of the inputs/input services used for construction of shops that are let out, as compared to those that are sold before completion, by the Developer.

Unfortunately, this major lacuna may continue under the GST regime, to the detriment of the Realty Sector.

Look at the exclusion clause contained in Section 16 of the model GST law, dealing with input tax credit, viz…

( 9) Notwithstanding anything contained in sub-section (1), (2), (2A) or (3) input tax credit shall not be available in respect of the following:….

(c) goods and/or services acquired by the principal in the execution of works contract when such contract results in construction of immovable property, other than plant and machinery;

(d) goods acquired by a principal, the property in which is not transferred (whether as goods or in some other form) to any other person, which are used in the construction of immovable property, other than plant and machinery;

A reading of the above indicates that, under the GST law, input tax credit would be denied when the goods and/or services are used for construction of an immovable property (other than plant and machinery) that is let out or that is used for internal purposes as a factory building or corporate office, etc. In other words, under the GST law, input tax credit would be allowed only when the immovable property is sold off as works contract, before completion of construction. The wording used in Section 16 of the model GST law, is extremely mischievous and misleading, in as much as, it can lead one to possibly conclude that input tax credit would be totally disallowed in respect of construction of all immovable properties, notwithstanding the fact that, when a residential or commercial building that is sold out in the course of construction is not treated as ‘immovable property’ in the books of the Developer/Builder.

To deny input tax credit in respect of construction of factory buildings comes as a big dampener, especially, in the context of the Government’s moves to encourage domestic manufacture which, obviously would entail construction of new factories and office buildings involving significant expenditure.

Before concluding…

Under the current service tax law, cenvat credit of the service tax paid on input services such as Architects, etc. is allowed, in respect of construction of a commercial building that is let out, as, credit is denied only on input construction/works contract services. However, it seems doubtful if credit would be available in respect of non-construction input services such Architects’ services, Consulting Engineers, Interior Designers, Legal fees, etc, under the GST regime, given the manner in which the exclusion clauses in Section 16 of the model GST are worded.

The Realty Sector had hoped that this unfair treatment involving denial of credit on construction of commercial buildings that are let out would disappear under the GST law. Unfortunately, this does not seem to be the case.

In our view, denial of credit in respect of the construction of an immovable property that is let out, in contrast to one that is sold off as works contract, is clearly violative of Article 14 of the Constitution.

Slash stamp duty to clean up real estate sector: Assocham Slash stamp duty to clean up real estate sector: Assocham : 14-11-2016


To further intensify the crackdown on black money, Assocham has suggested the Centre to impress upon states to “drastically” lower stamp duty on residential and commercial property deals to dissuade people from undervaluing purchases. The industry body said that the biggest beneficiary of the move would be buyers of residential or commercial properties.

“One of the biggest reasons for the cash forming 30-40 per cent of the real estate transactions is the high level of stamp duty. With 6-7 per cent stamp duty, purchaser of a flat worth Rs 1-1.50 crore will have to shell out different government levies and other charges like registration and lawyers’ fee to the extent of Rs 10 lakh or so.

“Likewise, the registration value also determines the capital gains tax for the sellers. With both these levies accounting for significant account, there is a big incentive for the buyers and sellers to show the registration amount as much lower than the real transaction value,” the chamber said.

It said there are instances where ironically, people filing their income tax returns and living a clean life, are forced to withdraw cash from their legitimate bank accounts cash for such transactions.

“Thus, the system forces you to convert white into black. Nobody likes it, but the state governments must come forward and slash it by at least 50 per cent and the move would result in increase in their revenue rather than reducing it,” Assocham Secretary General D S Rawat said.

He also said that the lower stamp duty would revive the demand in the highly suppressed sector which would further be jolted with cash totally drying out from the transactions.

“The cleanup will take place with lower duties, ease of doing business in terms of clear land titles by the state regulatory agencies and other clearances being made transparent.

It cannot be a one–way street where the builders are expected to grease the palm of the corrupt officials and others while they are then expected to do every other transactions by cheques. Hopefully, with the new model law in place, things should improve,” the chamber said.

A recent joint paper by Assocham and Thought Arbitrage found prevalence of rampant black money or ‘untaxed money’ in the real estate business posing a great challenge for the construction industry.

For speedy approvals and sanctions from authorities, builders or contractors are often compelled to pay large sums of money as bribe to government officials, surveyors, engineers etc. A part of the burden is passed on to the buyer who in turn has to pay in cash to the contractor, the paper noted.

Source : PTI

FM Arun Jaitley questions global agencies : 14-11-2016


Finance minister Arun Jaitley on Thursday said the government will continue tax reforms, even as he criticisedglobal agencies for not fully appreciating the efforts made by the government.

He also said that the government will meet its target of reining in fiscal deficit at 3.5% of GDP, even though a gap between the Centre’s expenditure  and income in the first half of the current financial year touched almost 84% of the Budget Estimates.

“I must acknowledge and state that the kind of steps we have taken, we still have not got from international agencies the full recognition of the effort we have put in,” he said at Economic Editors’Conference.

The comment assumes significance as India continues to be ranked low, at 130th position, in terms of ease of doing business index released recently by the World Bank. Besides, global rating agency S&Pruled out an upgrade for India from the lowest investment grade in the next two years. Moody’s Investors Service too   expressed its inability to upgrade India stating in the next two years because of muted private investment and rising NPAs.

Both the statements have drawn the government’s ire which has gone on to question these institutions’ credibility.

Speaking on the Goods and Service Tax, Jaitley said the Centre was making all efforts to build consensus on sticky issues, especially on jurisdiction of assessees, to ensure GST roll out from the scheduled date ofApril 1 next year.

“We are making all efforts to introduce GST from April1, 2017. GST has to be implemented latest by September 16, 2017, and if it is not implemented by then, then states will not be able to collect their share of taxes, and hence there is not enough scope to further delay the decision,”he said.

“We have already sorted out ten issues. The issue of dual control still remains, there is no reason why we will not be able to workout a reasonable solution on this,” he said.

Besides this, he said parallel reforms are also in the pipe line in direct tax structure. He said tax collection this year is reasonably good, there is spurt in public expenditure and local demand is increasing. Hence there will be positive impact of recent decision of demonetising of higher value currency notes.

The all powerful GST Council, which is chaired by the Union Finance Minister and has representations from state, has already decided on a four-tier rate structure — 5, 12, 18 and 28%  — with a cess over anda bove the peak rate for luxury and demerit goods.

“One of the objectives has been that since the GST Council is a federal decision-making process and the manner in which it functions in the initial years will lay down the precedent for the future rather than resorting to voting and division in every small issue. We have been trying to discuss, re-discuss and then reach a consensus and so far most of the major issues we have been able to resolve through consensus,” Jaitley said.

The issue of dual control, which deals with who will control which set of assessees under GST, has been holding back the negotiations.Jaitley and his state counterparts will meet on November 20 to work out a”political solution” to the issue and the GST Council will formally take up the issue on November 24-25.

“Only the last stages (of decision making) remain and I do hope we (GST Council) are able to resolve that through a larger consensus as well. And this form of functioning of the Council where discussion and consensus is a preferred option is a precedent we are trying in a federal decision-making body to establish,” Jaitley said.

Also at the conference were senior government bureaucrats. Economic Affairs Secretary Shaktikanta Das said that allowing foreign institutional investors (FIIs) in commodity trading was under consideration,but no decision has been taken. “Many suggestions have come with regard to permitting FIIs into commodity trading, but no decision has been taken. The matter is under consideration. The matter is also under consideration of Sebi,” Das said.

“If the Sebi board after taking a view makes recommendation as a regulator if they permit… if it requires government permission, we will see. But so far, no decision has been taken,” he said.

separately, The finance minister  denied any move to digitise personal lockers in banks. “Completely factually incorrect. There is no such proposal,” he told a news channel. Rumours are going around on social media that the government may next digitise bank lockers which would be opened in presence of revenue officials.

Source : Economic Times

17 – 11-11-2016


ISSUE OF PRE-PAID INSTRUMENTS TO FOREIGN TOURISTS

A.P. (DIR SERIES 2016-17) CIRCULAR NO.17DATED 11-11-2016

Attention of Authorised Persons is invited to the A.P. (DIR Series) Circular No. 16 dated November 9, 2016 on Withdrawal of the legal tender character of the existing and any older series banknotes in the denominations of Rs. 500 and Rs. 1000.

2. The circular inter alia instructs Authorized Persons to facilitate exchange transactions for foreign tourists.

3. In order to avoid any inconvenience to foreign tourists, Authorized Persons may issue Pre-paid instruments to them in terms of the instructions issued by Department of Payments and Settlement System, Reserve Bank of India, in exchange of foreign exchange tendered. Passport may be treated as a valid document for issuance of the said documents.

4. Authorised Persons may follow the above instructions and bring the contents of this circular to the notice of their constituents.

5. 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 are without prejudice to permissions/approvals, if any, required under any other law.

Want to make India the most open economy in the world, says PM Narendra Modi : 11-11-2016


Prime Minister Narendra Modi on Friday said that Asia has emerged as s the new centre of global growth, which is because of its competitive manufacturing, and expanding markets. Speaking at the CII-KEIDANREN business luncheon in Tokyo the PM expressed hope that India and Japan will have to continue to play an important role in Asia’s emergence. He also added that Japan has emerged as the fourth largest source of the FDI in various fields. Here are highlights of his speech:

* Asia has emerged as the new centre of global growth. This is because of its competitive manufacturing, and expanding markets: PM Modi

* India and Japan will have to continue to play an important role in Asia’s emergence.

* In 2015, the Indian economy grew faster than other major economies.

* Strong India strong Japan will also be a stabilising factor in Asia and the world.

* Japan has emerged as the 4th largest source of FDI and that too in various fields.

* ‘Made in India’ and ‘Made by Japan’ combination has started working wonderfully.

* Lower labour costs, large domestic market and macro-economic stability combine to make India a very attractive investment destination.* Want to make India the most open economy in the world.* Japan has important role as India needs scale, speed & skill; Involvement in our mega projects signifies scale & speed.* FDI equity inflows have gone up by 52% in last 2 yrs; We have done substantial improvement on ease of doing business.

* In 2 yrs, India is up by 32 places in global competitiveness index of world economic forum.

*Combo of your hardware & our software is fantastic; Let’s march forward & explore bigger potentials and brighter prospects.

 Source : Business Standard

ARUN JAITLEY: TAX DEPARTMENT NOT TO HOUND SMALL DEPOSITORS : 11-11-2016


 Assuring people that taxman will not hound those making small deposits in scrapped Rs 500/ Rs 1,000 currency, Finance Minister Arun Jaitley today advised them not to throng banks as there is enough time to exchange the junked notes.

He said however that those depositing large amounts of unaccounted money will have to face the consequences under tax laws, which provide for tax and a 200 per cent penalty.

“With regard to people making small deposits, nobody will face any question or harassment of any kind. People who have small amount of cash at home for exigencies and emergencies, they can deposit that in their account. And the revenue department is not going to take notice of small depositors,” Jaitley said.

He added that deposits within the tax exempted limit can always be made within the banking system without any questions being asked.

“It’s only people with large amounts of undisclosed monies who will have to face the consequences under the tax laws,” Jaitley said at the Economic Editors’ conference.

Revenue Secretary Hasmukh Adhia said yesterday that only cash deposits of over Rs 2.5 lakh in bank accounts will be scrutinised by the tax department and in case of mismatch with I-T returns, tax plus 200 per cent penalty would be levied.

The government has allowed citizens to deposit in their bank accounts old currency of Rs 500 and Rs 1,000, which has been declared invalid in the country’s biggest crackdown on black money, corruption and counterfeit notes, between November 10 and December 30.

On whether the demonetisation of Rs 500/1000 notes will help weed out black money, Jaitley said this is not an isolated initiative and the decision has to be seen in the backdrop of various steps being taken including GST roll out.

“You will have the currency squeeze that will take place because a lot of static currency is not going to come back into the market. You have the GST which will be implemented, which is a far more effective system where tax evasion will be much lower and compliance will be much higher. You have parallel movement to rationalise your direct tax rate,” he said.

Source : PTI

Govt readies proposal to relax service sector regulations : 11-11-2016


Making a case for permitting foreign universities to open campuses in India, Commerce Secretary Rita Teaotia on Thursday said the ministry had worked out a proposal to relax norms in the services sector, including higher education.

“We have worked on a draft note for consideration of the government which looks at the domestic reforms necessary in the services sector and this includes higher education,” Teaotia said here at the Ficci Higher EducationSummit.

She said the services sector contributes significantly to the country’s growth, trade and in terms of attracting foreign direct investments.

There is a need to focus on improving infrastructure in higher education as its demand is huge in the country, she said, adding that India has a huge potential to attract global students.

The largest exporters of education services are the US, UK and Europe and China and India are the largest net importers.

About 230,000 Indian students go abroad for study and almost one lakh go annually to the US, she said, adding that “the actual value of this in economic terms of Indians studying abroad is about $17 billion and it is a huge amount that we need to to see”.

This is the unmet demand in the country, the secretary said.

Teaotia said the department of commerce has recognised the export potential for the sector and at its services conclave, export of education services remains a focus area.

Based on the deliberations, an inter-ministerial group was set up and this group is instrumental in preparing reforms agenda for the higher education sector.

She further said factors that make India a preferred destination for higher education include India’s capacity to provide low cost of higher education as against many other developed countries, English-speaking population and world-reputed technical and professionals institutions.

“We should be looking at areas like setting up of campuses of foreign universities in special economic zones, where foreign students can study and such centres can offer global curriculum,” she added.

India offers “quality education and opportunities for foreign universities to set up campuses in India”, the secretary said, adding that it can lead to savings of billions of dollars that Indian studentsspend when they go abroad to study.

“I believe that this should be an area of focus for policymakers,” she added.

According to Teaotia, as policymakers, they need to be sensitive to the needs of students who come to study in India in terms of both policy framework, creating a conducive and welcoming environment and making visa regime friendlier.
Source : Economic Times

Centre resolved to get rid of black money: Arun Jaitley says after high-value currency note ban : 10-11-2016


A day after the ‘big announcement’ by Prime Minister Narendra Modi to ban currency notes of Rs 500 and Rs 1,000 denomination effective from Tuesday midnight, Finance Minister Arun Jaitley spoke on the merits of the move. Hailing the decision, Jaitley said that the centre is resolved to get rid of black moneycompletely. He further called the decision helpful in the long term and said that only those people should be worried who have not earned money honestly.

In an interaction with Doordarshan, Jaitley opened up about the currency ban. He explained the benefits of demonetising high-value currency notes and asked people to be patient as the move will help them in future.

Emphasising the sole motive of eradicating black money and corruption, he said, “We have resolved to get rid of black money” and added that the centre wants “our economy to be cashless”.

Asked about the suffering of common men after the decision, the union minister said only those people should worry “who have not earned honestly”, while on the quick implementation of the ban, he sought support of the people of India and assured that the decision will prove highly beneficial to everyone in the long term.

Source : Financial Express

Govt may curb on use of cash for high-value deals: Revenue secretary : 10-11-2016


The Centre is likely to unveil more steps to control the black money menace , including restrictions on the use of cash for high-value transactions, a top official has said.

Taking measures to control the menace is a continuous process and the government is taking different measures at different times, Revenue Secretary Hashmukh Adhia was quoted as saying by ‘The Times of India’.

He said that more such measures are expected to come, when asked by the paper whether the government will come out with restrictions on cash deposits of over Rs 3 lakh. The special investigation team ,which was appointed by the Supreme Court had suggested that curbs be imposed on cash deposits of over Rs 3 lakh. The main aim of the limit is to ensure that transactions are made using credit or debit cards, cheques or drafts which can be tracked.

The government decided the move at the highest level for a number of reasons, even though other options were also discussed, it was the best the prime minister felt. It was also because of the travel plan since he is travelling to Japan from Thursday, Hashmukh Adhia added.

The revenue secretary further said that the government had taken several steps including setting up an SIT, accepting some of its suggestions, Income Declaration Scheme, among others.

He also added that a number of people pay taxes is low and even those who pay, prefer to pay less than the actual.

Tax authorities will not immediately as questions on cash deposits that people make now, he said.

Source : PTI

Watch out for the 200% penalty: Deposit only what you can account for : 10-11-2016


If you have hoards of cash and wish to deposit it into the bank, do so if you can only account for that income as the government has said there will be a massive penalty incase of mismatch between the two.

If tax men find out that money deposited is not matching with the income declared,it would be treated as a case of tax evasion and the tax amount plus a penalty of 200% of the tax payable would be levied as per the section 270(A) of the income tax act. Hence,  authorities might take away 90% of your money if there is an income mismatch.

Imprisonment?
The tax defaulter could also attract prosecution under Section 276C of the Act, with imprisonment from three months to seven years with fine, said experts.

“One should be in a position to match the cash in hand with income from business operations,” said Pallav Pradyumn Narang, partner, Arkay & Arkay, a Delhi-based chartered accountancy firm. Businesses would have barely four months in the current financial year to justify the cash hoard as business income. Alternatively, they should be in a position to establish that the cash was withdrawn for business purpose.
If the amount is unaccounted for, various provisions of Income-Tax Act, 1961, will come into effect. “If the sources of income are unaccounted for, these would be deemed to be current year’s income under Section 69A of the Income-Tax Act, 1961, and will attract income tax at the rate of 30% along with applicable surcharge and education cess, under Section 115BBE of the Act,” said Neeru Ahuja, partner, Deloitte Haskins & Sells.

But what about housewives, small artisans and businessmen?

A lot of small businessmen, housewives, artisans, workers may have some cash lying around as their savings at home.

They need not worry about such small amount of deposits up to Rs 1.5-2 lakh, since it would be below the taxable income. There will be no harassment by income tax department for such  deposits made.
Source : Business Standard

Notification No : 49/2016 Dated: 09-11-2016


Seeks to amend notification No. 30/2012- ST, dated the 20th June, 2016 so as to put compliance liability of service tax payment and procedure on to the service provider located in the non-taxable territory with respect to online information and database access or retrieval services provided in the taxable territory to non-assesse online recipient – 49/2016

MINISTRY OF FINANCE (DEPARTMENT OF REVENUE)

NOTIFICATION No. 49/2016-Service Tax

New Delhi, the 9th November, 2016

G.S.R.____(E).-In exercise of the powers conferred by sub-section (2) of section 68 of the Finance Act, 1994 (32 of 1994), 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. 30/2012-Service Tax, dated the 20thJune, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 472 (E), dated the 20thJune, 2012, namely:-

In the said notification,-

(a) in paragraph I, in clause (B), after the words “located in the taxable territory”, the words “other than non-assesse online recipient” shall be inserted;

(b) in paragraph (II), in the TABLE, against Sl. No. 10, in the entry under column (2), after the words “located in the taxable territory”, the words “other than non-assesse online recipient” shall be inserted;

(c) after Explanation II, following shall be inserted, namely:-

Explanation III. For the purposes of this notification, “non-assesse online recipient” has the same meaning as assigned to it in clause (ccba) of sub-rule 1 of rule 2 of Service Tax Rules, 1994.’.

2. This notification shall come into force on the 1st day of December, 2016.

[F. No. 354/149/2016-TRU]

(Anurag Sehgal)

Under Secretary to the Government of India

Note:-The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 30/2012 – Service Tax, dated the 20thJune, 2012, vide number G.S.R. 472(E), dated the 20thJune, 2012 and last amended vide notification No. 34/2016-Service Tax, dated the 6th June, 2016 vide number G.S.R. 577(E), dated the 6th June, 2016.

Notification No : 48/2016 Dated: 09-11-2016


Seeks to amend Service Tax Rules, 1994 so as to prescribe that the person located in non-taxable territory providing online information and database access or retrieval services to non-assesse online recipient , as defined therein, is liable to pay service tax and the procedure for payment of service tax – 48/2016

GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE)

NOTIFICATION No. 48/2016-Service Tax,

New Delhi, the 9th November, 2016

G.S.R….. (E). - In exercise of the powers conferred by sub-section (1), read with sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994,namely:-

1. (1) These rules may be called the Service Tax (Fourth Amendment) Rules, 2016.

(2) They shall come into force on the 1st day of December, 2016.

2. In the Service Tax Rules, 1994,-

(i) in rule 2, in sub-rule (1),-

(a) after clause (ccb), the following clause shall be inserted, namely:-

‘(ccba) “non-assesse online recipient” means Government, a local authority, a governmental authority or an individual receiving online information and database access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory;

Explanation.- For the purposes of this clause, “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 243Wof the Constituion;’;

(b) after clause (ccc), the following clause shall be inserted, namely:-

‘(ccd) “online information and database access or retrieval services” means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology and includes electronic services such as,-

(i) advertising on the internet;

(ii) providing cloud services;

(iii) provision of e-books, movie, music, software and other intangibles via telecommunication networks or internet;

(iv) providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network;

(v) online supplies of digital content (movies, television shows, music, etc.);

(vi) digital data storage; and

(vii) online gaming;’;

(c) in clause (d),-

(i) in sub-clause (i),-

(a) in item (G), after the words “taxable service”, the words “other than online information and database access or retrieval services,” shall be inserted;

(b) after item (G), following item shall be inserted, namely:-

“(H) in relation to services provided or agreed to be provided by way of online information and database access or retrieval services, by any person located in a non-taxable territory and received by any person in the taxable territory other than non-assesse online recipient, recipient of such service;”;

(ii) in sub-clause (ii), the following provisos shall be inserted, namely:-

“Provided that in case of online information and database access or retrieval services provided or agreed to be provided by any person located in a non-taxable territory and received by non-assesse online recipient, provider of service located in a non-taxable territory shall be the person liable for paying service tax:

Provided further that in case of online information and database access or retrieval services provided or agreed to be provided by any person located in a non-taxable territory and received by non-assesse online recipient, an intermediary located in the non-taxable territory including an electronic platform, a broker, an agent or any other person, by whatever name called, who arranges or facilitates provision of such service but does not provides the main service on his account shall be deemed to be receiving such services from the service provider in non-taxable territory and providing such services to the non-assesse online recipient except when such intermediary satisfies all the following conditions, namely :-

(a) the invoice or customer’s bill or receipt issued or made available by such intermediary taking part in the supply clearly identifies the service in question, its supplier in non-taxable territory and the service tax registration number of the supplier in taxable territory;

(b) the intermediary involved in the supply does not authorise the charge to the customer or take part in its charge i.e. intermediary neither collects or processes payment in any manner nor is responsible for the payment between the non-assesse online recipient and the supplier of such services;

(c) the intermediary involved in the supply does not authorise delivery;

(d) the general terms and conditions of the supply are not set by the intermediary involved in the supply but by the service provider:

Provided also that in case of online information and database access or retrieval services provided or agreed to be provided by any person located in a non-taxable territory and received by non-assesse online recipient, any person located in taxable territory representing such service provider for any purpose in the taxable territory shall be the person liable for paying service tax:

Provided also that in case of online information and database access or retrieval services provided or agreed to be provided by any person located in a non-taxable territory and received by non-assesse online recipient, if the service provider does not have a physical presence or does not have a representative for any purpose in the taxable territory, the service provider may appoint a person in the taxable territory for the purpose of paying service tax and such person shall be liable for paying service tax:

Provided also that in case of online information and database access or retrieval services provided or agreed to be provided by any person located in a non-taxable territory and received by any person located in the taxable territory, person receiving such services shall be deemed to be located in the taxable territory if any two of the following non-contradictory conditions are satisfied, namely :-

(a) the location of address presented by the service recipient via internet is in taxable territory;

(b) the credit card or debit card or store value card or charge card or smart card or any other card by which the service recipient settles payment has been issued in the taxable territory;

(c) the service recipient‟s billing address is in the taxable territory;

(d) the internet protocol address of the device used by the service recipient is in the taxable territory;

(e) the service recipient‟s bank in which the account used for payment is maintained is in the taxable territory;

(f) the country code of the subscriber identity module (SIM) card used by the service recipient is of taxable territory;

(g) the location of the service recipient‟s fixed land line through which the service is received by the person, is in taxable territory:

Provided also that in case of online information and database access or retrieval services provided or agreed to be provided by any person located in a non-taxable territory and received by non-assesse online recipient, a person receiving such services shall be deemed to be a non-assesse online recipient, if such person does not have service tax registration under these rules.”;

(ii) in rule 4, in sub rule (1), after third proviso, the following proviso shall be inserted, namely:-

“Provided also that a person located in non taxable territory liable for paying the service tax in the case of online information and database access or retrieval services may make an application for registration in form ST-1A for registration within a period of thirty days from the date on which the service tax under section 66B of the Act is levied or the person located in non taxable territory has commenced supply of taxable services in the taxable territory in India and notwithstanding anything contrary in these rules, the registration shall be deemed to be granted in form ST-2A from the date of receipt of the application.”;

(iii) in rule 4A, in sub-rule 1, after the sixth proviso, the following proviso shall be inserted, namely:-

“Provided also that in case of online information and database access or retrieval services provided or agreed to be provided in taxable territory by a person located in the non-taxable territory, an invoice, a bill or, as the case may be, challan shall include any document, by whatever name called, whether or not serially numbered, but containing name and address of the person receiving taxable service to the extent available and other information in such documents as required under this sub-rule.”;

(iv) in rule 7, in sub-rule (1) after the letters and figure “ST-3A”, the word, letters and figure “or ST-3C” shall be inserted;