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

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

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Ideas from people give their views on Centre’s schemes: Arun Jaitle : 28-01-2016


Information and Broadcasting minister Arun Jaitley today said that sourcing ideas from people provides the government an opportunity to understand their perspective on its major flagship programmes.

The senior minister said during an event to felicitate winners of contests held on social media by the I&B ministry as part of the 67th Republic Day celebrations.

The contests were hosted on Facebook, Twitter and a specially-designed webpage where ‘graffiti’ were invited from participants on various flagship programmes of the Centre.

For ‘graffiti’ wall, the themes were Start Up India, Stand Up India, Digital Empowerment, Entrepreneurs of Young India, Skilled India, Powerful India, Make In India, Financial Security to All and Housing For All.

For the Twitter contest, netizens’ responses were invited on with three hashtags — Vision of Team India, My Idea of India and R-Day Not Just a Holiday.

Regarding the poster-making contest on Facebook, participants were invited to send posters on themes like – Give It Up-LPG Subsidy, Per Drop More Crop and Save the Girl Child.

Minister of State for I&B Rajyavardhan Rathore and Secretary Sunil Arora were also present during the event.

Source : The Economic Times

200 SEZs likely to be exempt from 18.5% MAT : 28-01-2016


Enterprises operating from over 200 Special Economic Zones (SEZs) in the country are likely to be exempted from the minimum alternative tax (MAT) of 18.5 per cent on their book profits. The Union commerce ministry is understood to have made a strong case for removing MAT on SEZ units on the ground that giving this tax benefit would revive domestic manufacturing and provide the much-needed boost to exports, declining in each of the last 13 months.

GROWTH STORY OF SEZS
1965: Asia’s first export processing zone set up in Kandla, Gujarat
Apr 2000: Special Economic Zones (SEZs) policy announced
Feb 2006: Special Economic Zones Act, 2005, comes into force
Apr 2012: MAT imposed at 18.5% as well as dividend distribution tax (June 2011) on 10% book profits of developers and units located inside SEZ

In addition, the commerce ministry has also put in place an effective monitoring mechanism that is closely looking at what remedial measures can be taken to promote exports in some of India’s key markets. The free trade agreements (FTAs) are going to be examined from that perspective, as and when they come up for review.

200 SEZs likely to be exempt from 18.5% MAT Meanwhile, an attempt is being made to use India’s services exports strength and build that into its negotiations for agreements for merchandise trade. Simultaneously, an effort is being made to strengthen the legal framework for the plantation industry, so that this sector can also play a more useful role in exports and in domestic markets.

On the question of MAT, the commerce ministry has had detailed discussions with the finance ministry. Expectations of the government removing MAT on SEZ units are high, even though the finance ministry is still debating the decision’s implications of revenue loss for a government that is struggling hard to adhere to its promised fiscal deficit of 3.5 per cent of gross domestic product for 2016-17.

In the current financial year, the fiscal deficit has to be kept within 3.9 per cent of GDP, but next year the challenges of an increased expenditure burden on account of the recommendations of the Seventh Central Pay Commission are going to be more difficult.

According to official estimates, the corporation tax revenues foregone on account of the SEZ units in 2014-15 were estimated at Rs 18,394 crore. This revenue loss would have been more if the government had not levied MAT on these units. MAT was levied with effect from April 2011 on SEZ units. Therefore, the size of the potential revenue loss on account of removing MAT on SEZ units is what is causing a dilemma in the finance ministry.

The larger implication of removing MAT on SEZ units would be that the government’s earlier plan of phasing out corporation tax exemptions on SEZ units from 2017-18 would need to be reviewed. If MAT is to be removed from 2016-17, as is expected in the commerce ministry, then there would be no logic of phasing out corporation tax exemptions for them from 2017-18.

FACTFILE
Out of 347 SEZs which have received all requisite clearance certificates and been notified as of November 2015, only 204 are currently operational
Comptroller and Auditor General, in its December 2014 report, said out of 45,635.63 hectares notified for the development of SEZs, actual operations took place only in 28,488.49 hectares, or 62% of the notified land
Exports from SEZs declined to Rs 4.63 lakh crore in 2014-15, from Rs 4.94 lakh crore in 2013-14
Nearly Rs 3.63 lakh crore investments in SEZs currently, with Rs 1.5 lakh crore additional proposed investment
Total employment: 1.54 million

The latest move to consider removal of MAT on SEZ units follows a detailed representation made by SEZ companies to the commerce ministry last month. It was argued that the 204-odd SEZs have an estimated 4,122 operating units, engaged in exports of Rs 4.6 lakh crore, which accounted for almost a fifth of India’s total exports in 2014-15. With total investments estimated at Rs 3.63 lakh crore in these SEZ units, they employ around 1.5 million workers.

Those arguing in favour of abolishing MAT on SEZ units point out that the move would also help counter the steady rise in imports of a large number of items from various developing countries and China, which have begun flooding the Indian markets with their products in view of a downturn in international trade. The removal of MAT is being justified not only for giving a boost to the government’s Make In India programme, but also for keeping a check on imports of a large number of items.

Source : Business Standard

Simpler tax regime likely in Budget : 27-01-2016


Finance Minister Arun Jaitley on Monday hinted that some tax change recommendations of the committees headed by Parthasarathi Shome and R V Easwar might be incorporated in the coming Union Budget proposals.

“The law must be simple. Then, even if there are a large number of assessees, then chances of litigation are at a minimum. Since we amend the Finance Act every year through the Income Tax Act, the Act itself has become very complicated. There is a group under (retired) Justice Easwar which is looking into cleaning up the Act…The Shome committee report has also given many recommendations, which we are at an advanced stage of looking into. It has suggested many reforms in the tax administration itself,” Jaitley said, addressing the platinum jubilee celebrations here of the Income Tax Appellate Tribunal.
Read our full coverage on Union Budget 2016

PANELS’ SUGGESTIONS
Parthasarathi Shome
Widening the use of the permanent account number
Abolition of the post of revenue secretary
Revamp of the dispute resolution mechanism
Spending a tenth of the tax department’s budget to improve taxpayer service
R V Easwar
A friendlier tax regime and measures to ease litigation
Reduction in the tax deducted at source on interest rates and post office deposits
Raising the threshold limits for the levies and rationalising of capital gains tax

The Easwar panel was asked to come up with a clear and neater tax regime, to reduce litigation. The minister said the government would simplify tax laws to this end.

Shome headed the Tax Administration Reform Commission (TARC), which gave four reports. It has made several recommendations to make the tax administration payer-friendly and accountable. The proposals include widening the use of the permanent account number, abolition of the post of revenue secretary, a complete revamp of the dispute resolution mechanism and spending a tenth of the tax department’s budget to improve taxpayer service.

TARC also recommended a tax council to develop a common tax policy and legislation for both direct and indirect taxes, and merit-based promotions of officials. It also suggested merger of the Central Board of Direct Taxes and Central Board of Excise and Customs.

The Easwar committee gave its first draft set of proposals last week, also calling for a friendlier tax regime and measures to ease litigation. It recommended reduction in the tax deducted at source on interest rates and post office deposits, raising the threshold limits for the levies and rationalising of capital gains tax.

The panel said nearly 65 percent of the personal income tax collected in India was through TDS, whose provisions need to be made less “tedious” and more tax-friendly.

The committee proposed raising the threshold for TDS to Rs 15,000 from Rs 2,500 annually, and reducing the tax rate to five per cent for interest on securities from the present 10 per cent. It also recommended raising the threshold limit to Rs 15,000 from the present Rs 10,000 for bank deposits and Rs 5,000 for others.

Source : Business Standard

No. 01/2016 Dated: 12-1-2016


Frequently Asked Questions (FAQs) with regard to Corporate Social Responsibility under section 135 of the Companies Act, 2013 – Dated 12-1-2016 – Companies Law

General Circular No. 01/2016

No. 05/19/2015- CSR

Government of India

Ministry of Corporate Affairs

5th Floor, ‘A’ Wing,

Shastri Bhawan, Dr. R. P. Marg

New Delhi – 110 001

Dated: 12th January, 2016

To,

All Regional Director,

All Registrar of Companies,

All Stakeholders

Subject: – Frequently Asked Questions (FAQs) with regard to Corporate Social Responsibility under section 135 of the Companies Act, 2013.

Sir,

Section 135 of the Companies Act, 2013, Schedule VII of the Act and Companies CSR Policy Rules, 2014 read with General Circular dated 18.06.2014 issued by the Ministry of Corporate Affairs, provide the broad contour within which eligible Companies are required to formulate their CSR policies including activities to be undertaken and implement the same in the right earnest. While complying with the Corporate Social Responsibility (CSR) provisions of the Act, Board of the eligible companies are empowered to appraise and approve their CSR policy including CSR projects or programmes or activities to be undertaken. In this connection, Ministry has been receiving several queries and references seeking further clarifications on various issues relating to CSR provision of the Act.

2. In continuation to this Ministry’s General Circular dated 18th June, 2014 and 17th September, 2014, a set of FAQs along with response of the Ministry is provided*for facilitating effective implementation of CSR           :

FREQUENTLY ASKED QUESTIONS ON CORPORATE SOCIAL RESPOSIBITITIES

SI. NO.

FAQS

1.

WHETHER CSR PROVISION OF THE COMPANIES ACT, 2013 IS APPLICABLE TO ALL COMPANIES?

 

CSR provisions of the Companies Act 2013 is applicable to every company registered under the Companies Act 2013 and any other previous companies law having

Net worth of rupees five hundred crore or more, or

Turnover of rupees one thousand crore or more or

A net profit of rupees five crore or more during any financial year

2.

WHAT IS MEANING OF ‘ANY FINANCIAL YEAR’ MENTIONED ABOVE?

 

“Any Financial Year” referred under Sub-section (1) of Section 135 of the Act read with Rule 3(2) of Companies CSR Rule, 2014 implies any of the three preceding financial years (referGeneral Circular No. 21/2014, dated: 18.06.2014)

3.

WHETHER CSR EXPENDITURE OF A COMPANY CAN BE CLAIMED AS A BUSINESS EXPENDITURE?

 

The amount spent by a company towards CSR cannot be claimed as business expenditure. The Finance Act, 2014 provides that any expenditure incurred by an assessee on the activities relating to Corporate Social Responsibility referred to in section 135 of theCompanies Act, 2013 shall not  be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession.

4.

WHETHER THE ‘AVERAGE NET PROFIT’ CRITERIA FOR SECTION 135(5) IS NET PROFIT BEFORE TAX OR NET PROFIT AFTER TAX?

 

Computation of net profit for section 135 is as per section 198 of the Companies Act, 2013which is primarily PROFIT BEFORE TAX (PBT).

5.

CAN THE CSR EXPENDITURE BE SPENT ON THE ACTIVITIES BEYOND SCHEDULE VII?

 

General Circular No. 21/2014 dated June 18, 2014 of MCA has clarified that the statutory provision and provisions of CSR Rules, 2014, is to ensure that activities undertaken in pursuance of the CSR policy must be relatable to Schedule VII of the Companies Act, 2013. The entries in the said Schedule VII must be interpreted liberally so as to capture the essence of the subjects enumerated in the said Schedule. The items enlisted in theSchedule VII of the Act, are broad-based and are intended to cover a wide range of activities. The General Circular also provides an illustrative list of activities that can be covered under CSR. In a similar way many more can be covered. It is for the Board of the company to take a call on this.

6.

WHAT TAX BENEFITS CAN BE AVAILED UNDER CSR?

 

No specific tax exemptions have been extended to CSR expenditure per se. The finance Act, 2014 also clarifies that expenditure on CSR does not form part of business expenditure. While no specific tax exemption has been extended to expenditure incurred on CSR, spending on several activities like contributions to Prime Minister’s Relief Fund, Scientific Research, Rural development projects, skill development projects, agricultural extension projects, etc. which find place in Schedule VII, already enjoy exemptions under different sections of the Income Tax Act, 1961.

7.

WHICH ACTIVITIES WOULD NOT QUALIFY AS CSR?

 

The CSR projects or programs or activities that benefit only the employees of the company and their families.

One- off events such as marathons/ awards/ charitable contribution/ advertisement/ sponsorships of TV programmes etc.

Expenses incurred by companies for the fulfilment of any other Act/ Statue of regulations (such as Labour Laws, Land Acquisition Act, 2013, Apprentice Act, 2013, Apprentice Act, 1961 etc.)

Contribution of any amount directly or indirectly to any political party.

Activities undertaken by the company in pursuance of its normal course of business.

The project or programmes or activities undertaken outside India.

8.

WHETHER A HOLDING OR SUBSIDIARY OF A COMPANY WHICH FULFILS THE CRITERIA UNDER SECTION 135(1) HAS TO COMPLY WITH SECTION 135, EVEN IF THE HOLDING AND SUBSIDIARY ITSELF DOES NOT FULFILL THE CRITERIA.

 

Holding or subsidiary of a company does not have to comply with section 135(1) unless the holding or subsidiary itself fulfills the criteria.

9.

Whether provisions of CSR are applicable on Section 8 Company, if it fulfills the criteria of section 135(1) of the Act.

 

Section 135 of the Act reads “Every company……”, i.e. no specific exemption is given tosection 8 companies with regard to applicability of section 135, hence section 8 companies are required to follow CSR provisions.

10.

CAN CONTRIBUTION OF MONEY TO A TRUST/ SOCIETY/ SECTION 8 COMPANIES BY A COMPANY BE TREATED AS CSR EXPENDITURE OF THE COMPANY?

 

General Circular No 21/2014 of MCA dated June 18, 2014 clarifies that contribution to Corpus of a Trust/ Society/ Section 8 companies etc. will qualify as CSR expenditure as long as:

The trust/ Society/ Section 8 company etc. is created exclusively for undertaking CSR activities or

Where the corpus is created exclusively for a purpose directly relatable to a subject covered in Schedule VII of the Act.

11.

WHETHER DISPLAY OF CSR POLICY OF A COMPANY ON WEBSITE OF THE COMPANY IS MANDATORY OR NOT?

 

As per section 135(4) the Board of Directors of the company shall, after taking into account the recommendations of CSR Committee, approve the CSR Policy for the company and disclose contents of such policy in its report and the same shall be displayed on the company’s website, if any (refer Rule 8 & 9 of CSR policy, Rules 2014).

12.

WHETHER REPORTING OF CSR IS MANDATORY IN BOARD’S REPORT?

 

The Board’s Report of a company qualifying under section 135(1) pertaining to a financial year commencing on or after the 1st day of April, 2014 shall include an annual report on CSR containing particulars specified in Annexure. (refer Rule 9 of CSR policy, Rules 2014).

13.

WHETHER IT IS MANDATORY FOR FOREIGN COMPANY TO GIVE REPORT ON CSR ACTIVITY?

 

In case of a foreign company, the balance sheet filed under sub-clause (b) of sub-section (1) of section 381 shall contain an Annexure regarding report on CSR.

14.

WHETHER CONTRIBUTION TOWARDS DISASTER RELIEF QUALIFIES AS CSR OR NOT?

 

(May please refer point no. 7 to the annexure to General Circular dated 18.06.2014 issued by Ministry of Corporate Affairs).

15.

WHETHER CONTRIBUTION IN KIND CAN BE MONETIZED TO BE SHOWN AS CSR EXPENDITURE?

 

Section 135 prescribes “….. shall ensure that company spends…..”. The company has to spend the amount.

16.

IF A COMPANY SPENDS IN EXCESS OF 2% OF ITS AVERAGE NET PROFITS OF THREE PRECEDING YEARS ON CSR IN A PARTICULAR YEAR, CAN THE EXCESS AMOUNT SPENT BE CARRIED FORWARD TO THE NEXT YEAR AND BE OFFSET AGAINST THE REQUIRED 2% CSR EXPENDITURE OF THE NEXT YEAR?

 

Any excess amount spent (i.e., more than 2% as specified in Section 135) cannot be carried forward to the subsequent years and adjusted against that year’s CSR expenditure.

17.

CAN THE UNSPENT AMOUNT FROM OUT OF THE MINIMUM REQUIRED CSR EXPENDITURE BE CARRIED FORWARD TO THE NEXT YEAR?

 

The Board is free to decide whether any unspent amount from out of the minimum required CSR expenditure is to be carried forward to the next year. However, the carried forward amount should be over and above the next year’s CSR allocation equivalent to at least 2% of the average net profit of the company of the immediately preceding three years.

18.

WHAT IS THE ROLE OF GOVERNMENT IN MONITORING IMPLEMENTATION OF CSR BY COMPANIES UNDER THE PROVISION OF THE COMPANIES ACT, 2013?

 

The main thrust and spirit of law is not to monitor but to generate conductive environment for enabling the corporates to conduct themselves in a socially responsible manner, while contributing towards human development goals of the country.

The existing legal provisions like mandatory disclosures, accountability of the CSR committee and the Board, provisions for audit of the accounts of the company etc., provide sufficient safeguards in this regard. Government has no role to play in monitoring implementation of CSR by companies.

19.

WHETHER GOVERNMENT IS PROPOSING TO ESTABLISH ANY MECHANISM FOR THIRD PARTIES TO MONITOR THE QUALITY AND EFFICACY OF CSR EXPENDITURE AS WELL AS TO HAVE AN IMPACT ASSESSMENT OF CSR BY COMPANIES?

 

Government has no role to play in engaging external experts for monitoring the quality and efficacy of CSR expenditure of companies. Boards / CSR Committees are fully competent to engage third parties to have an impact assessment of its CSR programme to validate compliance of the CSR provisions of the law.

20.

CAN CSR FUNDS BE UTILIZED TO FUND GOVERNMENT SCHEME?

 

The objective of this provision is indeed to involve the corporates in discharging their social responsibility with their innovative ideas and management skills and with greater efficiency and better outcomes. Therefore, CSR should not be interpreted as a source of financing the resource gaps in Government Scheme. Use of Corporate innovations and management skills in the delivery of ‘public goods’ is at the core of CSR implementation by the companies. In- principle, CSR fund of companies should not be used as a source of funding Government Schemes. CSR projects should have a larger multiplier effect than that under the Government Schemes.

However, under CSR provision of the Act and rules made thereunder, the Board of the eligible company is competent to take decision on supplementing any Government Scheme provided the Scheme permits corporates participation and all provisions of Section 135 of the Act and rules thereunder are compiled by the company.

21.

WHO IS THE APPROPRIATE AUTHORITY FOR APPROVING AND IMPLEMENTATION OF THE CSR PROGRAMMES/PROJECTS OF A COMPANY? WHAT IS GOVERNMENT’S ROLE IN THIS REGARD?

 

Government has no role to play in this regard. Section 135 of the Act, Schedule VII andCompanies CSR Policy Rules, 2014 read with General Circular dated 18.06.2014 issued by the Ministry of Corporate Affairs, provide the broad contour within which eligible companies are required to formulate their CSR policies including activities to be undertaken and implement the same in the right earnest. Therefore, all CSR programmes/ projects should be approved by the Boards on the recommendations of their CSR Committees. Changes, if any, in the programme / project should also be undertaken only with the approval of the Committee / Board.

22.

HOW CAN COMPANIES WITH SMALL CSR FUNDS TAKE UP CSR ACTIVITIES IN A PROJECT/ PROGRAMME MODE?

 

A well designed CSR project or programme can be managed with even small fund. Further, there is a provision in the CSR policy Rules, 2014 that such companies can combine their CSR programs with other similar companies by way of pooling their CSR resources. (referrule 4 in Companies (CSR Policy) Rules, 2014.

23.

WHETHER INVOLVEMENT OF EMPLOYEES OF THE COMPANY IN CSR PROJECT/ PROGRAMME OF A COMPANY CAN BE MONETIZED AND ACCOUNTED FOR UNDER THE HEAD OF ‘CSR EXPENDITURE’?

 

Contribution and involvement of employees in CSR activities of the company will no doubt generate interest/ pride in CSR work and promote transformation from Corporate Social Responsibility (CSR) as an obligation to Socially Responsible Corporate (SRC) in all aspects of their functioning. Companies therefore, should be encouraged to involve their employees in CSR activities. However monetization of pro bono services of employees would not be counted towards CSR expenditure.

3. This issues with the approval of Competent Authority.

Yours faithfully, 

(Seema Rath)

Deputy Director (CSR-Cell)

Tel: -011-23384657

 

GST: Govt yet to appoint empowered panel head : 25-01-2016


Finance minister Arun Jaitley is yet to name a chairman for the Empowered Group of State Finance Ministers (ECSFM) on the proposed national goods and services tax (GST), even two months after Kerala finance minister K M Mani stepped down.

This is despite the Union government also making fresh efforts to enable the tax’s rollout, including pushing for passage of constitutional amendment Bill in the Rajya Sabha session starting next month.

The Lok Sabha has already passed the Bill, stalled in the other House for want of majority support. After the passage, a Bill of the GST itself would come before Parliament and all state legislatures. Then, rules will be framed. The absence of a ECSFM chairman has derailed its meetings, needed to discuss key issues on the proposed laws and rules.

DEADLOCK
The Lok Sabha has already passed the Bill, but stalled in the other House for want of majority support

Since K M Mani resigned as finance minister of Kerala over corruption charges in November, only one meeting of the committee has taken place

A committee headed by the government’s chief economic advisor, Arvind Subramanian, recommended a standard GST rate of 17-18 per cent

It had also suggested a lower rate of 12 per cent for certain commodities and a ‘sin tax’ of 40 per cent for items like aerated drinks and tobacco

“There has been no communication from the finance minister. He has probably been keeping busy on account of budget preparations. We are still waiting,” said a member.

After Mani resigned as finance minister of Kerala over corruption charges in November, only one meeting of the committee has taken place. In November, Delhi finance minister Manish Sisodia was selected to chair a meeting for a day. It had decided on a sub-panel to decide on the issue of a threshold, as states were divided on whether GST should kick in from Rs 10 lakh or Rs 25 lakh of annual turnover.

The next round was to take place in December but did not happen. The committee was to draft a GST law and business processes for payments, refunds and returns filing.

The constitution amendment Bill could not be cleared in the previous session of Parliament, too. The Congress party stood stern on its demand to fix the proposed rates in the legislation itself. The Centre has staunchly opposed this, saying this would limit flexibility of the proposed GST Council to change these.

In between, a committee headed by the government’s chief economic advisor, Arvind Subramanian, recommended a standard GST rate of 17-18 per cent, with a lower rate of 12 per cent for certain commodities and a ‘sin tax’ of 40 per cent for items like aerated drinks and tobacco.

In the proposed GST Council, the Centre is to have a third of the members and states together the other two-third. The consensus so far is that a decision requires a three-fourth majority.

There were some signs of the Congress diluting its position over fixing the GST rate in the constitution amendment Bill. At the World Economic Forum in Davos, party leader Kamal Nath had said, “I hope they (the government) do say that I accept the cap but let’s not have it in the constitution.”

Jaitley had noted the GST was originally a Congress initiative. By insisting on inclusion of GST rates in the constitution amendment bill, it is demanding something it hadn’t proposed when the party was in power.

GST was originally proposed to be implemented from April 2010. Several deadlines were missed due to differences between Centre and states. The current deadline is April 2016, also set to be missed.

Source : Business Standard

Budget may ease rules for offshore fund managers moving to India : 25-01-2016


In a move to woo offshore fund managers to locate in India, the Union Budget for 2016-17 is likely to relax conditions for them to avail of tax exemptions.

Budget 2015 had announced some exemptions by amending the permanent establishment (PE) norms. The rules were changed to the extent that mere presence of a fund manager in India does not constitute PE of the offshore fund. This implies these fund managers are exempt from corporate taxation in India.

RELAXED RULES
Budget for 2015-16 had amended PE conditions to provide corporate tax exemption to foreign fund managers if they moved to India
Govt had hoped many fund managers would shift their base to India to avail of tax relief
However, fund managers feel the conditions for availing of exemptions are rather tough
Budget for 2016-17 is likely to ease some of these rules

“The present taxation structure has an in-built incentive for fund managers to operate from offshore locations. To encourage such offshore fund managers to relocate to India, I propose to modify the PE norms to the effect that mere presence of a fund manager in India will not constitute PE of the offshore funds resulting in adverse tax consequences,” Finance Minister Arun Jaitley had said in his Budget speech last year.

However, these efforts have so far not been able to impress offshore fund managers like Citi, Morgan Stanley, JPMorgan and others, as conditions for availing of the tax exemptions are rather stiff.

There are altogether 13 conditions, most contained in the Section 9 (A) of the Finance Act, 2015. One of those says that the fund has to have at least twenty-five members at the foreign institutional investor (FII) level. Most of these fund managers do not meet this condition. Besides, there are funds-of-funds that invest through one entity. These cannot be treated as just one investor.

In fact, the Securities and Exchange Board of India (Sebi) mandates that one member is enough for non-broad-based funds like pension funds, sovereign funds, university funds and insurance funds.

Consultants of offshore fund managers recently met finance ministry officials in this regard and asked them to have parity between Sebi rules and rules for offshore fund managers in Section 9 (A) of the Finance Act, 2015.

The finance ministry sources said they were considering the request and might incorporate this in the Budget.

The other condition, however, is that the remuneration paid by the fund to an eligible fund manager in respect of fund-management activity undertaken on its behalf must not be less than the arm’s-length price of such activity.

Now, deciding an arm’s-length price is subjective, say consultants. In transfer pricing, an arm’s length means the parties in a transaction are independent and on an equal footing. For instance, the goods supplied by a parent to Indian subsidiaries are considered an equal to the same goods supplied to others.

Fund managers say this condition should be diluted as it is anyway dealt in transfer-pricing disputes. “Since transfer-pricing disputes are common in India, and transfer pricing in any case is not an exact science, the arm’s-length condition should be removed, so that transfer-pricing disputes do not make a fund ineligible for availing of the tax exemption,” says Rajesh Gandhi, partner (tax), Deloitte Haskins & Sells. There is also a condition that a member of a fund cannot have any participation interest exceeding 10 per cent in the fund. Fund managers find this condition unrealistic.

The Finance Act of 2015 provides ffshore fund managers moving to India a relief from corporate taxation, the fund managers demand a relief from personal income tax for three years, as is given to start-ups. Their contention is that personal income tax rates in the highest slab (30 per cent) in India are double those in Singapore and Hong Kong; that is why they opt for those Southeast Asian countries. Besides offshore fund managers, the government is also looking at India-based specific fund managers which could be established by non-resident Indians.

Source : PTI

Notification No. : F. No. A-42011/03/2016-Ad.II Dated: 22-1-2016


Central Government establishes a Central Registration Centre (CRC) having territorial jurisdiction all over India – F. No. A-42011/03/2016-Ad.II – Dated 22-1-2016 – Companies Law

GOVERNMENT OF INDIA

MINISTRY OF CORPORATE  AFFAIRS

Notification

New Delhi, the 22 January 2016

S.O. 218 (E) -  In exercise of the powers conferred by sub-sections (1) and (2) of section 396 of the Companies Act, 2013 (18 of 2013) (herein after referred to as the Act), the Central Government hereby establishes a Central Registration Centre (CRC) having territorial jurisdiction all over India, for discharging or carrying out the function of processing and disposal of applications for reservation of names under the provisions of the said Act.

2.    The CRC shall function under the administrative control of Registrar of Companies, Delhi (ROC Delhi), who shall act as the Registrar of the CRC until a separate Registrar is appointed to the CRC. The CRC shall process applications for reservation of name i.e., e-Form No. INC-1 filed along with the prescribed fee as provided in theCompanies (Registration of Offices and Fees) Rules, 2014.

3.    Processing and approval of name or names proposed in e-Form No.INC-29 shall continue to be done by the respective Registrar of Companies having jurisdiction over incorporation of companies under the Companies Act, 2013 as per the provisions of the Act and the rules made thereunder.

4.   The CRC shall be located at Indian Institute of Corporate Affairs (IICA), Plot No. 6, 7, 8, Sector 5, IMT Manesar , District Gurgaon (Haryana), Pin Code- 122050.

5. This notification shall come into force from 26th  January, 2016.

[F. No. A-42011/03/2016-Ad.II]

(Manoj Kumar)

Joint Secretary to the Govt. of India

Notification No. : 4/2016 Dated: 22-1-2016


CORRIGENDUM – Notification No. S.O. 3313 (E), dated the 8th December, 2015 – 4/2016 – Dated 22-1-2016 – Income Tax

MINISTRY OF FINANCE

(Deaprtment of Revenue)

(CENTRAL BOARD OF DIRECT TEXES)

CORRIGENDUM

New Delhi, the 22nd January, 2016

S.O. 223(E).- In the notification of the Government of India in the Ministry of Finance, Department of Revenue (Central Board of Direct Taxes) number S.O. 3313 (E), dated the 8th December, 2015, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), dated the 8th December, 2015, in the English version, in line 5, for “9th December, 2015” read “8th December, 2015”.

[Notification No. 4/2016/F. No.178/21/2014-ITA-I]

DEEPSHIKHA SHARMA, Director

Notification No. : F. No. 1/13/2013 CL-V-part-II Dated: 22-1-2016


Companies (Incorporation) Amendment Rules, 2016 – F. No. 1/13/2013 CL-V-part-II – Dated 22-1-2016 – Companies Law

GOVERNMENT OF INDIA

MINISTRY OF CORPORATE AFFAIRS

Notification

New Delhi, the 22nd January, 2016

G.S.R.  (E).-In exercise of the powers conferred by sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Incorporation) Rules, 2014, namely:-

1. Short title and commencement.-

(1) These rules may be called the Companies (Incorporation) Amendment Rules, 2016.

(2) They shall come into force from 26th day of January, 2016.

2. In the Companies (Incorporation) Rules, 2014 (herein after referred to as the principal rules), in rule 8,-

(i) in sub-rule (2)

(a) sub-clause (ii) of clause (b) shall be omitted;

(b) sub-clause (x) of clause (b) shall be omitted; and

(c) sub-clause (xvii) of clause (b) shall be omitted.

(ii) sub-rule (3) shall be omitted.

(iii) sub-rule (4) shall be omitted.

3. In the principal rules, for Rule 9 the following shall be substituted namely:

“9. Reservation of name – An application for the reservation of a name shall be made in Form No. INC.1  along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 which may be approved or rejected, as the case may be, by the Registrar, Central Registration Centre.”

(4) In the principal rules, in rule 36, in sub-rule(12),-

(i) after sub-clause (b), the following shall be inserted.-

‘(ba) After the resubmission of the documents and on completion of second opportunity, if the registrar still finds that the documents are defective or incomplete, he shall give third opportunity  to remove such defects or deficiencies;’

Provided that the total period for re-submission of documents shall not exceed a total period of thirty days.

(ii) in sub-clause (c), for the words ‘two opportunities’, the words ‘three opportunities’ shall be substituted.

(5) In the principal rules, for the existing Form No.INC- 1, the following form no. INC-1 shall be substituted, namely:-

Cabinet reshuffle likely to push Jaitley out of finance: Reuters : 22-01-2016


Finance Minister Arun Jaitley may soon be moved out from the crucial ministry, Reuters reported Friday. Power and coal minister Piyush Goyal is likely to replace Jaitley who may be moved to the defence ministry. The reshuffle may take place post the annual budget on February 29, acccording to the Reuters report. 

This will be the first major reshuffle for the Narendra Modi-led NDA government since they came to power in May 2014. While the economy has been stable, the BJP-led alliance has faced widespread criticism for failing to get key economic bills like the Goods and Services Tax (GST) cleared in Parliament due to non-cooperation from a Congress-led Opposition. 

Reuters added that Jaitley’s exit from the ministry is a reflection of the belief in the government that they need a fresh face to push key reforms to kickstart the economy. India’s estimated GDP for FY15 has been reduced to 7.4% from earlier projections of 8% or more, thanks largely to stagnant private investments and a global decline in growth, led by a slowdown in China. 

An investment banker-turned-politician, Goyal is likely to be rewarded for tackling chronic power shortages and backing renewable sources of energy, two issues that are important for PM Narendra Modi’s pre-election promise to provide electricity to all households in the country. 

 
Source : PTI

Notification No. : 03/2016 Dated: 22-1-2016


Seeks to amend Notifications No.56/2002-CE & No.57/2002-CE both dated 14.11.2002 so as to insert a sunset clause of 31.03.2016 and to deny the benefit of the exemption to goods on which certain specified processes have been undertaken – 03/2016 – Dated 22-1-2016 – Central Excise – Tariff

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 03/2016-Central Excise

New Delhi, the 22nd  January, 2016.

G.S.R. 103 (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, (40 of 1978), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notifications of the Government of India in the Ministry of Finance (Department of Revenue) specified in column (2) of the Table below, in the manner and to the extent specified in the corresponding entry in column (3) of the said Table, namely:-

Table

S.No.

Notification No. and date

Amendments

(1)

(2)

(3)

1. 56/2002-Central Excise, dated the 14th November, 2002 [G.S.R. 764(E), dated 14th  November, 2002]. In the said notification,-
(a)  in paragraph 3,
(i)  in clause (a), after the figures, letters and words, “14th day of June, 2002″, the words, figures and letters “but not later than the 31st day of March, 2016″ shall be inserted;
(ii)  in sub- clause (i) of clause (b), after the figures, letters and words, “14th day of June, 2002″, the words, figures and letters, “but not later than the 31st day of March, 2016″ shall be inserted;
(iii) in sub- clause (ii) of clause (b), after the figures, letters and words, “14th day of June, 2002″, the words, figures and letters, “but not later than the 31st day of March, 2016″ shall be inserted;
(b) after paragraph (4), the following paragraph shall be inserted, namely:-
“5. The exemption contained in this notification shall not apply to such goods which have been subjected to only one or more of the following processes, namely, preservation during storage, cleaning operations, packing or repacking of such goods in a unit container or labeling or re-labelling of containers, sorting, declaration or alteration of retail sale price and have not been subjected to any other process or processes amounting to manufacture in the State of Jammu and Kashmir.”.
2. 57/2002-Central Excise, dated the 14th November, 2002 [G.S.R. 765(E), dated 14th  November, 2002]. In the said notification,-
(a)  in paragraph 3,-
(i)   in clause (a), after the figures, letters and words, “14th day of June, 2002″, the words, figures and letters “but not later than the 31st day of March, 2016″ shall be inserted;
(ii)  in sub-clause (i) of clause (b), after the figures, letters and words, “14th day of June, 2002″, the words, figures and letters, “but not later than the 31st day of March, 2016″ shall be inserted;
(iii) in sub-clause (ii) of clause (b), after the figures, letters and words, “14th day of June, 2002″, the words, figures and letters, “but not later than the 31st day of March, 2016″ shall be inserted and
(b) after paragraph (4), the following paragraph shall be inserted, namely:-
“5. The exemption contained in this notification shall not apply to such goods which have been subjected to only one or more of the following processes, namely, preservation during storage, cleaning operations, packing or repacking of such goods in a unit container or labeling or re-labelling of containers, sorting, declaration or alteration of retail sale price and have not been subjected to any other process or processes amounting to manufacture in the State of Jammu and Kashmir.”.

[F. No. 332/09/2013-TRU]

(Mohit Tewari)

Under Secretary to the Government of India

Note:- (1) The principal notification No. 56/2002-Central Excise, dated the 14th of November, 2002, was published in the Gazette of India, Extraordinary, vide number G.S.R. 764(E), dated the 14th of November, 2002 and last amended by notification No. 52/2008-Central Excise, dated the 3rd October, 2008, published vide number G.S.R. 711(E), dated the 3rd October, 2008.

(2) The principal notification No. 57/2002-Central Excise, dated the 14th of November, 2002, was published in the Gazette of India, Extraordinary, vide number G.S.R. 765(E), dated the 14th of November, 2002 and last amended by notification No. 53/2008-Central Excise, dated the 3rd October, 2008, published vide number G.S.R. 712(E), dated the 3rd October, 2008.

Notification No. : 7(R)/2015-RB Dated: 21-1-2016


Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015 – 7(R)/2015-RB – Dated 21-1-2016 – Foreign Exchange Management

RESERVE BANK OF INDIA

(Foreign Exchange Department)

CENTRAL OFFICE

NOTIFICATION No. FEMA 7(R)/2015-RB

Mumbai , the 21st January , 2016

Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015

G.S.R. 95(E).-In exercise of the powers conferred by clause (h) of sub-section (3) of Section 6, sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), and in supersession of Notification No. FEMA 7/2000-RB dated May 3, 2000, as amended from time to time, the Reserve Bank hereby makes the following regulations relating to acquisition and transfer of immovable property outside India, namely :-

1. Short title and commencement:-

(i) These regulations may be called the Foreign Exchange Management (Acquisition and transfer of immovable property outside India) Regulations, 2015.

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

2. Definitions:-

In these regulations, unless the context requires otherwise, -

(i) ‘Act’ means the Foreign Exchange Management Act, 1999 (42 of 1999);

(ii) The words and expressions used but not defined in these Regulations shall have the same meanings respectively assigned to them in the Act.

3. Restriction on acquisition or transfer of immovable property outside India:-

Save as otherwise provided in the Act or in these regulations, no person resident in India shall acquire or transfer any immovable property situated outside India without general or special permission of the Reserve Bank.

4. Exemptions:-

Nothing contained in these regulations shall apply to the property -

(a) held by a person resident in India who is a national of a foreign state;

(b) acquired by a person resident in India on or before 8th July 1947 and continued to be held by him with the permission of the Reserve Bank.

5. Acquisition and Transfer of Immovable Property outside India:-

(1) A person resident in India may acquire immovable property outside India, -

(a) by way of gift or inheritance from a person referred to in sub-section (4) of Section 6 of the Act, or referred to in clause (b) of regulation 4;

(b) by way of purchase out of foreign exchange held in Resident Foreign Currency (RFC) account maintained in accordance with the Foreign Exchange Management (Foreign Currency accounts by a person resident in India) Regulations, 2015;

(c) jointly with a relative who is a person resident outside India, provided there is no outflow of funds from India;

(2) A person resident in India may acquire immovable property outside India, by way of inheritance or gift from a person resident in India who has acquired such property in accordance with the foreign exchange provisions in force at the time of such acquisition.

(3) A company incorporated in India having overseas offices, may acquire immovable property outside India for its business and for residential purposes of its staff, in accordance with the direction issued by the Reserve Bank of India from time to time.

Explanation:

For the purposes of these regulations, ‘relative’ in relation to an individual means husband, wife, brother or sister or any lineal ascendant or descendant of that individual.

[F. No. 1/31/EM/2016]

B. P. KANUNGO, Principal Chief General Manager

Notification No. : 10(R)/2015-RB Dated: 21-1-2016


Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015 – 10(R)/2015-RB – Dated 21-1-2016 – Foreign Exchange Management

RESERVE BANK OF INDIA

(Foreign Exchange Department)

CENTRAL OFFICE

NOTIFICATION No. FEMA 10(R)/2015-RB

Mumbai, the 21st  January, 2016

Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015

G.S.R. 96(E).-In exercise of the powers conferred by Section 9 and clause (e) of sub-section (2) of section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), and in supersession of Notification No. FEMA 10/2000-RB dated May 3, 2000, as amended from time to time, the Reserve Bank of India makes the following regulations for opening, holding and maintaining of Foreign Currency Accounts and the limits up to which amounts can be held in such accounts by a person resident in India, namely:

1. Short title and commencement:-

i) These Regulations may be called the Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015.

ii) They shall come into force from the date of their publication in the Official Gazette.

2. Definitions:-

In these Regulations, unless the context otherwise requires, -

i) ‘Act’ means the Foreign Exchange Management Act, 1999 (42 of 1999);

ii) ‘Authorised dealer’ means a person authorised as an authorised dealer under sub-section (1) of section 10 of the Act;

iii) ‘Foreign Currency Account’ means an account held or maintained in currency other than the currency of India or Nepal or Bhutan;

iv) ‘Schedule’ means schedule to these Regulations;

v) the words and expressions used but not defined in these Regulations shall have the same meanings respectively assigned to them in the Act.

3. Restriction on holding foreign currency account by a person resident in India:-

Save as otherwise provided in the Act or rules or regulations made there under, no person resident in India shall open or hold or maintain a foreign currency account:

Provided that a Foreign Currency Account held or maintained before the commencement of these Regulations by a person resident in India with special or general permission of the Reserve Bank, shall be deemed to be held or maintained under these Regulations:

Provided further that the Reserve Bank, may on an application made to it, permit a person resident in India to open or hold or maintain a Foreign Currency Account, subject to such terms and conditions as may be considered necessary.

4. Opening, holding and maintaining Foreign Currency Accounts in India

(A) Exchange Earners’ Foreign Currency Account:-

A person resident in India may open, hold and maintain with an authorised dealer in India, a Foreign Currency Account to be known as Exchange Earners’ Foreign Currency (EEFC) Account, subject to the terms and conditions of the Exchange Earners’ Foreign Currency Account Scheme specified in the Schedule I.

(B) Resident Foreign Currency Account:-

(1) A person resident in India may open, hold and maintain with an authorised dealer in India a Foreign Currency Account, to be known as a Resident Foreign Currency (RFC) Account, out of foreign exchange –

(a) received as pension or any other superannuation or other monetary benefits from his employer outside India; or

(b) realised on conversion of the assets referred to in sub-section (4) of section 6 of the Act, and repatriated to India; or

(c) received or acquired as gift or inheritance from a person referred to in sub-section (4) of section 6 of theAct; or

(d) referred to in clause (c) of section 9 of the Act, or acquired as gift or inheritance there from; or

(e) received as the proceeds of life insurance policy claims/maturity/surrender values settled in foreign currency from an insurance company in India permitted to undertake life insurance business by the Insurance Regulatory and Development Authority.

(2) The funds in a Resident Foreign Currency Account opened or held or maintained in terms of sub-regulation (1) shall be free from all restrictions regarding utilisation of foreign currency balances including any restriction on investment in any form, by whatever name called, outside India.

(3) Resident individuals are permitted to include resident relative(s) as joint holder(s) in their Resident Foreign Currency account on ‘former or survivor’ basis. However, such resident Indian relative joint account holder shall not be eligible to operate the account during the life time of the resident account holder.

Explanation – For the purpose of this sub-regulation, the expression ‘relative’ shall have the same meaning as assigned to it under section 2(77) of the Companies Act, 2013.

(C) Resident Foreign Currency (Domestic) Account

(1) A resident Individual may open, hold and maintain with an Authorised Dealer in India a foreign currency account, to be known as Resident Foreign Currency (Domestic) Account, out of foreign exchange acquired in the form of currency notes, bank notes and travellers’ cheques as under:

(a) by way of payment for services not arising from any business in or anything done in India while on a visit to any place outside India; or

(b) from any person not resident in India and who is on a visit to India, as honorarium or gift or for services rendered or in settlement of any lawful obligation; or

(c) by way of honorarium or gift while on a visit to any place outside India; or

(d) in the form of unspent amount of foreign exchange acquired by him from an authorised person for travel abroad; or

(e) as gift from a relative;

Explanation - For the purpose of this sub-regulation, the expression ‘relative’ shall have the same meaning as assigned to it under section 2(77) of the Companies Act, 2013.

(f) by way of earning through export of goods/ services, or as royalty, honorarium or by any other lawful means;

(g) representing the disinvestment proceeds received by the resident account holder on conversion of shares held by him to ADRs/ GDRs under the DR Scheme, 2014 approved by the Government of India.

(h) by way of earnings received as the proceeds of life insurance policy claims/ maturity/ surrender values settled in foreign currency from an insurance company in India permitted to undertake life insurance business by the Insurance Regulatory and Development Authority

(2) Debits to the account shall be for payments towards a current account transaction in accordance with the provisions of the Foreign Exchange Management (Current Account Transactions) Rules, 2000 and towards a capital account transaction permissible under the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000.

(3) The account shall be maintained in the form of Current Account and shall not bear any interest.

(4) There shall be no ceiling on the balances in the account

(D) A Unit in a Special Economic Zone (SEZ)

A unit located in a Special Economic Zone may open hold and maintain a Foreign Currency Account with an authorized dealer in India provided that,

(a) all foreign exchange funds received by the unit in the Special Economic Zone (SEZ) are credited to such account,

(b) no foreign exchange purchased in India against rupees shall be credited to the account without prior permission from the Reserve Bank,

(c) the funds held in the account shall be used for bona fide trade transactions of the unit in the SEZ with the person resident in India or otherwise,

(d) the balances in the accounts shall be exempt from the restrictions imposed under Rule 5, except item 1(ii) of the Schedule III, of the Government of India Notification No.GSR.381(E) dated May 3, 2000, as amended from time to time.

Provided that the funds held in these accounts shall not be lent or made available in any manner to any person or entity resident in India not being a unit in Special Economic Zones.

(E) Diamond Dollar Accounts (DDAs)

An Authorized Dealer Category-I bank in India may allow firms and companies who comply with the eligibility criteria stipulated in the Foreign Trade Policy of Government of India, in force from time to time and the directions as may be issued by Reserve Bank of India, from time to time, to open, hold and maintain Diamond Dollar Accounts (DDAs) in India subject to the terms and conditions of the DDA Scheme specified in Schedule II.

(F) Exporters

A person resident in India, being an exporter who has undertaken a construction contract or a turnkey project outside India or who is exporting services or engineering goods from India on deferred payment terms may open, hold and maintain a Foreign Currency Account with a bank in India, provided that -

(a) approval as required under the Foreign Exchange Management (Export of goods and services) Regulations, 2015 has been obtained for undertaking the contract/ project/ export of goods or services, and

(b) the terms and conditions stipulated in the letter of approval have been duly complied with.

(G) Other cases

(1) The Indian agent of a shipping or an airline company incorporated outside India, may open, hold and maintain a Foreign Currency Account with an authorized dealer in India for meeting the local expenses in India of such airline or shipping company:

Provided that the credits to such accounts are only by way of freight or passage fare collections in India or from his principal outside India.

(2) An authorized dealer in India may, subject to the directions as may be issued by the Reserve Bank, allow shipmanning/crew managing agencies in India to open and maintain non-interest bearing foreign currency accounts in India for the purpose of undertaking transactions in the ordinary course of their business.

(3) An authorized dealer in India may, subject to the directions as may be issued by the Reserve Bank, allow Project Offices set up in India by foreign companies in terms of Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000 dated May 3, 2000, as amended from time to time to open, hold and maintain non-interest bearing one or more foreign currency accounts in India for the projects to be executed in India.

(4) An Indian company receiving foreign investment under FDI route in terms of Foreign Exchange Management (Transfer or Issue of security by a Person Resident outside India) Regulations, 2000 dated May 3, 2000, may open and maintain a foreign currency account with an Authorized Dealer in India.

Provided that the Indian investee company has impending foreign currency expenditure and the account shall be closed immediately after the requirements are completed and in no case shall be operational for more than six months from the date of opening of such account.

(5) An authorized dealer in India may, subject to the directions as may be issued by the Reserve Bank, allow opening temporary foreign currency accounts by organisers of international seminars, conferences, conventions etc. for holding such events in India for the receipt of the delegate fees and payment towards expenses including payment to special invitees from abroad.

5. Opening, holding and maintaining a Foreign Currency Account outside India:-

(A) Accounts of authorised dealers or their branches

(1) An authorised dealer in India may open, hold and maintain with his branch or head office or correspondent outside India, a Foreign Currency Account for the purpose of transacting foreign exchange business and other matters incidental thereto, in accordance with the provisions of the Act or the rules or regulations made or the directions issued thereunder.

(2) A branch outside India of a bank incorporated or constituted in India may open, hold and maintain with a bank outside India, a Foreign Currency Account for the purpose of carrying on normal banking business outside India, subject to compliance with the directions or guidelines issued from time to time by the Reserve Bank, and the regulatory authority in the country where the branch is located.

(B) Account by a company/ firm in the name of its office/ branch/ representative outside India

A firm or a company or a body corporate registered or incorporated in India (hereinafter referred to as ‘the Indian entity’) may open, hold and maintain in the name of its office (trading or non-trading) or its branch set up outside India or its representative posted outside India, a foreign currency account with a bank outside India by making remittances from India for the purpose of normal business operations of the office/ branch or representative;

Provided that –

(a) the overseas branch/ office has been set up or representative is posted overseas for conducting normal business activities of the Indian entity;

(b) the total remittances made under this sub-Regulation by the Indian entity, to all such accounts in an accounting year shall not exceed

(i) 15 per cent of the average annual sales/ income or turnover of the Indian entity during the last two financial years or up to 25 per cent of the net worth, whichever is higher, where the remittances are made to meet initial expenses of the branch or office or representative; and

(ii) 10 per cent of such average annual sales/ income or turnover during the last financial year where the remittances are made to meet recurring expenses of the branch or office or representative;

(c) the overseas branch/ office/ representative shall not enter in any contract or agreement in contravention of the Act, Rules or Regulations made thereunder;

(d) the account so opened, held or maintained shall be closed,

(i) if the overseas branch/ office is not set up within six months of opening the account, or

(ii) within one month of closure of the overseas branch/ office, or

(iii) where no representative is posted for six months,

and the balance held in the account shall be repatriated to India;

Provided further that the restriction contained in clause (b) of the first proviso shall not apply in a case where –

1) the remittances to the account maintained under this sub-Regulation are made out of funds held in EEFC account of the Indian entity, or

2) the overseas branch/ office is set up or representative posted by a 100% Export Oriented Unit (EOU) or a unit in Export Processing Zone (EPZ) or in a Hardware Technology Park or in a Software Technology Park, within two years of establishment of the Unit.

Explanation: For the purpose of this sub-Regulation,

1) Purchase of acquisition of office equipment and other assets required for normal business operations of the overseas branch/ office/ representative will not be deemed as a capital account transaction;

2) Transfer or acquisition of immovable property outside India, other than by way of lease not exceeding five years, by the overseas branch/ office/ representative will be subject to the Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2015.

(C) Exporters

A person resident in India, being an exporter who has undertaken a construction contract or a turnkey project outside India or who is exporting services or engineering goods from India on deferred payment terms may open, hold and maintain a Foreign Currency Account with a bank outside India, provided that -

a) approval as required under the Foreign Exchange Management (Export of goods and services) Regulations, 2015 has been obtained for undertaking the contract/ project/ export of goods or services, and

b) the terms and conditions stipulated in the letter of approval have been duly complied with.

(D) For making Overseas Direct Investment

An Indian party may open, hold and maintain Foreign Currency Account abroad for the purpose of making overseas direct investments subject to the following terms and conditions:

(a) The Indian party is eligible for making overseas direct investment in terms of Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 as amended from time to time

(b) The host country regulations stipulate that the investment into the country is required to be routed through a designated account.

(c) The account shall be opened, held and maintained as per the regulation of the host country.

(d) The remittances sent to the account by the Indian party should be utilized only for making overseas direct investment into the Joint Venture/ Wholly Owned Subsidiary (JV/ WOS) abroad.

(e) Any amount received in the account by way of dividend and/ or other entitlements from the subsidiary shall be repatriated to India within 30 days from the date of credit.

(f) The Indian party should submit the details of debits and credits in the account on yearly basis to the designated AD bank with a certificate from the Statutory Auditors of the Indian party certifying that the account was maintained as per the host country laws and the extant FEMA regulations / provisions as applicable.

(g) The account so opened shall be closed immediately or within 30 days from the date of disinvestment from JV/ WOS or cessation thereof.

Explanation: For the purpose of this regulation, the expression ‘Indian party’ shall have the same meaning as assigned to it in Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004.”

(E) Other Cases

(1) Subject to compliance with the conditions in regard to raising of External Commercial Borrowings (ECB) or raising of resources through American Depository Receipts (ADRs) or Global Depository Receipts (GDRs), the funds so raised may, pending their utilisation or repatriation to India, be held in deposits in foreign currency accounts with a bank outside India.

(2) A shipping or airline company incorporated in India may open, hold and maintain with a bank outside India, a Foreign Currency Account for the purpose of undertaking transactions in the ordinary course of its business.

(3) Life Insurance Corporation of India or General Insurance Corporation of India and its subsidiaries may open, hold and maintain with a bank outside India, a Foreign Currency Account for the purpose of meeting the expenditure incidental to the insurance business carried on by them and for that purpose, credit to such account the insurance premia received by them outside India.

(4) Resident individuals may open, maintain and hold foreign currency accounts with a bank outside India for making remittances under the Liberalised Remittance Scheme (hereinafter referred to as the “Scheme”). The account may be used for putting though all transactions connected with or arising from remittances eligible under this Scheme.

(5) A person resident in India who has gone out of India to participate in an exhibition/ trade fair outside India may open, hold and maintain a Foreign Currency Account with a bank outside India for crediting the sale proceeds of goods on display in the exhibition/ trade fair:

Provided that the balance in the account is repatriated to India through normal banking channels within a period of one month from the date of closure of the exhibition/ trade fair.

(6) A person resident in India who has gone abroad for studies may open, hold and maintain a Foreign Currency Account with a bank outside India during his stay outside India.

Provided that all credits from India into the account shall be made in accordance with the Act, Rules and Regulations made thereunder.

Provided further that on his return to India, after completion of studies, such an account will deemed to have been opened under the Liberalised Remittance Scheme.

(7) A person resident in India who is on a visit to a foreign country may open, hold and maintain a Foreign Currency Account with a bank outside India during his stay outside India, provided that on his return to India, the balance in the account is repatriated to India.

(8) (i) A citizen of a foreign State, resident in India, being an employee of a foreign company or a citizen of India, employed by a foreign company outside India and in either case on deputation to the office/ branch/ subsidiary/ joint venture/ group company in India of such foreign company may open, hold and maintain a foreign currency account with a bank outside India and receive the whole salary payable to him for the services rendered to the office/ branch/subsidiary/ joint venture/ group company in India of such foreign company, by credit to such account, subject to payment of taxes, as applicable in India.

(ii) A citizen of a foreign State resident in India being in employment with a company incorporated in India may open, hold and maintain a foreign currency account with a bank outside India and remit the whole salary received in India in Indian Rupees, to such account, for the services rendered to such an Indian company, subject to payment of taxes, as applicable in India.

Explanation:- For the purpose of this sub regulation, the expression ‘company’ shall include a ‘Limited Liability Partnership’ as defined under The Limited Liability Partnership Act, 2008.

6. Types of accounts:-

Unless otherwise specified in these Regulations, a Foreign Currency Account with an authorised dealer in India under these Regulations may be opened, held and maintained:

a) in the form of current or savings or term deposit account in cases where the account holder is an individual, and in the form of current account or term deposit account in all other cases:

Provided that the EEFC account referred to in Regulation 4 (A), shall be opened, held or maintained in a manner as prescribed by the Reserve Bank from time to time.

b) singly or jointly in the name of person eligible to open, hold and maintain such account.

7. Remittances out of the account after the account holder’s death:-

On the death of a foreign currency account holder, -

a) the authorised dealer with whom the account is held or maintained may remit to a nominee being a person resident outside India, funds to the extent of his share or entitlement from the account of the deceased account holder;

b) a nominee being a person resident in India, who is desirous of remitting funds outside India out of his share for meeting the liabilities abroad of the deceased, may apply to the Reserve Bank for such remittance;

c) A resident nominee of an account held outside India in accordance with Regulation 5 shall close the account and bring back the proceeds to India through banking channels.

8. Responsibility of authorised dealers maintaining foreign currency accounts:-

An authorised dealer maintaining foreign currency accounts shall -

a) comply with the directions issued by the Reserve Bank from time to time; and

b) submit periodic return or statement, if any, as may be stipulated by the Reserve Bank .

SCHEDULE I

[See Sub-Regulation (A) of Regulation 4]

Exchange Earner’s Foreign Currency (EEFC) Account Scheme

1. Limit up to which foreign currency may be credited to EEFC account

(1) A person resident in India may credit to the EEFC Account with an Authorised Dealer in India 100 percent of the foreign exchange earnings as specified here under:

i) inward remittance through banking channel, other than the remittance received pursuant to any undertaking given to the Reserve Bank or which represents foreign currency loan raised or investment received from outside India or those received for meeting specific obligations by the account holder;

ii) payments received in foreign exchange by a 100 per cent Export Oriented Unit or a unit in (a) Export Processing Zone or (b) Software Technology Park or (c) Electronic Hardware Technology Park for supply of goods to similar such unit or to a unit in Domestic Tariff Area and also payments received in foreign exchange by a unit in Domestic Tariff Area for supply of goods to a unit in Special Economic Zone (SEZ);

iii) payments received by an exporter from an account maintained with an authorised dealer for the purpose of counter trade, in accordance with the approval granted in terms of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015, as amended from time to time;

iv) advance remittance received by an exporter towards export of goods or services;

v) payment received for export of goods and services from India, out of funds representing repayment of State Credit in U.S. dollar held in the account of Bank for Foreign Economic Affairs, Moscow, with an authorised dealer in India;

(vi) Professional earnings including director’s fees, consultancy fees, lecture fees, honorarium and similar other earnings received by a professional by rendering services in his individual capacity.

(2) For the purpose of the sub-paragraph (1), payment received through an international credit card for which reimbursement will be provided in foreign exchange may be regarded as a remittance through banking channels.

2. Permissible credits to EEFC account

Following credits may be made to an EEFC Account, namely –

i) Inward remittance/ payment received by the recipient in foreign exchange subject to the provisions of paragraph (1);

ii) Interest earned on the funds held in the account;

iii) Re-credit of unutilised foreign currency earlier withdrawn from the account;

iv) Amount representing repayment by the account holder’s importer customer, of loan/ advances granted in terms of clause (iv) of Paragraph 3.

v) Representing the disinvestment proceeds received by the resident accountholder on conversion of shares held by him to ADRs/ GDRs under the DR Scheme, 2014 approved by the Government of India

3. Permissible debits to the EEFC account

Following debits may be made to an EEFC Account, namely -

i) Payment outside India towards a current account transaction in accordance with the provisions of theForeign Exchange Management (Current Account Transactions) Rules, 2000 and towards a capital account transaction permissible under the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000.

ii) Payment in foreign exchange towards cost of goods purchased from a 100 percent Export Oriented Unit or a Unit in (a) Export Processing Zone or (b) Software Technology Park or (c) Electronic Hardware Technology Park

iii) Payment of customs duty in accordance with the provisions of Export Import Policy of Central Government for the time being in force.

iv) Trade related loans/ advances, by an exporter holding such account to his importer customer outside India, subject to compliance with the Foreign Exchange Management (Borrowing and Lending in Foreign Exchange) Regulations, 2000.

v) Payment in foreign exchange to a person resident in India for supply of goods/ services including payments for air fare and hotel expenditure.

4. Miscellaneous:-

i) There is no restriction on withdrawal in rupees of funds held in an EEFC account. However, the amount so withdrawn in rupees cannot be re-credited to the account.

ii) Authorised dealer may issue cheque books of separate series with the superscription “EEFC Account” to the account holders maintaining such accounts, and also satisfy himself while honouring the cheques that the payment made by the account holder by issue of a cheque is permissible under these Regulations.

(iii) Resident individuals are permitted to include resident relative(s) as a joint holder(s) in their EEFC account on ‘former or survivor’ basis. However, such resident Indian relative(s) shall not be eligible to operate the account during the life time of the resident account holder.

Explanation – For the purpose of this sub-regulation, ‘relative’ means relative as defined in section 2(77) of theCompanies Act, 2013.

SCHEDULE II

[See Sub–regulation (E) of Regulation 4]

Diamond Dollar Account (DDA) Scheme

1. Firms and companies may open and maintain DDA with AD Category–I banks, subject to the following terms and conditions:-

a) The exporter should comply with the eligibility criteria stipulated in the Foreign Trade Policy of the Government of India, issued from time to time.

b) The DDA shall be opened in the name of the exporter and maintained in US Dollars only.

c) The account shall only be in the form of current account and no interest should be paid on the balance held in the account.

d) No intra-account transfer should be allowed between the DDAs maintained by the account holder.

e) An exporter firm/ company shall be permitted to open and maintain not more than 5 DDAs.

f) The balances held in the accounts shall be subject to Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements.

g) Exporter firms and companies maintaining foreign currency accounts, excluding EEFC accounts, with banks in India or abroad, are not eligible to open Diamond Dollar Accounts.

2. Permissible Credits:-

i. Amount of pre-shipment and post-shipment finance availed in US Dollars.

ii. Realisation of export proceeds from shipments of rough, cut, polished diamonds and diamond studded jewellery.

iii. Realisation in US Dollars from local sale of rough, cut and polished diamonds.

3. Permissible Debits:-

i. Payment for import/ purchase of rough diamonds from overseas/ local sources.

ii. Payment for purchase of cut and polished diamonds, coloured gemstones and plain gold jewellery from local sources.

iii. Payment for import/ purchase of gold from overseas/ nominated agencies and repayment of US Dollars loans availed from the bank.

iv. Transfer to rupee account of the exporter.

The above transactions are subject to the provisions of the Foreign Trade Policy of Government of India, issued from time to time.

4. Application Procedure:-

The exporter firm/ company shall make an application in the format annexed to the AD Category – I bank for opening of the DDA. AD Category – I banks should assess the track record of the firm / company at the end of every licensing year (April-March). In case any firm/ company fails to meet the eligibility criteria, the account may be closed immediately.

APPLICATION FOR OPENING DIAMOND DOLLAR ACCOUNT/S

To,

The Branch Manager/ (name & address of AD bank/branch)

Dear Sir,

We are dealing in purchase/ sale of rough or cut and polished diamonds / precious metal jewellery plain, minakari and/ or studded with/ without diamond and/or other stones, with a track record of at least 2 years in import / export of diamonds / coloured gemstones / diamond and coloured gemstones studded jewellery /plain gold jewellery, and having an average annual turnover of ₹ 3 crore or above during preceding three licensing years.

2. We wish to open a current account/s under the Diamond Dollar Account Scheme with your bank in accordance with the provisions of (mention the relevant paragraph) of the Foreign Trade Policy (period e.g. 2009-2014) of the Government of India read with the Handbook of Procedures (mention the relevant Volume No.) issued by Ministry of Commerce & Industry, Government of India.

3. The relevant particulars are furnished below:

i) Name of the Firm / Company:

ii) Address of the Registered Office:

iii) Principal business:

iv) IE Code No. :

v) Annual Turnover of the last two Years (enclose certificate of CA):

vi) Details of the EEFC account, if any :

4. We confirm that we are not maintaining any foreign currency account, excluding EEFC account, with banks in India or abroad.

5. We declare that we are not maintaining more than 5 DDAs including the one proposed to be opened with your branch.

6. We declare that we are neither on the caution list of exporters of Reserve Bank of India nor on the defaulters list of Export Credit Guarantee Corporation of India Ltd (ECGC).

7. We undertake to abide by the rules of the Diamond Dollar Account Scheme framed / to be framed from time to time and the terms and conditions stipulated for opening and maintenance of the DDA with your bank and any other foreign exchange / foreign trade regulation of Reserve Bank of India / Government of India.

We request you to open a Diamond Dollar Account/s in the name of the firm/company.

(Signature of the Authorized Official of the firm / company)

Name :

Designation :

Seal of firm / company:

Date :

Place:

[F. No. 1/31/EM/2016]

B. P. KANUNGO, Principal Chief General Manager

Notification No. : F. No. Q.23016/6/2015-Ad.IC(AAR) Dated: 21-1-2016


Advance Rulings (Procedure for Appointment as Chairman and Vice-Chairman) Rules, 2016 – F. No. Q.23016/6/2015-Ad.IC(AAR) – Dated 21-1-2016 – Income Tax

 

MINISTRY OF FINANCE

(Department of Revenue)

NOTIFICATION

New Delhi, the 21st January, 2016

G.S.R. 100(E).-In exercise of the powers conferred by sub-section (3) of Section 245-O, read with subsection (1) and clause (p) of sub-section 2 of Section 295 of the Income-tax Act, 1961 (43 of 1961), the Board hereby makes the following rules, namely:-

1. Short title and commencement.-

(1) These rules may be called the Authority for Advance Rulings (Procedure for Appointment as Chairman and Vice-Chairman) Rules, 2016

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

2. Definitions.- In these rules, unless the context otherwise requires,-

(a) “Act” means the Income-tax Act, 1961 (43 of 1961);

(b) “Chairman” means the Chairman of the Authority;

(c) “Vice-Chairman” means the Vice-Chairman of the Authority;

(d) words and expressions used and not defined in these rules but defined in the Act shall have the meanings respectively assigned to them in the Act.

3. Method of appointment.-

(1) Vacancy shall be circulated through open advertisement and applicants shall be asked to forward complete application through Registrar of Supreme Court or High Court, as the case may be.

(2) For the purpose of appointment to the post of Chairman and Vice-Chairman, there shall be a Selection Committee consisting of the following members, namely:-

(a) the Chief Justice of India or a Judge of the Supreme Court as nominated by the Chief Justice of India as Chairman;

(b) the Secretary to the Government of India in the Ministry of Finance, Department of Revenue;

(c) the Secretary to the Government of India in the Ministry of Law and Justice, Department of Legal Affairs;

(d) the Secretary to the Government of India in Ministry of Personnel, Public Grievances and Pensions, Department of Personnel and Training.

(3) Any three members of the Selection Committee including the Chairman shall form a quorum for the meeting of the Committee.

(4) The Selection Committee may devise its own procedure for selection and appointment of the Chairman and the Vice-Chairman.

(5) The Selection Committee shall recommend a panel of three names in order of priority for appointment of Chairman and Vice-Chairman.

4. Medical fitness.-No person shall be appointed as a Chairman or Vice-Chairman unless he is declared medically fit by a Medical Board to be constituted by the Central Government for the purpose.

[F. No. Q.23016/6/2015-Ad.IC(AAR)]

S. BHOWMICK, Under Secy.

MAT imposition has slowed down growth of SEZs: Nirmala Sitharaman : 21-01-2016


Noting that imposition of minimum alternate tax (MAT) and Dividend Distribution Tax (DDT) has led to a slowdown in the SEZ sector, the Commerce Ministry today said it has taken up the issues with its Finance counterpart.

Noting that imposition of minimum alternate tax (MAT) and Dividend Distribution Tax (DDT) has led to a slowdown in the SEZ sector, the Commerce Ministry today said it has taken up the issues with its Finance counterpart.

These issues were discussed during the meeting of members of Export Promotion Council for EOUs and SEZs (EPCES) and Commerce Minister Nirmala Sitharaman here yesterday.

The minister “informed that due to imposition of MAT/DDT, there has been slowdown in the SEZ sector in terms of growth in SEZs,” an official statement said.

It said the ministry is in the process of identifying the reasons for this slowdown in the sector.

“The Minister assured the members of the delegation that the ministry has already taken up this issue with Ministry of Finance,” it added.

The industry is demanding roll back or reduction in these taxes to boost exports from special economic zones (SEZs).

The Commerce Minister also assured to look into the matter raised by the industry regarding preferential rates of free trade agreements to import from SEZs by domestic tariff area (domestic market), use of land in non-processing area, and dual use of land in non-processing area.

In the meeting, EPCES Chairman P C Nambiar said that the imposition of MAT and DDT has dented the investor friendly image of SEZs, created uncertainty in the minds of foreign and domestic investors and has adversely affected the growth, investments, employment and exports from SEZs.

It has also resulted in loss of valuable foreign exchange earning of the country.

“He requested that MAT should be totally withdrawn or at least reduced to its original rate of 7.5 per cent,” it said.

As regards proposal for abolition of all direct tax benefits for SEZs not operationalized before April 2017, Nambiar informed that Central Board of Direct Taxes is considering this proposal.

It was requested to extend the sunset clause on SEZs up to 2023.

“The Commerce Minister informed that the issue has already been taken up with Finance Minister to remove the sunset clause on SEZs. Nasscom has also taken up this issue,” the statement said.

During April-September this fiscal, exports from these zones stood at Rs 2.21 lakh crore as against Rs 4.63 lakh crore in 2014-15.

During the first half of this fiscal, these zones generated jobs for 15.44 lakh people.

Source : The Hindu

No. F.No.390/Misc./163/2010-JC Dated: 21-1-2016


Report in respect of withdrawal of department’s appeals pending before High Court / CESTAT on the basis of ; (i) enhanced monetary limit and (ii) earlier Supreme Court’s decision on the identical matters – Dated 21-1-2016 – Central Excise

F.No.390/Misc./163/2010-JC

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

New Delhi , 21st January ,2016

To,

1. All Principal Chief Commissioners / Chief Commissioners and Directors General under the Central Board of Excise and Customs.

2. CC (AR), Customs, Excise & Service Tax Appellate Tribunal.

3. All Principal Commissioners /Commissioners of Customs/Central Excise/Service Tax/All Joint Chief Departmental Representatives/Commissioner, Directorate of Legal Affairs.

4. webmaster.cbec@icegate.gov.in

Sir/ Madam,

Subject: Report in respect of withdrawal of department’s appeals pending before High Court / CESTAT on the basis of ; (i) enhanced monetary limit and (ii) earlier Supreme Court’s decision on the identical matters – regarding

I am directed to invite your kind attention towards the Board’s Instructions of even no. dated 17.12.2015 & F. No. 390/Misc./67/2014-JC dated 18.12.2015 on the above mentioned subject.

In this regard, all the Principal Chief Commissioners/ Chief Commissioners were required vide instruction dated 18.12.2015 to furnish a monthly report in the prescribed format enumerating the number of cases reviewed on the basis of earlier Supreme Court’s decision on the identical matters and the appeals withdrawn on this account to the Board .

Further in this regard, Board’s letter of even number dated 01.01.2016 may also be referred to, wherein it was informed that the instructions dated 17.12.2015 will also apply to all pending appeals in the High Courts/ CESTAT. Vide the Board’s letter dated 01.01.2016, all the Principal Chief Commissioners/ Chief Commissioners were required to take immediate necessary action for cases which are below the new threshold limits subject to the conditions ibid.

In view of above the report regarding action taken in compliance of the said instructions dated 17.12.2015 and18.12.2015 may be sent to the Board by return fax.

(Rohit Singhal)

Dy. Secretary (Review)

Jaitley says GST cap cannot be mentioned in Bill : 21-01-2016


In signs of no thaw with Congress on Goods and Services Tax (GST), finance minister Arun Jaitley on Wednesday described as preposterous the opposition party’s demand for putting a cap on tax rate in the constitution amendment Bill saying nowhere in the world tariffs are mentioned in the statute.

“Three new propositions are now raised (by Congress) including a preposterous one that tariff must be mentioned in Constitution of India. Now if they can tell me that anywhere else in the world this happens that tariffs are mentioned in Constitution… So every time there is a drought, flood and you need to increase the tax rate, you have to first go to all states in India to change the tax rate. This is something which is just not possible,” he said.

“GST is certainly going to come. I have already conveyed to Congress leaders that I am willing to go to the states for the one per cent thing. I have privately conveyed that and I have no hesitation in admitting that publicly,” Jaitley said at a discussion organised by NDTV at the World Economic Forum in Davos.

With global headwinds hitting emerging markets as well, the FM said volatility has become a global norm, but India can certainly grow at 8-9 per cent in a friendlier global climate. “Certainly, the world is facing a difficult and challenging situation. I don’t think we are going into extreme conditions because there is predictability but volatility today is the norm and no country is immune to it,” he said.

Admitting that exports have shrunk and markets are going through turmoil, Jaitley said the government is always trying to prepare itself to meet such challenges. “The fact is we are (the) fastest growing economy, but we can do much better. Given a better climate and global situation, we can do much better. In a friendly global environment, we can do it (8-9 per cent). We had two bad monsoons while domestic and global issues impacted several sectors and that in turn has impacted banks. We are growing at 7-7.5 per cent. In a more favourable environment, getting an extra 1-1.5 per cent is not difficult,” he added.

The FM said, “Oil prices have helped India replan the government expenditure. One of the biggest reforms that have happened today is rationalisation of subsidies”.

As bad debts weigh down on banks, Jaitley said the process to de-stress the banks has been initiated while the government may add to the re-capitalisation of public sector lenders.

“More things are being done. Steps are being taken for recapitalisation of banks. We have announced the programme and we probably will have to add to that programme,” Jaitley said.

“Besides, RBI has asked banks to line up the bad debts they need to sell. The problem is not widespread and is limited to a few sectors… I am aware that both private and public sector banks are in touch with the concerned industry groups. We do not want to create a panic situation. Destressing of banks need to be tackled and the process for the same has been initiated,” he added.

Source : Business Standard

No. F. No. 96/41/2015-CX.I Dated: 7-1-2016


F.No. 96/41/2015-CX.I

Government of India

Department of Revenue

Ministry of Finance

Central Board of Excise and Customs

New Delhi, dated the 7th January, 2016

To

Principal Chief Commissioner / Chief Commissioner of Central Excise (All),

Principal Commissioner of Central Excise / Commissioner of Central Excise (All).

Web-master CBEC

Sir,

Subject:-Reference regarding proper certificate under Notification No. 108/95-Central Excise dated 28.08.1995

A reference was received from Minister of Road Transport Highways and Shipping, Government of India. Ministry has in its letter inter alia stated that,

  1. It has undertaken projects with the loan assistance of World Bank under National Highways Interconnectivity Improvement Programme (NHIP).
  2. Central Excise duty for the goods required for the execution of works financed by International Funding Organisation like World bank is exempted  under  Notification  No. 108/95-Central  Excise, dated 28.08.1995(amended from time to time).
  3.  As per provision of this Notification, certificate for availing excise duty exemption  is  to  be  signed  by  Executive Head  of the  Project Implementing Authority and countersigned by an Officer not below the rank of a Joint Secretary to the Government of India, in the concerned line Ministry in the Government of India.
  4. In this regard different interpretations with regard to “line ministry” and “officer not below the rank of a Joint Secretary to the Government of India, in the concerned line Ministry” have been made by the field formation.
  5. It is requested that certificates issued by the concerned Superintending Engineer and countersigned by Chief Engineer in the rank of Joint Secretary in the Ministry of Road Transport & Highways, Government of India, should be honoured by the field formations.

2. The issue has been examined. The language of the notification is abundantly clear. As per the notification, ‘Line Ministry’ means a ministry in Government of India which has been so nominated with respect to a project by the Government of India in the Ministry of Finance (Department of Economic Affairs). Therefore, in this case, Ministry of Road Transport & Highways is the ‘Line Ministry’. As per another condition, certificate is to be countersigned by an officer not below the rank of a Joint Secretary to Government of India in such Ministry i.e. Line Ministry. The certificate countersigned by Chief Engineer in the rank of Joint Secretary in the Ministry of Road Transport & Highways satisfies the other condition.

3.  In view of the clarification given above, certificates issued by the concerned Superintending Engineer and countersigned by Chief Engineer in the rank of Joint Secretary in the Ministry of Road Transport & Highways, Government of India, should be honoured.

4.  Difficulty experienced, if any, in implementing the instruction should be brought to the notice of the Board. Hindi version would follow.

Santosh Kumar Mishra

Under Secretary to the Government of India

Panel on income tax for hiking TDS threshold limits : 20-01-2016


Direct Tax: Panel on income tax for hiking TDS threshold limits 

The committee appointed to examine simplification of income tax laws recommended raising the threshold limits for deduction of tax at source as also slashing the rate of withholding tax. ”Considering the importance of the long overdue revision of these puny limits, the Committee has recommended suitable hikes in such threshold limits,” the Justice (retired) R.V.Easwar Committee said in its draft report released here. It recommended “enhancement and rationalisation of the threshold limits and reduction of the rates of TDS (tax deducted at source)” and that “TDS rates for individuals and HUFs (Hindu undivided family) to be reduced to 5 percent as against the present 10 percent”. The panel said nearly 65 percent of the personal income-tax collected in India was through TDS, whose provisions need to be made less “tedious”, as they have remained over the years and, more tax friendly. It said TDS is applicable on “such tiny annual limits” like Rs.2,500 on payment of interest on securities and on interest on NSS accounts, Rs.5,000 for payment of interest on private deposits and commission or brokerage, and Rs.10,000 for payment of bank interest. The committee proposed raising the threshold for TDS to Rs.15,000 from Rs.2,500 annually and reducing the tax rate to 5 percent for interest on securities. For other interest earnings it recommended raising the limit to Rs.15,000 from the present Rs.10,000 for bank deposits, and Rs.5,000 for others. For payments to contractors, the panel has proposed raising the TDS limit from the current Rs.30,000 for single transaction and Rs.75,000 annually, to a Rs.1 lakh limit per annum. It has also recommended deferring implementation of Income Computation and Disclosure Standards (ICDS) to provide more time to taxpayers to deal with changes in law such as to the Companies Act, 2013, and the proposed Goods and Services Tax (GST) Act. The TDS threshold limit on rent income has been proposed to be raised from Rs.1.8 lakh annually to Rs.2.4 lakh. The threshold for fees for professional or technical services is recommended to be raised to Rs.50,000 from Rs.30,000, but it said the TDS rate here may retained at 10 percent. It suggested an increase in turnover limit for tax audit applicability from Rs. 1 crore to Rs.2 crore for business and Rs.1 crore for professionals. The committee has invited comments from the public till January 23, following which it will finalise the report’s first part by January 31. 

Source : The Economic Times

Budget 2016: To boost savings, Centre may axe NPS withdrawal tax : 20-01-2016


Budget 2016: The government is expected to remove tax that is currently levied on withdrawals from the National Pension System, finance ministry sources said. This exemption may come through in the Union Budget 2016-17 as the government looks to boost savings.

Finance minister Arun Jaitley is scheduled to present the Budget on February 29. Sector regulator Pension Fund Regulatory and Development Authority (PFRDA), in its pre-Budget inputs to the finance ministry, has suggested the need to exempt withdrawals from the NPS from taxation. At a meeting of the Financial Stability and Development Council chaired by Jaitley earlier this month, the PFRDA pitched for exemption from tax at time of final withdrawal under NPS, bringing it on par with tax treatment of Public Provident Fund and Employees’ Provident Fund.

NPS has asset under management of Rs 1.08 lakh crore and 94.68 lakh subscribers as on December 31, 2015, according to data from the National Pension System Trust.

State government employees accounted for Rs 51,913 crore of AUM under the NPS, while Central government employees’ AUM in the pension plan stood at Rs 44,752 crore, the data shows. Corporate sector contributed Rs 8,089 crore to the AUM under NPS.

At present, only subscribers’ contribution and accumulation to the NPS are exempt from tax, while any withdrawal from the scheme is taxable. Removing tax on NPS withdrawal is aimed at raising country’s savings as well as bringing tax treatment of this pension scheme in line with other options like PPF. In its report in last November, the 7th Pay Commission also pitched for tax exemption on withdrawals under NPS to make it on par with other pension schemes.

In a pre-Budget meeting with Jaitley last Tuesday, banks sought significant tax breaks from the government to promote savings, such as reducing maturity period for tax-free term deposit to 1 year, and increasing exemption limit on savings to Rs 2.5 lakh per annum from Rs 1.5 lakh per year.

The Budget for 2015-16 allowed additional tax deduction — over and above the limit of Rs. 1.50 lakh — on contribution of up to Rs 50,000 towards NPS.

The NPS has been implemented for all government employees, except armed forces, joining Central government on or after January 1, 2004. Most states and Union Territories have also introduced the NPS for their new employees. The NPS was opened to Indian citizens from May 1, 2009 on a voluntary basis. To make the NPS attractive, the PFRDA has introduced a number of changes such electronic opening of pension account, partial withdrawal up to 25 per cent of subscriber’s own contribution for specific purposes like children’s higher education, marriage, construction of house and specified illness.

Source : PTI

No. F.No.354/311/2015-TRU Dated: 20-1-2016


Report of the High Level Committee; recommendation regarding valuation of flats for levy of Service Tax – Dated 20-1-2016 – Service Tax

F. No. 354/311/2015-TRU

Government of India

Ministry of Finance

Department of Revenue

(Tax Research Unit)

20th January, 2016

To,

Principal Chief Commissioners of Customs and Central Excise (All)

Principal Chief Commissioners of Central Excise & Service Tax (All)

Principal Director Generals of Goods and Service Tax/System/CEI

Director General of Audit/Tax Payer Services,

Principal Commissioners/ Commissioners of Customs and Central Excise (All)

Principal Commissioners/Commissioners of Central Excise and Service Tax (All)

Principal Commissioners/Commissioners of Service Tax (All)

Principal Commissioners/Commissioners LTU/Central excise/Service Tax (Audit)

Sub: – Report of the High Level Committee; recommendation regarding valuation of flats for levy of Service Tax – reg.

Madam/Sir,

The undersigned is directed to say that, as announced by the Finance Minister in his Budget Speech 2014-15, the Ministry of Finance has set up a High Level Committee (HLC) to interact with trade and industry and ascertain areas where clarity on tax laws is required. It has been pointed out by the HLC that there is a divergence of view between Para 6.2.1 of the Education Guide 2012 and the CBEC Circular No. 151/2/2012-ST dated 10.2.2012 on how flats handed over to land owners are to be valued for the purpose of levy of service tax. The two views need to be reconciled. The HLC has opined that the guidelines communicated by the said Circular are more appropriate.

2. The issue has been examined. In a tri-partite construction business model, there are 3 parties involved:

i. The land owner;

ii. The builder/developer; &

iii. The contractor (who undertakes the construction).

Typically, in such a model, the land owner enters into an agreement with the builder, whereby, the land owner gives either land /development rights (to construct/develop a residential complex and sell flats/houses of such complex to buyers) to the builder. The builder/developer, in turn, agrees to assign a portion of the constructed area, in the form of flats in favour of the land owner. The remaining flats are sold by the builder/developer to various buyers. The builder/developer receives consideration for the construction service provided by him, from two categories of service receivers:

i. from landowner, in the form of land /development rights; and

ii. from other buyers, normally in the form of money.

3. According to the CBEC Education Guide on Taxation of Services, 2012 value of construction service provided to such land owner will be the value of the land when the same is transferred and the point of taxation will also be determined accordingly. However, Circular No. 151/2/2012-ST dated 10.2.2012 states that value of land / development rights in the land may not be ascertainable ordinarily and therefore, value, in the case of flats given to first category of service receiver, that is, the land owner, is determinable in terms of section 67(1)(iii) read withrule 3(a) of Service Tax (Determination of Value) Rules, 2006. Accordingly, the value of these flats would be equal to the value of similar flats charged by the builder/developer from the second category of service receivers. In case the prices of flats/houses undergo a change over the period of sale (from the first sale of flat/house in the residential complex to the last sale of the flat/house), the value of similar flats as are sold nearer to the date on which land is being made available for construction should be used for arriving at the value for the purpose of tax. Service tax is liable to be paid by the builder/developer on the ‘construction service’ involved in the flats to be given to the land owner, at the time when the possession or right in the property of the said flats are transferred to the land owner by entering into a conveyance deed or similar instrument(e.g. allotment letter).

4. The Circular dated 10.2.2012 is in accordance with the provisions relating to valuation as laid down in theFinance Act, 1994 and the Service Tax (Determination of Value) Rules, 2006. As regards the Education Guide, it has been clearly stated in the Education Guide, 2012 that it is merely an educational aid based on a broad understanding of a team of officers on the issues. It is neither a “Departmental Circular” nor a manual of instructions issued by the Central Board of Excise and Customs. To that extent it does not command the required legal backing to be binding on either side in any manner. The guide was released purely as a measure of facilitation so that all stakeholders could obtain some preliminary understanding of the new issues for smooth transition to the new regime. Hence, Circulars such as the present one would prevail over the Education Guide, 2012.

5. In view of the above, it is directed that in valuing the service of construction provided by a builder/developer to a landowner, who transfers his land/development rights to builder , for getting, in return, constructed flats/dwellings from builder/developer, the Service Tax assessing authorities should be guided by the said Board Circular dated 10.2.2012 and not the Education Guide.

6. All concerned are requested to acknowledge the receipt of this instruction.

Yours faithfully,

(Abhishek Verma)

Technical Officer (TRU)

Notification No. : F. No. 5/27/2013-IEPF (Part) Dated: 13-1-2016


 Commencement of sub-sections (5), (6) and (7) of section 125 of CA 2013 – F. No. 5/27/2013-IEPF (Part) – Dated 13-1-2016 – Companies Law

Government of India

Ministry of Corporate Affairs

Notification

New Delhi, the 13th January, 2016

S.O.  (E) - 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 13th day of January, 2016 as the date on which the provisions of sub-section (5), sub-section (6) [except with respect to the manner of administration of the investor Education and Protection Fund] and sub-section (7) of section 125 of the said Act shall come into force.

[File No. 5/27/2013-IEPF (Part)]

(Amardeep Singh Bhatia)

Joint Secretary to the Government of India

 

Centralized Processing Centre (CPC) Bengaluru awarded “ISO 9001:2008 standard for Quality Management System” Certificate by British Standards Institution (BSI) on 11 January 2016 : 19-01-2016


Centralized Processing Centre (CPC) Bengaluru awarded “ISO 9001:2008 standard for Quality Management System” Certificate by British Standards Institution (BSI) on 11 January 2016

The flagship project of Income Tax Department for processing of tax returns, Centralized Processing Centre (CPC) Bengaluru, has been awarded “ISO 9001:2008 standard for Quality Management System” Certificate by British Standards Institution (BSI) on 11 January 2016. The Certificate encompasses all business services and business enabler services of CPC. ISO 9001 is an international standard that specifies requirements for quality management system (QMS) addressing the principles and processes that surround the design, development and delivery of services. Organizations use this standard to demonstrate their ability to consistently provide services that meet customer and regulatory requirements.

Set up in 2009, this state of the art facility has already been certified as ISO 27001 compliant for its Information Security Management System in 2014 and ISO 15489 for its Records Management System in 2013. With ISO 9001 certification, the CPC Bengaluru has achieved the rare distinction of receiving three ISO certificates. Conformance to these internationally recognised standards ensures that the CPC is able to efficiently and accurately process Income Tax returns and expeditiously issue refunds.

As on 31.12.2015, the CPC has processed 3.27 crore returns, registering a growth of 18% over 2.65 crore returns processed during the corresponding period of the previous year. During the current year, the CPC has issued refunds in 1.81 crore cases out of which in 1.32 crore cases that is 73%, the refunds were issued within 30 days of filing of the returns by the taxpayers.

The Income Tax Department is committed to continuously improve the quality of tax payer services and enhance taxpayer satisfaction.

Source : The Hindu

Notification No. : 1/ 2016 Dated: 19-1-2016


Electronic Verification CODE (EVC) for electronically filed Income Tax Return – Additional Modes – 1/ 2016 – Dated 19-1-2016 – Income Tax

F No. 1/23/CIT(OSD)/E-filing- Electronic Verification /2015-16

Government of India

Ministry of Finance

Central Board of Direct Taxes

Directorate of Income Tax (Systems)

Notification No. 1/ 2016

New Delhi

Dated the 19th day of January 2016

Subject: Electronic Verification CODE (EVC) for electronically filed Income Tax Return – Additional Modes.

Explanation to sub rule  (3) of rule  12  of the Income tax Rules  1962, states that for the purposes of this sub-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). Further, Sub-rule (4) of Rule 12 of the Income Tax Rules 1962 states that 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 returns in the manners (other than the paper form) specified in column (iv) of the Table in sub-rule (3) and the report of audit or notice in the manner specified in proviso to sub-rule (2).

2.  In exercise of the powers delegated by the Central Board of Direct Taxes (‘Board’) under Explanation to sub rule 3 and sub-rule 4 of Rule 12 of the Income tax Rules 1962, the Principal Director General of Income-tax (Systems) lays down the procedures, data structure and standards for additional modes of generation of Electronic Verification Code in addition to EVC prescribed vide earlier Notification No. 2/2015 dated 13thJuly 2015 as under:

Additional Modes of Generation of EVC:

Case (5): Where the EVC (Electronic Verification Code) is generated by giving bank details to the e-filing website https://incometaxindiaefiling.gov.in

A facility  to pre-validate Bank account details will be provided to the assessee under Profile Settings menu in e-Filing website i.e. https://incometaxindiaefilinq.gov.in. Assessee has to provide the following bank account details : 1. Bank account number 2. IFSC  3. Email ID and 4. Mobile Number. These details provided by the assessee along with PAN and Name as per e-filing database will be validated against the details of taxpayer registered with bank. If the pre-validation is successfully completed, assessee can opt for “Generate EVC using bank account details” option while verifying the Income tax return.

Generated EVC will be sent by e-filing portal to taxpayer’s Email ID and/or Mobile Number verified from bank.

List of Banks   participating in this facility will be   as   provided   in https://incometaxindiaefiling.gov.in

Case (6): Where the EVC (Electronic Verification Code) is generated after Demat account authentication using Demat details registered with CDSL/ NSDL

A facility  to pre-validate Demat account details will be provided to the assessee under Profile Settings menu in e-Filing website i.e.https://incometaxindiaefiling.gov.in. Assessee has to provide the following Demat account details: 1. Demat account number 2. Email ID and 3. Mobile Number. These details provided by the assessee along with PAN and Name as per e-filing database will be validated against the details of taxpayer registered with depository (CDSL/NSDL). If the pre-validation is successfully completed, assessee can opt for “Generate EVC using Demat account details” option while verifying the Income tax return.

Generated EVC will be sent by e-filing portal to Email ID and/or Mobile Number verified from CDSL/NSDL.

The  Depositories  (CDSL/NSDL)  participating in this facility will be as provided in https://incometaxindiaefiling.gov.in.

3. Other Conditions

The additional mode of EVC generation will come into effect from the date of issue of this notification. All other condition shall remain same as specified in Notification No 2/2015 dated 13.07.2015 issued by Pr. DGIT (Systems), New Delhi.

4.  The mode and process for generation and validation of EVC and its use can be modified, deleted or added by the Principal DGIT (System)/ DGIT (System).

(Nishi Singh)

Pr. DGIT (Systems), CBDT

No. 2/2016 Dated: 15-1-2016


Whether Hindu Undivided Family (HUF)/ its Karta can become partner/ Designated Partner (DP) in Limited Liability Partnership (LLP) – Dated 15-1-2016 – Companies Law

General Circular No. 2/2016

F.No.1/13/2012 CL-V

Government of India

Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhavan

Dr. R.P. Road, New Delhi-110001

Dated: 15th January, 2016

All the RDs,

All the ROCs/OLs

All stakeholders,

Subject: Whether Hindu Undivided Family (HUF)/ its Karta can become partner/ Designated Partner (DP) in Limited Liability Partnership (LLP).

Sir,

Reference  is  invited to General Circular No. 13/2013 wherein,  in paragraph 2, it has been clarified that ‘as persection 5 of LLP Act, 2008 only an individual or body corporate may be a partner in a Limited Liability Partnership. A HUF cannot be treated as a body corporate for the purposes of LLP Act, 2008. Therefore, a HUF or its Karta cannot become partner or designated partner in LLP’.

2. However, the clarification inadvertently does not mention partner in the last sentence of the paragraph quoted above which has been pointed out by a stakeholder. It is hereby clarified that a HUF or its Karta cannot become partner or designated partner in LLP.

3. This issues with the approval of the Secretary, MCA.

Yours faithfully,

(Kamna Sharma)

Deputy Director

Notification No. : 2/2016 Dated: 15-1-2016


Seeks to further amend notification No 12/2012-Central Excise dated 17.03.2012 so as to increase the Basic Excise Duty rates on Petrol and Diesel(both unbranded and branded) – 2/2016 – Dated 15-1-2016 – Central Excise – Tariff

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 2/2016-Central Excise

New Delhi, the 15th January, 2016

G.S.R. 77 (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 G.S.R. 163(E), dated the 17th March, 2012, namely: -

In the said notification, in the Table,-

(i) in serial number 70,-

(a) against item (i) of column (3), for the entry in column (4), the entry “Rs. 8.48 per litre” shall be substituted;

(b) against item (ii) of column (3), for the entry in column (4), the entry “Rs. 9.66 per litre” shall be substituted;

(ii) in serial number 71,-

(a) against item (i) of column (3), for the entry in column (4), the entry “Rs. 9.83 per litre” shall be substituted;

(b) against item (ii) of column (3), for the entry in column (4), the entry “Rs. 12.19 per litre” shall be substituted;

2. This notification shall come into force with effect from the 16th day of January, 2016.

[F. No.354/123/2014 -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 was last amended vide notification No.1/2016-Central Excise, dated the 1st January, 2016 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 1(E) dated the 1st January, 2016.

Notification No. : F.No. 05/27/2013-IEPF Dated: 13-1-2016


Investor Education and Protection Fund Authority (Appointment of Chairperson and Members holding of meetings and provision for offices and officers) Rules, 2016 – F.No. 05/27/2013-IEPF – Dated 13-1-2016 – Companies Law

GOVERNMENT OF INDIA

MINISTRY OF CORPORATE AFFAIRS

Notification

New Delhi. the 13th January  2016

G.S.R. (E).- In exercise of the powers conferred by sub-sections (5), (6) and (7) of section 125 read with section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules, namely:-

1.  Short title, extent and commencement. - (I) These rules may be called the Investor Education and Protection Fund Authority (Appointment of Chairperson and Members holding of meetings and provision for offices and officers) Rules, 2016.

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

2.  Definitions.- (I) In these rules, unless the context otherwise requires.

(a) “Act” means the Companies Act 2013:

(b) “Authority” means the Investor Education and Protection Fund Authority constituted under sub-section (5) of section 125 of the Act:

(c) “Chairperson” means the chairperson of the authority appointed under rule (5) of these rules:

(d) “Company” means company as defined in sub-section (20) of section 2 of the Act and includes ‘corresponding new bank’ as defined in sub-section (d) of section 2 of the Banking Companies (Acquisition and ‘Transfer of Undertakings) Act. 1970 (5 of 1970) and clause (b) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act. 1980 (40 of 1980):

(e) “Fund” means the Investor Education and Protection Fund (IEPF) established under section 125 of theAct:

(f) “Investor” means any person, who has committed money in shares, or debentures, bond or deposits under a scheme or plan of a company registered under the Act:

(g) “Member” means members of the Authority appointed under sub-section (6) of section 125 of the Act: and

(h) “Section” means the section of the Act.

(2) Words and expressions used in these rules and not defined herein but defined in the Act or in theCompanies (Specification of Definitions Details) Rules, 2014, shall have the same meanings respectively assigned to them in the Act or in the said rules.

3. Establishment of the Authority.- The Authority shall be established on such date as may be notified by the Central Government.

4. Composition of the Authority.- (1) The Authority shall consist of the following, namely :-

(a) Chairperson

(b) six members

(c) Chief Executive Officer

(2) The Chief Executive Officer shall be the convenor of the Authority.

5. Chairperson of the Authority.- The Secretary. Ministry of Corporate Affairs shall be the ex-officio Chairperson of the Authority.

6. Chief Executive Officer of the Authority.- The Central Government shall appoint a person to be the Chief Executive Officer of the Authority.

7. Members of the Authority.- The Central Government may appoint the following as the members of the Authority, namely:

(i) a person not below the rank of Executive Director to be nominated by the Reserve Bank  of India as ex-officio member:

(ii) a person not below the rank of Executive Director to be nominated by the Securities  and Exchange Board of India as ex-officio member:

(iii) four persons having special knowledge and experience of not less than fifteen years, in  finance, management. accountancy or law with one person from each discipline and such person shall have special knowledge, or professional experience, which shall in the opinion of the Central Government shall be useful to the Authority.

8.  The term of office of members of the Authority.- (I) The members of the Authority appointed under clause (iii) of rule 7 shall hold office for a period of three years and shall be eligible for reappointment;

Provided that no member shall hold office for more than three terms.

Provided further that a member shall be eligible for reappointment after expiration of cooling off period of three years also his term.

(2) Notwithstanding anything contained In sub-rule (1), the Central Government shall have the right to terminate the services of a member appointed under clause (iii) of rule 7, at any time before the expiry of the period specified under sub-rule (I). by giving him notice of not less than three months in writing for reasons mentioned in sub-rule (4), and a member shall also have the right to relinquish his office, at any time before the expiry of the period specified under sub-rule  (1), by giving to the Central Government notice of not less than three months in writing.

(3) The members appointed under clause (iii) of rule 7 shall hold office for a period of three years or till attaining the age of 65 years whichever is earlier.

(4) The Central Government shall remove a member From office if he  -

(a) is, or at any time has been, adjudicated as insolvent:

(b) is of unsound mind and stands so declared by a competent court:

(c) has been convicted of an offence which, in the opinion of the Central  Government, involves a moral turpitude;

(d) has, in the opinion of the Central Government, so abused his position as to  render his continuation in office detrimental to the public interest.

Provided that no member shall be removed under this sub-rule unless he has been given a reasonable opportunity of being heard in the matter.

9.  The number of officers and employees of the Authority.-The Authority shall have such number of officers and other employees for rendering secretarial assistance and for its day to day functions as are set out in Schedule 1 to these rules.

10. Functions of the Authority.- (I) Subject to the provision of the Act, the Authority shall have the duty to administer the Fund for Investor Education and Protection.

(2) The general management of the affairs of the Authority shall vest in the Chief Executive Officer, who may exercise powers, which may be authorised by the Authority.

(3) The Chief Executive Officer shall function under superintendence and direction of the Chairperson.

(4) Without prejudice to the generality of ‘the provisions, the functions o the Authority shall include the following, namely:-

(a)  The Authority may constitute permanent Committees for Overseeing its functions:

(b) Each Committee shall comprise two members. Chief’ Executive Officer and  concerned functional head, who shall be the secretary of the Committee. The Committee shall be headed by an ex-officio member:

(c) The Committee may invite experts with special knowledge and expertise. as  and when required to assist it on any specific issue:

(d) The Authority may outsource, if required, work related to Funds and Shares  Management.

(e) The broad functional divisions of the Authority shall be as per Schedule II to these rules.

11  Meetings.- (1) The Authority and its Committees shall meet at such tinges and places as it may consider necessary.

(2) The Authority and its Committees shall determine its own procedure fir holding of meetings.

(3) If the Authority or its Committees has to hold a meeting elsewhere than in New Delhi, the approval of the Chairperson of the Authority shall be obtained indicating the reasons thereof.

(4) The Authority and the Committees shall meet at least once in a quarter and at least four such meetings shall be held in a financial year:

Provided that not more than one hunched and twenty days shall intervene between two consecutive meetings.

(5) The meeting of the Authority shall be presided over by the Chairperson.

(6) If for any reason, the Chairperson is unable to attend a meeting, any other Member chosen by the Members present from amongst themselves at the meeting shall preside over the meeting.

(7) In case of difference in opinion on any question before the Authority, or any of its Committees, the views of the majority shall be taken as the final decision.

(8) More than fifty percent appointed Members of the Authority shall constitute the quorum for the  transaction of business at a meeting of the Authority.

(9) Two members of a Committee shall constitute the quorum for the transaction of business at a meeting of the Committee.

(10) For journeys performed by a non-official member of the Authority or Committee or a special invitee in connection with the work of the Authority or Committee, the actual expenditure for attending the meeting shall be reimbursed, subject to maximum of’ such expenditure limit applicable to a Senior Administrative Grade officer of Government of India.

12.  Member not to participate in meetings in certain cases.- A member. who has any pecuniary interest, direct or indirect in any matter that is brought up for consideration at a meeting of  the Authority and its Committees, shall, as soon as possible after relevant circumstances have come to his knowledge, disclose the nature of his interest at such meeting and such disclosure shall be recorded in the proceedings of the Authority and its Committees, and the member shall not take any part in any deliberation or decision of the Authority and its Committees with respect to that matter.

13.  Vacancies, etc., not to invalidate proceedings of Authority.- No act or proceeding of the Authority and its Committees shall be invalid merely by reason of-

(a) any vacancy in, or any defect in the constitution of the Authority and its Committees;

(b) any defect in the appointment of a person acting as a member of the Authority and its Committees;

(c) any  laches in the procedure of the Authority and its Committees not affecting the merits of the case.

14.  Protection of action taken in good faith. – No suit, prosecution or other legal proceedings shall lie against the Central Government or Authority or any officer of the Central Government or any member, officer or other employee of the Authority for anything, which is in good faith done or intended to be clone under these rules.

Schedule I

 S. No. Designation Pay Scale Number of posts
1. General Manager PB-4 + GP ₹ 8700 01
2. Assistant General Manager PB-3 + GP ₹ 5400 01
3. Senior Accounts Officer PB-3 + GP ₹ 5400 01
4. Assistant Account Officer PB-2 + GP ₹ 4800 02

Schedule II

Functional Divisions of the Authority

(1) Administration:

(i) Establishing, equipping. maintaining and operating administrative functions as  may be necessary or deemed expedient for fulfilling the objects of the Fund.

(ii) Authority and committees of Authority, related matters.

(2) Investment/ funds Management:

(i) Maintaining funds standing to the credit of fund, investing the same in interest bearing account of any nationalised bank.

(ii)  Opening of depository account of authority and transferring into the account securities of investor and transferring to investors account securities upon settlement of the claim.

(3) Claims and Settlement:

(i) Making refunds to eligible investors after following due procedure in respect of claims lodged by investors in accordance with clause (a) of- sub-section (3) of section 125 of the Act and rules made thereunder.

(ii) Distribution of disgorged amount as per the order of the court or the Authority.

(iii) Distribution of disgorged amount in consultation with Legal and Enforcement Division, to eligible and identified security holders who have suffered losses due to any wrong actions of any person in accordance with the order of Tribunal or order of the Authority, as the case may be. The amount to be distributed shall be limited to amount disgorged in respect of any particular order and no other funds can be used for distribution.

(4) Legal and Enforcement:

(i) Initiation of legal cases against non-compliant companies or persons.

(ii) Handling disputes and legal cases arising out of claims or settlement of any other dispute.

(iii) Reimbursement of funds from Fund for meeting legal expenses incurred in pursuing class action suits under section 37 and 245 of the Act by members, debenture holders or depositors as sanctioned by Tribunal in accordance with the procedure prescribed in this regard.

(5) Investor Education and Protection:

(i) Registering associations or institutions or professional bodies or chambers of commerce and industry or other organisations engaged in investor education and protection activities.

(ii) Sanctioning grants to the registered entities for-seminars, programmes  projects or activities in the field of corporate `governance. Investors’ Education and Protection including research activities.

(iii) Monitoring of the utilisation of the grants to ensure the achievements of the objectives of the sanctioning of the grants.

(iv) Cooperating and collaborating with institutions engaged in Investor education corporate governance, awareness, and protection activities.

(v)  Conducting on its own or in collaboration with entities engaged in Investor education and protection or academic institutions or other regulated entities like  Stock Exchanges, Depositories, Banks and Mutual funds nationwide investors’  education and awareness programmes including seminars and symposia.

(vi) Setting  up of institutional  arrangements or  infrastructure  for taking  up  programmes: projects and action plans keeping in view the objectives and  expenditure relating thereto, including research and training activities.

(vii) Publishing and disseminating information tier investors’ benefit and objects and achievements of the Fund.

(viii) Advising Central Government on the issues related to Investors’ interest.

(ix) Sponsor specific studies or research or analysis for the development of capital market.

(6) Finance, Accounts and Audit:

(i) Maintenance of accounts of inflow and outflows of funds.

(ii) Reconciliation of accounts of investors.

(iii) Preparation of all accounting reports. audit work and annual report.

(iv) Returns to Central Government.

(v) Preparation of budget of authority and its monitoring.

(vi) Accounting for all claims of investor in respective accounts.

(vii) Procedure For accounting of investors’ funds and securities.

(7) the Chairperson may re-allocate functions, merit or sub-divide divisions as per administrative requirement.

[F. No. 05/27/2013-IEPF]

Manoj Kumar, Joint Secretary

 

CII summit: Govt committed to reforms; will push GST, other bills, says Venkaiah Naidu : 122-01-2016


The government today assured industry that all efforts will be made for the passage of Goods and Services Tax (GST) and other Bills as it is committed to reforms and ease of doing business.

“The government is very keen, that is why we are pushing one reform after another. I can assure you that in the coming days also the Real Estate Development and also the GST, both of them are going to become a reality, because the entire country wants it and it will accelerate the growth of the country,” Parliamentary Affairs Minister M Venkaiah Naidu said.

The Real Estate Development Bill seeks to provide uniform regulatory environment to ensure speedy adjudication of disputes and orderly growth of the real estate sector. It aims to boost domestic and foreign investment in the sector.

The Goods and Services Tax (GST) Bill is stuck in the the Rajya Sabha on account of stiff opposition by the Congress party.

Addressing the CII partnership Summit, Naidu invited both the domestic and foreign investors to participate in Make in India, Skill India, Clean India and Digital India initiatives of the Centre.

“I can assure you that the government at the Centre will accelerate the reform and we are committed to that,” he said.

He said that India is going for a big transformation and foreign investors are looking at India with hope.

“There is a growing confidence everywhere. Centre and states are working like a Team India. We have proper climate. … You (industry) are all welcome to invest,” he added.

Inviting investors in Andhra Pradesh, Naidu said huge development of infrastructure is happening in areas like agriculture, roads, railways, highways, ports and airports.

He said that HUDCO is going to sign an expression of interest of Rs 7,500 crore with the state for the development of the new capital city.

Talks are also at advance stage on the construction of metro network in Visakhapatnam and Vijaywada, said Naidu, who is also the Minister for Urban Development.

Regarding Vijaywada metro, he said, detailed project report is being prepared and in-principle nod has been given, he said, adding that talks are on for the development of inland waterways.

On the request to include the new capital city of Andhra Pradesh in the list of smart cities, he said: “We will consider it positively.”

Source : PTI

No. 01/2016 Dated: 12-01-2016


FAQ_CSR

CII summit: Govt committed to reforms; will push GST, other bills, says Venkaiah Naidu : 12-01-2016


The government today assured industry that all efforts will be made for the passage of Goods and Services Tax (GST) and other Bills as it is committed to reforms and ease of doing business.

“The government is very keen, that is why we are pushing one reform after another. I can assure you that in the coming days also the Real Estate Development and also the GST, both of them are going to become a reality, because the entire country wants it and it will accelerate the growth of the country,” Parliamentary Affairs Minister M Venkaiah Naidu said.

The Real Estate Development Bill seeks to provide uniform regulatory environment to ensure speedy adjudication of disputes and orderly growth of the real estate sector. It aims to boost domestic and foreign investment in the sector.

The Goods and Services Tax (GST) Bill is stuck in the the Rajya Sabha on account of stiff opposition by the Congress party.

Addressing the CII partnership Summit, Naidu invited both the domestic and foreign investors to participate in Make in India, Skill India, Clean India and Digital India initiatives of the Centre.

“I can assure you that the government at the Centre will accelerate the reform and we are committed to that,” he said.

He said that India is going for a big transformation and foreign investors are looking at India with hope.

“There is a growing confidence everywhere. Centre and states are working like a Team India. We have proper climate. … You (industry) are all welcome to invest,” he added.

Inviting investors in Andhra Pradesh, Naidu said huge development of infrastructure is happening in areas like agriculture, roads, railways, highways, ports and airports.

He said that HUDCO is going to sign an expression of interest of Rs 7,500 crore with the state for the development of the new capital city.

Talks are also at advance stage on the construction of metro network in Visakhapatnam and Vijaywada, said Naidu, who is also the Minister for Urban Development.

Regarding Vijaywada metro, he said, detailed project report is being prepared and in-principle nod has been given, he said, adding that talks are on for the development of inland waterways.

On the request to include the new capital city of Andhra Pradesh in the list of smart cities, he said: “We will consider it positively.”

Source : The Hindu

Transfer pricing rules with wider ambit soon : 12-01-2016


The government might change transfer pricing provisions in Budget 2016-17 to ensure companies with overseas presence and consolidated revenue of more than Rs 5,000 crore comply with extensive data reporting and documentation.

Legislative changes in the Income Tax Act would be in line with the Base Erosion and Profit Shifting (BEPS) measures unveiled by the Paris-based think-tank, the Organisation for Economic Co-operation and Development (OECD), in October last year to curb tax evasion by multinational companies.

Called the new world order in taxation, BEPS will require Indian companies with overseas presence and consolidated annual revenue of more than Rs 5,000 crore in the previous financial year to furnish country-by-country reports (CBCR) to the Indian tax department as well as a master file and local file directly to the tax authorities of each country of operation. The Indian tax department would have to share the CBCR documents with tax authorities of other jurisdictions. The three-tiered standardised approach is among the 15 action points listed by BEPS to plug loopholes that allow companies to shift their profits to low-tax countries and debt to high-tax countries.

“Country-by-country reporting is a minimum standard under BEPS,” said a government official. “We will introduce it by making amendments in the I-T Act through the Finance Bill, 2016. Rules will follow that. It will mainly list the reporting requirements and those covered under these.”

The increased data reporting legislation will cover close to 200 companies in India. These companies will have to furnish details related to revenue, capital and taxes paid on a country-by-country basis.

“With CBCR set to be introduced in the Budget this year, compliance requirements will go up,” said Jayesh Sanghvi, national leader-international tax services, EY India. “It is possible that the structures prevalent within companies throw up red flags. Once the information is shared, companies might be on the receiving end of audits and demands. Companies will need to start remediating their structures to make sure they fall within the global system.”

The government is also working to put in place procedures and practices to enable speedy resolution of tax disputes through the mutual alternate procedure (MAP) route, via legislative and administrative changes in compliance with BEPS. India could also look at implementing best practices that facilitate effective MAP implementation, including suspension of collection of taxes during pendency of MAP proceedings, already covered under in tax treaties with the US, the UK, Canada and Denmark. “We are committed to a dispute-resolution mechanism. We will put in place procedures and practices to enable speedy resolution of tax disputes through MAP. If administrative or legislative changes are needed, we will implement those as well,” said the official.

BEPS action recommends resolution through MAP in two years or more under bilateral tax treaties.

On the controlled foreign company ( CFC) provision, which was also in the Direct Taxes Code, the government would tread carefully and might not carry out policy changes that would drastically affect Indian companies.

CFC regulations pertain to taxing undistributed incomes of foreign entities, which are tax resident of low-tax jurisdiction but controlled by Indians (distributed income is already taxed). It is one of the few Direct Taxes Code Bill provisions not yet introduced by the government.

Source : PTI

Budget 2016-17 to focus on rural economy, infrastructure, and banks : 11-01-2016


The government is readying a strategy to focus on infrastructure, agriculture and restoring the health of the banking system as well as specific measures to ease stress in the rural economy as part of the 2016-17 Budget.

According to the preliminary blueprint that has emerged during Budget discussions, the government plans to focus on these crucial areas to fire up growth and tackle the growing unease in the farm economy.

“There will be more attention on irrigation and agriculture. We are working out the numbers. We will have to address the problems in the rural economy which has borne the brunt of two consecutive droughts,” said a senior official who did not wish to be identified. “This is a very crucial Budget for the government,” he said, highlighting the need to take effective measures to revive vital sectors and overall growth.

The official also said that the infrastructure sector will see greater attention as the government is keen to step up investment despite a challenging fiscal situation. The government has already allocated Rs 5,300 crore to support micro-irrigation, watershed development and the Pradhan Mantri Krishi Sinchai Yojana and has urged states to chip in substantially in this vital sector. Sources say this effort will be stepped up in the current Budget.

The rural economy, a key driver of demand and a support for the broader economy, has taken a knock from the two back-to-back seasons of patchy monsoon rains. The segment drives demand for everything from motorcycles to tractors, televisions and refrigerators.
Finance minister Arun Jaitley has already signalled the government’s support by backing calls for raising investment in the crucial farm sector and leveraging technology to fire up growth.

“There have been demands that micro-irrigation be given infrastructure lending status. We are looking at several options to step up irrigation,” said the official, adding that reviving the farm sector was a top priority. Growth in the sector slowed down to 2.2% in the September quarter compared to a 2.1% expansion in the preceding quarter.

The next focus area would be infrastructure, where investment in 2015-16 was estimated to have gone up by Rs 70,000 crore, including funds from the Centre and state-run undertakings. Highways and roads have proved to be a success area and in the absence of private investment, indications are that the sector will receive special attention, including unveiling of some innovative financing schemes.

The health of the banking sector has been a sources of worry. The government has taken several measures, including pumping in Rs 70,000 crore to recapitalise state-run banks. Sources said there is a view within the government that more needs to be done to secure the health of the crucial sector.

Apart from the focus on crucial sectors, Jaitley’s Budget team is also working on the big numbers of the financial document, keeping in view the government’s commitment to meet the fiscal deficit target of 3.9% of the gross domestic product for the current fiscal year. Tepid revenues from stake sales in state-run firms and the possibility of shortfall in direct tax revenues have made the government’s job tougher but officials said the Budget is expected to have a clear statement on the road ahead.

Source : PTI

CBDT to review new taxpayer centric measures, tax collection : 11-01-2016


The CBDT will hold a high-level meeting with top Income Tax department officials this week to review the on-ground implementation of some of the recent initiatives announced by the government for a taxpayer- friendly regime and to widen the base of taxpaying people.

The CBDT will hold a high-level meeting with top Income Tax department officials this week to review the on-ground implementation of some of the recent initiatives announced by the government for a taxpayer- friendly regime and to widen the base of taxpaying people.

The meeting, scheduled for January 13, will be chaired by Central Board of Direct Taxes (CBDT) Chairman A K Jain and will be attended by other members of the board who will interact with all the regional IT department heads via video conferencing.

According to the agenda proposed for the meeting accessed by PTI, the top policy-making body of the Income Tax department will review the current status of revenue collection under the direct taxes category, prompt issuance of refunds upto Rs 50,000 in non-scrutiny cases and progress on the new project of holding scrutiny of cases through email and internet-based communication.

The meeting will also assess the progress made by IT department in adding new assesses under the initiative to add one crore new taxpayers this fiscal.

The inputs received by the CBDT after the meeting, officials said, will be used in preparation of the Union Budget.

The other subjects for review include the monitoring of pending legal cases and their effective disposal, implementation of recent orders for hike in monetary limits for appeal in the Income Tax Appellate Tribunal (ITAT) and High Courts, quick disposal of taxpayer grievances and status of scrutiny cases being worked out in the department.

In the last few months, the CBDT and the Finance Ministry have introduced a number of projects to bring about a system of non-adversarial tax regime and improve ease of doing business in the country.

Officials said the CBDT brass, during the meeting, is expected to direct the field offices of the department to speed up the pace of these initiatives while leaving no stone unturned to enhance overall revenue collections.

Source : The Hindu

Notification No. : S.O. 76(E) Dated: 5-1-2016


MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

NOTIFICATION

New Delhi, the 5th January, 2016

S.O. 76(E).-Whereas, M/s. State Industries Promotion Corporation of Tamil Nadu Limited (SIPCOT) 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 Leather Sector at State Promotion Corporation of Tamil Nadu Industrial Complex, Ranipet Phase – III, Mukuntharayapuram village, Walajah Taluk, Vellore 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 an area of 104.76.0 hectares at the above Special Economic Zone vide Ministry of Commerce and Industry Notifications Numbers S.O. 1992 (E), dated 27th November, 2007;

And, whereas, the Central Government, approved the request of M/s. State Industries Promotion Corporation of Tamil Nadu for change of sector from “Leather sector to Engineering Goods, vide letter dated 27th February, 2009;

And, whereas, M/s. State Industries Promotion Corporation of Tamil Nadu has now proposed for denotification of 50.60.7 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. 2 (D) No.9, dated 6th April, 2015;

And, whereas, the Development Commissioner, Madras Special Economic Zone has recommended the proposal for de-notification of an area of 50.60.7 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 theSpecial 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 50.60.7 hectares, thereby making resultant area as 54.15.3 hectares, comprising the survey numbers and the area given below in the table, namely:-

TABLE

S.No.

Survey No.

Area to de-notified (in Hectares)

1

87 Part

0.78.0

2

88 Part

1.98.2

3

89

3.97.5

4

99

3.86.5

5

100

3.09.0

6

101

4.46.0

7

102

4.81.0

8

103 Part

3.18.5

9

104

4.45.5

10

105

15.7.0

11

108

4.07.3

12

109(Part)

0.07.7

13

78/1

0.12.0

14

78/2

0.03.5

Total

50.60.7 hectares

Total Area of SEZ after above deletion

54.15.3 hectares

[F. No. F.1/53/2007-SEZ]

Dr. GURUPRASAD MOHAPATRA, Jt. Secy.

Notification No. : S.O. 76(E) Dated: 5-1-2016


MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

NOTIFICATION

New Delhi, the 5th January, 2016

S.O. 76(E).-Whereas, M/s. State Industries Promotion Corporation of Tamil Nadu Limited (SIPCOT) 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 Leather Sector at State Promotion Corporation of Tamil Nadu Industrial Complex, Ranipet Phase – III, Mukuntharayapuram village, Walajah Taluk, Vellore 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 an area of 104.76.0 hectares at the above Special Economic Zone vide Ministry of Commerce and Industry Notifications Numbers S.O. 1992 (E), dated 27th November, 2007;

And, whereas, the Central Government, approved the request of M/s. State Industries Promotion Corporation of Tamil Nadu for change of sector from “Leather sector to Engineering Goods, vide letter dated 27th February, 2009;

And, whereas, M/s. State Industries Promotion Corporation of Tamil Nadu has now proposed for denotification of 50.60.7 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. 2 (D) No.9, dated 6th April, 2015;

And, whereas, the Development Commissioner, Madras Special Economic Zone has recommended the proposal for de-notification of an area of 50.60.7 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 theSpecial 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 50.60.7 hectares, thereby making resultant area as 54.15.3 hectares, comprising the survey numbers and the area given below in the table, namely:-

TABLE

S.No.

Survey No.

Area to de-notified (in Hectares)

1

87 Part

0.78.0

2

88 Part

1.98.2

3

89

3.97.5

4

99

3.86.5

5

100

3.09.0

6

101

4.46.0

7

102

4.81.0

8

103 Part

3.18.5

9

104

4.45.5

10

105

15.7.0

11

108

4.07.3

12

109(Part)

0.07.7

13

78/1

0.12.0

14

78/2

0.03.5

Total

50.60.7 hectares

Total Area of SEZ after above deletion

54.15.3 hectares

[F. No. F.1/53/2007-SEZ]

Dr. GURUPRASAD MOHAPATRA, Jt. Secy.

Notification No.F. No. 1/40/2013-CL-V dated 31-12-2014


The Companies (Cost Records and Audit) Amendment Rules,2014. – F. No. 1/40/2013-CL-V – Dated 31-12-2014 – Companies Law

[TO BE PUBLISHED IN THE GAZETTE OF INDIA,

EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (I)]

GOVERNMENT OF INDIA

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, the 31st December, 2014

G.S.R…..(E). - In exercise of the powers conferred by sub-sections (1) and (2) of section 469and section 148 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules to amend the Companies (Cost Records and Audit) Rules, 2014, namely:-

1. (1) “These rules may be called the Companies (Cost Records and Audit) Amendment Rules, 2014.

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

2.  In the Companies (Cost Records and Audit) Rules 2014, -

(i) in rule 2, after clause (a), the following clause shall be inserted, namely:-

“(aa) “Central Excise Tariff Act Heading” means the heading as referred to in the Additional Notes in the First Schedule to the Central Excise Tariff Act, 1985 [5 of 1986]

(ii) for rule 3, the following rule shall be substituted, namely:-

“3.  Application of Cost Records.- For the purposes of sub-section (1) of section 148of the Act, the class of companies, including foreign companies defined in clause (42) of section 2 of the Act, engaged in the production of the goods or providing services, specified in the Table below, having an overall turnover from all its products and services of rupees thirty five crore or more during the immediately preceding financial year, shall include cost records for such products or services in their books of account, namely:-

Table

(A) Regulated Sectors

Sl. No.

Industry/ Sector/ Product/ Service

CETA Heading 
(wherever applicable)

1.

Telecommunication services made available to users by means of any transmission or reception of signs, signals, writing, images and sounds or intelligence of any nature (other than broadcasting services) and regulated by the Telecom Regulatory Authority of India under the Telecom Regulatory Authority of India Act, 1997 (24 of 1997);

Not applicable

2.

Generation,  transmission,  distribution and supply of electricity regulated by the relevant regulatory body or authority under the Electricity Act, 2003 (36 of 2003), other than for captive generation (referred to in the Electricity Rules, 2005);

——

3.

Petroleum  products regulated by the Petroleum and Natural Gas Regulatory Board under the Petroleum and Natural Gas Regulatory Board Act, 2006 (19 of 2006 ;

2709 to 2715;

4.

Drugs and pharmaceuticals;

2901  to 2942;  3001  to

3006.

5.

Fertilisers;

3102 to 3105.

6.

Sugar and industrial alcohol;

1701; 1703;2207

(B) Non-regulated Sectors

Sl. No. Industry/ Sector/ Product/ Service CETA   Heading (whereverapplicable)
1. Machinery and mechanical appliances used in defence,  space  and  atomic energy sectors  excluding any ancillary item or items;Explanation.  – For the purposes of this sub-clause, any company which is engaged in any item or items supplied exclusively for use under this clause, shall be deemed to be covered under these rules 8401 to 8402;  8801 to 8805; 8901 to 8908
2. Turbo jets and turbo propellers; 8411
3. Arms and ammunitions; 3601 to 3603; 9301 to 9306.
4. Propellant powders; Prepared explosives (other than  propellant   powders);   safety   fuses; detonating fuses; percussion or detonating caps; igniters; electric detonators; 3601 to 3603
5. Radar   apparatus,   radio   navigational   aid apparatus and radio remote control apparatus; 8526
6 Tanks and other armoured fighting vehicles, motorised, whether or not fitted with weapons and parts of such vehicles, that are funded (investment made in the company) to the extent of ninety per cent. or more by the Government or Government agencies; 8710
7 Port services of stevedoring, pilotage, hauling,. mooring,   re-mooring,  hooking,  measuring, loading and unloading services rendered by a Port in relation to a vessel or goods regulated by the Tariff Authority for Major Ports under section  III  of the Major Port Trusts Act, 1963(38 of 1963); Not applicable
8. Aeronautical services of air traffic management, aircraft  operations,  ground  safety services, ground handling, cargo facilities and supplying fuel rendered by airports and regulated by the Airports Economic Regulatory Authority under the Airports Economic Regulatory Authority of India Act, 2008 (27 of 2008); Not applicable.
9. Steel; 7201 to 7229; 7301 to 7326
10. Roads   and   other   infrastructure   projects corresponding to para No. (1) (a) as specified inSchedule VI of the Companies Act, 2013; Not applicable
11. Rubber and allied products being regulated by the Rubber Board constituted under the Rubber Act, 1947 (XXIV of 1947). 4001 to 4017
12. Coffee and tea; 0901 to 0902
13. Railway or tramway locomotives, rolling stock, railway  or  tramway  fixtures  and  fittings, mechanical  (including  electro  mechanical) traffic signalling equipment’s of all kind; 8601 to 8608
14. Cement; 2523; 6811 to 6812
15. Ores and Mineral products; 2502 to 2522;  2524 to 2526; 2528 to 2530; 2601 to 2617
16. Mineral fuels  (other than Petroleum), mineral oils etc.; 2701 to 2708
17. Base metals; 7401 to 7403;  7405 to 7413; 7419; 7501 to 7508; 7601 to 7614; 7801 to 7802; 7804; 7806; 7901 to 7905; 7907; 8001; 8003; 8007; 8101 to 8113.
18. Inorganic  chemicals,  organic  or  inorganic compounds of precious metals, rare-earth metals of radioactive elements or isotopes, and Organic Chemicals; 2801 to 2853; 2901 to 2942; 3801 to 3807; 3402 to 3403; 3809 to 3824.
19. Jute and Jute Products; 5303, 5310
20. Edible Oil 1507 to 1518
21. Construction industry as per pars No. (5) (a) as specified in Schedule VI of the Companies Act, 2013(18 of 2013) Not applicable.
22. Health  services,  namely functioning as or running hospitals, diagnostic centres, clinical centres or test laboratories; Not applicable.
23. Education  services, other than such similar services falling under philanthropy or as part of social spend which do not form part of any business. Not applicable.
24. Milk   Powder ; 0402
25. Insecticides; 3808
26. Plastics and polymers; 3901 to 3914; 3916 to 3921; 3925
27. Tyres and tubes 4011 to 4013
28. Paper; 4801 to 4802
29. Textiles; 5004 to 5007; 5106 to 5113; 5205 to 5212; 5303; 5310; 5401 to 5408; 5501 to 5516
30. Glass; 7003 to 7008; 7011; 7016
31. Other machinery 8403 to 8487
32. Electricals or electronic machinery; 8501 to 8507; 8511 to 8512; 8514 to 8515; 8517; 8525 to 8536; 8538 to 8547
33. Production, import and supply or trading of following medical devices, namely:-(i) Cardiac stents;

(ii) Drug eluting stents;

(iii) Catheters;

(iv) Intra ocular lenses;

(v) Bone cements;

(vi) Heart valves;

(vii) Orthopaedic implants;

(viii) Internal prosthetic replacements;

(ix) Scalp vein set;

(x) Deep brain stimulator;

(xi) Ventricular peripheral shud;

(xii) Spinal implants;

(xiii) Automatic impalpable cardiac deflobillator;

(xiv) Pacemaker (temporary and permanent);

(xv) Patent ductus arteriosus, atrial septal defect and ventricular septal defect closure device;

(xvi) Cardiac re-synchronize therapy ;

(xvii) Urethra spinicture devices;

(xviii) Sling male or female;

(xix) Prostate occlusion device; and

(xx) Urethral stents:

9018 to 9022

Provided that nothing contained in serial number 33 shall apply to foreign companies having only liaison offices.

Provided further that nothing contained in this rule shall apply to a company which is classified as a micro enterprise or a small enterprise including as per the turnover criteria under sub-section (9) of section 7 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006).

(iii) for rule 4, the following rule shall be substituted, namely:-

“4. Applicability for cast audit.- (1) Every company specified in item (A) of rule 3 shall get its cost records audited in accordance with these rules if the overall annual turnover of the company from all its products and services during the immediately preceding financial year is rupees fifty crore or more and the aggregate turnover of the individual product or products or service or services for which cost records are required to be maintained under rule 3 is rupees twenty five crore or more.

(2) Every company specified in item (B) of rule 3 shall get its cost records audited in accordance with these rules if the overall annual turnover of the company from all its products and services during the immediately preceding financial year is rupees one hundred crore or more and the aggregate turnover of the individual product or products or service or services for which cost records are required to be maintained under rule 3 is rupees  thirty five crore or more.

(3) The requirement for cost audit under these rules shall not apply to a company which is covered in rule 3, and -

(i) whose revenue from exports, in foreign exchange, exceeds seventy five per cent of its total revenue; or

(ii) which is operating from a special economic zone.”

(iv) in rule 5, in sub-rule (1), the following proviso shall be inserted, namely:-

“Provided that in case of company covered in serial number  12  and serial numbers 24 to 32 of item (B) of rule 3, the requirement under this rule shall apply in respect of each of its financial year commencing on or after 1st  day of April, 2015.”

(v) in rule 6, after sub-rule (3), following sub-rule shall be inserted, namely:-

“(3A) Any casual vacancy in the office of a cost auditor, whether due to resignation, death or removal, shall be filled by the Board of Directors within thirty days of occurrence of such vacancy and the company shall inform the Central Government in Form CRA-2 within thirty days of such appointment of cost auditor.”

(vi) rule 7 shall be omitted;

(vii) in Annexure, for Form CRA-I and Form CRA-3, the following shall respectively, be substituted, namely:-

FORM CRA-1 

FORM CRA-3

[F. No. 1/40/2013-CL-V]

AMARDEEP SINGH BHATIA,

Joint 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 number G.S.R. 425(E), dated the 30th June, 2014.

Notification No. : 95/2015 Dated: 30-12-2015


GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

Notification No. 95/2015

New Delhi, the 30th December, 2015

S.O. 3545(E)- In exercise of the powers conferred by section 139A, section 271FAA and section 285BA, read withsection 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 (22nd Amendment) Rules, 2015.

(2) Rules 114B, 114C and 114D shall come into force from the 1st day of January, 2016 and rule 114E shall come into force from the 1st day of April, 2016.

2. In the Income-tax Rules, 1962 (hereinafter referred to as the said rules), for rules 114B, 114C, 114D and 114E, the following rules shall respectively be substituted, namely:-

“114B. Transactions in relation to which permanent account number is to be quoted in all documents for the purpose of clause (c) of sub-section (5) of section 139A.-

Every person shall quote his permanent account number in all documents pertaining to the transactions specified in the Table below, namely:-

TABLE

Sl.No.

Nature of transaction

Value of transaction

(1)

(2)

(3)

1.

Sale or purchase of a motor vehicle or vehicle, as defined in clause (28) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988) which requires registration by a registering authority under Chapter IV of that Act, other than two wheeled vehicles.

All such transactions.

2

Opening an account [other than a time-deposit referred to at Sl. No.12 and a Basic Savings Bank Deposit Account] 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).

All such transactions.

3.

Making an application to any 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) or to any other company or institution, for issue of a credit or debit card.

All such transactions.

4.

Opening of a demat account with a depository, participant, custodian of securities or any other person registered under sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992).

All such transactions.

5.

Payment to a hotel or restaurant against a bill or bills at any one time. Payment in cash of an amount exceeding fifty thousand rupees.

6.

Payment in connection with travel to any foreign country or payment for purchase of any foreign currency at any one time. Payment in cash of an amount exceeding fifty thousand rupees.

7.

Payment to a Mutual Fund for purchase of its units. Amount exceeding fifty thousand rupees.

8.

Payment to a company or an institution for acquiring debentures or bonds issued by it. Amount exceeding fifty thousand rupees.

9.

Payment to the Reserve Bank of India, constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934) for acquiring bonds issued by it. Amount exceeding fifty thousand rupees.

10.

Deposit with 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). Deposits in cash exceeding fifty thousand rupees during any one day.

11.

Purchase of bank drafts or pay orders or banker’s cheques from 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). Payment in cash for an amount exceeding fifty thousand rupees during any one day.

12.

A time deposit with, -(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) a Post Office;(iii) a Nidhi referred to in section 406 of theCompanies Act, 2013 (18 of 2013); or

(iv) a non-banking financial company which holds a certificate of registration under section 45-IA of the Reserve Bank of India Act, 1934 (2 of 1934), to hold or accept deposit from public.

Amount exceeding fifty thousand rupees or aggregating to more than five lakh rupees during a financial year.

13.

Payment for one or more pre-paid payment instruments, as defined in the policy guidelines for issuance and operation of pre-paid payment instruments issued by Reserve Bank of India under section 18 of the Payment and Settlement Systems Act, 2007 (51 of 2007), to 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) or to any other company or institution. Payment in cash or by way of a bank draft or pay order or banker’s cheque of an amount aggregating to more than fifty thousand rupees in a financial year.

14.

Payment as life insurance premium to an insurer as defined in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938). Amount aggregating to more than fifty thousand rupees in a financial year.

15.

A contract for sale or purchase of securities (other than shares) as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956). Amount exceeding one lakh rupees per transaction.

16.

Sale or purchase, by any person, of shares of a company not listed in a recognised stock exchange. Amount exceeding one lakh rupees per transaction.

17.

Sale or purchase of any immovable property. Amount exceeding ten lakh rupees or valued by stamp valuation authority referred to in section 50C of the Act at an amount exceeding ten lakh rupees.

18.

Sale or purchase, by any person, of goods or services of any nature other than those specified at Sl. No. 1 to 17 of this Table, if any. Amount exceeding two lakh rupees per transaction:

Provided that where a person, entering into any transaction referred to in this rule, is a minor and who does not have any income chargeable to income-tax, he shall quote the permanent account number of his father or mother or guardian, as the case may be, in the document pertaining to the said transaction:

Provided further that any person who does not have a permanent account number and who enters into any transaction specified in this rule, he shall make a declaration in Form No.60 giving therein the particulars of such transaction:

Provided also that the provisions of this rule shall not apply to the following class or classes of persons, namely:-

(i) the Central Government, the State Governments and the Consular Offices;

(ii) the non-residents referred to in clause (30) of section 2 of the Act in respect of the transactions other than a transaction referred to at Sl. No. 1 or 2 or 4 or 7 or 8 or 10 or 12 or 14 or 15 or 16 or 17 of the Table.

Explanation.-For the purposes of this rule,-

(1) “payment in connection with travel” includes payment towards fare, or to a travel agent or a tour operator, or to an authorised person as defined in clause (c) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999);

(2) “travel agent or tour operator” includes a person who makes arrangements for air, surface or maritime travel or provides services relating to accommodation, tours, entertainment, passport, visa, foreign exchange, travel related insurance or other travel related services either severally or in package;

(3) “time deposit” means any deposit which is repayable on the expiry of a fixed period.

114C. Verification of Permanent Account Number in transactions specified in rule 114B.-

(1) Any person being,-

(a) a registering officer or an Inspector-General appointed under the Registration Act, 1908 (16 of 1908);

(b) a person who sells the immovable property or motor vehicle;

(c) a manager or officer of a banking company or co-operative bank, as the case may be, referred to at Sl. No. 2 or 3 or 10 or 11 or 12 or 13 of rule 114B;

(d) post master;

(e) stock broker, sub-broker, share transfer agent, banker to an issue, trustee of a trust deed, registrar to issue, merchant banker, underwriter, portfolio manager, investment adviser and such other intermediaries registered under sub-section (1) section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);

(f) a depository, participant, custodian of securities or any other person registered under sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) referred to at Sl. No. 4 of rule 114B;

(g) the principal officer of a company referred to at Sl. No. 3 or 4 or 8 or 12 or 13 or 15 or 16 of rule 114B;

(h) the principal officer of an institution referred to at Sl. No. 2 or 3 or 8 or 10 or 11 or 12 or 13 of rule 114B;

(i) any trustee or any other person duly authorised by the trustee of a Mutual Fund referred to at Sl. No. 7 of rule 114B;

(j) an officer of the Reserve Bank of India, constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934), or of any agency bank authorised by the Reserve bank of India;

(k) a manager or officer of an insurer referred to at Sl. No. 14 of rule 114B, who, in relation to a transaction specified in rule 114B, has received any document shall ensure after verification that permanent account number has been duly and correctly mentioned therein or as the case may be, a declaration in Form 60has been duly furnished with complete particulars.

(2) Any person, being a person raising bills referred to at Sl. No. 5 or 6 or 18 of rule 114B, who, in relation to a transaction specified in the said Sl. No., has issued any document shall ensure after verification that permanent account number has been correctly furnished and the same shall be mentioned in such document, or as the case may be, a declaration in Form 60 has been duly furnished with complete particulars.

114D. Time and manner in which persons referred to in rule 114C shall furnish a statement containing particulars of Form No. 60.-

(1) Every person referred to in,-

(I) clauses (b) to (k) of sub-rule (1) of rule 114C; and

(II) sub-rule (2) of rule 114C and who is required to get his accounts audited under section 44AB of theAct,

who has received any declaration in Form No. 60, on or after the 1st day of January, 2016, in relation to a transaction specified in rule 114B, shall-

(i) furnish a statement in Form No. 61 containing particulars of such declaration to the Director of Income-tax (Intelligence and Criminal Investigation) or the Joint Director of Income-tax (Intelligence and Criminal Investigation) through online transmission of electronic data to a server designated for this purpose and obtain an acknowledgement number; and

(ii) retain Form No. 60 for a period of six years from the end of the financial year in which the transaction was undertaken.

(2) The statement referred to in clause (i) of sub-rule (1) shall,-

(i) where the declarations are received by the 30th September, be furnished by the 31st October of that year; and

(ii) where the declarations are received by the 31st March, be furnished by the 30th April of the financial year immediately following the financial year in which the form is received.

(3) The statement referred to in clause (i) of sub-rule (1) shall be verified-

(a) in a case where the person furnishing the statement is an assessee as defined in clause (7) of section 2 of the Act, by a person specified in section 140 of the Act;

(b) in any other case, by the person referred to in rule 114C.

114E. Furnishing of statement of financial transaction.-

(1) The statement of financial transaction required to be furnished under sub-section (1) of section 285BA of the Act shall be furnished in respect of a financial year in Form No. 61A and shall be verified in the manner indicated therein.

(2) The statement referred to in sub-rule (1) shall be furnished by every person mentioned in column (3) of the Table below in respect of all the transactions of the nature and value specified in the corresponding entry in column (2) of the said Table in accordance with the provisions of sub-rule (3), which are registered or recorded by him on or after the 1st day of April, 2016, namely:-

TABLE

Sl.No.

Nature and value of transaction

Class of person (reporting person)

(1)

(2)

(3)

1.

(a) Payment made in cash for purchase of bank drafts or pay orders or banker’s cheque of an amount aggregating to ten lakh rupees or more in a financial year.(b) Payments made in cash aggregating to ten lakh rupees or more during the financial year for purchase of pre-paid instruments issued by Reserve Bank of India under section 18 of the Payment and Settlement Systems Act, 2007 (51 of 2007).(c) Cash deposits or cash withdrawals (including through bearer’s cheque) aggregating to fifty lakh rupees or more in a financial year, in or from one or more current account of a person. 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).

2.

Cash deposits aggregating to ten lakh rupees or more in a financial year, in one or more accounts (other than a current account and time deposit) 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).

3.

One or more time deposits (other than a time deposit made through renewal of another time deposit) of a person aggregating to ten lakh rupees or more in a financial year 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);(iii) Nidhi referred to in section 406 of the Companies Act, 2013 (18 of 2013); (iv) Non-banking financial company which holds a certificate of registration under section 45-IA of the Reserve Bank of India Act, 1934 (6 of 1934), to hold or accept deposit from public.

4.

Payments made by any person of an amount aggregating to-(i) one lakh rupees or more in cash; or(ii) ten lakh rupees or more by any other mode,against bills raised in respect of one or more credit cards issued to that person, in a financial year. 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) or any other company or institution issuing credit card.

5.

Receipt from any person of an amount aggregating to ten lakh rupees or more in a financial year for acquiring bonds or debentures issued by the company or institution (other than the amount received on account of renewal of the bond or debenture issued by that company). A company or institution issuing bonds or debentures.

6.

Receipt from any person of an amount aggregating to ten lakh rupees or more in a financial year for acquiring shares (including share application money) issued by the company. A company issuing shares.

7.

Buy back of shares from any person (other than the shares bought in the open market) for an amount or value aggregating to ten lakh rupees or more in a financial year. A company listed on a recognised stock exchange purchasing its own securities under section 68 of theCompanies Act, 2013 (18 of 2013).

8.

Receipt from any person of an amount aggregating to ten lakh rupees or more in a financial year for acquiring units of one or more schemes of a Mutual Fund (other than the amount received on account of transfer from one scheme to another scheme of that Mutual Fund). A trustee of a Mutual Fund or such other person managing the affairs of the Mutual Fund as may be duly authorised by the trustee in this behalf.

9.

Receipt from any person for sale of foreign currency including any credit of such currency to foreign exchange card or expense in such currency through a debit or credit card or through issue of travellers cheque or draft or any other instrument of an amount aggregating to ten lakh rupees or more during a financial year. Authorised person as referred to inclause (c) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999).

10.

Purchase or sale by any person of immovable property for an amount of thirty lakh rupees or more or valued by the stamp valuation authority referred to in section 50Cof the Act at thirty lakh rupees or more. Inspector-General appointed under section 3 of the Registration Act, 1908 or Registrar or Sub-Registrar appointed under section 6 of that Act.

11.

Receipt of cash payment exceeding two lakh rupees for sale, by any person, of goods or services of any nature (other than those specified at Sl. No. 1 to 10 of this rule, if any. Any person who is liable for audit undersection 44AB of the Act.

(3) The reporting person mentioned in column (3) of the Table under sub-rule (2) (other than the person at Sl.No.9) shall, while aggregating the amounts for determining the threshold amount for reporting in respect of any person as specified in column (2) of the said Table,-

(a) take into account all the accounts of the same nature as specified in column (2) of the said Table maintained in respect of that person during the financial year;

(b) aggregate all the transactions of the same nature as specified in column (2) of the said Table recorded in respect of that person during the financial year;

(c) attribute the entire value of the transaction or the aggregated value of all the transactions to all the persons, in a case where the account is maintained or transaction is recorded in the name of more than one person;

(d) apply the threshold limit separately to deposits and withdrawals in respect of transaction specified in item (c) under column (2), against Sl. No. 1 of the said Table.

(4)(a) The return in Form No. 61A referred to in sub-rule (1) shall be furnished to the Director of Income-tax (Intelligence and Criminal Investigation) or the Joint Director of Income-tax (Intelligence and Criminal Investigation) through online transmission of electronic data to a server designated for this purpose under the digital signature of the person specified in sub-rule (7) and in accordance with the data structure specified in this regard by the Principal Director General of Income-tax (Systems):

Provided that in case of a reporting person, being a Post Master General or a Registrar or an Inspector General referred to in sub-rule (2), the said return in Form 61A may be furnished in a computer readable media, being a Compact Disc or Digital Video Disc (DVD), alongwith the verification in Form-V on paper.

Explanation.-For the purposes of this sub-rule, “digital signature” means a digital signature issued by any Certifying Authority authorised to issue such certificates by the Controller of Certifying Authorities.

(b) Principal 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.

(c) The Board may designate an officer as Information Statement Administrator, not below the rank of a Joint Director of Income-tax for the purposes of day to day administration in relation to the furnishing of returns or statements.

(5) The statement of financial transactions referred to in sub-rule (1) shall be furnished on or before the 31st May, immediately following the financial year in which the transaction is registered or recorded.

(6) (a) Every reporting person mentioned in column (3) of the Table under sub-rule (2) 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.

(b) It shall be the duty of every person specified in column (3) of the Table under sub-rule (2), its Designated Director, Principal Officer and employees to observe the procedure and the manner of maintaining information as specified by its regulator and ensure compliance with the obligations imposed under section 285BA of the Act and rules 114B to 114D and this rule.

Explanation 1.- “Designated Director” means a person designated by the reporting person to ensure overall compliance with the obligations imposed under section 285BA of the Act and the rules 114B to 114D and this rule and includes-

(i) the Managing Director or a whole-time Director, as defined in the Companies Act, 2013 (18 of 2013), duly authorised by the Board of Directors if the reporting person is a company;

(ii) the managing partner if the reporting person is a partnership firm;

(iii) the proprietor if the reporting person is a proprietorship concern;

(iv) the managing trustee if the reporting person is a trust;

(v) a person or individual, as the case may be, who controls and manages the affairs of the reporting entity if the reporting person is, an unincorporated association or, a body of individuals or, any other person.

Explanation 2.- “Principal Officer” means an officer designated by the reporting person referred to in the Table in sub-rule (2).

Explanation 3.- “Regulator” means a person or an authority or a Government which is vested with the power to license, authorise, register, regulate or supervise the activity of the reporting person referred to in the Table in sub-rule (2).

(7) The statement of financial transaction referred to in sub-rule (1) shall be signed, verified and furnished by the Designated Director specified in sub-rule (6):

Provided that where the reporting person is a non-resident, the statement may be signed, verified and furnished by a person who holds a valid power of attorney from such Designated Director”.

3. In the said rules, in Appendix-II, for “Forms 60, 61 and 61A” the following “Forms 60, 61 and 61A” shall respectively be substituted, namely:-

No. 15/2015 Dated: 30-11-2015


MCA decided to relax Additional Fees and Extend the last date of filing of forms MGT-7 (Annual Return) and AOC-4 (Financial Statement) upto 30.12.2015. – Dated 30-11-2015 – Companies Law

General circular No. 15/ 2015

F. No. 01/3412013 CL-V

Government of India

Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-l

Dated: 30 /11/2015

To

All Regional Directors,

All Registrar of Companies,

All Stakeholders.

Subject: Relaxation of additional fees and extension of last date of in filing off forms MGT-7 (Annual Return) and AOC-4 (Financial Statement) under the Companies Act, 2013-reg.

Sir,

In continuation of this Ministry’s General Circular 14/2015 dated 28.10.2015, keeping in view requests received from various stakeholders, it has been decided to relax the additional fees payable on e-forms AOC4, AOC (CFS) AOC-4 XBRL and e- Form MGT-7 upto 30.12,2015, wherever additional fee is applicable.

2. This issues with the approval of the competent authority.

Yours faithfully

(KMS NARYANAN)

Assistant Director

011-23387263

Copy to:-

1. E-Governance section

No. 16/2015 Dated: 30-12-2015


Relaxation of additional fees and extension of last date of in filing of forms MGT-7 (Annual Return) and AOC-4 (Financial Statement) under the Companies Act, 2013- State of Tamil Nadu and UT of Puducherry – Dated 30-12-2015 – Companies Law

General Circular No.16/2015

F. No. 01/34/2013 CL-V

Government of India

Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-1

Dated: 30/12/2015

To

All Regional Directors,

All Registrar of Companies,

All Stakeholders.

Subject: Relaxation of additional fees and extension of last date of in filing of forms MGT-7 (Annual Return) and AOC-4 (Financial Statement) under the Companies Act, 2013- State of Tamil Nadu and UT of Puducherry- reg.

Sir,

In continuation of this Ministry’s General Circular 15/2015 dated 30.11.2015, keeping in view the requests received from various stakeholders stating that due to heavy rains and floods in the State of Tamil Nadu and UT of Puducherry, the normal life/work was affected, it has been decided to relax the additional fees payable for theState of Tamil Nadu and UT of Puducherry on e-forms AOC-4, AOC (CFS) AOC-4 XBRL and  e- Form MGT-7 upto 30.01.2016, wherever additional fee is applicable.

2. This issues with the approval of the competent authority.

Yours faithfully,

(KMS Narayanan )

Assistant Director

011-23387263

Copy to:-

1. E-Governance section

Start-up action plan: Govt to seek inputs from VCs, incubators : 29-12-2015


The detailed action plan for propelling start-ups to be unveiled by Prime MinisterNarendra Modi on January 16 would include various facilitation steps and exemptions for new-age ventures.

Top government brass, venture funds, financiers and incubators will convene on January 16 at Vigyan Bhavan to deliberate on the detailed “action plan” for start-ups. The proposed plan will be presented to the Prime Minister at the end of the day.

“The action plan would include the definition of start-ups and incentives for them. Innovation should be the key to qualify as a start-up unit. They have to be technology driven,” an official said.

The entire ecosystem for start-ups will be covered in the action plan and that would consist of a mix of exemptions and facilitation steps, the official said.

The Department of Industrial Policy and Promotion (DIPP) is also developing a ‘portal’ and an interactive ‘app’ for them.

Modi in his monthly radio programme ‘Mann ki Baat’ yesterday said that the Action Plan of the ‘Start-up India, Stand-up India’ will be unveiled on January 16. Modi had announced the campaign — Start-up India; Stand up India — to promote entrepreneurship in his Independence Day speech.

Hectic parleys are going on among the PMO, DIPP, Department of Telecommunications, Cabinet Secretariat and Department of Electronics and Information Technology for preparing the action plan.

On January 16, about 10-11 sessions would be held to discuss issues such as financing, mentoring, seed capital, linking companies with universities and institutions, marketing support, consultancy on intellectual property rights and providing easy regulatory mechanism for them.

The day-long programme will be held on the lines of ‘Make in India’.

As per estimates, there are about 3,200 tech-led start-ups in India, with 800 coming on board every year.

The government is also planning to give exemptions to start-ups for participating in government procurements.

Currently, a unit which participates in a government procurement programme has to show its “prior experience and turnover” but “we are planning to give exemptions to start-ups in this,” an official said.

The official also said that a facilitation cell may be established to help them comply with the laws.

“Start-ups face problems in complying with laws such as Minimum Wages Act and Employees’ State Insurance Act. To deal with this, we are thinking to set up a kind of cell which would help them,” the official added.

Meanwhile, the DIPP has invited bids for appointment of digital amplification and social analytics agency for ‘Start Up India, Stand-Up India’ programme.

DIPP said it intends to undertake on-line international promotion and media campaign including digital amplification, digital media and non-media campaign across all mediums (website, electronic, social media) across the world to brand India as an investment destination for new entrepreneurs and start-ups.

The objective of the campaign is to generate awareness about the government of India’s efforts to promote entrepreneurship, innovation and design, it said in its request for qualification-cum-request for proposal.

“The main objectives of the assignment are sourcing a digital marketing vision and formulating and implementation of a detailed marketing strategy for domestic and international markets for three year starting from 2015-16 for promoting India as an investment destination for new entrepreneurs, innovators and designers and amplification of digital marketing communication and messaging through planning and execution of a digital marketing campaign,” it said.

The government intends to launch ‘Start-up India’ initiative to create a strong ecosystem for fostering innovation and start-ups in the country.

Source : PTI

FM Arun Jaitley confident of GST roll out in 2016; says in constant touch with Congress : 29-12-2015


Rolling out the ambitious Goods and Services Tax (GST) regime is “certainly” doable in 2016, Finance Minister Arun Jaitley said today, adding that he is in “continuous touch” with the Congress party in a bid to persuade them to cooperate.

“I hope that in the next session (of Parliament), the GST will make headway,” he said.

“After all, it was a Bill brought by them (Congress). For political reasons, they have done a volte-face but they should not be doing it indefinitely,” Jaitley told PTI in an interview.

“I am in continuous touch with them and I intend continuing that. It is part of my job to continue to persuade them,” he added.

GST, which seeks to simplify and harmonise the indirect tax regime across the country with a single uniform rate, has been stuck for many years in a political gridlock.

While the previous UPA regime failed to get it passed in Parliament due to opposition from the BJP and some other parties, Congress has now refused to support the bill proposed by the NDA government in its present form.

Asked about the government’s target to roll out GST from April 1, 2016, Jaitley said it was not like income tax and therefore it was not necessary to bring it in force from the beginning of a new financial year.

“GST is not an income tax (measure) and it does not have to come on only on first April of every year. It is a transactional tax and so it can come even in the middle of the year,” he said.

Jaitley said the passage of GST remains one of his key priority areas for the New Year, along with rationalising the direct taxes and further easing of process for doing business.

“I had hoped that we complete the process for GST this year. But it was plain and simple obstructionism of the Congress party which has prevented that.

“In fact, a national party adopting a disruptionist role and getting a sadistic pleasure in stalling a reform which could add to India’s GDP is a disappointment,” he said.

To a specific query on whether the GST was doable in 2016, he said, “It certainly is”.

The GST is expected to broaden the tax base and result in better tax compliance with a robust IT infrastructure.

The government also hopes it will herald a seamless transfer of input tax credit from one state to another, while an in-built mechanism has been envisaged to incentivise tax compliance by traders.

The Finance Minister said the Congress did not have “numbers to obstruct, so it used disruption in order to obstruct and I think it is a very bad precedent for India’s Parliamentary democracy if this is followed in state legislatures and if this is followed by future opposition parties, I think it would be a bad trend to set”.

“So, I do hope that the Congress party introspects whether such tactics can be indefinitely be followed in a Parliamentary democracy,” he said.
Jaitley further said the Parliament itself would have to find alternative methods of approving legislation if the Congress party does not change its tactics.

Asked about such alternatives, he said, “I hope it does not come to a stage where all legislations are passed in a din or you rely on money legislations, you rely more on executive decision making”.

“The fundamental question is how does India legislate? Fortunately, most of the legislations I have been able to get through, some even without discussion. But that is not the ideal way how laws should be passed”.

On his comments about the role of Rajya Sabha, Jaitley said, “I have frankly not argued for a fresh look at Rajya Sabha. Rajya Sabha is essential and part of India’s basic structure. The structure of Rajya Sabha cannot be altered.”

“I have never for a moment suggested that nor will I suggest that,” he asserted, while adding he was only talking about “the impact on Parliamentary democracy if the indirectly elected house continues to veto a directly elected house”.

Giving illustrations, Jaitley said, “Standing Committees of both houses of Parliament, Joint Standing Committees, approve unanimously a legislation. The Rajya Sabha vetoes it and appoints its Select Committee which means they are questioning the very credibility of the Standing Committee system which for over two decades has served us well.

“Therefore, this time we have had to go for a Joint Committee instead of the Standing Committee to avoid this kind of situation.

“Two, Rajya Sabha as a house which is supposed to maintain a check and balance, can once in a while disagree with a legislation passed by the Lok Sabha. It can be referred to a joint session, but every other law they cannot disagree with. It cannot happen too frequently.

“And if the indirectly elected house, for political and collateral reasons, vetoes a directly elected house, it does not augur well,” he said.

Talking about the system in other countries, Jaitley said, “In Britain, they follow a pattern that the Upper House can send it (a bill) back once for reconsideration to the Lower House and if the Lower House, which works on a mandate and which has been elected on a manifesto, second time approves it, the Upper House always accepts it.”

Asked whether that can be followed in India too, he said, “That could be accepted as a possible precedent.”

Source : The Hindu

No. F. No. 142/11/2015-TPL Dated: 23-12-2015


Draft Guiding Principles for determination of Place of Effective Management (POEM) of a Company – Circular – Dated 23-12-2015 – Income Tax

F. No. 142/11/2015-TPL

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

Dated: 23rd December, 2015

Subject: – Draft Guiding Principles for determination of Place of Effective Management (POEM) of a Company.

Section 6(3) of the Income-tax Act, 1961, prior to its amendment by the Finance Act, 2015, provided that a company is said to be resident in India in any previous year, if it is an Indian company or if during that year, the control and management of its affairs is situated wholly in India. This allowed tax avoidance opportunities for companies to artificially escape the residential status under these provisions by shifting insignificant or isolated events related with control and management outside India. To address these concerns, the existing provisions ofsection 6(3) of the Income-tax Act, 1961 were amended vide Finance Act, 2015, with effect from 1st April, 2016 to provide that a company is said to be resident in India in any previous year, if-

(i) it is an Indian company; or

(ii) its place of effective management in that year is in India .

2. For the purposes of this clause, “place of effective management” means a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance, made.

3. ‘Place of effective management’ (PoEM) is an internationally recognised test for determination of residence of a company incorporated in a foreign jurisdiction. Most of the tax treaties entered into by India recognize the concept of ‘place of effective management’ for determination of residence of a company as a tie-breaker rule for avoidance of double taxation.

4. The Explanatory Memorandum to the Finance Bill, 2015 has stated that a set of guiding principles to be followed in the determination of PoEM would be issued for the benefit of the taxpayers as well as the tax administration. Accordingly the guiding principles on the following lines are proposed to be issued.

5. For the purposes of these guidelines, -

(a) A company shall be said to be engaged in “active business outside India” if the passive income is not more than 50% of its total income and ,-

(i) less than 50% of its total assets are situated in India; and

(ii) less than 50% of total number of employees are situated in India or are resident in India; and

(iii) the payroll expenses incurred on such employees is less than 50% of its total payroll expenditure ;

(b) “Head Office” of a company would bethe place where the company’s senior management and their direct support staff are located or, if they are located at more than one location, the place where they are primarily or predominantly located. A company’s head office is not necessarily the same as the place where the majority of its employees work or where its board typically meets;

(c) “ Passive income”of a company shall be aggregate of ,-

(i) incomefrom the transactions where both the purchase and sale of goods is from / to its associated enterprises; and

(ii) income by way of royalty, dividend, capital gains, interest or rental income;

(d) “Senior Management” in respect of a company means the person or persons who are generally responsible for developing and formulating key strategies and policies for the company and for ensuring or overseeing the execution and implementation of those strategies on a regular and on-going basis. While designation may vary, these persons may include:

(i) Managing Director or Chief Executive Officer;

(ii) Financial Director or Chief Financial Officer;

(iii) Chief Operating Officer; and

(iv) The heads of various divisions or departments (for example, Chief Information or Technology Officer, Director for Sales or Marketing).

6. Any determination of the PoEM will depend upon the facts and circumstances of a given case. The PoEM concept is one of substance over form. It may be noted that an entity may have more than one place of management, but it can have only one place of effective management at any point of time. Since “residence” is to be determined for each year, POEM will also be required to be determined on year to year basis. The process of determination of POEM would be primarily based on the fact as to whether or not the company is engaged in active business outside India.

7. The place of effective management in case of a company engaged in active business outside India shall be presumed to be outside India ifthe majority meetings of the board of directors of the company are held outside India.

7.1 However, if on the basis of facts and circumstances it is established that the Board of directors of the company are standing aside and not exercising their powers of management and such powers are being exercised by either the holding company or any other person (s) resident in India, then the place of effective management shall be considered to be in India.

7.2 For the purpose of determining whether the company is engaged in active business outside India the average of the data of the previous year and two years prior to that shall be taken into account. In case the company has been in existence for a shorter period, then data of such period shall be considered.

8. In cases of companies other than those that are engaged in active business outside India referred to in para 7 the determination of POEM would be a two stage process , namely:-

(i) . First stage would be identification or ascertaining the person or persons who actually make the key management and commercial decision for conduct of the company’s business as a whole.

(ii) . Second stage would be determination of place where these decisions are in fact being made.

8.1 The place where these management decisions are taken would be more important than the place where such decisions are implemented. For the purpose of determination of POEM it is the substance which would be conclusive rather than the form.

8.2 Some of the guiding principles which may be taken into account for determining the PoEM are as follows:

(a) The location where a company’s board regularly meets and makes decisions may be the company’s place of effective management provided, the Board-

(i) retains and exercises its authority to govern the company; and

(ii) does, in substance, make the key management and commercial decisions necessary for the conduct of the company’s business as a whole.

It may be mentioned that mere formal holding of board meetings at a place would by itself not be conclusive for determination of POEM being located at that place. If the key decisions by the directors are in fact being taken in a place other than the place where the formal meetings are held then such other place would be relevant for POEM. As an example this may be the case where the board meetings are held in a location distinct from the place where head office of the company is located or such location is unconnected with the place where the predominant activity of the company is being carried out.

If a board has de facto delegated the authority to make the key management and commercial decisions for the company to the senior management or any other person including a shareholder and does nothing more than routinely ratifying the decisions that have been made, the company’s place of effective management will ordinarily be the place where these senior managersor the other person make those decisions.

(b) A company’s board may delegate some or all of its authority to one or more committees such as an executive committee consisting of key members of senior management. In these situations, the location where the members of the executive committee are based and where that committee develops and formulates the key strategies and policies for mere formal approval by the full board will often be considered to be the company’s place of effective management.

The delegation of authority may be either de jure (by means of a formal resolution or Shareholder Agreement) or de facto (based upon the actual conduct of the board and the executive committee).

(c) The location of a company’s head office will be a very important factor in the determination of the company’s place of effective management because it often represents the place where key company decisions are made.The following points need to be considered for determining the location of the head office of the company:-

  • If the company’s senior management and their support staff are based in a single location and that location is held out to the public as the company’s principal place of business or headquarters then that location is the place where head office is located.
  • If the company is more decentralized (for example where various members of senior management may operate, from time to time, at offices located in the various countries)then the company’s head office would be the location where these senior managers,-

(i) are primarily or predominantly based; or

(ii) normally return to following travel to other locations; or

(ii) meet when formulating or deciding key strategies and policies for the company as a whole.

  • Members of the senior management may operate from different locations on a more or less permanent basis and the members may participate in various meetings via telephone or video conferencing rather than by being physically present at meetings in a particular location. In such situation the head office would normally be the location, if any, where the highest level of management (for example, the Managing Director and Financial Director) and their direct support staff are located.
  • In situations where the senior management is so decentralised that it is not possible to determine the company’s head office with a reasonable degree of certainty, the location of a company’s head office would not be of much relevance in determining that company’s place of effective management.

(d) It may be clarified that day to day routine operational decisions undertaken by junior and middle management shall not be relevant for the purpose of determination of POEM.

(e) The use of modern technology impacts the place of effective management in many ways. It is no longer necessary for the persons taking decision to be physically present at a particular location. Therefore physical location of board meeting or executive committee meeting or meeting of senior management may not be where the key decisions are in substance being made. In such cases the place where the directors or the persons taking the decisions or majority of them usually reside may also be a relevant factor.

(f) If the above factors do not lead to clear identification of POEM then the following secondary factors can be considered :-

(i) Place where main and substantial activity of the company is carried out; or

(ii) Place where the accounting records of the company are kept.

9. It needs to be emphasized that the determination of PoEMis to be based on all relevant facts related to the management and control of the company, and is not to be determined on the basis of isolated facts that by itself do not establish effective management, as illustrated by the following examples:

i. The fact that a foreign company is completely owned by an Indian company will not be conclusive evidence that the conditions for establishing PoEM in India have been satisfied.

ii. The fact that one or some of the Directors of a foreign company reside in India will not be conclusive evidence that the conditions for establishing PoEM in India have been satisfied.

iii. The fact of , local management being situated in India in respect of activities carried out by a foreign company in India will not , by itself, be conclusive evidence that the conditions for establishing PoEM have been satisfied.

iv. The existence in India of support functions that are preparatory and auxiliary in character will not be conclusive evidence that the conditions for establishing PoEM in India have been satisfied.

10. It is reiterated that the above principles for determining the PoEM are for guidance only. No single principle will be decisive in itself. The above principles are not to be seen with reference to any particular moment in time rather activities performed over a period of time, during the previous year, need to be considered. In other words a “snapshot” approach is not to be adopted. Further, based on the facts and circumstances if it is determined that during the previous year the PoEM is in India and also outside India then PoEM shall be presumed to be in India if it has been mainly /predominantly in India

11. Further, in case the Assessing officer proposes to hold a company incorporated outside India, on the basis of its PoEM, as being resident in India then any such finding shall be given by the Assessing officer after seeking prior approval of the Principal Commissioner or the Commissioner, as the case may be, in this regard. The Principal Commissioner or the Commissioner shall provide an opportunity of being heard to the company before deciding the matter.

12. The comments and suggestion of stakeholders and general public on the above draft guidance are invited. The comments and suggestions may be submitted by 02nd January, 2016 at the email address (dirtpl1@nic.in) or by post at the following address with “Comments on draft Guidance on POEM” written on the envelop.

Director (Tax Policy & Legislation)-I

Central Board of Direct Taxes,

Room No. 147-D,

North Block,

New Delhi – 110001

No. 18/2015 Dated: 23-12-2015


Applicability of Minimum Alternate Tax (MAT) on foreign companies for the period prior to 1.04.2015 – Order-Instruction – Dated 23-12-2015 – Income Tax

nstruction No. 18/2015

Government of India

Ministry of Finance

Department of Revenue

(Central Board of Direct Taxes)

(TPL Division)

New Delhi, the 23rd December, 2015

Subject: Applicability of Minimum Alternate Tax (MAT) on foreign companies for the period prior to 1.04.2015-reg.

On the issue of applicability of Minimum Alternate Tax (MAT) under section 115JB of the Income Tax Act, 1961(‘the Act’) on Foreign Institutional Investors (FIls)/Foreign Portfolio Investors (FPIs), the Board had issuedinstruction No. 9 dated 02/09/2015 informing the field authorities that the Government has accepted the recommendation of the Committee on Direct Tax Matters that section 115JB be amended to clarify the inapplicability of MAT to Flls/FPIs having no permanent establishment/ place of business in India and decided to carry out appropriate amendment to this effect. In view of this, the field authorities were advised to keep In abeyance, for the time being, the pending assessment proceedings in cases of FIIs/FPIs involving the said issue. It was also advised that the recovery of outstanding demands, If any, in such cases may not be pursued.

2. The Government had, subsequently, considered the broader issue of applicability of section 115JB of the Act to foreign companies which do not have a place of business/permanent establishment in India. A Press Release dated 24.09.2015 was issued conveying the decision of the Government on inapplicability of MAT on foreign companies in certain cases. Subsequently, the Government conveyed its intention of abiding by the decision contained in the aforesaid Press Release to the Supreme Court in the case of Castleton Investment Ltd. The Supreme Court disposed of the case based on the commitment made by the Government.

3. In view of the decision as reflected in the Press Release dated 24.09.2015 and the commitment made by the Government before the Supreme Court it is hereby reiterated that with effect from 01.04.2001, the provisions ofsection 115JB shall not be applicable to a foreign company (including an FII/FPI) if -

(i) the foreign company is a resident of a country with which India has a Double Taxation Avoidance Agreement and such foreign company does not have a permanent establishment in accordance with the provisions of the relevant Double Taxation Avoidance Agreement, or

(ii) the foreign company is a resident of a country with which India does not have a Double Taxation Avoidance Agreement and such foreign company is not required to seek registration under section 592 of the Companies Act, 1956 or section 380 of the Companies Act, 2013.

An appropriate amendment to the Income-tax Act in this regard shall be undertaken through Finance Bill, 2016.

4. In view of the above and the fact that Government’s commitment to abide by its decision as contained in para 3 above has been taken into account by the Supreme Court while disposing of the Civil Appeal No. 4559/2013 in the case of Castleton Investment Ltd., the field authorities are hereby advised that pending assessments involving applicability of MAT on foreign companies (including FIIs/FPIs) should be completed in accordance with the decision of the Government as reflected in para 3 above.

[F. No.153/12/2015-TPL]

(Pravin Rawal)

Director

Rajya Sabha passes 3 Bills, Lok Sabha passes 1 : 22-12-2015


The Rajya Sabha, which had passed only one Bill since the current session began on November 26, passed three on Monday, without any discussion. It had 18 pending at the start of the session.

The Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Amendment Bill was passed by voice vote, though with some members cautioning that voting without discussion should not be frequent.

The House also approved an additional Rs 56,256 crore of supplementary demands for grants to the government, mainly for defence pensions and the Swachh Bharat Mission. And, passed Appropriation Bill Numbers 4 and 5 by a voice vote without debate, returning these to the Lok Sabha which has already approved these.

An all-party meeting on Friday had agreed on six Bills the RS could pass before the session ends on Wednesday. A senior minister hoped more might be taken up, to clear the backlog.

The Lok Sabha passed the National Waterways Bill, 2015, with the aim of developing 101 of these (in addition to the existing five). Shipping Minister Nitin Gadkari said the government aimed to garner Rs 1 lakh crore to fund the project, including Rs 50,000 crore from the World Bank, to provide low-cost river transport. Profits of state shipping companies would also be routed to a subsidiary company for this.

The Rajya Sabha was repeatedly adjourned in the morning session, when Congress members demanded the resignation of Finance Minister Arun Jaitley over alleged financial irregularities in Delhi’s cricket body when he was at its helm. They staged a walkout after he rubbished the charges.

Also, opposition parties there criticised the government’s move to bring the Juvenile Justice Bill through the supplementary agenda route. The legislation is now for Tuesday. The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015, was also postponed for Tuesday.

The opposition said Friday’s all-party meeting had decided that after passage of the bills, the House would take for discussion the issues of farm distress and intolerance in society. It did begin a discussion on the plight of farmers because of flood and drought, with some asking for a Farmers’ Commission.

The finance minister introduced the Insolvency and Bankruptcy Code, 2015, in the Lok Sabha.

Source : PTI

Notification No. : 94/2015 Dated: 21-12-2015


Agreement for Avoidance of double taxation and prevention of fiscal evasion with foreign countries – Macedonia – 94/2015 – Dated 21-12-2015 – Income Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(Department of Revenue)

NOTIFICATION NO. 94/2015

(INCOME TAX)

New Delhi, the  21st December, 2015

S.O.  (E) - Whereas, an Agreement was entered into between the Government of the Republic of India and the Government of the Republic of Macedonia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income that was signed at Delhi on the 17th December, 2013 as set out in the Annexure to this notification (hereinafter referred to as the said Agreement):

And whereas, the date of enter into force of the said Agreement is the 12th September, 2014. being the date of the later of the notifications of completion of the procedures as required by the respective laws for entry into force of the said Agreement, in accordance with paragraph 1 of Article 30 of the said Agreement;

And whereas, clause (a) of paragraph 3 of Article 30 of the said Agreement provides that the provisions of the said Agreement shall have effect in India in respect of taxes withheld at source, to income paid or credited on or after the first day of April of the calendar year next following the year in which the said Agreement enters into force, and in respect of other taxes on income chargeable for any fiscal year beginning on or after the first day of April of the calendar year next following the year in which the said Agreement enters into force.

Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961). the Central Government hereby directs that all the provisions of the said Agreement between the Government of the Republic of India and the Government of the Republic of Macedonia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. as set out in the Annexure hereto, shall be given effect to in the Union of India from the first day of April, 2015 being the first day of the fiscal year next following the year in which the said Agreement entered into force

ANNEXURE

AGREEMENT

BETWEEN

THE GOVERNMENT OF THE REPUBLIC OF INDIA

AND THE GOVERNMENT OF THE REPUBLIC OF MACEDONIA

FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF

FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

The Government of the Republic of India and the Government of the Republic of Macedonia, desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and with a view to promoting economic cooperation between the two countries, have agreed as follows:

ARTICLE 1

PERSONS COVERED

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2

TAXES COVERED

1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property and taxes on the total amounts of wages or salaries paid by enterprises.

3. The existing taxes to which the Agreement shall apply are in particular:

(a)      In India:

the income tax (including any surcharge thereon)

(hereinafter referred to as “Indian tax”);

(b)      in Macedonia:

i.      the profit tax;

ii.      the personal income tax;

(hereinafter referred to as “Macedonian tax”).

4. The Agreement shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their respective taxation laws.

ARTICLE 3

GENERAL DEFINITIONS

1. For the purposes of this Agreement, unless the context otherwise requires:

(a)      the term “India” means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law, including the U.N. Convention on the Law of the Sea;

(b)      the term “Macedonia” means the territory of the Republic of Macedonia, over which it has jurisdiction or sovereign rights for the purpose of exploring, exploiting, conserving and managing natural resources, pursuant to internal jurisdiction and international law;

(c)      the terms “Contracting State” and “the other Contracting State” mean the Republic of India or the Republic of Macedonia as the context requires;

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

(e)      the term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;

(f)      the term ” enterprise” applies to the carrying on of any business;

 

ARTICLE 4

RESIDENT

1. For the purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

(a)      be shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);

(b)      if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;

(c)      if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;

(d)      if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall endeavor to settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. If the State in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall endeavor to settle the question by mutual agreement. In the absence of such agreement, such person shall not be considered to be a resident of either Contracting State for the purposes of enjoying benefits under this Agreement.

ARTICLE 5

PERMANENT ESTABLISHMENT

1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2. The term “permanent establishment” includes especially:

(a)      a place of management;

(b)      a branch;

(c)      an office;

(d)      a factory;

(e)      a workshop;

(f)      a sales outlet;

(g)      a warehouse in relation to a person providing storage facilities for others;

(h)      a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on; and

(i)      a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

3. (a) A building site or construction, installation or assembly project or supervisory activities in connection therewith constitutes a permanent establishment only if such site, project or activities last more than nine months.

(b) The furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or connected project) within the country for a period or periods aggregating more than 90 days within any 12-month period.

4. Notwithstanding the preceding provisions of this Article the term “permanent establishment” shall be deemed not to include:

(a)      the use of facilities solely for the purpose of storage, display of goods or merchandise belonging to the enterprise;

(b)      the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;

(c)      the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d)      the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;

(e)      the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;

(f)      the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent of an independent status to whom paragraph 7 applies – is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person:

(a)      has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph, or

(b)      has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise, or

(c)      habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself.

6. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 7 applies.

7. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph.

8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

ARTICLE 6

INCOME FROM IMMOVABLE PROPERTY

1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.

2. The term “immovable property” shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.

ARTICLE 7

BUSINESS PROFITS

1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the tax laws of that State. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights, or by way of commission or other charges for specific services performed or for management, or, except in the case of banking enterprises, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than toward reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights, or by way of commission or other charges for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.

5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

ARTICLE 8

SHIPPING AND AIR TRANSPORT

1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

2. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbor of the ship is situated, or, if there is no such home harbor, in the Contracting State of which the operator of the ship is a resident.

3. Profits derived by a transportation enterprise which is a resident of a Contracting State from the use, maintenance, or rental of containers (including trailers and other equipment for the transport of containers) used for the transport of goods or merchandise in international traffic shall be taxable only in that Contracting State unless the containers are used solely within the other Contracting State.

4. For the purposes of this Article interest on investments directly connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft if they are integral to the carrying on of such business, and the provisions of Article 11 shall not apply in relation to such interest.

5. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

ARTICLE 9

ASSOCIATED ENTERPRISES

1. Where

(a)      an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b)      the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

2. Where a Contracting State includes in the profits of an enterprise of the State – and taxes accordingly – profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.

ARTICLE 10

DIVIDENDS

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

2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed ten per cent of the gross amount of the dividends. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

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

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

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

ARTICLE 11

INTEREST

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed ten per cent of the gross amount of the interest.

3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State, provided that it is derived and beneficially owned by:

(a)      the Government, a political sub-division or a local authority of the other Contracting State, or

(b)      (i) in the case of India, the Reserve Bank of India, the Export-Import bank of India, the National Housing bank; and

(ii) in the case of Macedonia, the National Bank of the Republic of Macedonia; or

(c)      any other institution as may be agreed upon from time to time between the Competent authorities of the Contracting States through exchange of letters.

4. The term “interest” as used in this Article means income from debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 12

ROYALTIES AND FEES FOR TECHNICAL SERVICES

1. Royalties or fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such royalties or fees for technical services may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties or fees for technical services is a resident of the other Contracting State the tax so charged shall not exceed ten per cent of the gross amount of the royalties or fees for technical services.

3. (a) The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films or films or tapes used for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.

(b) The term “fees for technical services” as used in this Article means payments of any kind, other than those mentioned in Articles 14 and 15 of this Agreement as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical services being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

5. (a) Royalties and fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority, or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated.

(b) Where under sub-paragraph (a) royalties or fees for technical services do not arise in one of the Contracting States, and the royalties relate to the use of, or the right to use, the right or property, or the fees for technical services relate to services performed, in one of the Contracting States, the royalties or fees for technical services shall be deemed to arise in that Contracting State.

6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 13

CAPITAL GAINS

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base may be taxed in that other State.

3. Gains from the alienation of ships or aircraft operated in international traffic, or movable property pertaining to the operation of such ships or aircraft shall be taxable only in the Contracting State of which the alienator is a resident.

4. Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State.

5. Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed in that State.

6. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3, 4 and 5, shall be taxable only in the Contracting State of which the alienator is a resident.

ARTICLE 14

INDEPENDENT PERSONAL SERVICES

1. Income derived by an individual who is a resident of a Contracting State from the performance of professional services or other independent activities of a similar character shall be taxable only in that State except in the following circumstances when such income may also be taxed in the other Contracting State:

(a)      if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or

(b)      if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in any period of 12 -months; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State.

2. The term “professional services” includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, surgeons, dentists and accountants.

ARTICLE 15

DEPENDENT PERSONAL SERVICES

1. Subject to the provisions of Articles 16, 18, 19, 20 and 21, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

(a)      the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned, and

(b)      the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and

(c)      the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic, by an enterprise of a Contracting State may be taxed in that State.

ARTICLE 16

DIRECTORS FEES

Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors in a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17

ARTISTES AND SPORTSPERSONS

1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from -personal activities as such exercised in the other Contracting State, may be taxed in that other State.

2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

3. The provisions of paragraphs 1 and 2, shall not apply to income from activities performed in a Contracting State by entertainers or sportspersons if the activities are substantially supported by public funds of one or both of the Contracting States or of political subdivisions or local authorities thereof. In such a case, the income shall be taxable only in the Contracting State of which the entertainer or sportsperson is a resident.

ARTICLE 18

PENSIONS

Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.

ARTICLE 19

GOVERNMENT SERVICE

1.  (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other  Contracting State if the services are rendered in that State and the individual is a resident of that State who:

(i)      is a national of that State; or

(ii)      did not become a resident of that State solely for the purpose of rendering the services.

2.  (a) Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages and other similar remuneration and to pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

ARTICLE 20

PROFESSORS, TEACHERS AND RESEARCH SCHOLARS

1. A professor, teacher or research scholar who is or was a resident of the Contracting State immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college or other similar approved institution in that other Contracting State shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding two years from the date of his arrival in that other State.

2. This Article shall apply to income from research only if such research is undertaken by the individual in the public interest and not primarily for the benefit of some private person or persons.

3. For the purposes of this Article, an individual shall be deemed to be a resident of a Contracting State if he is a resident in that State in the fiscal year in which he visits the other Contracting State or in the immediately preceding fiscal year.

ARTICLE 21

STUDENTS

1. A student who is or was a resident of one of the Contracting States immediately before visiting the other Contracting State and who is present in that other Contracting State solely for the purpose of his education or training, shall besides grants, loans and scholarships be exempt from tax in that other State on:

(a)      payments made to him by persons residing outside that other State for the purposes of his maintenance, education or training; and

(b)      remuneration which he derives from an employment which he exercises in the other Contracting State if the employment is directly related to his studies.

2. The benefits of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this Article, for more than six consecutive years from the date of his first arrival in that other State.

ARTICLE 22

OTHER INCOME

1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

3. Notwithstanding the provisions of paragraph 1 if a resident of a Contracting State derives income from sources within the other Contracting State in form of lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any nature whatsoever, such income may be taxed in the other Contracting State.

ARTICLE 23

METHODS FOR ELIMINATION OF DOUBLE TAXATION

1. In India, the double taxation shall be eliminated as follows:

(a)      Where a resident of India derives income which, in accordance with the provisions of this Agreement, may be taxed in Macedonia, India shall allow as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in Macedonia. Such deduction shall not, however, exceed that portion of the tax as computed before the deduction is given, which is attributable, as the case may be, to the income which may be taxed in Macedonia.

(b)      Where in accordance with any provision of the Agreement income derived by a resident of India is exempt from tax in India, India may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.

2. In Macedonia, the double taxation shall be eliminated as follows:

(a)      Where a resident of Macedonia derives income which, in accordance with the provisions of this Agreement, may be taxed in India, Macedonia shall allow as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in India. Such deduction shall not, however, exceed that portion of the tax as computed before the deduction is given, which is attributable, as the case may be, to the income which may be taxed in India.

(b)      Where in accordance with any provision of the Agreement income derived by a resident of a Macedonia is exempt from tax in Macedonia, Macedonia may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.

ARTICLE 24

NON-DISCRIMINATION

1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.

2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favorably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. This provision shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which a company of the other Contracting State has in the first mentioned State at a rate of tax which is higher than that imposed on the profits of a similar company of the first mentioned Contracting State, nor as being in conflict with the provisions of paragraph 3 of Article 7.

3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 7 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.

4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.

5. The provisions of this Article shall apply to taxes covered by this Agreement.

ARTICLE 25

MUTUAL AGREEMENT PROCEDURE

1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement

2. The competent authority shall endeavor, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve, the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.

ARTICLE 26

EXCHANGE OF INFORMATION

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

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

3. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:

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

(b)      to supply information (including documents or certified copies of the documents) which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

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

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

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

6. A Contracting State may allow representatives of the competent authority of the other Contracting State to enter the territory of the first-mentioned Contracting State to interview individuals and examine records with the written consent of the persons concerned. The competent authority of the second-mentioned Contracting State shall notify the competent authority of the first-mentioned Contracting State of the time and place of the meeting with the individuals concerned.

7. At the request of the competent authority of one Contracting State, the competent authority of the other Contracting State may allow representatives of the competent authority of the first-mentioned Contracting State to be present at the appropriate part of a tax examination in the second-mentioned Contracting State.

8. If the request referred to in paragraph 7 is acceded to, the competent authority of the Contracting State conducting the examination shall, as soon as possible, notify the competent authority of the other Contracting State about the time and place of the examination, the authority or official designated to carry out the examination and the procedures and conditions required by the first-mentioned Contracting State for the conduct of the examination. All decisions with respect to the conduct of the tax examination shall be made by the Contracting State conducting the examination.

ARTICLE 27

ASSISTANCE IN THE COLLECTION OF TAXES

1. The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.

2. The term “revenue claim” as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount.

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

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

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

6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall only be brought before the courts or administrative bodies of that State. Nothing in this Article shall be construed as creating or providing any right to such proceedings before any court or administrative body of the other Contracting State.

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

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

(b)      in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection,

the competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first-mentioned State shall either suspend or withdraw its request.

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

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

(b)      to carry out measures which would be contrary to public policy (ordre public);

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

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

ARTICLE 28

LIMITATION OF BENEFITS

1. Nothing in this Agreement shall affect the application of the domestic provisions to prevent tax evasion or tax avoidance.

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

3. The case of legal entities not having bona fide business activities shall be covered by the provisions of this Article.

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

ARTICLE 29

MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.

ARTICLE 30

ENTRY INTO FORCE

1. The Contracting States shall notify each other in writing, through diplomatic channels, of the completion of the procedures required by the respective laws for the entry into force of this Agreement.

2. This Agreement shall enter into force on the date of the later of the notifications referred to in paragraph 1 of this Article.

3. The provisions of this Agreement shall have effect:

(a)      In the case of India:

(i)      in respect of taxes withheld at source, to income paid or credited on or after the first day of April of the calendar year next following the year in which the Agreement enters into force;

(ii)      in respect of other taxes on income chargeable for any fiscal year beginning on or after the first day of April of the calendar year next following the year in which the Agreement enters into force; and

(b)      In the case of Macedonia:

(i)      in respect of taxes withheld at source, to income paid or credited on or after the first day of January of the calendar year next following the year in which the Agreement enters into force;

(ii)      in respect of other taxes on income chargeable for any fiscal year beginning on or after the first day of January of the calendar year next following the year in which the Agreement enters into force.

ARTICLE 31

TERMINATION

This Agreement shall remain in force indefinitely until terminated by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year beginning after the expiration of five years from the date of entry into force of the Agreement. In such event, the Agreement shall cease to have effect:

(a) In the case of India:

(i)      in respect of taxes withheld at source, to income paid or credited on or after the first day of April of the calendar year next following the year in which the notice is given;

(ii)      in respect of other taxes on income chargeable for any fiscal year beginning on or after the first day of April of the calendar year next following the year in which the notice is given; and

(b) In the case of Macedonia:

(i)      in respect of taxes withheld at source, to income paid or credited on or after the first day of January of the calendar year next following the year in which the notice is given;

(ii)      in respect of other taxes on income chargeable for any fiscal year beginning on or after the first day of January of the calendar year next following the year in which the notice was given.

IN WITNESS WHEREOF the undersigned, duly authorized thereto, have signed this Agreement.

DONE in duplicate at Delhi this 17th day of December 2013, each in the Macedonian, Hindi and English languages, all texts being equally authentic. In case of divergence of interpretation, the English text shall prevail.

[F.NO.503/08/2004-FTD-I]

 

Draft GST Bill to be floated soon : 18-12-2015


The government would soon roll out a final draft of the goods and services tax (GST) bill and drastically prune central exemptions, a senior finance ministry official said on Thursday.

“The government will roll out the final GST draft paper in the public domain very soon,” said Rashmi Verma, special secretary in the department of revenue, at a conference organised by the PHD Chamber of Commerce.

Verma added the government would drastically prune the list of exemptions, now being enjoyed by business.

The Centre’s excise duty exemption list of around 300 items will be reduced to 90 items, in line with exemptions allowed by states from value-added tax.

States exempt unprocessed goods and those consumed by the poor like fruit, vegetables, salt, grain and coarse fabric.

The list of services exempt from levy will be reduced to include only essential services like health and education.

Reduction in exemptions would result in a seamless flow of GST and substantially arrest its cascading effect, Verma said.

Najib Shah, chairman, Central Board of Excise and Customs (CBEC), also said tax exemptions extended to business for expansion and diversification would have to go with the GST legislation becoming a reality.

The Congress has blocked passage of the Constitution amendment Bill for GST in the Rajya Sabha over key demands, including scrapping of the one per cent additional tax on interstate sales and incorporation of an 18 per cent peak tax rate within the Bill. The GST rollout is expected to be delayed beyond its target date of April 1, 2016.

“The journey towards GST has been long. We will have to see whether it (the Bill) is passed in this session or in the coming Budget session. But, I can say with full confidence that GST is going to be a reality very soon,” Verma said.

“GST will subsume all indirect taxes like excise duty, sales tax and service tax. We have set the goal of rolling out GST in 2016,” Verma added.

Finance Minister Arun Jaitley on Wednesday, in an address to business representatives, hinted at accepting the Congress demand of scrapping the one per cent additional tax for interstate sales, but stood firm on not incorporating the ceiling tax rate in the Constitution amendment Bill. He added the standard rate under GST, which would apply to a majority of goods, would be less than 18 per cent.

Chief Economic Advisor Arvind Subramanian has recommended a low GST rate of 12 per cent, a standard rate of 17-18 per cent, and a high rate of 40 for demerit goods like aerated drinks, luxury cars and tobacco.

A CUT ABOVE
The Centre’s excise duty exemption list of around 300 items will be reduced to 90 items, in line with exemptions allowed by states from VAT

States exempt unprocessed goods and those consumed by the poor like fruit, vegetables, salt, grain and coarse fabric

The list of services exempt from levy will be reduced to include only essential services like health and education

Reduction in exemptions would result in a seamless flow of GST and substantially arrest its cascading effect

Source : PTI

Notification No. : 27/2015 Dated: 18-12-2015


Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

Notification No. 27/2015-Service Tax

New Delhi, the 18th December, 2015

27 Agrahayana, 1937 Saka

G.S.R. 987 (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, 2015.

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

2. In the Service Tax Rules, 1994, in rule 6, in sub-rule (1), in the fourth proviso, for the words “State of Tamil Nadu”, the words State of Tamil Nadu and the Union Territory of Puducherry (except Mahe & Yanam)” shall be substituted.

(Himani Bhayana)

Under Secretary to the Government of India

[F.No. 137/78/2015-Service Tax]

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. 26/2015-SERVICE TAX, dated the 9th December, 2015 vide number G.S.R. 948 (E), dated the 9th December, 2015.

No. 22/2015 Dated: 17-12-2015


Allowability of employer’s contribution to funds for the welfare of employees in terms of section 43B(b) of the Income Tax Act – Circular – Dated 17-12-2015 – Income Tax

Circular No. 22/2015

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

New Delhi, 17th December, 2015

Subject:- Allowability of employer’s contribution to funds for the welfare of employees in terms of section 43B(b) of the Income Tax Act.

As per section 43B of the Act certain deductions are admissible only on payment basis. It is observed by the Board that some field officers disallow employer’s contributions to provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees, by invoking the provisions of section 43B of the Act, if it has been paid after the ‘due dates’, as per the relevant Acts.

2. The matter has been examined in light of the judicial decisions on this issue. In the case of Commissioner vs. Alom Extrusions Ltd, [2009] 185 TAXMAN 416 (SC), the Apex Court held that the amendments made in section 43B of the Act i.e, deletion of second proviso and amendment in the first proviso, being curative in nature are retrospectively applicable from 1.04.1988. It further held that by deleting the second proviso to section 43B of theAct and amending the first proviso, the contribution to welfare funds have been brought at par with the other duty, cess, fee, etc. Thus, the proviso is equally applicable to the welfare funds also. Therefore the deduction is allowable to the employer assessee if he deposits the contributions to welfare funds on or before the ‘due date’ of filing of return of income.

3. Accordingly, w.e.f. 1.4.1988, the settled position is that if the assessee deposits any sum payable by it by way of tax, duty, cess or fee by whatever name called under any law for the time being in force, or any sum payable by the assesse as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees, on or before the ‘due date’ applicable in his case for furnishing the return of income under section 139(1) of the Act, no disallowance can be made under section 43B of the Act.

4. In the light of the Supreme Court’s decision in the matter, the issue is well settled. Accordingly, the Board has decided that no appeals may henceforth be filled on this ground by the officers of the Department and appeals already filed, if any, on this ground before Courts/Tribunals may be withdrawan/ not pressed upon. This may be brought to the notice of all concerned.

5. It is clarified that this Circular does not apply to claim of deduction relating to employee’s contribution to welfare funds which are governed by section 36(1)(va) of the IT Act.

[F. No. 279/Misc./140/2015-ITJ]

(Ramanjit Kaur Sethi)

DCIT (OSD)(ITJ),

CBDT, New Delhi

Improved RS numbers by Budget session give govt hope for GST : 17-12-2015


The numbers in the Rajya Sabha will somewhat change by the latter half of the Budget session next year to give a clear two-thirds majority to political parties that support the goods and services tax (GST) Bill. This has given government strategists confidence that the tax reform Bill can be passed after April even if the Congress and All-India Anna Dravida Munnetra Kazhagam (AIADMK) were to oppose the Bill. Government strategists are, therefore, also mulling postponing the GST rollout date from April to June 2016.

Some in the government are still hopeful that the Congress will have a change of heart on the Bill after Saturday’s hearing in the National Herald case in a Delhi court. They have also proposed, on the suggestion of a senior Opposition leader, to call an all-party meet to break the logjam. But the dominant view is that the government will need to wait until the latter half of the Budget session if the Congress continues to remain obstinate on a couple of its demands. The Budget session starts in February-end and continues until the first week of May.

Currently, all parties barring the Congress (67 MPs) and AIADMK (12 MPs), support the Bill. In addition, the government believes most among the MPs nominated by the President might vote with the Congress, as they were sent to Parliament by the UPA government. (The President nominates 12 MPs, of which currently there are two vacancies and two others, Mani Shankar Aiyar and Bhalchandra Mungnekar later opted to be treated as part of the Congress.)

A Constitution amendment Bill needs to be passed by a two-thirds majority. Current strength of the Rajya Sabha is 242, with three vacancies. The Bill, if all members were to vote, will need 162 votes in favour. But the government only has confirmed support of 155. As many as 17 MPs will end their terms by April 2016, including five from the nominated category. These are Aiyar, Mungnekar, Javed Akhtar, B Jayashree and Mrinal Miri.

Of the 12 elected MPs set to retire by April, five are from the Congress, three from Communist Party of India (Marxist), two each of the BJP and Shiromani Akali Dal. Government strategists forecast that after these 17 are be elected or nominated, those in support of the GST will be in majority. It is also confident that the AIADMK could be persuaded to stage a walkout at the time of voting.

However, this thin advantage will be useless if the Congress, instead of voting on the Bill, chooses to protest. Passage of a Constitution amendment Bill requires that the House be in order. Rajya Sabha Chairman M Hamid Ansari is also a stickler for rules and does not favour passing of Bills in the din. On Wednesday, Bahujan Samaj Party chief Mayawati suggested that the SC/ST amendment Bill be passed in the din created by protested Congress MPs but the chair refused. Ansari’s term ends in August 2017.

On calling an all-party meeting, Parliamentary Affairs Minister M Venkaiah Naidu said: “I am not ruling it in. I am not ruling it out. An all party meet can happen on any issue.” Naidu had a word with Congress leader Mallikarjun Kharge but was tightlipped about the time and place of the next meeting of senior ministers with Congress leaders on GST.

Source : PTI

Notification No. : 93/2015 Dated: 16-12-2015


GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION No. 93/2015

New Delhi, the 16th December, 2015

INCOME-TAX

G.S.R. 978(E).- In exercise of the powers conferred by sub-section (6) of section 195 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 (21st Amendment) Rules, 2015.

(2) They shall come into force on the 1st day of April, 2016.

  1. In the Income-tax Rules, 1962(hereafter referred to as the said rules), for rule 37BB, the following rule shall be substituted, namely:-

37BB. Furnishing of information for payment to a non-resident, not being a company, or to a foreign company.- (1) The person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum chargeable under the provisions of the Act, shall furnish the following, namely:-

(i) the information in Part A of Form No.15CA, if the amount of payment or the aggregate of such payments, as the case may be, made during the financial year does not exceed five lakh rupees;

(ii) for payments other than the payments referred in clause (i), the information,-

(a) in Part B of Form No.15CA after obtaining,-

(I) a certificate from the Assessing Officer under section 197; or

(II) an order from the Assessing Officer under sub-section (2) or sub-section (3) of section 195;

(b) in Part C of Form No.15CA after obtaining a certificate in Form No. 15CB from an accountant as defined in the Explanation below sub-section (2) of section 288.

(2) The person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum which is not chargeable under the provisions of the Act, shall furnish the information in Part D of Form No.15CA.

(3) Notwithstanding anything contained in sub-rule (2), no information is required to be furnished for any sum which is not chargeable under the provisions of the Act, if,-

(i) the remittance is made by an individual and it does not require prior approval of Reserve Bank of India as per the provisions of section 5 of the Foreign Exchange Management Act, 1999 (42 of 1999) read with Schedule III to the Foreign Exchange (Current Account Transaction) Rules, 2000; or

(ii) the remittance is of the nature specified in column (3) of the specified list below:

SPECIFIED LIST

Sl. No. Purpose code as per RBI Nature of payment
(1) (2) (3)
1 S0001 Indian investment abroad-in equity capital (shares)
2 S0002 Indian investment abroad-in debt securities
3 S0003 Indian investment abroad-in branches and wholly owned subsidiaries
4 S0004 Indian investment abroad-in subsidiaries and associates
5 S0005 Indian investment abroad-in real estate
6 S0011 Loans extended to Non-Residents
7 S0101 Advance payment against imports
8 S0102 Payment towards imports-settlement of invoice
9 S0103 Imports by diplomatic missions
10 S0104 Intermediary trade
11 S0190 Imports below ₹ 5,00,000-(For use by ECD offices)
12 S0202 Payment for operating expenses of Indian shipping companies operating abroad.
13 S0208 Operating expenses of Indian Airlines companies operating abroad
14 S0212 Booking of passages abroad – Airlines companies
15 S0301 Remittance towards business travel.
16 S0302 Travel under basic travel quota (BTQ)
17 S0303 Travel for pilgrimage
18 S0304 Travel for medical treatment
19 S0305 Travel for education (including fees, hostel expenses etc.)
20 S0401 Postal services
21 S0501 Construction of projects abroad by Indian companies including import of goods at project site
22 S0602 Freight insurance – relating to import and export of goods
23 S1011 Payments for maintenance of offices abroad
24 S1201 Maintenance of Indian embassies abroad
25 S1202 Remittances by foreign embassies in India
26 S1301 Remittance by non-residents towards family maintenance and savings
27 S1302 Remittance towards personal gifts and donations
28 S1303 Remittance towards donations to religious and charitable institutions abroad
29 S1304 Remittance towards grants and donations to other Governments and charitable institutions established by the Governments
30 S1305 Contributions or donations by the Government to international institutions
31 S1306 Remittance towards payment or refund of taxes
32 S1501 Refunds or rebates or reduction in invoice value on account of exports
33 S1503 Payments by residents for international bidding.

 

(4) The information in Form No. 15CA shall be furnished,-

(i) electronically under digital signature in accordance with the procedures, formats and standards specified by the Principal Director General of Income-tax (Systems) under sub-rule (8) and thereafter printout of the said form shall be submitted to the authorised dealer, prior to remitting the payment; or

(ii) electronically in accordance with the procedures, formats and standards specified by the Principal Director General of Income-tax (Systems) under sub-rule (8) and thereafter signed printout of the said form shall be submitted to the authorised dealer, prior to remitting the payment.

(5) An income-tax authority may require the authorised dealer to furnish the signed printout of Form No.15CAreferred to in clause (ii) of sub-rule (4) for the purposes of any proceedings under the Act.

(6) The certificate in Form No. 15CB shall be furnished and verified electronically in accordance with the procedures, formats and standards specified by the Principal Director-General of Income-tax (Systems) under sub-rule (8).

(7) The authorised dealer shall furnish a quarterly statement for each quarter of the financial year in Form No.15CC to the Principal Director General of Income-tax (Systems) or the person authorised by the Principal Director General of Income-tax (Systems) electronically under digital signature within fifteen days from the end of the quarter of the financial year to which such statement relates in accordance with the procedures, formats and standards specified by the Principal Director General of Income-tax (Systems) under sub-rule (8).

(8) The Principal Director General of Income-tax (Systems) shall specify the procedures, formats and standards for the purposes of furnishing and verification of Form 15CA, Form 15CB and Form 15CC and shall be responsible for the day-to-day administration in relation to the furnishing and verification of information, certificate and quarterly statement in accordance with the provisions of sub-rules (4), (6) and (7).

Explanation.- For the purposes of this rule ‘authorised dealer’ means a person authorised as an authorised dealer under sub-section (1) of section 10 of the Foreign Exchange Management Act, 1999 (42 of 1999).”.

  1. In the said rules, in Appendix-II, for Form No.15CAand Form No. 15CB, the following Forms shall be substituted, namely:

Fading hope for GST as govt, Cong make no efforts for next meeting : 16-12-2015


Oppn MP says govt suffering from Cinderella syndrome, while CPI(M) alleges NDA sabotaging Bill

With only six working days of the ongoing winter session left, the likelihood of the passage of the goods and services tax (GST) Bill became remote because of the continuing disruption of parliamentary proceedings by the Opposition. Also, neither the government nor the Congress showed any keenness to meet again to take forward their negotiations on the issue.

The Opposition parties on Tuesday ensured repeated adjournments of the Rajya Sabha over the alleged Central Bureau of Investigation (CBI) raids at the office of Delhi Chief Minister Arvind Kejriwal. The Congress protested the “interference” of the governor of Arunachal Pradesh with the activities of the state government and over summoning of winter session of the Assembly “without the state government requesting for it”. The issue is likely to dominate Congress protests on Wednesday as well. In the Lok Sabha, the Congress staged a walkout to protest alleged atrocities on Dalit youths in Punjab.

Parliamentary Affairs Minister M Venkaiah Naidu and Finance Minister Arun Jaitley had met Congress’ Ghulam Nabi Azad, Anand Sharma and Jyotiraditya Scindia on Monday. The meeting was inconclusive, primarily as it was felt that Congress leader in the Lok Sabha Mallikarjun Kharge should also be present. Kharge was away in Karnataka.

On Tuesday, Kharge returned. According to sources, Naidu phoned Kharge to find whether the two sides could meet but there was no response from the Congress side. A senior Congress leader, in a reference to the government unwilling to accept his party’s three demands on GST, said there was no use “meeting when there was no meeting ground”.

A senior minister said the government was hopeful of a change in mood of the Congress post the hearing in the National Herald case on December 19. “Anything is possible in the last three days of the session,” the source said, confirming that Bharatiya Janata Party (BJP) MPs have been issued a “three-line whip” to be present in their respective Houses from Tuesday until the end of the session on December 23.

In the Lok Sabha, Biju Janata Dal’s Bhartruhari Mahtab said during a discussion that unless the GST Bill was passed its benefits were unlikely to accrue before 2019. “How long can this country wait? Will we wait till the 12th hour,” he said, likening India to Cinderella of the fairy tale who in her rush loses her slippers at midnight. He said the earlier government also suffered from the Cinderella syndrome, which generally refers to an unconscious desire that somebody will take care of you.

At the BJP Parliamentary Party meeting, Jaitley told party MPs that Congress was “changing its stand” everyday on the GST. The matter was also taken up by BJP leaders at a separate meeting with party chief Amit Shah during which they discussed how Congress was disrupting both the Houses on one pretext or the other.

Meanwhile, the Communist Party of India (Marxist) or CPI(M) blamed the government for parliamentary logjam which was stalling the GST Bill, claiming a section of the ruling dispensation was “sabotaging” it. “We have told the BJP to call an all-party meeting on the GST issue but it has not been called yet. We suspect the government itself is sabotaging GST, a section in the government is against the GST,” CPI(M) chief Sitaram Yechury said.

Source : The Economic Times

FM seeks Congress’ support to GST, says India can touch 9% growth : 16-12-2015


Jaitley asked Congress to think about the legacy the party will be leaving behind by opposing the GST bill

Contending that India has an opportunity to touch 9% growth, Finance Minister Arun Jaitley today made a fresh bid to end the deadlock on GST bill as he reached out to Congress, asking it to think about the “legacy” it would be leaving behind by opposing it.

Speaking in the Lok Sabha, Jaitley praised West Bengal Chief Minister Mamata Banerjee and Bihar Chief Minister Nitish Kumar for openly supporting GST and appealed to those opposing it that a message should not go to the world that Parliament in India is being an “obstruction”.

He said India is being seen as a “bright spot” when other major economies have slowed down and this opportunity to realise the full growth potential should be seized.

“It not difficult for India to grow at 8-9%. It is not impossible,” Jaitley said in the Lok Sabha while replying to a debate on the second batch of Supplementary Demand for Grants of Rs 56,256 crore which was later approved.

He said the best solution to poverty eradication is enabling the country to grow faster which will generate jobs and increase resources of the government.

“Those who try to create impediments want to poverty to perpetuate…. By short-sighted vision, we end up hurting the poor in this country,” the Finance Minister said.

He said GST (Goods and Services Tax) bill, which aims at reforming the direct taxation system in the country, can push the country’s growth by one and one-and-a-half percent.

Reaching out to main opposition party which is opposing the bill that is pending in Rajya Sabha, Jaitley said, “I would urge the current leadership of Congress party also to look at the history and legacy they want to leave behind. Support these measures so that we are able to grow faster. We have more money to get rid of poverty much faster.”

He noted that GST was first brought by the previous Congress-led government and was “unquestionably” the “collective wisdom of everybody… But today they oppose.”

Jaitley, who spoke in the absence of Congress which was boycotting the House over alleged ‘vendetta politics’, said he was conveying the message to the main opposition party through the Chair.

He hoped that the growth in the current year would be 7-7.5% and the fiscal deficit would be restricted to 3.9% of the GDP with quality “much superior” than previous government.

Source : PTI

NEWSLETTER DATED DEC 15, 2015 FOR THE IT INDUSTRY


S3-Newsletter dated December 15 2015

No. F. No. 385/26/2015-IT(B) Dated: 15-12-2015


Order under Section 119(2)(a) of the Income-tax Act, 1961-Extension of last date of payment of December instalment of Advance Tax for FY 2015-16 in respect of assessees in the State of Tamil Nadu and Union territory of Puducherry – Circular – Dated 15-12-2015 – Income Tax

F. No. 385/26/2015-IT(B)

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

North Block, New Delhi

15th December, 2015

Order under Section 119(2)(a) of the Income-tax Act, 1961-Extension of last date of payment of December instalment of Advance Tax for FY 2015-16 in respect of assessees in the State of Tamil Nadu and Union territory of Puducherry.

In exercise or power conferred under clause (a) of sub-clause (2) of Section 119 of the Income-tax Act, 1961, Central Board of Direct Taxes hereby extends the last date of payment of December instalment of advance tax for FY 2015-16 from 15th December, 2015 to 31st December, 2015 in case of all the assesses, corporate and other than corporate, in the State of Tamil Nadu and Union territory of Puducherry.

(Sandeep Singh)

Under Secretary to the Government of India

Tele: 23094182

No. 190/9/2015 Dated: 15-12-2015


Scope of Job Work and Manpower supply services – Applicability of service tax on the services received by apparel exporters in relation to fabrication of garments – Dated 15-12-2015 – Service Tax

Circular No.190/9/2015-Service Tax

F.No.354/153/2014-TRU

Government of India

Ministry of Finance

Department of Revenue

(Tax Research Unit)

Dated- 15th December, 2015

To,

Principal Chief Commissioners of Customs and Central Excise(All)

Principal Chief Commissioners of Central Excise & Service Tax (All)

Principal Director Generals of Goods and Service Tax/System/CEI

Director General of Audit/Tax Payer Services,

Principal Commissioners/ Commissioners of Customs and Central Excise (All)

Principal Commissioners/Commissioners of Central Excise and Service Tax (All)

Principal Commissioners/Commissioners of Service Tax (All)

Principal Commissioners/Commissioners LTU/Central excise/Service Tax (Audit)

Sub :- Applicability of service tax on the services received by apparel exporters in relation to fabrication of garments – reg.

Madam/Sir,

It has come to the notice of the Board that certain field formations are taking a view that service tax is payable on services received by the apparel exporters from third party for job work. Apparently field formations are taking a view that the services received by apparel exporters is of manpower supply, which neither falls under the negative list nor is specifically exempt. However, trade is of the view that the services received by them is of job work involving a process amounting to manufacture or production of goods, and thus would fall under negative list [section 66D (f)] and hence would not attract service tax.

2. The matter has been examined. The nature of manpower supply service is quite distinct from the service of job work. The essential characteristics of manpower supply service are that the supplier provides manpower which is at the disposal and temporarily under effective control of the service recipient during the period of contract. Service provider’s accountability is only to the extent and quality of manpower. Deployment of manpower normally rests with the service recipient. The value of service has a direct correlation to manpower deployed, i.e., manpower deployed multiplied by the rate. In other words, manpower supplier will charge for supply of manpower even if manpower remains idle.

2.1 On the other hand, the essential characteristics of job work service are that service provider is assigned a job e.g. fabrication/stitching, labeling etc. of garments in case of apparel. Service provider is accountable for the job he undertakes. It is for the service provider to decide how he deploys and uses his manpower. Service recipient is concerned only as regard the job work. In other words service receiver is not concerned about the manpower. The value of service is function of quantum of job work undertaken, i.e. number of pieces fabricated etc. It is immaterial as to whether the job worker undertakes job work in his premises or in the premises of service receiver.

3. Therefore, the exact nature of service needs to be determined on the facts of each case which would vary from case to case. The terms of agreement and scope of activity undertaken by the service provider would determine the nature of service being provided. A typical agreement that has been forwarded by the Apparel Export Promotion Council in respect of outsourced services contains following terms and condition,-

a. The contractor (service provider) is engaged for undertaking specific jobs.

b. The contractor is at liberty to decide the number of workers which are required for undertaking the jobs.

c. The job worker may undertake job in his premises or in the premises of service receiver;

d. Value of service is payable on per piece basis, depending upon item and style;

e. Service provider is liable to compensate the service recipient if the work is not as per the standard norm;

f. In case the work is executed by service provider at the site of service recipient, the service provider would indemnify the service receiver of any loss to inputs and infrastructure.

g. The employee deployed for the assigned job would be under the control/supervision of the service provider.

h. Payment would be at agreed piece rate basis.

Plain reading of this agreement makes it an agreement of job work applying the criterion outline in para 2 above.

4. However, every job work is not covered under the negative list. If the job work involves a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944, it would be covered under negative list in terms of Section 66D(f) read with section 65B (40) of the Finance Act, 1994.

5. The issue of applicability of service tax may accordingly be decided taking into account the nature of agreement/contract and the service being provided.

6. All concerned are requested to acknowledge the receipt of this circular.

7. Trade Notice/ Public Notice to be issued. Difficulty if any, in the implementation of the circular should be brought to the notice of the Board. Hindi version would follow.

Yours faithfully,

(Dr. Abhishek Chandra Gupta)

Technical Officer (TRU)

Notification No. : 26/2015 Dated: 9-12-2015


Amendment of Service Tax Rules, 1994 – 26/2015 – Dated 9-12-2015 – Service Tax

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

Notification No. 26/2015-Service Tax

New Delhi, the 9th December, 2015

18 Agrahayana, 1937 Saka

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 (Third Amendment) Rules, 2015.

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

2. In the Service Tax Rules, 1994, in rule 6, in sub-rule (1), after the third proviso, the following shall be inserted, namely :-

Provided also that in the case of an assessee in the State of Tamil Nadu, the service tax payable for the month of November, 2015, shall be paid to the credit of the Central Government by the 20th day of December, 2015

(Himani Bhayana)

Under Secretary to the Government of India

[F. No. 137/78/2015-Service Tax]

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. 25/2015-SERVICE TAX, dated the 12th November, 2015 vide number G.S.R. 855 (E), dated the 12th November, 2015.

GST’s fate uncertain as winter session nears close : 14-12-2015


The government and the opposition seem to be bracing for a battle of nerves over the GST and National Herald issues in both the Houses of Parliament from Monday when the penultimate week of the winter session begins.

The main opposition Congress has rejected the charge that it was blocking the GST Bill because of the court summons to party president Sonia Gandhi and her deputy Rahul Gandhi in the National Herald case, while BJP continues to insist there is a link between the two developments.

“I wish and pray that the GST (issue) is delinked (from the National Herald case),” Finance Minister Arun Jaitley said when asked whether he sees any link between the two issues.

Former Finance Minister and senior Congress leader P Chidambaram, however, said the ruling party was making a “bizarre link” and insisted the Congress has raised “genuine concerns” on the Goods and Services Tax (GST).

He rued that the opposition party has not received the “revised formulation” of the government on the issue after the party conveyed its suggestions on the bill to it.

Jaitley, however, contested Chidambaram’s remarks, saying the government had communicated its response to “responsible leaders” of that party. “I am not responsible for communication gap in that party,” he said.

Jaitley said that the three suggestions that have come from Congres now were “contrary to” what Chidambaram and his predecessor in Finance Ministry Pranab Mukherjee had proposed.

At the same time, Jaitley said, even on those “there is some meeting ground”, which the government has conveyed to Congress.

“These issues can be overcome provided there is willingness from Congress party to honestly support the GST,” he said.

While Jaitley stoutly rejected suggestions that the government had any role in the National Herald issue, saying neither Enforcement Directorate (ED) nor Income Tax department had taken any punitive action so far, Chidambaram flagged the “suspicion”. Jaitley also said the government was not a party to the dispute.

Chidambaram recalled that after BJP came to power, the ED conducted a preliminary enquiry and closed the matter, saying “no case” existed.

“The ED (director) was abruptly transferred and the case was re-opened. That answers the question why there is suspicion about the BJP’s motive…It (the issue) came to Parliament because the BJP did not remain neutral on this…that triggers a suspicion,” he said.

Meanwhile, Sonia Gandhi went into a huddle with senior party leaders at her 10, Janpath residence to chalk out the party’s strategy. Among those present in the meeting were Leader of Opposition in the Rajya Sabha Ghulam Nabi Azad and party’s deputy leader in the House Anand Sharma.

Source : PTI

Notification No. : 92/2015 Dated: 11-12-2015


Income-tax (20th Amendment) Rules, 2015 – 92/2015 – Dated 11-12-2015 – Income Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 92/2015

New Delhi, the 11th December, 2015

S.O. – In exercise of the powers conferred by section 295 read with sub-section (7) of section 115UB 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 (20th Amendment) Rules, 2015.

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

2. In the income-tax Rules, 1962, after rule 12CA, the following rule shall be inserted, namely:-

“Statement under sub-section (7) of section 115UB.

12CB.(1) The statement of income paid or credited by an investment fund to its unit holder shall be furnished by the person responsible for crediting or making payment of the income on behalf of an investment fund and the investment fund to the-

(i) unit holder by 30th day of June of the financial year following the previous year during which the income is paid or credited in Form No. 64C, duly verified by the person paying or crediting the income on behalf of the investment fund in the manner indicated therein; and

(ii) Principal Commissioner or the Commissioner of Income-tax within whose jurisdiction the Principal office of the investment fund is situated by 30th day of November of the financial year following the previous year during which the income is paid or credited, electronically under digital signature, in Form No. 64D duly verified by an accountant in the manner indicated therein.

(2) 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. 64D and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to the statements of income paid or credited so furnished under this rule.”

Centre-states differences persist over GST threshold : 11-12-2015


Differences remain between Centre and states over an appropriate threshold rate for the proposed national goods and services tax (GST). A committee of finance ministry and state government officials has been set up to look at it.

The governments of Karnataka, Uttar Pradesh and Rajasthan want a lower limit of Rs 10 lakh gross annual turnover. Centre and governments of Punjab and Delhi prefer Rs 25 lakh. GST would apply for units having a turnover above the threshold.

According to government data on the situation three years earlier, units in the Rs 10-25 lakh range of annual gross revenue comprised 60 per cent of all dealers but contributed only two per cent of average national tax revenue. The situation varies across states.

Chief Economic Advisor Arvind Subramanian wanted an even higher threshold at Rs 40 lakh in his panel’s GST report, saying this would ensure compliance and minimise the burden on smaller payers.

Under GST, gross turnover will be considered for exemption limit, as against net taxable income in the current regime.

“Even we feel the limit should be higher. Rs 10 lakh means nothing with inflation all around. In GST, we will look at gross turnover and even a small fruitseller will be earning that much,” argued an official. “We are collecting the latest data and will update and study the revenue implications for states. But, it is unlikely to be a significant change from the data we had three years ago.”

We will try to come back with the latest data by the next meeting, he added. Currently small-scale industries with an annual turnover of up to Rs 1.5 crore are exempted from central excise duty, but will lose the benefits under the GST regime.

North-Eastern states will have separate thresholds, which will be considered in a separate meeting. The Centre has proposed Rs 10 lakh threshold for N-E states.

The Subramanian panel has argued that a higher threshold will minimise the burden on small taxpayers, besides achieving social objectives as poorer households are more likely to buy from smaller outlets (such as kirana shops).

The current proposal is to have a common threshold of Rs 25 lakh for goods and services combined but raising this threshold, say up to Rs 40 lakh, may be considered, the report said.

It further said that as per the corporate income tax data, between turnover in the Rs 25-40 lakh range, there are 3.26 lakh registered entities, accounting for just over Rs 1.04 lakh crore in total turnover. “The benefit-cost ratio of minimising the compliance burden relative to the revenue foregone may need to be considered,” the panel said.

CROSSING THE THRESHOLD

The governments of Karnataka, Uttar Pradesh and Rajasthan want a lower limit of Rs 10 lakh gross annual turnover

Centre and govts of Punjab and Delhi prefer Rs 25 lakh

Chief Economic Advisor Arvind Subramanian wanted an even higher threshold at Rs 40 lakh in his panel’s GST report, saying this would ensure compliance and minimise burden on smaller payers

Source : PTI

Cabinet clears 20 major amendments to Real Estate Bill : 10-12-2015


The Cabinet has approved 20 major amendments to the real estate regulatory Bill that seeks to protect home buyers as well as help boost investments in the real estate industry.

These changes are based on the recommendations of a Rajya Sabha committee that examined the Bill pending in the upper house of Parliament.

Under the amendments, projects on at least 500 sq metres of area or with eight flats will have to be registered with the proposed regulatory authority, instead of .. of the minimum size of 1,000 sq metres suggested earlier, bringing a larger number of projects under the regulator’s ambit.

Builders will have to deposit at least 70% of the sale proceeds, including land cost, in an escrow account to meet construction cost, compared with the earlier proposal for 50% or less, and pay interest to home buyers for any default or delays at the same rate they charge them. Builders will be liable for structural defects for five years, instead of two years earlier.

Carpet area has been clearly defined under the new proposals to include usable spaces like kitchen and toilets. Garage will be kept out of the purview of definition of apartment. Formation of residents’ association is compulsory within three months of the allotment of a majority of units in a project.

The Bill seeks to allow aggrieved buyers to approach consumer courts at the district level, instead of only the real estate regulatory authorities proposed to be set up under the Bill. The The regulatory bodies will mostly come up in state capitals.

The government had made a few changes to the Bill earlier in December 2014. It had brought commercial real estate projects under the ambit of the Bill, made the provisions of the Bill applicable to all projects wherein sales are still in progress and put in place a system that would require consent of twothirds of the buyers in a project for changing project plans.

Getamber Anand, national president of the Confederation of Real Estate Developers’ Associations of India (CREDAI), said while builders welcome the changes, the Bill should not be retrospective in nature as it would lead to a lot of confusion and delays. Commercial real estate should be kept out of the ambit of the regulator, he said.

“Also, they still have not included sanctioning authorities in the Bill. So where do we go if there is a delay in getting approvals such as plinth certificates, occupancy certificate, electricity and water connections, even after the project has taken off. Without these permissions, even a completed project cannot be offered for possession to home buyers,” Anand said. These issues, he said, should be addressed so that they do not become a pain point for the industry.

Anuj Puri, chairman and country head at property consultancy JLL India, said the Bill will bring more transparency and accountability into the sector, which will in turn help reduce the cost of capital. This will be be good for both developers and buyers, Puri said.

“However, it needs to be ensured that it (the proposed regulator) does not become one more approval authority as we already have several of them,” he said. “To begin with, we could have started with large projects and then brought smaller ones under its ambit, as it will be too much of volume to handle at a time when we are starting with it.” The revised Bill includes an enabling provision for arranging insurance of land title,which is currently not available. This will benefit buyers and sellers in situations where the title of the land is held invalid.

The regulatory authorities will promote a single-window system of clearances for real estate projects. This will likely speed up construction work that now lags because of delays in getting permissions.

Regulatory authorities can grade projects along with grading of promoters, besides ensuring digitisation of land records. They will be required to make regulations within three months of the formation of the regulator as against six months proposed earlier.

States will have to make rules within six months of notification of the proposed Act as against the one year proposed earlier. Allottees shall take possession of houses in two months of issuance of occupancy certificate.

Under the new proposals, additional benches of appellate tribunals can be set up in a state if required for speedy adjudication of grievances.

A new provision has been created for imprisonment of up to three years in case of promoters and up to one year in case of real estate agents and buyers for violation of orders of the appellate tribunals or monetary penalties, or both.

Under the proposals, tribunals will have to adjudicate cases in 60 days as against 90 days proposed earlier. Regulatory authorities will have to dispose of complaints within 60 days. No such time limit was indicated earlier.

 Source : PTI

No. Press Release Dated: 10-12-2015


Clarification regarding defective notices issued to FII/FPIs – Circular – Dated 10-12-2015 – Income Tax

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

10th December, 2015

Press Release

Subject: Clarification regarding defective notices issued to FII/FPIs-reg.

Notices of defective returns were issued under section 139(9) of the Income-tax Act to Foreign Institutional Investors/Foreign Portfolio Investors (FIIs/FPIs) in cases where Balance Sheet and P&L account were not filled.

In order to overcome this difficulty, it is clarified that such returns will not be treated as defective in cases where the FIIs/FPIs:

i) is registered with SEBI

ii) has no Permanent Establishment/ Place of Business in India

iii) has provided basic information required under section 139(9)(f) of the Income-tax Act, if there is business income

All such cases , where the SEBI registration number has been provided by the FIIs/FPIs in the return for AY 2015-16 are being taken up for processing at CPC Bengaluru. For previous assessment years where the above information is not available in the Income Tax Return, FII/FPI may provide such details in their online response on the e-filing portal of the Income-tax Department (www.incometaxindiaefiling.gov.in) to the previously issued notice u/s 139(9) of the Income-tax Act.

(Shefali Shah)

Pr. CIT(OSD),

Official Spokesperson, CBDT

No proposal to relax e-filing norms under Companies Act: Government : 09-12-2015


There is no proposal before the government to relax rules pertaining to electronic filing of documents under the Companies Act, Parliament was informed today.

Currently, the Corporate Affairs Ministry provides end-to-end e-governance services on its MCA 21 portal, which occasionally faces software and hardware issues.

To address this, the ministry has taken several steps, including a dedicated e-governance division which intensively monitors not just performance of MCA 21, but work status at various registrar offices, timely resolution of stakeholder complaints and positive consideration of any suggestions.

“There is no proposal before the ministry for relaxing the rules pertaining to electronic filing of documents,” Corporate Affairs Minister Arun Jaitley said in a written reply to the Rajya Sabha.

He was replying to a query whether the ministry is intending to relax the existing set of stringent regulations in this regard.

In a separate written reply, Jaitley said the councils of the three professional institutes — ICAI, ICSI and ICAoI — are yet to take a final decision on setting up multi-disciplinary partnerships of their members.

The modalities are under discussion among the Institute of Chartered Accountants of India (ICAI), the Institute of Company Secretaries of India (ICSI) and the Institute of Cost Accountants of India (ICAoI), he added.

Source : The Hindu

 

Early passage of GST Bill unlikely : 09-12-2015


Congress in no mood to do business with the government before its demands are conceded.

The space Prime Minister Narendra Modi had created for political consensus over the Goods and Services Tax (GST), following his meeting with Congress president Sonia Gandhi and former Prime Minister Manmohan Singh, seemed to be shrinking as the National Herald controversy gained traction in Parliament on Tuesday.

High-level sources in the government told reporters that given the political situation, the Modi regime no longer expects the Constitution (122nd Amendment) Bill, meant to introduce the GST, to clear Parliament in the current session. “The Congress is stalling the GST Bill,” said a top source.

Speaking to The Hindu, Congress leader Anand Sharma said that the party plans to counter the ruling BJP not only over the National Herald controversy, but also challenge it over what he called a prolonged misuse of state organs and selective targeting of its leaders.

The GST debate, according to Mr.Sharma, could have to wait for the set of issues that the Congress plans to raise first in Parliament over the coming days. “We will wait to give our final response until the bill is tabled in Parliament.” For the Congress, the compelling issues it wants to raise range from its demand for the sacking of Minister of State V.K. Singh over his alleged “dog” remarks, to what Mr. Sharma described as financial misappropriations allegedly done by BJP leaders and their kin. “It [GST] was never going to be easy… If you look at the last statement of Ms.Sonia Gandhi, she has said that the government must agree to our key demands”.

Separately, pitching for early passage of the Bill in the Rajya Sabha, Union Finance Minister Arun Jaitley said that efforts to create hurdles for the pending reform would amount to damaging the country. “India desperately needs the GST…anybody tries to create hurdles in the passing of GST will be doing great damage to the country… It’s extremely important and all parties must come together,” Mr.Jaitley told a TV channel, expressing disappointment over the absence of a response from the Congress to the recommendation of a government-appointed panel on keeping the revenue neutral rate for GST at 15 per cent.

Mr.Jaitley said he conceded that the GST was an initiative started by the Congress party and said that the party, in supporting its passage, would act fair to its own programme as well as to the country.

Earlier, in a bid to ensure that the Bill clears Parliament in the current session so as to meet the April 1, 2016, target for roll out of the GST, Mr.Modi held talks with Ms.Gandhi and Mr.Singh. This was after the Congress, over a set of three broad demands, had not allowed the Bill to be taken up for passage during the monsoon session in the Rajya Sabha, where the government is dependent on that party’s support for the two-thirds majority required to pass it.

 

Notification No. : 91/2015 Dated: 8-12-2015


Notified Pension Fund under Section 80C(2)(xiv) – 91/2015 – Dated 8-12-2015 – Income Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 91/2015

New Delhi, the 8th December, 2015

S.O. (E) – In exercise of the powers conferred by clause (xiv) of sub-section 2 of the section 80C of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby specifies the HDFC Retirement Savings Fund, set up by the HDFC Mutual Fund registered under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 having registration No. MF/044/00/6, dated the 30th June 2000, as a pension fund for the purposes of the said section for the assessment year 2016-17 and subsequent assessment years.

This notification shall come into force from the date of its publication in the Official Gazette.

[F. No. 178/21/2014-ITA.I]

(Rohit Garg)

Deputy Secretary to the Govt. of India

Raghuram Rajan optimistic about passage of GST : 08-12-2015


Optimistic about the passage of long pending GST bill in the Parliament, Reserve Bank of India Governor Raghuram Rajan has told American investors that continued focus on fiscal consolidation and inflation will mean they will reach their targeted goal.

In an interaction with American financial institutional investors in New York last week at an event organised by US India Business Council, Rajan said another priority of the RBI is to clean up banks and their non-performing assets (NPAs).

Rajan said RBI’s continued focus on fiscal consolidation and inflation will mean that they will reach their targeted goals, according to a USIBC media statement.

Another priority is to clean up banks and their non-performing assets, he said. Intention is to give banks more powers to allow for greater recovery of money and give relevant stakeholders an active role in the resolution process, he observed.

During the interaction, Rajan said he is optimistic about the passage of GST and the opportunities for compromise that will help realise the goals of the GST – a unified tax market, improvement in tax collection and broadening the tax base, USIBC said.

Led by USIBC chairman and president and CEO of MasterCard, Ajay Banga, the discussion focused on issues such as inflation and fiscal deficit management, recent rate cuts and monetary policy, deepening capital markets, modernising India’s capital markets to mobilise investment in Indian infrastructure and world-class companies.

Industry’s desire for reforms also included further development of a corporate debt market, improved infrastructure trusts and debt fund structures, long-term rupee-denominated government securities, and an updated external commercial borrowing regime, USIBC said.

USIBC applauded the Indian government for its recent reform introduced in private sector banking that permits the total foreign holding in private banks to have a composite cap of 74% and eliminates existing sub-limits for FDI and FII capital (which were at 49%).

Exemption list to be pruned for GST

Banks and investors will have greater flexibility to raise capital and to meet the stringent capital adequacy norms. This reform is a critical step in supporting credit growth in the financial markets and the Indian economy, USIBC said.

“As global commercial institutions and investors, we remain profoundly committed to India as we continue to provide a variety of long-term resources – including capital, technology, and know-how – which will help advance the Prime Minister’s goals of financial stability, economic growth, digital access, and financial inclusion,” Banga said.

CEA defends GST rates, quells fears on ‘sin’ tax

USIBC president Mukesh Aghi said the Indian financial markets are an important driver for the country’s economic growth. “There needs to be a level playing field for global participants in India’s financial markets with clear, nationality-neutral regulations across all asset classes,” he said.

Source : PTI

GST tax rate finds room in draft law; provides clarity on structure : 07-12-2015


NEW DELHI: The draft goods & services tax (GST) law provides for tax rates in the legislation, partly addressing a key demand of Congress for a cap on the levy.

The law that’s in the works also suggests that all tax-related decisions will be under the purview of the proposed GST Council and that the states and the Centre will not be able to unilaterally exempt any good or service from the levy.

The law provides for full input tax credit flow, proposes a compounding scheme for turnover up to Rs 50 lakh and introduces the concept of tax on transaction value. This is absent in value-added and service taxes but is a feature of excise and customs duties.

“Work is going full throttle… The draft is being finalised,” said an official who is part of the deliberations on GST while confirming the broader details cited above.
The Narendra Modi government has been seeking to persuade Congress to drop its resistance to GST and help get parliamentary approvals needed so the April 1 deadline can be met for what is seen as a crucial economic reform. GST seeks to replace central and state taxes such as excise duty, service tax, value-added tax, entry tax and octroi with a single levy and create a unified national market.

Congress has set four conditions for backing the constitutional amendment Bill in Upper Hous where the ruling dispensation does not have requisite numbers.

The main opposition party wants the rate to be capped at 18% in the Constitution and the 1% levy on inter-state sales to be scrapped. It also wants an independent disputesettlement mechanism and voting power of three-fourths for states in place of the two-thirds suggested. The government is not inclined to impose a constitutional cap on the rate, which will be difficult to change, but has instead provided for the levy in the
the GST law.

In at least two key areas, building a consensus would appear to have become simpler. A panel headed by Chief Economic Adviser Arvind Subramanian has suggested a standard rate of 17-18% and recommended scrapping the 1% additional levy.

Talks with Congress likely soon

The recommendations provide the government with a good starting point for talks with Congress that are likely later this week. The draft law provides both rigidity and flexibility to GST framework by leaving decision-making with the GST Council, which is being proposed in the constitutional amendment Bill.

“This draft Act, though a work in progress, has finally given clarity regarding the structure and can be a good base for individual industries to assess the impact of GST on their business and represent to the government in case of issues,” EY Partner Bipin Sapra told ET.

Full input tax credit will also allow retailers to offset expenses against the total tax liability, such as that paid on a refrigerator in a chemist’s shop.

“Input tax credit provisions would be much broader and GST paid on any goods/services used in the course of, or in furtherance of, business would be allowed as credit.

This is good for businesses as their credit pool would be bigger and hopefully litigation would be reduced,” said Pratik Jain, partner, KPMG India. Under the current value-added tax regime, there is a compounding scheme for businesses below a turnover of Rs 50 lakh with a flat tax rate of 1% in many states.

Source : The Hindu

Refund rules need more than good intentions : 07-12-2015


The Central Board of Excise and Customs (CBEC) has issued instructions for speedy disbursal of part of refund claims of services exporters, under Rule 5 of the Cenvat Credit Rules, 2004. However, getting the certificate prescribed might not be easy.

Rule 5 allows refund of unutilised credit for exports made without payment of excise duty or service tax. The claims of many services’ exporters for such refunds are pending at the operating levels. CBEC now envisages provisional disbursement of 80 per cent of the amount claimed as refund within five working days of presenting a certificate, from the statutory auditor in the case of companies or a certificate from a chartered accountant (CA) for others, with an undertaking to return any excess payment. After making the provisional payment, the authorities have to check the refund claims for correctness and either sanction the balance amount or demand the excess amount paid provisionally.

This is available only for refund claims filed before March 1 this year that has not yet been disposed off. No time limit is prescribed for disbursal of the balance amount.

CBEC requires the statutory auditor or CA to certify that the refund claim is complete in all aspects, with the relevant documents filed within the prescribed time limit, the amount claimed as refund is correct as in their books of accounts and relevant records, the claim is in accordance with the relevant statutory provisions, the amount claimed is eligible to be taken as Cenvat credit in terms of the relevant rules and the services claimed to be exported qualify to be treated so.

Now, it might be difficult for most CAs to certify compliance with such legal requirements when doubts persist on many issues like eligibility for taking Cenvat credit, time limits, refund, etc, all under litigation at various levels.

The idea of provisional payment of 80 per cent of the refund claimed is not new. For select categories of merchandise exporters, CBEC circular 828/5/2006-CX, dated April 20, 2006, already provides for refund of 80 per cent of the unutilised credit within 15 days of presenting a claim, under the same Rule 5, and the balance 20 per cent within 45 days. This circular was made applicable to claim of refund of service tax on specified taxable services received by an exporter and also used for export of goods. However, the experience is that most authorities at the operating levels do not follow these instructions. Very few exporters might have received the provisional payments envisaged in above circulars.

There is no doubt that the intention behind the CBEC circulars is to help exporters of goods or services quickly get their refunds and, thus, improve their cash flow.

The good point about the latest circular from CBEC is that it prescribes a monitoring mechanism for a speedy refund and asks the principal commissioners to ensure there are no complaints about delay. CBEC should also prescribe a similar monitoring mechanism in respect of claims for refund of unutilised credit from merchandise exporters.

Source : PTI

No. 1012/19/2015-CX Dated: 2-12-2015


Suspension of benefits under North East Industrial and Investment Promoton Policy (NEIIPP), 2007 by DIPP and its bearing on Central Excise duty Exemption – Dated 2-12-2015 – Central Excise

Circular No.1012/19/2015-CX

F. No. 332/03/2014-TRU

Government of India

Ministry of Finance

(Department of Revenue)

Tax Research Unit

New Delhi, the 2nd December, 2015

To,

All Chief Commissioners of Central Excise.

All Chief Commissioners of Customs & Central Excise.

Subject: Suspension of benefits under North East Industrial and Investment Promotion Policy (NEIIPP), 2007 by DIPP and its bearing on Central Excise duty Exemption – Regarding.

Sir / Madam,

The undersigned is directed to refer to the above mentioned subject and to state as follows.

2. Doubts have been raised regarding availability or otherwise of central excise duty exemption under notification No.20/2007-Central Excise dated 25.04.2007 to new units or units undertaking substantial expansion after 01.12.2014 in the North Eastern Region including Sikkim pursuant to the suspension of fresh registrations by the Department of Industrial Policy & Promotion (DIPP) for the schemes under North East Industrial and Investment Promotion Policy (NEIIPP), 2007 with effect from 1.12.2014 vide OM No.10(1)/2014-DBA-II/ER dated 01.12.2014.

3. The matter has been examined in the Ministry in consultation with the DIPP. Fresh registrations for the schemes under NEIIPP, 2007 have been suspended by the DIPP essentially due to shortage of funds allocated to DIPP. Therefore, DIPP OM No.10(1)/2014- DBA-II/NER dated 01.12.2014 has not suspended the entire package of incentives offered for the schemes under NEIIPP, 2007 as such. Further, notification No.20/2007-Central Excise dated 25.04.2007 does not mandate registration under NEIIPP, 2007 to avail of the excise duty exemption thereunder.

4. In view of the above, it is clarified that new units or units undertaking substantial expansion after 01.12.2014 and upto the cut-off date of 31.03.2017 shall continue to he eligible for excise duty exemption under notification No.20/2007-Central Excise dated 25.04.2007 subject to the conditions specified thereunder.

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

6. Difficulties, if any, faced in the implementation of the instructions may be brought to the notice of the Ministry at an early date.

Yours faithfully,

(Mohit Tewari)

Under Secretary (TRU)

Notification No. : 357/2015-RB Dated: 7-12-2015


Foreign Exchange Management (Manner of Receipt and Payment) (Amendment) Regulations, 2015 – 357/2015-RB – Dated 7-12-2015 – Foreign Exchange Management

RESERVE BANK OF INDIA

(Foreign Exchange Department)

(CENTRAL OFFICE)

NOTIFICATION NO. 357/2015-RB

Mumbai, the 7th December, 2015

Foreign Exchange Management (Manner of Receipt and Payment) (Amendment) Regulations, 2015

G.S.R. 935(E).-In exercise of the powers conferred by Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999) and in partial modification of its Notification No.FEMA 14/2000-RB dated 3rd May, 2000, Reserve Bank of India makes the following amendments to Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000 namely;

1. Short title and commencement

i. These Regulations may be called the Foreign Exchange Management (Manner of Receipt and Payment) (Amendment) Regulations, 2015.

ii. They shall come into force on the date of their publication in the official Gazette.

2. Amendment to the Regulations

In the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000, in the Regulation 5, after sub-regulation (2) (b) following shall be added at (c), namely:

‘Any other mode of payment in accordance with the directions issued by the Reserve Bank of India to authorised dealers from time to time.’

A. K. PANDEY, Chief General Manager

 

India may move cautiously to cut interest rates on retail deposits: FM Jaitely : 05-12-2015


NEW DELHI: India will have to move cautiously on revising down interest rates on retail deposits, Finance Minister Arun Jaitley said on Friday, as it could hurt vulnerable sections such as retired employees.

The finance ministry had agreed to cut interest rates offered to millions of savers in about $137 billion federal deposit schemes, following a larger-than-expected rate cut of 50 basis points by the central bank in September. However, the decision has yet to be implemented.

Jaitley said cutting interest rates on small savings too radically could hurt some sections of society.

“We as an elected government have to look at it, in addition to the economic principle, with a tinge of political pragmatism because lots of people are dependent on it,” Jaitley said.

He said the government would move in that direction cautiously.

The Reserve Bank of India has been cutting rates this year to support the economy, but has been frustrated by commercial banks.

Bankers say transmission of lower rates through the system has been partially delayed as they fear depositors could shift funds to retail schemes if they reduced interest rates beyond a point.

While leaving policy rates unchanged at 6.75 percent on Tuesday, Rajan said he was focusing on the transmission of rate cuts passed earlier this year though he remained open to ease rates further.

“If deposit rates don’t ease, the banks’ ability and appetite to cut base ra .. rates too will be limited,” said Shubhada Rao, chief economist at Mumbai-based YES Bank.

Indian savers are getting 2-3 percent in real interest rates on their bank deposits as retail inflation has eased to near 5 percent from around 10 percent in 2013.

Analysts said the government would have to consider a cut in interest rates on retail deposits while keeping in mind the interest of small savers.

“The government has to cut the small savings’ rate enough to boost transmission, but not too much to hurt savers,” said Sonal Varma, an economist at Nomura. “A balancing act is required.”

 Source : Business Standard

‘Target non-TDS income group, cash economy to widen tax base’ : 4-12-2015


To widen the tax base, a Parliamentary panel today asked the government to use its resources with “strict vigil” over non-TDS income group and which are lying above Rs 5 lakh annual income bracket.

The Standing Committee on Finance, headed by M Veerappa Moily, in its report tabled in the Lok Sabha said that in the past a number of approaches have been ideated by the government with respect to broadening of the tax base.

The report said that government strongly believe that tim time has come to reinvent the tax collection approach i.e to move towards the untapped or lesser tapped brackets of income which mostly comprise the unorganised sector and the cash economy.

“For this purpose, the Committee would expect the Finance Ministry to diligently use their manpower and other resources with a strict vigil over non-TDS (Tax Deduction at Source) income group and which are lying above Rs 5 lakh annual income bracket,” it said.

This becomes more important in the light of the submission made by the Ministry that presently three out of four tax payers are from the sub-five lakh bracket, while tax collection from this bracket is merely around 12 per cent of the total tax collection, the report said.

The Committee are constrained to observe that on the question of tax arrears, the Department of Revenue clearly lacks a coherent vision.

The panel was for an emergent need of a two-pronged approach to tackle the menace of tax arrears – focused quantitative approach to tackle outstanding tax demands and recovering them in a time bound manner; and an enhanced qualitative approach especially at the level of Assessing Officers.

Assessing Officers need to be trained and equipped better for quality and realistic assessment, which will also correspondingly help in fixing accountability of concerned officials.

“This, the Committee hope, will help in minimising the quantum of tax arrears and also preventing/minimising further occurrence of tax arrears,” the report said.

The panel also believes that maintaining a centralised data-base on actual yield of searches and surveys would help analyse and throw light on the efficacy of these operations, thereby nailing the chronic and wilful tax evaders and safeguarding the interest of honest taxpayers.

Such a step will also ensure tax buoyancy in the long run, it added.

Source : PTI

GST Bill: government may go for compromise : 4-12-2015


Of the three objections the Congress has on the Goods and Services Tax Bill, it is becoming increasingly clear that the Modi government is prepared to address two: it is willing to scrap the one per cent additional origin tax proposed to help manufacturing states make up the losses they may incur due to GST by promising to make up those losses for five years and set up a grievance redressal mechanism.

On the third — capping the GST — a committee headed by the government’s Chief Economic Advisor Arvind Subramanian is preparing a report that could be out this week.

Instead of one fixed GST rate, the government is exploring the possibility of going for a “tax band,” which can start at a low of 18 per cent and a high of 24 per cent. The government feels that if there is a fixed rate in the constitutional amendment, any change in the future will be difficult. A tax band will ensure that any GST rate within it can be implemented.

Sourcec : Business Standard

Notification No.328/RB-2014 dated 03-12-2014


Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Amendment) Regulations, 2014 – 328/RB-2014 – Dated 3-12-2014 – Foreign Exchange Management

RESERVE BANK OF INDIA

(Foreign Exchange Department)

(Central Office)

NOTIFICATION No. FEMA.328/RB-2014

Mumbai, the 3rd December, 2014

Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Amendment) Regulations, 2014

G.S.R. 913(E).—In exercise of the powers conferred by clause (b) of Section 9 and clause (e) of sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank of India makes the following amendment in the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000, (Notification No. FEMA 10/2000-RB dated 3rd May, 2000), namely:—

1. Short title and commencement:—

(i) These Regulations may be called the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Amendment) Regulations, 2014.

(ii) These Regulations shall come into force from the date of their publication in the Official Gazette

2. Amendment to the Regulations:—

In the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000, (Notification No. FEMA. 10/2000-RB dated 3rd May, 2000), inRegulation 7, in sub-regulation (8),

(A) the existing clause (i) shall be substituted as follows:

“(8) (i) A citizen of a foreign State, resident in India, being an employee of a foreign company or a citizen of India, employed by a foreign company outside India and in either case on deputation to the office/branch/subsidiary/joint venture/group company in India of such foreign company may open, hold and maintain a foreign currency account with a bank outside India and receive the whole salary payable to him for the services rendered to the office/branch/subsidiary/joint venture/group company in India of such foreign company, by credit to such account, provided that income-tax chargeable under the Income-tax Act,1961 is paid on the entire salary as accrued in India.

(B) After clause (ii), the following shall be added, namely—

Explanation : For the purpose of this sub regulation, the expression ‘company’ shall include a ‘Limited Liability Partnership’ as defined under The Limited Liability Partnership Act, 2008”.

C. D. SRINIVASAN, Chief General Manager

Foot Note:

(i) The Principal Regulations were published in the Official Gazette vide G.S.R. No.393(E) dated May 5, 2000 in Part II, Section 3, sub-section (i) and subsequently amended as under:—

G.S.R.No. 675(E) dated 25.8.2000

G.S.R.No. 89(E) dated 12.2.2001

G.S.R.No. 103(E) dated 19.2.2001

G.S.R.No. 200(E) dated 21.3.2001

G.S.R.No. 5(E) dated 2.01.2002

G.S.R.No. 261(E) dated 09.04.2002

G.S.R.No. 474(E) dated 8.7.2002

G.S.R.No. 465(E) dated 2.7.2002

G.S.R.No. 755(E) dated 8.11.2002

G.S.R.No. 756(E) dated 8.11.2002

G.S.R.No. 224(E) dated 18.3.2003

G.S.R.No. 398(E) dated 14.5.2003

G.S.R.No. 452(E) dated 3.6.2003

G.S.R.No. 453(E) dated 4.6.2003

G.S.R.No. 11(E) dated 7.1.2004

G.S.R.No. 13(E) dated 07.01.2004

G.S.R.No. 209(E) dated 23.03.2004

G.S.R.No. 455(E) dated 30.06.2007

G.S.R.No. 778(E) dated 19.12.2007

G.S.R.No. 92(E) dated 15.02.2008

G.S.R.No. 838(E) dated 23.11.2009

G.S.R.No. 340(E) dated 21.04.2010

G.S.R.No. 491(E) dated 09.03.2011

G.S.R.No. 915(E) dated 21.12.2012

G.S.R.No. 385(E) dated 20.06.2013

GST Bill: Government reaches out to opposition in winter session : 03-12-2015


NEW DELHI: Keen to pass key bills including GST, Government today reached out to Opposition ahead of an expected stormy week of winter session, saying the credit goes to both the ruling party and the Opposition if Parliament transacts business.

Acknolwedging that Opposition has the majority in Rajya Sabha, Parliamentary Affairs Minister Venkaiah Naidu flagged the importance of collaborative parliamentary democracy and expressed happiness over the relative calm in Parliament in the last in the last three days of the session contrary to speculation.

Sources said that the ruling alliance members have been asked “not to get provoked” and engage in unncessary sparring with the Opposition as the government is keen to get through its pending legislative business.

The last Monsoon session was a complete washout and the government is running short of its deadline for the GST.

Thanking Oppostion for “restoring normalcy in both the Houses and move forward”, Naidu said that the functioning of Parliament so far comes as a relief to the people.

“The meeting between the Prime Minister (Narendra Modi) and Congress president (Sonia Gandhi) has been widely welcomed across the country. This response is a clear indication that people strongly want collaborative parliamentary democracy and not confrontationist politics.

“This is also a clear indication that people want Parliament to deliver on matters that concern their life and aspirations.I hope that this spirit of collaborative functioning of Parliament will continue to prevail for larger good,” he said.

Naidu said that the Prime Minister has made it clear that he prefers consensus based approach rather than going by the numbers of majority.

“Government has the numbers in the Lok Sabha while the opposition has it in Rajya Sabha. This dynamics of numbers highlights the need for collaboration in furthering the cause of the nation.

“In such a scenario, for any good work done by the Parliament by way of passing important legislations, credit goes to both the ruling and opposition. This in essence means, both the sides have equal stakes and responsibilities in ensuring effective functioning of Parliament,” Naidu said.

With the Opposition raising the issue of “intolerance” in a big way, the Parliamentary Affairs Minister also assured that there is “no place for intolerance in our country”.

“Both the ruling and opposition are equally concerned about any stray incidents betraying intolerance. Collectively, we need to promote unity and harmony. This message going out of Parliament would be a major outcome of this Winter session,” he said expressing hope that Parliament would go about passing major pending legislations including the GST.

Source : The Economic Times

No. LETTER F.NO.312/109/2015-OT Dated: 2-12-2015


Issue the refund of less than amount ₹ 50,000 in case of non-CASS cases direct by Revenue Secretary – Order-Instruction – Dated 2-12-2015 – Income Tax

LETTER F.NO.312/109/2015-OT

DATED 2-12-2015

I am directed to say that as on 1-11-2015, there were 2.07 lakh returns involving refund claims of ₹ 659 crore for AY 2013-14 and 12.90 lakh returns involving ₹ 4,837 crore for AY 2014-15 still pending for processing and issue of refunds. These returns have not been selected for scrutiny under CASS.

2. While reviewing the pendency of refunds, the Revenue Secretary has directed that refunds in respect of cases not selected under CASS and involving refund of less than ₹ 50,000/- for the assessment years 2013-14 and 2014-15 may be issued as early as possible. Most of the returns for AY 2013-14 have now been pushed by CPC-Bengaluru to AST, Similarly, some of the returns of AY 2014-15 may also have been pushed by CPC to the assessing officer.

3. In view of the above, it is requested that the Assessing Officers in your Region may kindly be advised to expeditiously process and determine refunds in non-CASS cases having claim of refund of less than ₹ 50,000/- and issue the same as early as possible.

This issues with the approval Member (Revenue), CBDT.

No. 20/2015 Dated: 2-12-2015


CIRCULAR NO : 20/2015

F. No. 275/192/2015-IT(B)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

North Block, New Delhi

Dated the 2nd December, 2015

SUBJECT: INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2015-16 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961.

Reference is invited to Circular No.17/2014 dated 10.12.2014 whereby the rates of deduction of income-tax from the payment of income under the head “Salaries” under Section 192 of the Income-tax Act, 1961 (hereinafter ‘the Act’), during the financial year 2014-15, were intimated. The present Circular contains the rates of deduction of income-tax from the payment of income chargeable under the head “Salaries” during the financial year 2015-16 and explains certain related provisions of the Act and Income-tax Rules, 1962 (hereinafter the Rules). The relevant Acts, Rules, Forms and Notifications are available at the website of the Income Tax Department-www.incometaxindia.gov.in.

2. RATES OF INCOME-TAX AS PER FINANCE ACT, 2015:

As per the Finance Act, 2015, income-tax is required to be deducted under Section 192 of the Act from income chargeable under the head “Salaries” for the financial year 2015-16 (i.e. Assessment Year 2016-17) at the following rates:

2.1 Rates of tax

A. Normal Rates of tax:

Sl No Total Income Rate of tax
1 Where the total income does not exceed ₹ 2,50,000/-. Nil
2 Where the total income exceeds ₹ 2,50,000/- but does not exceed ₹ 5,00,000/-. 10 per cent of the amount by which the total income exceeds ₹ 2,50,000/-
3 Where the total income exceeds ₹ 5,00,000/- but does not exceed ₹ 10,00,000/-. ₹ 25,000/- plus 20 per cent of the amount by which the total income exceeds ₹ 5,00,000/-.
4 Where the total income exceeds ₹ 10,00,000/-. ₹ 1,25,000/- plus 30 per cent of the amount by which the total income exceeds ₹ 10,00,000/-

B. Rates of tax for every individual, resident in India, who is of the age of sixty years or more but less than eighty years at any time during the financial year:

Sl No Total Income Rate of tax
1 Where the total income does not exceed ₹ 3,00,000/- Nil
2 Where the total income exceeds ₹ 3,00,000 but does not exceed ₹ 5,00,000/- 10 per cent of the amount by which the total income exceeds ₹ 3,00,000/-
3 Where the total income exceeds ₹ 5,00,000/- but does not exceed ₹ 10,00,000/- ₹ 20,000/- plus 20 per cent of the amount by which the total income exceeds ₹ 5,00,000/-.
4 Where the total income exceeds ₹ 10,00,000/- ₹ 1,20,000/- plus 30 per cent of the amount by which the total income exceeds ₹ 10,00,000/-

C. In case of every individual being a resident in India, who is of the age of eighty years or more at any time during the financial year:

Sl No

Total Income Rate of tax

1

Where the total income does not exceed ₹ 5,00,000/- Nil

2

Where the total income exceeds ₹ 5,00,000 but does not exceed ₹ 10,00,000/- 20 per cent of the amount by which the total income exceeds ₹ 5,00,000/-

4

Where the total income exceeds ₹ 10,00,000/- ₹ 1,00,000/- plus 30 per cent of the amount by which the total income exceeds ₹ 10,00,000/-

2.2 Surcharge on Income tax:

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section 111A or section 112 of the Income-tax Act, shall, in the case of every individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, having a total income exceeding one crore rupees, be increased by a surcharge for the purpose of the Union calculated at the rate of twelve per cent of such income-tax:

Provided that in the case of persons mentioned above having total income exceeding one crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

2.3.1 Education Cess on Income tax:

The amount of income-tax including the surcharge if any, shall be increased by Education Cess on Income Tax at the rate of two percent of the income-tax.

2.3.2 Secondary and Higher Education Cess on Income-tax:

An additional education cess is chargeable at the rate of one percent of income-tax including the surcharge if any, but not including the Education Cess on income tax as in 2.3.1.

3. SECTION 192 OF THE INCOME-TAX ACT, 1961: BROAD SCHEME OF TAX DEDUCTION AT SOURCE FROM “SALARIES”:

3.1 Method of Tax Calculation:

Every person who is responsible for paying any income chargeable under the head “Salaries” shall deduct income-tax on the estimated income of the assessee under the head “Salaries” for the financial year 2015-16. The income-tax is required to be calculated on the basis of the rates given above, subject to the provisions related to requirement to furnish PAN as per sec 206AA of the Act, and shall be deducted at the time of each payment. No tax, however, will be required to be deducted at source in any case unless the estimated salary income including the value of perquisites, for the financial year exceeds ₹ 2,50,000/- or ₹ 3,00,000/- or ₹ 5,00,000/-, as the case may be, depending upon the age of the employee.(Some typical illustrations of computation of tax are given at Annexure-I).

3.2 Payment of Tax on Perquisites by Employer:

An option has been given to the employer to pay the tax on non-monetary perquisites given to an employee. The employer may, at its option, make payment of the tax on such perquisites himself without making any TDS from the salary of the employee. However, the employer will have to pay the tax at the time when such tax was otherwise deductible i.e. at the time of payment of income chargeable under the head “salaries” to the employee.

3.2.1 Computation of Average Income Tax:

For the purpose of making the payment of tax mentioned in para 3.2 above, tax is to be determined at the average of income tax computed on the basis of rate in force for the financial year, on the income chargeable under the head “salaries”, including the value of perquisites for which tax has been paid by the employer himself.

3.2.2 Illustration:

The income chargeable under the head “salaries” of an employee below sixty years of age for the year inclusive of all perquisites is ₹ 4,50,000/-, out of which, ₹ 50,000/- is on account of non-monetary perquisites and the employer opts to pay the tax on such perquisites as per the provisions discussed in para 3.2 above.

STEPS:

Income Chargeable under the head “Salaries” inclusive of all perquisites ₹ 4,50,000/-
Tax on Total Salary (including Cess) ₹ 20,600/-
Average Rate of Tax [(20,600/4,50,000) X 100] 4.57%
Tax payable on ₹ 50,000/= (4.57% of 50,000) ₹ 2285/-
Amount required to be deposited each month ₹ 190 ((Rs. 190.40) =2285/12)

The tax so paid by the employer shall be deemed to be TDS made from the salary of the employee.

3.3 Salary From More Than One Employer:

Section 192(2) deals with situations where an individual is working under more than one employer or has changed from one employer to another. It provides for deduction of tax at source by such employer (as the tax payer may choose) from the aggregate salary of the employee, who is or has been in receipt of salary from more than one employer. The employee is now required to furnish to the present/chosen employer details of the income under the head “Salaries” due or received from the former/other employer and also tax deducted at source therefrom, in writing and duly verified by him and by the former/other employer. The present/chosen employer will be required to deduct tax at source on the aggregate amount of salary (including salary received from the former or other employer).

3.4 Relief When Salary Paid in Arrear or Advance:

3.4.1 Under section 192(2A) where the assessee, being a Government servant or an employee in a company, co-operative society, local authority, university, institution, association or body is entitled to the relief under Section 89(1) he may furnish to the person responsible for making the payment referred to in Para (3.1), such particulars in Form No. 10E duly verified by him, and thereupon the person responsible, as aforesaid, shall compute the relief on the basis of such particulars and take the same into account in making the deduction under Para(3.1) above.

Here “university” means a university established or incorporated by or under a Central, State or Provincial Act, and includes an institution declared under Section 3 of the University Grants Commission Act, 1956 to be a university for the purpose of that Act.

3.4.2 With effect from 1/04/2010 (AY 2010-11), no such relief shall be granted in respect of any amount received or receivable by an assessee on his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of a public sector company referred to in section 10(10C)(i) (read with Rule 2BA), a scheme of voluntary separation, if an exemption in respect of any amount received or receivable on such voluntary retirement or termination of his service or voluntary separation has been claimed by the assessee under section 10(10C) in respect of such, or any other, assessment year.

3.5 Information regarding Income under any other head:

(i) Section 192(2B) enables a taxpayer to furnish particulars of income under any head other than “Salaries” ( not being a loss under any such head other than the loss under the head “ Income from house property”) received by the taxpayer for the same financial year and of any tax deducted at source thereon. The particulars may now be furnished in a simple statement, which is properly signed and verified by the taxpayer in the manner as prescribed under Rule 26B(2) of the Rules and shall be annexed to the simple statement. The form of verification is reproduced as under:

I, …………………. (name of the assessee), do declare that what is stated above is true to the best of my information and belief.

It is reiterated that the DDO can take into account any loss only under the head “Income from house property”. Loss under any other head cannot be considered by the DDO for calculating the amount of tax to be deducted.

3.6 Computation of income under the head “ Income from house property”:

While taking into account the loss from House Property, the DDO shall ensure that the employee files the declaration referred to above and encloses therewith a computation of such loss from house property. Following details shall be obtained and kept by the employer in respect of loss claimed under the head “ Income from house property” separately for each house property:

a) Gross annual rent/value

b) Municipal Taxes paid, if any

c) Deduction claimed for interest paid, if any

d) Other deductions claimed

e) Address of the property

f) Amount of loan, if any; and

g) Name and address of the lender (loan provider)

3.6.1 Conditions for Claim of Deduction of Interest on Borrowed Capital for Computation of Income From House Property [Section 24(b)]:

Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital as under:-

(i) the deduction is allowed only in case of house property which is owned and is in the occupation of the employee for his own residence. However, if it is actually not occupied by the employee in view of his place of the employment being at other place, his residence in that other place should not be in a building belonging to him.

(ii) the quantum of deduction allowed as per table below:

Sl No Purpose of borrowing capital Date of borrowing capital Maximum Deduction allowable
1 Repair or renewal or reconstruction of the house Any time ₹ 30,000/-
2 Acquisition or construction of the house Before 01.04.1999 ₹ 30,000/-
3 Acquisition or construction of the house On or after 01.04.1999 ₹ 1,50,000/-(upto AY 2014-15)
₹ 2,00,000/-  (w. e. f. AY 2015-16)

In case of Serial No. 3 above

(a) The acquisition or construction of the house should be completed within3 years from the end of the FY in which the capital was borrowed. Hence, it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.

(b) Further any prior period interest for the FYs upto the FY in which the property was acquired or constructed (as reduced by any part of interest allowed as deduction under any other section of the Act) shall be deducted in equal installments for the FY in question and subsequent four FYs.

(c) The employee has to furnish before the DDO a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest payable. In case a new loan is taken to repay the earlier loan, then the certificate should also show the details of Principal and Interest of the loan so repaid.

3.7 Adjustment for Excess or Shortfall of Deduction:

The provisions of Section 192(3) allow the deductor to make adjustments for any excess or shortfall in the deduction of tax already made during the financial year, in subsequent deductions for that employee within that financial year itself.

3.8 Salary Paid in Foreign Currency:

For the purposes of deduction of tax on salary payable in foreign currency, the value in rupees of such salary shall be calculated at the “Telegraphic transfer buying rate” of such currency as on the date on which tax is required to be deducted at source ( see Rule 26).

4. PERSONS RESPONSIBLE FOR DEDUCTING TAX AND THEIR DUTIES:

4.1. As per section 204(i) of the Act, in the context of payments other than payments by the Central Government of the State Government the “persons responsible for paying” for the purpose of Section 192 means the employer himself or if the employer is a Company, the Company itself including the Principal Officer thereof. Further, as perSection 204(iv), in case the credit, or as the case may be, the payment is made by or on behalf of Central Government or State Government, the DDO or any other person by whatever name called, responsible for crediting, or as the case may be, paying such sum is the “persons responsible for paying” for the purpose ofSection 192.

4.2. The tax determined as per para 9 should be deducted from the salary u/s 192 of the Act.

4.3. Deduction of Tax at Lower Rate:

If the jurisdictional TDS officer of the Taxpayer issues a certificate of No Deduction or Lower Deduction of Tax under section 197 of the Act, in response to the application filed before him in Form No 13 by the Taxpayer; then the DDO should take into account such certificate and deduct tax on the salary payable at the rates mentioned therein.(see Rule 28AA). The Unique Identification Number of the certificate is required to be reported in Quarterly Statement of TDS (Form 24Q).

4.4. Deposit of Tax Deducted:

Rule 30 prescribes time and mode of payment of tax deducted at source to the account of Central Government.

4.4.1. Due dates for payment of TDS:

Prescribed time of payment/deposit of TDS to the credit of Central Government account is as under:

a) In case of an Office of Government:

Sl No. Description Time up to which to be deposited.

1

Tax deposited without Challan [Book Entry] SAME DAY

2

Tax deposited with Challan 7TH DAY NEXT MONTH

3

Tax on perquisites opt to be deposited by the employer. 7TH DAY NEXT MONTH

b) In any case other than an Office of Government

Sl No. Description Time up to which to be deposited.
1 Tax deducted in March 30th APRIL NEXT FINANCIAL YEAR
2 Tax deducted in any other month 7TH DAY NEXT MONTH
3 Tax on perquisites opted to be deposited by the employer 7TH DAY NEXT MONTH

However, if a DDO applies before the jurisdictional Additional/Joint Commissioner of Income Tax to permit quarterly payments of TDS under section 192, the Rule 30(3) allows for payments on quarterly basis and as per time given in Table below:

Sl. No. Quarter of the financial year ended on Date for quarterly payment
1 30th June 7th July
2 30th September 7th October
3 31st December 7th January
4 31st March 30th April next Financial Year

4.4.2 Mode of Payment of TDS

4.4.2.1 Compulsory filing of Statement by PAO, Treasury Officer, etc in case of payment of TDS by Book Entry u/ s 200 (2A):

In the case of an office of the Government, where tax has been paid to the credit of the Central Governmentwithout the production of a challan [Book Entry], the Pay and Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer or any other person by whatever name called to whom the deductor reports about the tax deducted and who is responsible for crediting such sum to the credit of the Central Government, shall‐

(a) submit a statement in Form No. 24G under section 200 (2A) within ten days from the end of the month to the agency authorized by the Director General of Income‐tax (Systems) [TIN Facilitation Centres currently managed by M/s National Securities Depository Ltd] in respect of tax deducted by the deductors and reported to him for that month; and

(b) intimate the number (hereinafter referred to as the Book Identification Number or BIN) generated by the agency to each of the deductors in respect of whom the sum deducted has been credited. BIN consist of receipt number of Form 24G, DDO sequence number in Form No. 24G and date on which tax is deposited.

If the PAO/CDDO/TO etc, as stated above, fails to deliver the statement as required u/s 200(2A), he will be liable to pay, by way of penalty, under section 272A(2)(m), a sum which shall be ₹ 100/- for every day during which the failure continues. However, the amount of such penalty shall not exceed the amount of tax which is deductable at source.

The procedure of furnishing Form 24G is detailed in Annexure III. PAOs/DDOs should go through the FAQs in Annexure IV to understand the correct process to be followed. The ZAO / PAO of Central Government Ministries is responsible for filing of Form No. 24G on monthly basis. The person responsible for filing Form No. 24G in case of State Govt. Departments is shown at Annexure V.

The procedure of furnishing Form 24G is detailed in Annexure IV. PAOs/DDOs should go through the FAQs therein to understand the correct process to be followed.

4.4.2.2 Payment by an Income Tax Challan:

(i) In case the payment is made by an income-tax challan, the amount of tax so deducted shall be deposited to the credit of the Central Government by remitting it, within the time specified in Table in para 4.4.1 above, into any office of the Reserve Bank of India or branches of the State Bank of India or of any authorized bank;

(ii) In case of a company and a person (other than a company), to whom provisions of section 44AB are applicable, the amount deducted shall be electronically remitted into the Reserve Bank of India or the State Bank of India or any authorised bank accompanied by an electronic income-tax challan (Rule125).

The amount shall be construed as electronically remitted to the Reserve Bank of India or to the State Bank of India or to any authorized bank, if the amount is remitted by way of:

(a) internet banking facility of the Reserve Bank of India or of the State Bank of India or of any authorized bank; or

(b) debit card. {Notification No.41/2010 dated 31st May 2010}

4.5 Interest, Penalty & Prosecution for Failure to Deposit Tax Deducted:

4.5.1 If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Central Government within the prescribed time, he shall be liable to action in accordance with the provisions of section 201 and shall be deemed to be an assessee-in-default in respect of such tax and liable for penal action u/s 221 of the Act. Further Section 201(1A) provides that such person shall be liable to pay simple interest

(i) at the rate of 1% for every month or part of the month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and

(ii) at the rate of one and one-half percent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid.

Such interest, if chargeable, is mandatory in nature and has to be paid before furnishing of quarterly statement of TDS for respective quarter.

4.5.2 Section 271C inter alia lays down that if any person fails to deduct whole or any part of tax at source or fails to pay the whole or part of tax under the second proviso to section 194B, he shall be liable to pay, by way of penalty, a sum equal to the amount of tax not deducted or paid by him.

4.5.3 Further, section 276B lays down that if a person fails to pay to the credit of the Central Government within the prescribed time, as above, the tax deducted at source by him or tax payable by him under the second proviso to Section 194B, he shall be punishable with rigorous imprisonment for a term which shall be between 3 months and 7 years, along with fine.

4.6 Furnishing of Certificate for Tax Deducted (Section 203):

4.6.1 Section 203 requires the DDO to furnish to the employee a certificate in Form 16 detailing the amount of TDS and certain other particulars. Rule 31 prescribes that Form 16 should be furnished to the employee by 31st May after the end of the financial year in which the income was paid and tax deducted. Even the banks deducting tax at the time of payment of pension are required to issue such certificates. Revised Form 16 annexed to Notification No 11 dated 19-02-2013 is enclosed. The certificate in Form 16 shall specify

(a) Valid permanent account number (PAN) of the deductee;

(b) Valid tax deduction and collection account number (TAN) of the deductor;

(c) (i) Book identification number or numbers (BIN) where deposit of tax deducted is without production of challan in case of an office of the Government;

(ii) Challan identification number or numbers (CIN*) in case of payment through bank.

(*Challan identification number (CIN) means the number comprising the Basic Statistical Returns (BSR) Code of the Bank branch where the tax has been deposited, the date on which the tax has been deposited and challan serial number given by the bank.)

(d) Receipt numbers of all the relevant quarterly statements of TDS (24Q). The receipt number of the quarterly statement is of 8 digit.

Further as per Circular 04/2013 dated 17-04-2013 all deductors (including Government deductors who deposit TDS in the Central Government Account through book entry) shall issue the Part A of Form No. 16, by generating and subsequently downloading it through TRACES Portal and after duly authenticating and verifying it, in respect of all sums deducted on or after the 1st day of April, 2012 under the provisions of section 192 of Chapter XVII-B. Part A of Form No 16 shall have a unique TDS certificate number. ‘Part B (Annexure)’ of Form No. 16 shall be prepared by the deductor manually and issued to the deductee after due authentication and verification alongwith the Part A of the Form No. 16.

It may be noted that under the new TDS procedure, TAN of deductee/ PAN of the deductee and receipt number of TDS statement filed by the deductor act as unique identifier for granting online credit of TDS to the decutee. Hence due care should be taken in filling these particulars. Due care should also be taken in indicating correct CIN/ BIN in TDS statement.

If the DDO fails to issue these certificates to the person concerned, as required by section 203, he will be liable to pay, by way of penalty, under section 272A(2)(g), a sum which shall be ₹ 100/- for every day during which the failure continues.

It is, however, clarified that there is no obligation to issue the TDS certificate in case tax at source is not deductible/deducted by virtue of claims of exemptions and deductions.

[Note: TRACES is a web-based application of the Income - tax Department that provides an interface to all stakeholders associated with TDS administration. It enables viewing of challan status, downloading of NSDL Conso File, Justification Report and Form 16 / 16A as well as viewing of annual tax credit statements (Form 26AS). Each deductor is required to Register in the Traces portal. Form 16/16A issued to deductees should mandatorily be generated and downloaded from the TRACES portal].

Certain essential points regarding the filing of the Statement and obtaining TDS certificates are mentioned below:

(a) TDS certificate (Form16) would be generated for the deductee only if Valid PAN is correctly mentioned in the Annexure II of Form 24Q in Quarter 4 filed by the deductor. Moreover, employers are advised to ensure in Form 16 that the status of “matching” with respect to “Form No. 24G/OLTAS” is ‘F’. If the status of matching other than ‘F’, kindly take necessary action promptly to rectify the same. It is pertinent to mention here that certain facilities have been provided to the deductors at website www.tdscpc.gov.in/ including online correction of statements (Form 24Q).

(b) The employer should quote the gross amount of salary (including any amount exempt under section 10 and the deductions under chapter VI A) in column 321 (Amount paid/credited) of Annexure I of Form 24Q as per NSDL RPU (hereafter Return Preparation Utility).

(c) The employer should quote the amount of salary excluding any amount exempt under section 10 in column 333 (Total amount of salary) of Annexure II of Form 24Q as per NSDL RPU.

(d) TDS on Income (including loss from House Property) under any Head other than the head ‘Salaries’ offered for TDS (shown in column 339) can be shown in column 350 (Reported amount of TDS by previous employer, as per NSDL RPU.

(e) Employer is advised to quote Total Taxable Income (Column 344) in Annexure II without rounding-off and TDS should be deducted and reported accordingly i.e. without rounding-off of TDS also.

Example:

Total Taxable Income Total Taxable Income (Rounded Off) TDS to be Deducted TDS Deducted/ Reported after rounding-off of income Short Deduction
Rs.1350094 ₹ 1350090 ₹ 235028.20 ₹ 235027 Rs.1.20

4.6.2. If an assessee is employed by more than one employer during the year, each of the employers shall issue Part A of the certificate in Form No. 16 pertaining to the period for which such assessee was employed with each of the employers and Part B may be issued by each of the employers or the last employer at the option of the assessee.

4.6.3. Authentication by Digital Signatures:

(i) Where a certificate is to be furnished in Form No. 16, the deductor may, at his option, use digital signatures to authenticate such certificates.

(ii) In case of certificates issued under clause (i), the deductor shall ensure that

(a) the conditions prescribed in para 4.6.1 above are complied with;

(b) once the certificate is digitally signed, the contents of the certificates are not amenable to change; and

(c) the certificates have a control number and a log of such certificates is maintained by the deductor.

  • The digital signature is being used to authenticate most of the e-transactions on the internet as transmission of information using digital signature is failsafe. It saves time specially in organisations having large number of employees where issuance of certificate of deduction of tax with manual signature is time consuming (Circular no 2 of 2007 dated 21.05.2007)

4.6.4. Furnishing of particulars pertaining to perquisites, etc (Section 192(2C):

4.6.4.1 As per section 192(2C), the responsibility of providing correct and complete particulars of perquisites or profits in lieu of salary given to an employee is placed on the person responsible for paying such income i.e., the person responsible for deducting tax at source. The form and manner of such particulars are prescribed in Rule 26A, Form 12BA (Annexure II) and Form 16 of the RulesInformation relating to the nature and value of perquisites is to be provided by the employer in Form 12BA in case salary paid or payable is above ₹ 1,50,000/-. In other cases, the information would have to be provided by the employer in Form 16 itself.

4.6.4.2 An employer, who has paid the tax on perquisites on behalf of the employee as per the provisions discussed in para 3.2 of this circular, shall furnish to the employee concerned, a certificate to the effect that tax has been paid to the Central Government and specify the amount so paid, the rate at which tax has been paid and certain other particulars in the amended Form 16.

4.6.4.3 The obligation cast on the employer under Section 192(2C) for furnishing a statement showing the value of perquisites provided to the employee is a crucial responsibility of the employer, which is expected to be discharged in accordance with law and rules of valuation framed there under. Any false information, fabricated documentation or suppression of requisite information will entail consequences thereof provided under the law. The certificates in Forms 16 and/or Form 12BA specified above, shall be furnished to the employee by 31st May of the financial year immediately following the financial year in which the income was paid and tax deducted. If he fails to issue these certificates to the person concerned, as required by section 192(2C), he will be liable to pay, by way of penalty, under section 272A(2)(i), a sum which shall be ₹ 100/- for every day during which the failure continues.

As per Section 139C of the Act, the Assessing Officer can require the taxpayer to produce Form 12BA alongwith Form 16, as issued by the employer.

4.6.5 DDOs empowered to obtain evidence of proof or particulars of the prescribed claim (including claim for set-off of loss) under the section 192(2D):

DDOs have been authorized u/s 192 to allow certain deductions, exemptions or allowances or set-off of certain loss as per the provisions of the Act for the purpose of estimating the income of the assessee or computing the amount of tax deductible under the said section. The evidence /proof /particulars for some of the deductions/exemptions/allowances/set-off of loss claimed by the employee such as rent receipt for claiming deduction in HRA, evidence of interest payments for claiming loss from self-occupied house property, etc is not available to the DDO. To bring certainity and uniformity in this matter, Finance Act, 2015 inserted section 192(2D). Section 192(2D) provides that person responsible for paying (DDOs) shall obtain from the assessee evidence or proof or particular of the prescribed claim (including claim for set off of loss) in the form and manner as may be prescribed.

4.7 Mandatory Quoting of PAN and TAN:

4.7.1 Section 203A of the Act makes it obligatory for all persons responsible for deducting tax at source to obtain and quote the Tax deduction and collection Account No (TAN) in the challans, TDS-certificates, statements and other documents. Detailed instructions in this regard are available in this Department’s Circular No.497 [F.No.275/118/ 87-IT(B) dated 9.10.1987]. If a person fails to comply with the provisions of section 203A, he will be liable to pay, by way of penalty, under section 272BB, a sum of ten thousand rupees. Similarly, as per Section 139A(5B), it is obligatory for persons deducting tax at source to quote PAN of the persons from whose income tax has been deducted in the statement furnished u/s 192(2C), certificates furnished u/s 203 and all statements prepared and delivered as per the provisions of section 200(3) of the Act.

4.7.2 All tax deductors are required to file the TDS statements in Form No.24Q (for tax deducted from salaries). As the requirement of filing TDS certificates alongwith the return of income has been done away with, the lack of PAN of deductees is creating difficulties in giving credit for the tax deducted. Tax deductors are, therefore, advised to procure and quote correct PAN details of all deductees in the TDS statements for salaries in Form 24Q. Taxpayers are also liable to furnish their correct PAN to their deductors. Non-furnishing of PAN by the deductee (employee) to the deductor (employer) will result in deduction of TDS at higher rates u/s 206AA of the Act mentioned in para 4.8 below.

4.8 Compulsory Requirement to furnish PAN by employee (Section 206AA):

4.8.1 Section 206AA in the Act makes furnishing of PAN by the employee compulsory in case of receipt of any sum or income or amount, on which tax is deductible. If employee (deductee) fails to furnish his/her PAN to the deductor , the deductor has been made responsible to make TDS at higher of the following rates:

i) at the rate specified in the relevant provision of this Act; or

ii) at the rate or rates in force; or

iii) at the rate of twenty per cent.

The deductor has to determine the tax amount in all the three conditions and apply the higher rate of TDS.However, where the income of the employee computed for TDS u/s 192 is below taxable limit, no tax will be deducted. But where the income of the employee computed for TDS u/s 192 is above taxable limit, the deductor will calculate the average rate of income-tax based on rates in force as provided in sec 192. If the tax so calculated is below 20%, deduction of tax will be made at the rate of 20% and in case the average rate exceeds 20%, tax is to be deducted at the average rate. Education cess @ 2% and Secondary and Higher Education Cess @ 1% is not to be deducted, in case the tax is deducted at 20% u/s 206AA of the Act.

4.9 Statement of deduction of tax under section 200(3) [Quarterly Statement of TDS]:

4.9.1 The person deducting the tax (employer in case of salary income), is required to file duly verified Quarterly Statements of TDS in Form 24Q for the periods [details in Table below] of each financial year, to the TIN Facilitation Centres authorized by DGIT (System’s) which is currently managed by M/s National Securities Depository Ltd (NSDL). Particulars of e-TDS Intermediary at any of the TIN Facilitation Centres are available at http://www.incometaxindia.gov.in and http://tin-nsdl.com portals. The requirement of filing an annual return of TDS has been done away with w.e.f. 1.4.2006. The quarterly statement for the last quarter filed in Form 24Q(as amended by Notification No. S.O.704(E) dated 12.5.2006) shall be treated as the annual return of TDS. Due dates of filing this statement quarterwise is as in the Table below.

TABLE: Dates of filing Quarterly Statements E-TDS Return 24Q

Sl No Return for Quarter ending Due date for Government Offices Due date for Other Deductors
1 30th June 31st July 15th July
2 30th September 31st October 15th October
3 31st December 31st January 15th January
4 31st March 15th May 15th May

4.9.2 The statements referred above may be furnished in paper form or electronically under digital signature or alongwith verification of the statement in Form 27A of verified through an electronic process in accordance with the procedures, formats and standards specified by the Director General of Income‐tax (Systems). The procedure for furnishing the e-TDS/TCS statement is detailed at Annexure VI.

4.9.3 All Returns in Form 24Q are required to be furnished in electronically except in case where the number of deductee records is less than 20 and deductor is not an office of Government, or a company or a person who is required to get his accounts audited under section 44AB of the Act. [Notification No. 11 dated 19.02.2013].

4.9.4 Fee for default in furnishing statements (Section 234E):

If a person fails to deliver or caused to be delivered a statement within the time prescribed in section 200(3) in respect of tax deducted at source on or after 1.07.2012 he shall be liable to pay, by way of fee a sum of ₹ 200 for every day during which the failure continues. However, the amount of such fee shall not exceed the amount of tax which was deductible at source. This fee is mandatory in nature and to be paid before furnishing of such statement.

4.9.5 Rectification of mistake in filing TDS Statement:

A DDO can also file a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered earlier.

4.9.6 Penalty for failure in furnishing statements or furnishing incorrect information (section 271H):

If a person fails to deliver or caused to be delivered a statement within the time prescribed in section 200(3) or furnishes an incorrect statement, in respect of tax deducted at source on or after 1.07.2012, he shall be liable to pay, by way of penalty a sum which shall not be less than ₹ 10,000/- but which may extend to ₹ 1,00,000/-. However, the penalty shall not be levied if the person proves that after paying TDS with the fee and interest, if any, to the credit of Central Government, he had delivered such statement before the expiry of one year from the time prescribed for delivering the statement.

4.9.7 At the time of preparing statements of tax deducted, the deductor is required to:

(i) mandatory quote his tax deduction and collection account number (TAN) in the statement;

(ii) mandatory quote his permanent account number (PAN) in the statement except in the case where the deductor is an office of the Government( including State Government). In case of Government deductors “PANNOTREQD” to be quoted in the e-TDS statement;

(iii) mandatory quote of permanent account number PAN of all deductees;

(iv) furnish particulars of the tax paid to the Central Government including book identification number or challan identification number, as the case may be.

(v) furnish particular of amounts paid or credited on which tax was not deducted in view of the issue of certificate of no deduction of tax u/s 197 by the assessing officer of the payee.

4.10 TDS on Income from Pension:

In the case of pensioners who receive their pension (not being family pension paid to a spouse) from a nationalized bank, the instructions contained in this circular shall apply in the same manner as they apply to salary-income. The deductions from the amount of pension under section 80C on account of contribution to Life Insurance, Provident Fund, NSC etc., if the pensioner furnishes the relevant details to the banks, may be allowed.Necessary instructions in this regard were issued by the Reserve Bank of India to the State Bank of India and other nationalized Banks vide RBI’s Pension Circular(Central Series) No.7/C.D.R./1992 (Ref. CO: DGBA: GA (NBS) No.60/GA.64 (11CVL)-/92) dated the 27th April 1992, and, these instructions should be followed by all the branches of the Banks, which have been entrusted with the task of payment of pensions. Further all branches of the banks are bound u/s 203 to issue certificate of tax deducted in Form 16 to the pensioners also vide CBDT circular no. 761 dated 13.1.98.

4.11. Matters pertaining to the TDS made in case of Non Resident:

4.11.1 Where Non-Residents are deputed to work in India and taxes are borne by the employer, if any refund becomes due to the employee after he has already left India and has no bank account in India by the time the assessment orders are passed, the refund can be issued to the employer as the tax has been borne by it [Circular No. 707 dated 11.07.1995].

4.11.2 In respect of non-residents, the salary paid for services rendered in India shall be regarded as income earned in India. It has been specifically provided in the Act that any salary payable for rest period or leave period which is both preceded or succeeded by service in India and forms part of the service contract of employment will also be regarded as income earned in India.

5. COMPUTATION OF INCOME UNDER THE HEAD “SALARIES”

5.1 INCOME CHARGEABLE UNDER THE HEAD “SALARIES”:

(1) The following income shall be chargeable to income-tax under the head “Salaries” :

(a) any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not;

(b) any salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer though not due or before it became due to him.

(c) any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if not charged to income-tax for any earlier previous year.

(2) For the removal of doubts, it is clarified that where any salary paid in advance is included in the total income of any person for any previous year it shall not be included again in the total income of the person when the salary becomes due.

Any salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as “Salary”.

5.2 DEFINITION OF “SALARY”, “PERQUISITE” AND “PROFIT IN LIEU OF SALARY” (SECTION 17):

5.2.1 “Salary” includes:-

i. wages, fees, commissions, perquisites, profits in lieu of, or, in addition to salary, advance of salary, annuity or pension, gratuity, payments in respect of encashment of leave etc.

ii. the portion of the annual accretion to the balance at the credit of the employee participating in a recognized provident fund as consists of {Rule 6 of Part A of the Fourth Schedule of the Act}:

a) contributions made by the employer to the account of the employee in a recognized provident fund in excess of 12% of the salary of the employee, and

b) interest credited on the balance to the credit of the employee in so far as it is allowed at a rate exceeding such rate as may be fixed by Central Government. [w.e.f. 01-09-2010 rate is fixed at 9.5% - Notification No SO 1046(E) dated 13-05-2011]

iii. the contribution made by the Central Government or any other employer to the account of the employee under the New Pension Scheme as notified vide Notification F.N. 5/7/2003- ECB&PR dated 22.12.2003 (enclosed as Annexure VII) referred to in section 80CCD (para 5.5.3 of this Circular).

It may be noted that, since salary includes pension, tax at source would have to be deducted from pension also, unless otherwise so required. However, no tax is required to be deducted from the commuted portion of pension to the extent exempt under section 10 (10A).

Family Pension is chargeable to tax under head “Income from other sources” and not under the head “Salaries”. Therefore, provisions of section 192 of the Act are not applicable. Hence, DDOs are not required to deduct TDS on family pension paid to person.

5.2.2 Perquisite includes:

I. The value of rent free accommodation provided to the employee by his employer;

II. The value of any concession in the matter of rent in respect of any accommodation provided to the employee by his employer;

III. The value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases:

i) By a company to an employee who is a director of such company;

ii) By a company to an employee who has a substantial interest in the company;

iii) By an employer (including a company)to an employee, who is not covered by (i) or (ii) above and whose income under the head “Salaries” (whether due from or paid or allowed by one or more employers), exclusive of the value of all benefits and amenities not provided by way of monetary payment, exceeds ₹ 50,000/-.

[What constitutes concession in the matter of rent have been prescribed in Explanations 1 to 4 below section 17(2)(ii) of the Act]

IV. Any sum paid by the employer in respect of any obligation which would otherwise have been payable by the assessee.

V. Any sum payable by the employer, whether directly or through a fund, other than a recognized provident fund or an approved superannuation fund or other specified funds u/s 17, to effect an assurance on the life of an assessee or to effect a contract for an annuity.

VI. The value of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer, or former employer, free of cost or at concessional rate to the employee and for this purpose, .

(a) “specified security” means the securities as defined in section 2(h) of the Securities Contracts (Regulation) Act, 1956 and, where employees’ stock option has been granted under any plan or scheme therefor, includes the securities offered under such plan or scheme;

(b) “sweat equity shares” means equity shares issued by a company to its employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called;

(c) the value of any specified security or sweat equity shares shall be the fair market value of the specified security or sweat equity shares, as the case may be, on the date on which the option is exercised by the assessee as reduced by the amount actually paid by, or recovered from the assessee in respect of such security or shares;

(d) “fair market value” means the value determined in accordance with the method as may be prescribed (refer Rule 3(9) of the IT Rules);

(e) “option” means a right but not an obligation granted to an employee to apply for the specified security or sweat equity shares at a predetermined price;

VII. The amount of any contribution to an approved superannuation fund by the employer in respect of the assessee, to the extent it exceeds one lakh rupees; and

VIII The value of any other fringe benefit or amenity as prescribed in Rule 3.

5.2.2A Rules for valuation of such benefit or amenity as given in Rule 3 are as under : -

I. Residential Accommodation provided by the employer [Rule 3(1)]:-

“Accommodation” includes a house, flat, farm house or part thereof , hotel accommodation, motel, service apartment, guest house, a caravan, mobile home, ship or other floating structure.

A. For valuation of the perquisite of rent free unfurnished accommodation, all employees are divided into two categories:

(i) For employees of the Central and State governments the value of perquisite shall be equal to the licence fee charged for such accommodation as reduced by the rent actually paid by the employee. Employees of autonomous, semi-autonomous institutions, PSUs/PSEs & subsidiaries, Universities, etc. are not covered under this method of valuation.

(ii) For all others, i.e., those salaried taxpayers not in employment of the Central government and the State government, the valuation of perquisite in respect of accommodation would be at prescribed rates, as discussed below:

a) Where the accommodation provided to the employee is owned by the employer:

Sl No Cities having population as per the 2001 census Perquisite
1 Exceeds 25 lakh 15% of salary
2 Exceeds 10 lakhs but does not exceed 25 lakhs 10% of salary
3 For other places 7.5 % of salary

b) Where the accommodation so provided is taken on lease/ rent by the employer:

The prescribed rate is 15% of the salary or the actual amount of lease rental payable by the employer, whichever is lower, as reduced by any amount of rent paid by the employee. Meaning of ‘Salary ‘for the purpose of calculation of perquisite in respect of Residential Accommodation :

a. Basic Salary ;

b. Dearness Allowance, or Dearness Pay if it enters into the computation of superannuation or retirement benefit of the employees;

c. Bonus ;

d. Commission ;

e. All other taxable allowances (excluding the portion not taxable ); and

f. Any monetary payment which is chargeable to tax (by whatever name called).

Salary from all employers shall be taken into consideration in respect of the period during which an accommodation is provided. Where on account of the transfer of an employee from one place to another, he is provided with accommodation at the new place of posting while retaining the accommodation at the other place, the value of perquisite shall be determined with reference to only one such accommodation which has the lower value for a period not exceeding 90 days and thereafter the value of perquisite shall be charged for both such accommodation.

Valuation of the perquisite of furnished accommodation- the value of perquisite as determined by the above method (in A) shall be increased by-

i) 10% of the cost of furniture, appliances and equipments, or

ii) where the furniture, appliances and equipments have been taken on hire, by the amount of actual hire charges payable

and the value so arrived at shall be reduced by any charges paid by the employee himself.

It is added that where the accommodation is provided by the Central Government or any State Government to an employee who is serving on deputation with any body or undertaking under the control of such Government,-

(i). the employer of such an employee shall be deemed to be that body or undertaking where the employee is serving on deputation; and

(ii). the value of perquisite of such an accommodation shall be the amount calculated in accordance with Table in A(ii)(a) above, as if the accommodation is owned by the employer.

C. Furnished Accommodation in a Hotel: The value of perquisite shall be determined on the basis of lower of the following two:

1. 24% of salary paid or payable in respect of period during which the accommodation is provided; or

2. Actual charges paid or payable by the employer to such hotel,

for the period during which such accommodation is provided as reduced by any rent actually paid or payable by the employee.

However, nothing in (C) shall be taxable if following two conditions are satisfied :

1. The hotel accommodation is provided for a total period not exceeding in aggregate 15 days in a previous year, and

2. Such accommodation is provided on an employee’s transfer from one place to another place.

It may be clarified that while services provided as an integral part of the accommodation, need not be valued separately as perquisite, any other services over and above that for which the employer makes payment or reimburses the employee shall be valued as a perquisite as per the residual clause. In other words, composite tariff for accommodation will be valued as per the Rules and any other charges for other facilities provided by the hotel will be separately valued under the residual clause.

D. However, the value of any accommodation provided to an employee working at a mining site or an on-shore oil exploration site or a project execution site or a dam site or a power generation site or an off-shore site will not be treated as a perquisite if:

i) such accommodation is located in a “remote area” or

ii) where it is not located in a “remote area”, the accommodation is of a temporary nature having plinth area of not more than 800 square feet and should not be located within 8 kilometers of the local limits of any municipality or cantonment board.

A project execution site here means a site of project up to the stage of its commissioning. A “remote area” means an area located at least 40 kilometers away from a town having a population not exceeding 20,000 as per the latest published all-India census.

II Perquisite on Motor car provided by the Employer [ Rule 3(2)]:

(1) If an employer provides motor car facility to his employee, the value of such perquisite shall be :

a) Nil, if the motor car is used by the employee wholly and exclusively in the performance of his official duties.

b) Actual expenditure incurred by the employer on the running and maintenance of motor car including remuneration to chauffeur as increased by the amount representing normal wear and tear of the motor car and as reduced by any amount charged from the employee for such use (in case the motor car is exclusively for private or personal purposes of the employee or any member of his household).

c) ₹ 1800/- (plus ₹ 900/-, if chauffeur is also provided) per month (in case the motor car is used partly in performance of duties and partly for private or personal purposes of the employee or any member of his household if the expenses on maintenance and running of motor car are met or reimbursed by the employer). However, the value of perquisite will be ₹ 2400/-(plus ₹ 900/-, if chauffeur is also provided) per month if the cubic capacity of engine of the motor car exceeds 1.6 litres.

d) ₹ 600/- (plus ₹ 900/-, if chauffeur is also provided) per month (In case the motor car is used partly in performance of duties and partly for private or personal purposes of the employee or any member of his household if the expenses on maintenance and running of motor car for such private or personal use are fully met by the employee). However, the value of perquisite will be ₹ 900/- (plus ₹ 900/-, if chauffeur is also provided) per month if the cubic capacity of engine of the motor car exceeds 1.6 litres.

(2) If the motor car or any other automotive conveyance is owned by the employee but the actual running and maintenance charges are met or reimbursed by the employer, the method of valuation of perquisite value is different and as below:

a) where the motor car or any other automotive conveyance is owned by the employee but actual maintenance & running expenses (including chauffeur salary, if any) are met or reimbursed by the employer, no perquisite shall be chargeable to tax if the car is used wholly and exclusively for official purposes. However following compliances are necessary:

  • The employer has maintained complete details of the journey undertaken for official purposes;
  • The employer gives a certificate that the expenditure was incurred wholly for official duties.

However if the motor car is used partly for official or partly for private purposes then the amount of perquisite shall be the actual expenditure incurred by the employer as reduced by the amounts in c) referred to in (1) above.

Normal wear and tear of the motor shall be taken at 10 % per annum of the actual cost of the motor car.

III Personal attendants etc. [Rule 3(3)]: The value of free service of all personal attendants including a sweeper, gardener and a watchman is to be taken at actual cost to the employer. Where the attendant is provided at the residence of the employee, full cost will be taxed as perquisite in the hands of the employee irrespective of the degree of personal service rendered to him. Any amount paid by the employee for such facilities or services shall be reduced from the above amount.

IV Gas, electricity & water for household consumption [Rule 3(4)]: The value of perquisite in the nature of gas, electricity and water shall be the amount paid by the employer. Where the supply is made from the employer’s own resources, the manufacturing cost per unit incurred by the employer would be taken for the valuation of perquisite. Any amount paid by the employee for such facilities or services shall be reduced from the perquisite value.

V Free or concessional education [Rule 3(5)]: Perquisite on account of free or concessional education for any member of the employee’s household shall be determined as the sum equal to the amount of expenditure incurred by the employer in that behalf. However, where such educational institution itself is maintained and owned by the employer or where such free educational facilities are provided in any institution by reason of his being in employment of that employer, the value of the perquisite to the employee shall be determined with reference to the cost of such education in a similar institution in or near the locality if the cost of such education or such benefit per child exceeds ₹ 1000/- p.m. The value of perquisite shall be reduced by the amount, if any, paid or recovered from the employee.

VI Carriage of Passenger Goods [Rule 3(6)]: The value of any benefit or amenity resulting from the provision by an employer, who is engaged in the carriage of passengers or goods, to any employee or to any member of his household for personal or private journey free of cost or at concessional fare, in any conveyance owned, leased or made available by any other arrangement by such employer for the purpose of transport of passengers or goods shall be taken to be the value at which such benefit or amenity is offered by such employer to the public as reduced by the amount, if any, paid by or recovered from the employee for such benefit or amenity. This will not apply to the employees of any airline or the railways.

VII Interest free or concessional loans [Rule 3(7)(i)]: It is common practice, particularly in financial institutions, to provide interest free or concessional loans to employees or any member of his household. The value of perquisite arising from such loans would be the excess of interest payable at prescribed interest rate over interest, if any, actually paid by the employee or any member of his household. The prescribed interest ratewould now be the rate charged per annum by the State Bank of India as on the 1st day of the relevant financial year in respect of loans of same type and for the same purpose advanced by it to the general public. Perquisite value would be calculated on the basis of the maximum outstanding monthly balance method. For valuing perquisites under this rule, any other method of calculation and adjustment otherwise adopted by the employer shall not be relevant. However, small loans up to ₹ 20,000/- in the aggregate are exempt.

Loans for medical treatment of diseases specified in Rule 3A are also exempt, provided the amount of loan for medical reimbursement is not reimbursed under any medical insurance scheme. Where any medical insurance reimbursement is received, the perquisite value at the prescribed rate shall be charged from the date of reimbursement on the amount reimbursed, but not repaid against the outstanding loan taken specifically for this purpose.

VIII Perquisite on account of travelling, touring, accommodation and any other expenses paid for or reimbursed by the employer for any holiday availed [Rule 3(7)(ii)]:

The value of perquisite on account of travelling, touring, accommodation and any other expenses paid for or reimbursed by the employer for any holiday availed of by the employee or any member of his household, other than leave travel concession (as per section 10(5) ), shall be the amount of the expenditure incurred by the employer in that behalf. However, any amount recovered from or paid by the employee shall be reduced from the perquisite value so determined.

Where such facility is maintained by the employer, and is not available uniformly to all employees, the value of benefit shall be taken to be the value at which such facilities are offered by other agencies to the public. If a holiday facility is maintained by the employer and is available uniformly to all employees, the value of such benefit would be exempt.

Where the employee is on official tour and the expenses are incurred in respect of any member of his household accompanying him, the amount of expenditure with respect to the member of the household shall be a perquisite.

IX Value of Subsidized / Free food / non-alcoholic beverages provided by employer to an employee[Rule 3(7)(iii)]:

Value of taxable perquisite is calculated as under:

Expenditure incurred by the employer on the value of food / non-alcoholic beverages including ‘paid vouchers which are not transferable and usable only at eating joints’             XXX

Less: Fixed value of a sum of ₹ 50/- per meal                 XXX

Less: Amount recovered from the employee                    XXX XXX

Balance amount is the taxable as perquisites on the value of food provided to the employees                     XXX

Note : Exemption is given in following situations :

1. Tea / snacks provided in working hours.

2. Food & non-alcoholic beverages provided in working hours in remote area or in an offshore installation.

X Membership fees and Annual Fees [Rule 3(7)(v)]: Any membership fees and annual fees incurred by the employee (or any member of his household), which is charged to a credit card (including any add-on card) provided by the employer, or otherwise, paid for or reimbursed by the employer is taxable on the following basis:

Amount of expenditure incurred by the employer                  XXX

Less : Expenditure on use for official purposes                     XXX

Less : Amount, if any, recovered from the employee           XXX XXX

Amount taxable as perquisite                                                     XXX

However if the amount is incurred wholly and exclusively for official purposes it will be exempt if the following conditions are fulfilled

i) Complete details of such expense, including date and nature of expenditure, is maintained by the employer.

ii) Employer gives a certificate that the same was incurred wholly and exclusively for official purpose.

XI Club Expenditure [Rule 3(7)(vi)]:

Any annual or periodical fee for Club facility and any expenditure in a club by the employee (or any member of his household), which is paid or reimbursed by the employer is taxable on the following basis:

Amount of expenditure incurred by the employer               XXX

Less : Expenditure on use for official purposes                 XXX

Less : Amount, if any, recovered from the employee        XXX XXX

Amount taxable as perquisite                                                 XXX

However if the amount is incurred wholly and exclusively for official purposes it will be exempt if the following conditions are fulfilled

i) Complete details of such expense, including date and nature of expenditure and its business expediency is maintained by the employer.

ii) Employer gives a certificate that the same was incurred wholly and exclusively for official purpose.

Note: 1) Health club, sport facilities etc. provided uniformly to all classes of employee by the employer at the employer’s premises and expenditure incurred on them are exempt.

2) The initial one-time deposits or fees for corporate or institutional membership, where benefit does not remain with a particular employee after cessation of employment are exempt. Initial fees / deposits, in such case, is not included.

XII Use of assets [Rule 3(7)(vii)]: It is common practice for a movable asset (other than those referred in other sub rules of rule 3) owned by the employer to be used by the employee or any member of his household. This perquisite is to be charged at the rate of 10% of the original cost of the asset as reduced by any charges recovered from the employee for such use. However, the use of Computers and Laptops would not give rise to any perquisite.

XIII Transfer of assets [Rule 3(7)(viii)]: Often an employee or member of his household benefits from the transfer of movable asset (not being shares or securities) at no cost or at a cost less than its market value from the employer. The difference between the original cost of the movable asset (not being shares or securities) and the sum, if any, paid by the employee, shall be taken as the value of perquisite. In case of a movable asset, which has already been put to use, the original cost shall be reduced by a sum of 10% of such original cost for every completed year of use of the asset. Owing to a higher degree of obsolescence, in case of computers and electronic gadgets, however, the value of perquisite shall be worked out by reducing 50% of the actual cost by the reducing balance method for each completed year of use. Electronic gadgets in this case means data storage and handling devices like computer, digital diaries and printers. They do not include household appliance (i.e. white goods) like washing machines, microwave ovens, mixers, hot plates, ovens etc. Similarly, in case of cars, the value of perquisite shall be worked out by reducing 20% of its actual cost by the reducing balance method for each completed year of use.

XIV Gifts [Rule 3(7)(iv)]:

The value of any gift or vouchers or token in lieu of which such gift may be received, given by the employer to the employee or member of his household, is taxable as perquisite. However gift, etc less than ₹ 5,000 in aggregate per annum would be exempt.

XV Medical Reimbursement by the employer exceeding ₹ 15,000/- p.a. u/s 17(2) is to be taken as perquisite.

It is further clarified that the method regarding valuation of perquisites are given in section 17(2) of the Act and in rule 3 of the Rules. The deductors may look into the above provisions carefully before they determine the perquisite value for deduction purposes.

5.2.3 ‘Profits in lieu of salary’ shall include

I. the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto;

II. any payment (other than any payment referred to in clauses (10), (10A), (10B), (11), (12) (13) or (13A) of section 10 due to or received by an assessee from an employer or a former employer or from a provident or other fund, to the extent to which it does not consist of contributions by the assessee or interest on such contributions or any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy.

“Keyman insurance policy” shall have the same meaning as assigned to it in section 10(10D);

III. any amount due to or received, whether in lump sum or otherwise, by any assessee from any person-

(A) before his joining any employment with that person; or

(B) after cessation of his employment with that person.

5.3 INCOMES NOT INCLUDED UNDER THE HEAD “SALARIES” (EXEMPTIONS)

Any income falling within any of the following clauses shall not be included in computing the income from salaries for the purpose of section 192 of the Act :-

5.3.1 The value of any travel concession or assistance received by or due to an employee from his employer or former employer for himself and his family, in connection with his proceeding (a) on leave to any place in India or (b) after retirement from service, or, after termination of service to any place in India is exempt under Section 10(5) subject, however, to the conditions prescribed in Rule 2B of the Rules.

For the purpose of this clause, “family” in relation to an individual means:

(i) the spouse and children of the individual; and

(ii) the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual.

It may also be noted that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel.

5.3.2 Death-cum-retirement gratuity or any other gratuity is exempt to the extent specified from inclusion in computing the total income under Section 10(10). Any death-cum-retirement gratuity received under the revised Pension Rules of the Central Government or, as the case may be, the Central Civil Services (Pension) Rules, 1972, or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all-India services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority or any payment of retiring gratuity received under the Pension Code or Regulations applicable to the members of the defence service is exempt. Gratuity received in cases other than those mentioned above, on retirement, termination etc is exempt up to the limit as prescribed by the Board. Presently the limit is ₹ 10 lakhs w.e.f. 24.05.2010 [Notification no. 43/2010 S.O. 1414(E) F.No. 200/33/2009-ITA-1 dated 11th June 2010].

5.3.3 Any payment in commutation of pension received under the Civil Pensions (Commutation) Rules of the Central Government or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all- India services or to the members of the defence services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority] or a corporation established by a Central, State or Provincial Act, is exempt under Section10(10A)(i). As regards payments in commutation of pension received under any scheme of any other employer, exemption will be governed by the provisions of section 10(10A)(ii). Also, any payment in commutation of pension from a fund referred to in Section 10(23AAB) is exempt under Section 10(10A)(iii).

5.3.4 Any payment received by an employee of the Central Government or a State Government, as cash-equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement, whether on superannuation or otherwise, is exempt under Section 10(10AA)(i). In the case of other employees, this exemption will be determined with reference to the leave to their credit at the time of retirement on superannuation or otherwise, subject to a maximum of ten months’ leave. This exemption will be further limited to the maximum amount specified by the Government of India Notification No.S.O.588(E) dated 31.05.2002 at ₹ 3,00,000/- in relation to such employees who retire, whether on superannuation or otherwise, after 1.4.1998.

5.3.5 Under Section 10(10B), the retrenchment compensation received by a workman is exempt from income-tax subject to certain limits. The maximum amount of retrenchment compensation exempt is the sum calculated on the basis provided in section 25F(b) of the Industrial Disputes Act, 1947 or any amount not less than ₹ 50,000/- as the Central Government may by notification specify in the Official Gazette, whichever is less. These limits shall not apply in the case where the compensation is paid under any scheme which is approved in this behalf by the Central Government, having regard to the need for extending special protection to the workmen in the undertaking to which the scheme applies and other relevant circumstances. The maximum limit of such payment is ₹ 5,00,000/- where retrenchment is on or after 1.1.1997 as specified in Notification No. 10969 dated 25-06-1999.

5.3.6 Under Section 10(10C), any payment received or receivable (even if received in installments) by an employee of the following bodies at the time of his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of public sector company, a scheme of voluntary separation, is exempt from income-tax to the extent that such amount does not exceed ₹ 5,00,000/-:

a) A public sector company;

b) Any other company;

c) An Authority established under a Central, State or Provincial Act;

d) A Local Authority;

e) A Cooperative Society;

f) A university established or incorporated or under a Central, State or Provincial Act, or, an Institution declared to be a University under section 3 of the University Grants Commission Act, 1956;

g) Any Indian Institute of Technology within the meaning of Section 3 (g) of the Institute of Technology Act, 1961;

h) Such Institute of Management as the Central Government may by notification in the Official Gazette, specify in this behalf.

The exemption of amount received under VRS has been extended to employees of the Central Government and State Government and employees of notified institutions having importance throughout India or any State or States. It may also be noted that where this exemption has been allowed to any employee for any assessment year, it shall not be allowed to him for any other assessment year. Further, if relief has been allowed under section 89 for any assessment year in respect of amount received on voluntary retirement or superannuation, no exemption under section 10(10C) shall be available.

5.3.7 Any sum received under a Life Insurance Policy (Sec 10(10D), including the sum allocated by way of bonus on such policy other than the following is exempt under section 10(10D):

i) any sum received under section 80DD(3) or section 80DDA(3); or

ii) any sum received under a Keyman insurance policy; or

iii) any sum received under an insurance policy issued on or after 1.4.2003, but on or before 31-03-2012, in respect of which the premium payable for any of the years during the term of the policy exceeds 20 percent of the actual capital sum assured; or

iv) any sum received under an insurance policy issued on or after 1.4.2012 in respect of which the premium payable for any of the years during the term of the policy exceeds 10 percent of the actual capital sum assured; or

v) any sum received under an insurance policy issued on or after 1.4.2013 in cases of persons with disability or person with severe disability as per Sec 80U or suffering from disease or ailment as specified in Sec 80DDB, in respect of which the premium payable for any of the years during the term of the policy exceeds 15 percent of the actual capital sum assured

However, any sum received under such policy referred to in (iii), (iv) and (v) above, on the death of a person would be exempt.

5.3.8 Any payment from a Provident Fund to which the Provident Funds Act, 1925, applies or from any other provident fund set up by the Central Government and notified by it in the Official Gazette is exempt under section 10(11).

5.3.9 Under section 10(13A) of the Act, any special allowance specifically granted to an assessee by his employer to meet expenditure incurred on payment of rent (by whatever name called) in respect of residential accommodation occupied by the assessee is exempt from Income-tax to the extent as may be prescribed, having regard to the area or place in which such accommodation is situated and other relevant considerations. According to Rule 2A of the Rules, the quantum of exemption allowable on account of grant of special allowance to meet expenditure on payment of rent shall be the least of the following:

(a) the actual amount of such allowance received by the assessee in respect of the relevant period i. e. the period during which the accommodation was occupied by the assesse during the financial year; or

(b) the actual expenditure incurred in payment of rent in excess of one-tenth of the salary due for the relevant period; or

(i) where such accommodation is situated in Bombay, Calcutta, Delhi or Madras, 50% of the salary due to the employee for the relevant period; or

(ii) where such accommodation is situated in any other places, 40% of the salary due to the employee for the relevant period.

For this purpose, “Salary” includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites.

It has to be noted that only the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee subject to the limits laid down in Rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. The disbursing authorities should satisfy themselves in this regard by insisting on production of evidence of actual payment of rent before excluding the House Rent Allowance or any portion thereof from the total income of the employee.

Though incurring actual expenditure on payment of rent is a pre-requisite for claiming deduction under section 10(13A), it has been decided as an administrative measure that salaried employees drawing house rent allowance upto ₹ 3000/- per month will be exempted from production of rent receipt. It may, however, be noted that this concession is only for the purpose of tax-deduction at source, and, in the regular assessment of the employee, the Assessing Officer will be free to make such enquiry as he deems fit for the purpose of satisfying himself that the employee has incurred actual expenditure on payment of rent.

Further if annual rent paid by the employee exceeds ₹ 1,00,000 per annum, it is mandatory for the employee to report PAN of the landlord to the employer. In case the landlord does not have a PAN, a declaration to this effect from the landlord along with the name and address of the landlord should be filed by the employee.

5.3.10 Section 10(14) provides for exemption of the following allowances :-

(i) Any special allowance or benefit granted to an employee to meet the expenses wholly, necessarily and exclusively incurred in the performance of his duties as prescribed under Rule 2BB subject to the extent to which such expenses are actually incurred for that purpose.

(ii) Any allowance granted to an employee either to meet his personal expenses at the place of his posting or at the place he ordinarily resides or to compensate him for the increased cost of living, which may be prescribed and to the extent as may be prescribed.

However, the allowance referred to in (ii) above should not be in the nature of a personal allowance granted to the assessee to remunerate or compensate him for performing duties of a special nature relating to his office or employment unless such allowance is related to his place of posting or residence.

The CBDT has prescribed guidelines for the purpose of Section 10(14) (i) & 10 (14) (ii) vide notification No.SO 617(E) dated 7th July, 1995 (F.No.142/9/95-TPL)which has been amended vide notification SO No.403(E) dt 24.4.2000 (F.No.142/34/99-TPL). The transport allowance granted to an employee to meet his expenditure for the purpose of commuting between the place of his residence and the place of duty is exempt to the extent of ₹ 1600 p. m. or ₹ 3200 p.m. (for a person who is blind or deaf and dumb or is orthopaedically handicapped with disabilities of lower extremes) vide notification S.O.No. 395(E) dated 13.05.98 r/w S.O. No. 1002 (E) dated 13.04.2015 & S.O. No. 2604 (E) dated 23.09.2015.

5.3.11 Under Section 10(15)(iv)(i) of the Act, interest payable by the Government on deposits made by an employee of the Central Government or a State Government or a public sector company out of his retirement benefits, in accordance with such scheme framed in this behalf by the Central Government and notified in the Official Gazette is exempt from income-tax. By notification No.F.2/14/89-NS-II dated 7.6.89, as amended by notification No.F.2/14/89-NS-II dated 12.10.89, the Central Government has notified a scheme called Deposit Scheme for Retiring Government Employees, 1989 for the purpose of the said clause.

5.3.12 Any scholarship granted to meet the cost of education is not to be included in total income as per provisions of section 10(16) of the Act.

5.3.13 Section 10(18) provides for exemption of any income by way of pension received by an individual who has been in the service of the Central Government or State Government and has been awarded “Param Vir Chakra” or “Maha Vir Chakra” or “Vir Chakra” or such other gallantry award as may be specifically notified by the Central Government. Family pension received by any member of the family of such individual is also exempt [Notifications No.S.O.1948(E) dated 24.11.2000 and 81(E) dated 29.1.2001, which are enclosed as per Annexure VIII & IX]. “Family” for this purpose shall have the meaning assigned to it in Section 10(5) of the Act.

DDO may not deduct any tax in the case of recipients of such awards after satisfying himself about the veracity of the claim.

5.3.14 Under Section 17 of the Act, exemption from tax will also be available in respect of:-

(a) the value of any medical treatment provided to an employee or any member of his family, in any hospital maintained by the employer;

(b) any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or of any member of his family:

(i) in any hospital maintained by the Government or any local authority or any other hospital approved by the Government for the purposes of medical treatment of its employees;

ii) in respect of the prescribed diseases or ailments as provided in Rule 3A(2) of the Rules in any hospital approved by the Chief Commissioner having regard to the prescribed guidelines as provided in Rule 3(A)(1)of the Rules,

(c) premium paid by the employer in respect of medical insurance taken for his employees (under any scheme approved by the Central Government or Insurance Regulatory and Development Authority) or reimbursement of insurance premium to the employees who take medical insurance for themselves or for their family members (under any scheme approved by the Central Government or Insurance Regulatory and Development Authority);

(d) reimbursement, by the employer, of the amount spent by an employee in obtaining medical treatment for himself or any member of his family from any doctor, not exceeding in the aggregate ₹ 15,000/- in an year;

(e) As regards medical treatment abroad, the actual expenditure on stay and treatment abroad of the employee or any member of his family, or, on stay abroad of one attendant who accompanies the patient, in connection with such treatment, will be excluded from perquisites to the extent permitted by the Reserve Bank of India. It may be noted that the expenditure incurred on travel abroad by the patient/attendant, shall be excluded from perquisites only if the employee’s gross total income, as computed before including the said expenditure, does not exceed ₹ 2 lakhs.

For the purpose of availing exemption on expenditure incurred on medical treatment, “hospital” includes a dispensary or clinic or nursing home, and “family” in relation to an individual means the spouse and children of the individual. Family also includes parents, brothers and sisters of the individual if they are wholly or mainly dependent on the individual.

It is pertinent to mention that benefits specifically exempt u/s 10(13A), 10(5), 10(14), 17 etc. of the Act would continue to be exempt. These include benefits like house rent allowance, leave travel concession, travel expense allowance on tour and transfer, daily allowance to meet tour expenses as prescribed, medical facilities subject to conditions.

5.3.15 In this connection it is to be noted that as per sec. 10 (14) read wit rule 2BBany allowance granted to meet the cost of travel on tour or on transfer includes any sum paid in connection with transfer, packing and transportation of personal effects o such transfer shall be exempt. Also any allowance, whether, granted for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence form his normal place of duty shall be exempt.

5.4 DEDUCTIONS U/S 16 OF THE ACT FROM THE INCOME FROM SALARIES

5.4.1 Entertainment Allowance [Section 16(ii)]:

A deduction is also allowed under section 16(ii) in respect of any allowance in the nature of an entertainment allowance specifically granted by an employer to the assessee, who is in receipt of a salary from the Government, a sum equal to one-fifth of his salary(exclusive of any allowance, benefit or other perquisite) or five thousand rupees whichever is less. No deduction on account of entertainment allowance is available to non-government employees.

5.4.2 Tax on Employment [Section 16(iii)]:

The tax on employment (Professional Tax) within the meaning of article 276(2) of the Constitution of India, leviable by or under any law, shall also be allowed as a deduction in computing the income under the head “Salaries”.

It may be clarified that “Standard Deduction” from gross salary income, which was being allowed up to financial year 2004-05 is not allowable from financial year 2005-06 onwards.

5.5 DEDUCTIONS UNDER CHAPTER VI-A OF THE ACT

In computing the taxable income of the employee, the following deductions under Chapter VI-A of the Act are to be allowed from his gross total income:

5.5.1 Deduction in respect of Life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc. (section 80C)

A. Section 80C, entitles an employee to deductions for the whole of amounts paid or deposited in the current financial year in the following schemes, subject to a limit of ₹ 1,50,000/-:

(1) Payment of insurance premium to effect or to keep in force an insurance on the life of the individual, the spouse or any child of the individual.

(2) Any payment made to effect or to keep in force a contract for a deferred annuity, not being an annuity plan as is referred to in item (7) herein below on the life of the individual, the spouse or any child of the individual, provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity;

(3) Any sum deducted from the salary payable by, or, on behalf of the Government to any individual, being a sum deducted in accordance with the conditions of his service for the purpose of securing to him a deferred annuity or making provision for his spouse or children, in so far as the sum deducted does not exceed 1/5th of the salary;

(4) Any contribution made :

(a) by an individual to any Provident Fund to which the Provident Fund Act, 1925 applies;

(b) to any provident fund set up by the Central Government, and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of an individual, or spouse or children;

[The Central Government has since notified Public Provident Fund vide Notification S.O. No. 1559(E) dated 3.11.05]

(c) by an employee to a Recognized Provident Fund;

(d) by an employee to an approved superannuation fund;

It may be noted that “contribution” to any Fund shall not include any sums in repayment of loan or advance;

(5) Any sum paid or deposited during the year as a subscription :-

(a) in the name of employee or a girl child of that employee including a girl child for whom the employee is the legal guardian in any such security of the Central Government or any such deposit scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf;

[The Central Government has since notified the scheme ‘Sukanya Samriddhi Account’ vide Notification GSR No. 863(E) dated 02.12.2014]

(b) to any such saving certificates as defined under section 2(c) of the Government Saving Certificate Act, 1959 as the Government may, by notification in the Official Gazette, specify in this behalf.

[The Central Government has since notified National Saving Certificate (VIIIth Issue) vide Notification S.O. No. 1560(E) dated 3.11.05and National Saving Certificate (IXth Issue) vide Notification . G.S.R. 848 (E), dated the 29th November, 2011, publishing the National Savings Certificates (IX-Issue) Rules, 2011 G.S.R. 868 (E), dated the 7th December, 2011, specifying the National Savings Certificates IX Issue as the class of Savings Certificates F No1-13/2011-NS-II r/w amendment Notification No.GSR 319(E), dated 25-4-2012 ]

(6) Any sum paid as contribution in the case of an individual, for himself, spouse or any child,

a. for participation in the Unit Linked Insurance Plan, 1971 of the Unit Trust of India;

b. for participation in any unit-linked insurance plan of the LIC Mutual Fund referred to section 10 (23D) and as notified by the Central Government.

[The Central Government has since notified Unit Linked Insurance Plan (formerly known as Dhanraksha, 1989) of LIC Mutual Fund vide Notification S.O. No. 1561(E) dated 3.11.05.]

(7) Any subscription made to effect or keep in force a contract for such annuity plan of the Life Insurance Corporation or any other insurer as the Central Government may, by notification in the Official Gazette, specify;

[The Central Government has since notified New Jeevan Dhara, New Jeevan Dhara-I, New Jeevan Akshay, New Jeevan Akshay-I and New Jeevan Akshay-II vide Notification S.O. No. 1562(E) dated 3.11.05 and Jeevan Akshay-III vide Notification S.O. No. 847(E) dated 1.6.2006 ]

(8) Any subscription made to any units of any Mutual Fund, of section 10(23D), or from the Administrator or the specified company referred to in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002 under any plan formulated in accordance with any scheme as the Central Government, may, by notification in the Official Gazette, specify in this behalf;

[The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S.O. No. 1563(E) dated 3.11.2005]

The investments made after 1.4.2006 in plans formulated in accordance with Equity Linked Saving Scheme, 1992 or Equity Linked Saving Scheme, 1998 shall also qualify for deduction under section 80C.

(9) Any contribution made by an individual to any pension fund set up by any Mutual Fund referred to in section 10(23D), or, by the Administrator or the specified company defined in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002, as the Central Government may, by notification in the Official Gazette, specify in this behalf;

[The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S.O. No. 1563(E) dated 3.11.2005]

(10) Any subscription made to any such deposit scheme of, or, any contribution made to any such pension fund set up by, the National Housing Bank, as the Central Government may, by notification in the Official Gazette, specify in this behalf;

(11) Any subscription made to any such deposit scheme, as the Central Government may, by notification in the Official Gazette, specify for the purpose of being floated by (a) public sector companies engaged in providing long-term finance for construction or purchase of houses in India for residential purposes, or, (b) any authority constituted in India by, or, under any law, enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both.

[The Central Government has since notified the Public Deposit Scheme of HUDCO vide Notification S.O. No.37(E), dated 11.01.2007, for the purposes of Section 80C(2)(xvi)(a)].

(12) Any sums paid by an assessee for the purpose of purchase or construction of a residential house property, the income from which is chargeable to tax under the head “Income from house property” (or which would, if it has not been used for assessee’s own residence, have been chargeable to tax under that head) where such payments are made towards or by way of any instalment or part payment of the amount due under any self-financing or other scheme of any Development Authority, Housing Board etc.

The deduction will also be allowable in respect of re-payment of loans borrowed by an assessee from the Government, or any bank or Life Insurance Corporation, or National Housing Bank, or certain other categories of institutions engaged in the business of providing long term finance for construction or purchase of houses in India. Any repayment of loan borrowed from the employer will also be covered, if the employer happens to be a public company, or a public sector company, or a university established by law, or a college affiliated to such university, or a local authority, or a cooperative society, or an authority, or a board, or a corporation, or any other body established under a Central or State Act.

The stamp duty, registration fee and other expenses incurred for the purpose of transfer shall also be covered. Payment towards the cost of house property, however, will not include, admission fee or cost of share or initial deposit or the cost of any addition or alteration to, or, renovation or repair of the house property which is carried out after the issue of the completion certificate by competent authority, or after the occupation of the house by the assessee or after it has been let out. Payments towards any expenditure in respect of which the deduction is allowable under the provisions of section 24 of the Act will also not be included in payments towards the cost of purchase or construction of a house property.

Where the house property in respect of which deduction has been allowed under these provisions is transferred by the tax-payer at any time before the expiry of five years from the end of the financial year in which possession of such property is obtained by him or he receives back, by way of refund or otherwise, any sum specified in section 80C(2)(xviii), no deduction under these provisions shall be allowed in respect of such sums paid in such previous year in which the transfer is made and the aggregate amount of deductions of income so allowed in the earlier years shall be added to the total income of the assessee of such previous year and shall be liable to tax accordingly.

(13) Tuition fees, whether at the time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children of the employee.

Full-time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full-time for the said course. It is also clarified that full-time education includes play-school activities, pre-nursery and nursery classes.

It is clarified that the amount allowable as tuition fees shall include any payment of fee to any university, college, school or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature.

(14) Subscription to equity shares or debentures forming part of any eligible issue of capital made by a public company, which is approved by the Board or by any public finance institution.

(15) Subscription to any units of any mutual fund referred to in clause (23D) of Section 10 and approved by the Board, if the amount of subscription to such units is subscribed only in eligible issue of capital of any company.

(16) Investment as a term deposit for a fixed period of not less than five years with a scheduled bank, which is in accordance with a scheme framed and notified by the Central Government, in the Official Gazette for these purposes.

[The Central Government has since notified the Bank Term Deposit Scheme, 2006 for this purpose vide Notification S.O. No. 1220(E) dated 28.7.2006]

(17) Subscription to such bonds issued by the National Bank for Agriculture and Rural Development, as the Central Government may, by such notification in the Official Gazette, specify in this behalf.

(18) Any investment in an account under the Senior Citizens Savings Scheme Rules, 2004.

(19) Any investment as five year time deposit in an account under the Post Office Time Deposit Rules, 1981.

B. Section 80C(3) & 80C(3A) states that in case of Insurance Policy other than contract for a deferred annuity the amount of any premium or other payment made is restricted to:

Policy issued before 1st April 2012 20% of the actual capital sum assured
Policy issued on or after 1st April 2012 10% of the actual capital sum assured
Policy issued on or after 1st April 2013 * – In cases of persons with disability or person with severe disability as per Sec 80 U or suffering from disease or ailment as specified in rules made under Sec 80DDB 15% of the actual

*Introduced by Finance Act 2013

Actual capital sum assured in relation to a life insurance policy means the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into account –

i. the value of any premium agreed to be returned, or

ii. any benefit by way of bonus or otherwise over and above the sum actually assured which may be received under the policy by any person.

5.5.2 Deduction in respect of contribution to certain pension funds (Section 80CCC)

Section 80CCC allows an employee deduction of an amount paid or deposited out of his income chargeable to tax to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from the Fund referred to in section 10(23AAB). However, the deduction shall exclude interest or bonus accrued or credited to the employee’s account, if any and shall not exceed ₹ 1,50,000.

However, if any amount is standing to the credit of the employee in the fund referred to above and deduction has been allowed as stated above and the employee or his nominee receives this amount together with the interest or bonus accrued or credited to this account due to the reason of

(i) Surrender of annuity plan whether in whole or part

(ii) Pension received from the annuity plan

then the amount so received during the Financial Year shall be the income of the employee or his nominee for that Financial Year and accordingly will be charged to tax.

Where any amount paid or deposited by the employee has been taken into account for the purposes of this section, a deduction with reference to such amount shall not be allowed under section 80C.

5.5.3 Deduction in respect of contribution to pension scheme of Central Government (Section 80CCD):

Section 80CCD(1) allows an employee, being an individual employed by the Central Government on or after 01.01.2004 or being an individual employed by any other employer, or any other assessee being an individual, a deduction of an amount paid or deposited out of his income chargeable to tax under a pension scheme as notified vide Notification F. N. 5/7/2003- ECB&PR dated 22.12.2003 National Pension System-NPS or as may be notifed by the Central Government. However, the deduction shall not exceed an amount equal to 10% of his salary (includes Dearness Allowance but excludes all other allowance and perquisites).

As per section 80CCD(1B), an assessee referred to in 80CCD(1) shall be allowed an deduction in computation of his income, of the whole of the amount paid or deposited in the previous year in his account under the pension scheme notified or as may be notified by the Central Government, which shall not exceed ₹ 50,000. The deduction of ₹ 50,000 shall be allowed whether or not any deduction is allowed under sub-section(1). However, the same amount cannot be claimed both under sub-section (1) and sub-section (1B) of section 80CCD.

As per Section 80CCD(2), where any contribution in the said pension scheme is made by the Central Government or any other employer then the employee shall be allowed a deduction from his total income of the whole amount contributed by the Central Government or any other employer subject to limit of 10% of his salary of the previous year.

If any amount is standing to the credit of the employee in the pension scheme referred above and deduction has been allowed as stated above, and the employee or his nominee receives this amount together with the amount accrued thereon, due to the reason of

(i) Closure or opting out of the pension scheme or

(ii) Pension received from the annuity plan purchased and taken on such closure or opting out

then the amount so received during the FYs shall be the income of the employee or his nominee for that Financial Year and accordingly will be charged to tax.

Where any amount paid or deposited by the employee has been taken into account for the purposes of this section, a deduction with reference to such amount shall not be allowed under section 80C.

Further it has been specified that w.e.f 01.04.09 any amount received by the employee from the New Pension Scheme shall be deemed not to have been received in the previous year if such amount is used for purchasing an annuity plan in the same previous year.

It is emphasized that as per the section 80CCE the aggregate amount of deduction under sections 80C, 80CCC and Section 80CCD(1) shall not exceed ₹ 1,50,000/-. The deduction allowed under section 80 CCD(1B) is an additional deduction in respect of any amount paid in the NPS upto ₹ 50,000/-. However, the contribution made by the Central Government or any other employer to a pension scheme u/s 80CCD(2) shall be excluded from the limit of ₹ 1,50,000/- provided under this section.

5.5.4 Deduction in respect of investment made under an equity savings scheme (Section 80 CCG):

Section 80CCG provides deduction wef assessment year 2013-14 in respect of investment made under notified equity saving scheme. Rajiv Gandhi Equity Savings Scheme 2012 has been notified vide SO No 2777 E, dated 23.11.2012 (subsequent corrigendum SO NO. 2835E dated 05.12.2012) and amended vide notification SO No. 3693E dated 18.12.2013 as a scheme under this section. The scheme was modified in December 2013 vide notification SO 3693 dated 18.12.13 ( RGESS, 2013). The deduction under this section in accordance with RGESS 2013 is available if following conditions are satisfied:

(a) The assessee is a resident individual

(b) His gross total income does not exceed ₹ 12 lakhs;

(c) He has acquired listed shares in accordance with a notified scheme or listed units of an equity oriented fund as defined in section 10(38);

(d) The assessee is a new retail investor;

(e) The investment is locked-in for a period of 3 years from the date of acquisition in accordance with the above scheme;

(f) The assessee satisfies any other condition as may be prescribed.

Amount of deduction –The amount of deduction is at 50% of the amount invested in equity shares/units. However, the amount of deduction under this provision cannot exceed ₹ 25,000.

Withdrawal of deduction – If the assessee, after claiming the aforesaid deduction, fails to satisfy the above conditions, the deduction originally allowed shall be deemed to be the income of the assessee of the year in which default is committed.

This deduction is allowed for three consecutive assessment years beginning with the AY in which the listed equity shares or units were first acquired. If any deduction is claimed by a taxpayer under this section in any year, he shall not be entitled to any deduction under this section for any other year.

5.5.5 Deduction in respect of health insurance premia paid, etc. (Section 80D)

Section 80D provides for deduction available for health insurance premia paid, etc. which is calculated as under:

No

Persons for whom payment made Nature of payment Mode of payment Allowable Deduction (in Rs)

1

Employee or his family*   the whole of the amount paid to effect or to keep in force an insurance on the health of the employee or his family orany contribution made to the CGHS or such other scheme as may be notified by Central Government (Finance Act 2013)

 

any mode other than cash  Aggregate allowable is ₹ 25,000/(Rs 30000/- for senior and very senior citizen)

2

 any payment on account of preventive health check-up of the employee or family,[restricted to ₹ 5000/-; cash payment allowed here]  any mode including cash 

3

 Whole of the amount paid on account of medical expenditure incurred on health of a very senior citizen and no amount has been paid to effect of keep in force an insurance on the health of such person  any mode other than cash  Aggregate allowable is ₹ 30,000/ 

4

Parent or Parents of employee*   the whole of the amount paid to effect or keep in force an insurance on the health of the parent or parents of the employee  any mode other than cash  Aggregate allowable is ₹ 25,000/(Rs 30000/-

for senior and very senior citizen)

 

5

 any payment made on account of preventive health check-up of the parent or parents of the employee [restricted to ₹ 5000/-; cash payment allowed here]  any mode including cash 

6

 Whole of the amount paid on account of medical expenditure incurred on health of a very senior citizen and no amount has been paid to effect of keep in force an insurance on the health of such person any mode other than cash  Aggregate allowable is ₹ 30,000/ 

*Aggregate of the sum allowable as deduction under Sl No 1, 2 & 3 and 4, 5 &6 above shall not exceed ₹ 30000/-

Here

i) “family” means the spouse and dependent children of the employee.

ii) Senior citizen” means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year.

iii) Very senior citizen means an individual resident in India who is of the age of eighty years or more at any time during the relevant previous year

The DDO must ensure that the medical insurance referred to above shall be in accordance with a scheme made in this behalf by-

(a) the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalization) Act, 1972 and approved by the Central Government in this behalf; or

(b) any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999.

5.5.6 Deductions in respect of expenditure on persons or dependants with disability

5.5.6.1 Deductions in respect of maintenance including medical treatment of a dependent who is a person with disability (section 80DD):

Under section 80DD, where an employee, who is a resident in India, has, during the previous year-

(a) incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability; or

(b) paid or deposited any amount under a scheme framed in this behalf by the Life Insurance Corporation or any other insurer or the Administrator or the specified company subject to the conditions specified in this regard andapproved by the Board in this behalf for the maintenance of a dependant, being a person with disability, the employee shall be allowed a deduction of a sum of ₹ 75,000/- from his gross total income of that year.

However, where such dependant is a person with severe disability, an amount ₹ 1,25,000/- shall be allowed as deduction subject to the specified conditions.

The deduction under (b) above shall be allowed only if the following conditions are fulfilled:-

(i) the scheme referred to in (b) above provides for payment of annuity or lump sum amount for the benefit of a dependant, being a person with disability, in the event of the death of the individual in whose name subscription to the scheme has been made;

(ii) the employee nominates either the dependant, being a person with disability, or any other person or a trust to receive the payment on his behalf, for the benefit of the dependant, being a person with disability.

However, if the dependant, being a person with disability, predeceases the employee, an amount equal to the amount paid or deposited under sub-para(b) above shall be deemed to be the income of the employee of the previous year in which such amount is received by the employee and shall accordingly be chargeable to tax as the income of that previous year.

5.5.6.2 Deductions in respect of a person with disability (section 80U):

Under section 80U, in computing the total income of an individual, being a resident, who, at any time during the previous year, is certified by the medical authority to be a person with disability, there shall be allowed a deduction of a sum of ₹ 75,000/-. However, where such individual is a person with severe disability, a higher deduction of ₹ 1,25,000/- shall be allowable.

DDOs should note that 80DD deduction is in case of the dependent of the employee whereas 80U deduction is in case of the employee himself. However, under both the sections, the employee shall furnish to the DDO the following:

1. A copy of the certificate issued by the medical authority as defined in Rule 11A(1) in the prescribed form as per Rule 11A(2) of the Rules. The DDO has to allow deduction only after seeing that the Certificate furnished is from the Medical Authority defined in this Rule and the same is in the form as mentioned therein.

2. Further in cases where the condition of disability is temporary and requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any subsequent period unless a new certificate is obtained from the medical authority as in 1 above and furnished before the DDO.

3. For the purposes of sections 80DD and 80 U some of the terms defined are as under:-

(a) “Administrator” means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 ;

(b) “dependant” means-

(i) in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them;

(ii) in the case of a Hindu undivided family, a member of the Hindu undivided family, dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance, and who has not claimed any deduction under section 80U in computing his total income for the assessment year relating to the previous year;

(c) “disability” shall have the meaning assigned to it in clause (i) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 and includes “autism”, “cerebral palsy” and “multiple disability” referred to in clauses (a), (c) and (h) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;

(d) “Life Insurance Corporation” shall have the same meaning as in clause (iii) of sub-section (8) of section 88;

(e) “medical authority” means the medical authority as referred to in clause (p) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 or such other medical authority as may, by notification, be specified by the Central Government for certifying “autism”, “cerebral palsy”, “multiple disabilities”, “person with disability” and “severe disability” referred to in clauses (a), (c), (h), (j) and (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;

(f) “person with disability” means a person as referred to in clause (t) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 or clause (j) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;

(g) “person with severe disability” means-

(i) a person with eighty per cent or more of one or more disabilities, as referred to in sub-section (4) of section 56 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995; or

(ii) a person with severe disability referred to in clause (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;

(h) “specified company” means a company as referred to in clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002.

5.5.7. Deduction in respect of medical treatment, etc. (Section 80DDB):

Section 80DDB allows a deduction in case of employee, who is resident in India, during the previous year, of any amount actually paid for the medical treatment of such disease or ailment as may be specified in the rules 11DD (1) for himself or a dependant. The deduction allowed is equal to the amount actually paid is in respect of the employee or his dependant or ₹ 40,000 whichever is less.

Now the deduction can be allowed on the basis of a prescription from an oncologist, a urologist, nephrologist, a haematologist, an immunologist or such other specialist, as mentioned in Rule 11DD. However, the amount of the claim shall be reduced by the amount if any received from the insurer or reimbursed by the employer. Further in case of the person against whom such claim is made is a senior citizen (60 age years or more) then the deduction upto ₹ 60,000/- is allowed and in case of very senior citizen (80 age years or more) the deduction upto ₹ 80,000/- is allowed.

For the purpose of this section, in the case of an employee, “dependant” means individual, the spouse, children, parents, brothers and sisters of the employee or any of them, dependant wholly or mainly on the employee for his support and maintenance.

Vide Notification SO No. 2791(E) dated 12.10.2015, Rules 11DD has been amended to do away with the requirement of furnishing a certificate in Form 10-I. A prescription from a specialist as specified in the Rules containing the name and age the patient, name of the disease/ailment along with the name, address, registration number & qualification of the specialist issuing the prescription would now be required.

5.5.8 Deduction in respect of interest on loan taken for higher education (Section 80E):

Section 80E allows deduction in respect of payment of interest on loan taken from any financial institution or any approved charitable institution for higher education for the purpose of pursuing his higher education or for the purpose of higher education of his spouse or his children or the student for whom he is the legal guardian.

The deduction shall be allowed in computing the total income for the Financial year in which the employee starts paying the interest on the loan taken and immediately succeeding seven Financial years or until the Financial year in which the interest is paid in full by the employee, whichever is earlier.

For the purpose of this section -

(a) “approved charitable institution” means an institution established for charitable purposes and approved by the prescribed authority section 10(23C), or an institution referred to in section 80G(2)(a);

(b) “financial institution” means a banking company to which the Banking Regulation Act, 1949 applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf;

(c) “higher education” means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognized by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so;

5.5.9 Deductions on respect of donations to certain funds, charitable institutions, etc. (Section 80G):

Section 80G provides for deductions on account of donation made to various funds , charitable organizations etc. In cases where employees make donations to the Prime Minister’s National Relief Fund, the Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund through their respective employers, it is not possible for such funds to issue separate certificate to every such employee in respect of donations made to such funds as contributions made to these funds are in the form of a consolidated cheque. An employee who makes donations towards these funds is eligible to claim deduction under section 80G. It is, hereby, clarified that the claim in respect of such donations as indicated above will be admissible under section 80G on the basis of the certificate issued by the Drawing and Disbursing Officer (DDO)/Employer in this behalf – Circular No. 2/2005, dated 12-1-2005.

No deduction under this section is allowable in case the amount of donation exceeds ₹ 10000/- unless the amount is paid by any mode other than cash.

5.5.10 Deductions is respect of rents paid (Section 80GG):

Section 80GG allows the employee to a deduction in respect of house rent paid by him for his own residence. Such deduction is permissible subject to the following conditions :-

(a) the employee has not been in receipt of any House Rent Allowance specifically granted to him which qualifies for exemption under section 10(13A) of the Act;

(b) the employee files the declaration in Form No.10BA. (Annexure X)

(c) The employee does not own:

(i) any residential accommodation himself or by his spouse or minor child or where such employee is a member of a Hindu Undivided Family, by such family, at the place where he ordinarily resides or performs duties of his office or carries on his business or profession; or

(ii) at any other place, any residential accommodation which is in the occupation of the employee, the value of which is to be determined under section 23(2)(a) or section 23(4)(a), as the case may be.

(d) He will be entitled to a deduction in respect of house rent paid by him in excess of 10% of his total income. The deduction shall be equal to 25% of total income or ₹ 2,000/- per month, whichever is less. The total income for working out these percentages will be computed before making any deduction undersection 80GG.

The Drawing and Disbursing Authorities should satisfy themselves that all the conditions mentioned above are satisfied before such deduction is allowed by them to the employee. They should also satisfy themselves in this regard by insisting on production of evidence of actual payment of rent.

5.5.11 Deductions in respect of certain donations for scientific research or rural development (Section 80 GGA):

Section 80GGA allows deduction from total income of employee in respect of donations of any sum as given in the Table below:

Sl No Donations made to persons Approval / Notification under Section Authority granting approval/ Notification
1 A research association which has as its object the undertaking of scientific research or to a University, college or other institution to be used for scientific research u/s 35(1)(ii) Central Government
2 A research association which has as its object the undertaking of research in social science or statistical research or to a University, college or other institution to be used for research in social science or statistical research u/s 35(1)(iii) Central Government
3 an association or institution, which has as its object the undertaking of any programme of rural development, to be used for carrying out any programme of rural development approved for the purposes of section 35CCA furnishes the certificateu/s 35CCA (2) Prescribed Authority under Rule 6AAA
4 an association or institution which has as its object the training of persons for implementing programmes of rural development. furnishes the certificateu/s 35CCA (2A) Prescribed Authority under Rule 6AAA
5 a public sector company or a local authority or to an association or institution approved by the National Committee, for carrying out any eligible project or scheme. furnishes the certificate u/s 35AC(2)(a) National Committee for Promotion of Social & Economic Welfare
7 a rural development fund notified u/s 35CCA (1)(c) set up and notified by the Central Government
8 National Urban Poverty Eradication Fund notified u/s 35CCA (1)(d) set up and notified by the Central Government

No deduction under this section is allowable in case:

i) The employee has gross total income which includes income which is chargeable under the head “Profits and gains of business or profession”.

ii) The amount of donation exceeds ₹ 10000 and is paid in cash.

The Drawing and Disbursing Authorities should satisfy themselves that all the conditions mentioned above are satisfied before such deduction is allowed by them to the employee. They should also satisfy themselves in this regard by insisting on production of evidence of actual payment of donation and a receipt from the person to whom donation has been made and ensure that the approval/notification has been issued by the right authority. DDO must ensure a self-declaration from the employee that he has no income from “Profits and gains of business or profession”.

5.5.12 Deduction in respect of interest on deposits in savings account (Section 80TTA):

Section 80TTA has been introduced from the Financial Year 2012-13 and it allows to an employee from his gross total income if it includes any income by way of interest on deposits (not being time deposits) in a savings account, a deduction amounting to:

(i) in a case where the amount of such income does not exceed in the aggregate ten thousand rupees, the whole of such amount; and

(ii) in any other case, ten thousand rupees.

The deduction is available if such savings account is maintained in a

(a) banking company to which the Banking Regulation Act, 1949, applies (including any bank or banking institution referred to in section 51 of that Act);

(b) co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank); or

(c) Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898,

For this section, “time deposits” means the deposits repayable on expiry of fixed periods.

6. REBATE OF ₹ 2000 FOR INDIVIDUALS HAVING TOTAL INCOME UPTO ₹ 5 LAKH [SECTION 87A]

Finance Act 2013 provided relief in the form of rebate to individual taxpayers, resident in India, who are in lower income bracket, i. e. having total income not exceeding ₹ 5,00,000/-. The amount of rebate is ₹ 2000/- or the amount of tax payable, whichever is lower. This rebate is available for AY 2014-15 and subsequent assessment years.

7 TDS ON PAYMENT OF ACCUMULATED BALANCE UNDER RECOGNISED PROVIDENT FUND AND CONTRIBUTION FROM APPROVED SUPERANNUATION FUND:

7.1 The trustees of a Recognized Provident Fund, or any person authorized by the regulations of the Fund to make payment of accumulated balances due to employees, shall in cases where sub-rule(1) of Rule 9 of Part A of the Fourth Schedule to the Act applies, at the time when the accumulated balance due to an employee is paid, make therefrom the deduction specified in Rule 10 of Part A of the Fourth Schedule to the Act.

The accumulated balance is treated as income chargeable under the head “Salaries”.

7.2 Where any contribution made by an employer, including interest on such contributions, if any, in an approved Superannuation Fund is paid to the employee, tax on the amount so paid shall be deducted by the trustees of the Fund to the extent provided in Rule 6 of Part B of the Fourth Schedule to the Act. TDS should be at the average rate of tax at which, the employee was liable to be taxed during the preceding three years or during the period, if that period is less than three years, when he was member of the fund.

The deductor shall remain liable to deduct tax on any sum paid on account of returned contributions (including interest, if any) even if a fund or part of a fund ceases to be an approved Superannuation fund.

7.3 As per section 192A of the Act, w. e. f. 01.06.2015 the trustees of the EPF Scheme 1952 framed under section 5 of the EPF & Misc. Provisions Act, 1952 or any person authorized under the scheme to make payment of accumulated balance due to employees, shall, in a case where the accumulated balance due to an employee participating in a recognized provident fund is includible in his total income owing to the provisions of Rule 8 of Part A of Fourth Schedule not being applicable at the time of payment of accumulated balance due to the employee, deduct income tax thereon @ 10% if the amount of such payment or aggregate of such payment exceeds ₹ 30,000/-. In case the employee does not provide his/her PAN No., then the deduction will have to be made at maximum marginal rate.

8. DDOS TO SATISFY THEMSELVES ABOUT THE GENUINENESS OF CLAIM:

The Drawing and Disbursing Officers should satisfy themselves about the actual deposits/ subscriptions / payments made by the employees, by calling for such particulars/ information as they deem necessary before allowing the aforesaid deductions. In case the DDO is not satisfied about the genuineness of the employee’s claim regarding any deposit/ subscription/ payment made by the employee, he should not allow the same, and the employee would be free to claim the deduction/ rebate on such amount by filing his return of income and furnishing the necessary proof etc., therewith, to the satisfaction of the Assessing Officer.

9. CALCULATION OF INCOME-TAX TO BE DEDUCTED:

9.1 Salary income for the purpose of section 192 shall be computed as follow:-

(a) First compute the gross salary as mentioned in para 5.1 including all the incomes mentioned in para 5.2 and excluding the income mentioned in para 5.3.

(b) Allow deductions mentioned in para 5.4 from the figure arrived at (a) above and compute the amount to arrive at Net salary of the employee

(c) Add income from all other heads- ‘House property’, ‘Profits & gains of Business or Profession’, Capital gains and Income from other Sources to arrive at the Gross Total Income as shown in the form of simple statement mentioned para 3.5. However it may be remembered that no loss under any such head is allowable by DDO other than loss under the Head “Income from House property”.

(d) Allow deductions mentioned in para 5.5 from the figure arrived at (c) above ensuring that the relevant conditions are satisfied. The aggregate of the deductions subject to the threshold limits mentioned in para 5.5 shall not exceed the amount at (b) above and if it exceeds, it should be restricted to that amount.

This will be the amount of total income of the employee on which income tax would be required to be deducted. This income should be rounded off to the nearest multiple of ten rupees.

9.2 Income-tax on such income shall be calculated at the rates given in para 2.1 of this Circular keeping in view the age of the employee and subject to the provisions of sec. 206AA, as discussed in para 4.8. Rebate as perSection 87A upto ₹ 2000/- to eligible persons (see para 6) may be given. Surcharge shall be calculated in cases where applicable (see para 2.2).

9.3 The amount of tax payable so arrived at shall be increased by educational cess as applicable (2% for primary and 1% for secondary education) to arrive at the total tax payable.

9.4 The amount of tax as arrived at para 9.3 should be deducted every month in equal installments. Any excess or deficit arising out of any previous deduction can be adjusted by increasing or decreasing the amount of subsequent deductions during the same financial year.

10. MISCELLANEOUS:

10.1 These instructions are not exhaustive and are issued only with a view to guide the employers to understand the various provisions relating to deduction of tax from salaries. Wherever there is any doubt, reference may be made to the provisions of the Income-tax Act, 1961, the Income-tax Rules, 1962, the Finance Act 2015, the relevant circulars / notifications, etc.

10.2 In case any assistance is required, the Assessing Officer/the Local Public Relation Officer of the Income-tax Department may be contacted.

10.3 These instructions may be brought to the notice of all Disbursing Officers and Undertakings including those under the control of the Central/ State Governments.

10.4 Copies of this Circular are available with the Director of Income-tax (Public Relations, Printing & Publications and Official Language), 6th Floor, Mayur Bhavan, Connaught Place, New Delhi-110 001 and at the following websites:

Finance Minister’s Budget announcement – phasing out plan of deductions under the Income-tax Act : 12-02-2015


The Finance Minister in his Budget Speech, 2015 indicated that the rate of corporate tax will be reduced from 30% to 25% over the next four years along with corresponding phasing out of exemptions and deductions. This is a step towards simplification of tax laws, which is expected to bring about transparency and clarity.

2. The Government proposes to implement this decision in the following manner:

 Profit linked, investment linked and area based deductions will be phased out for both corporate and non-corporate tax payers.

 The provisions having a sunset date will not be modified to advance the sunset date. Similarly the sunset dates provided in the Act will not be extended.

 In case of tax incentives with no terminal date, a sunset date of 31.3.2017 will be provided either for commencement of the activity or for claim of benefit depending upon the structure of the relevant provisions of the Act.

 There will be no weighted deduction with effect from 01.04.2017.

3. Based on the above principles, the details of the phasing out plan to be implemented are as under: 

(i) Section 32 : The depreciation under the Income-tax Act is available up to 100% in respect of certain block of assets. The highest rate of depreciation under the Income-tax Act is proposed to be reduced to 60%. This is proposed to be made applicable from 01.4.2017. The new rate is proposed to be made applicable to all the assets (whether old or new) falling in the relevant block of assets. 

(ii) Section 35AD of the Income-tax Act provides for 100% deduction of capital expenditure (other than expenditure on land, goodwill and financial assets) incurred by certain specified businesses such as laying and operating a crosscountry natural gas or crude or petroleum oil pipeline network, building hotel (two star and above), warehousing facility for sugar etc. However, in case of a cold chain facility, warehousing facility for storage of agricultural produce, an affordable housing project, production of fertiliser etc. weighted deduction of 150% of capital expenditure is allowed. It is proposed that no weighted deduction will be allowed on any specified business w.e.f 01.4.2017. 

(iii) Section 35AC: No deduction under section 35AC will be available from financial year 2017-18 (Assessment Year 2018-19). (iv) Section 35 of the Income-tax Act provides for deduction for expenditure incurred on scientific research. It allows for both capital and revenue expenditure and also allows for weighted deduction for donations made to certain institutions/associations/company for scientific research. It is proposed to provide that – (a) deduction under section 35(1)(ii), (iia), (iii) and 35 (2AA) is proposed to be restricted to 100% from F.Y 2017-18, and 

(b) deduction under section 35(2AB) of the Income-tax Act is proposed to be limited to 100% from Financial Year 2017-18 as against 200% available up to 31.03.2017 under the Income-tax Act. 

(v) There are certain tax incentives which at present do not have any sunset date for commencement of activity. It is proposed to provide a sunset date of 31.03.2017 for commencement of activity in the following cases:-

A) Development, operation and maintenance of infrastructure facility [Section 80-IA (4)(i)].

B) Development of special economic zone (Section 80-IAB).

C) Export of articles or things or services by a unit located in a Special Economic Zone (Section 10AA).

D) Commercial production of natural gas in blocks licenced under CBM-IV and NELP VIII. [Section 80-IB(9)(iv)&(v)].

E) Commercial production of mineral oil from blocks licenced under a contract awarded up to 31.03.2011. [Section 80-IB(9)(ii)].(vi) No weighted deduction is proposed to be provided under Section 35CCC and 35CCD from 01.04.2017. However deduction up to 100% of expenditure referred to therein shall be available.

4. Comments on the aforesaid phasing out plan may be sent within 15 days to Director (TPL-III) on mail at dirtpl3@nic.in or by post in an envelope under the caption

“Phasing out of deductions” at the following address:
Director (TPL III),
Central Board of Direct Taxes,
Room No. 147G,
North Block,
New Delhi 11000

Notification No. : 359/2015-RB Dated: 2-12-2015


Foreign Exchange Management (Transfer or Issue of Any Foreign Security) (Amendment) Regulations, 2015 – 359/2015-RB – Dated 2-12-2015 – Foreign Exchange Management

RESERVE BANK OF INDIA

(Foreign Exchange Department)

(Central Office)

NOTIFICATION No. FEMA. 359/2015-RB

Mumbai, the 2nd December, 2015

Foreign Exchange Management (Transfer or Issue of Any Foreign Security) (Amendment) Regulations, 2015

G.S.R. 921(E).-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 Any Foreign Security) Regulations, 2004 (Notification No. FEMA. 120/2004-RB dated July 7, 2004) namely:-

1. Short Title & Commencement

(i) These Regulations may be called the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) (Amendment) Regulations, 2015.

(ii) They shall come into force from the date of their publication in the Official Gazette

2. Amendment of the Regulation 21 (2) (ii)

In the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 (Notification No. FEMA. 120/2004-RB dated July 7, 2004), after Regulation 21 (2) (ii), the following proviso shall be inserted, namely:-

“Provided that under these Regulations, the Reserve Bank may, in consultation with the Government of India,change / prescribe for the automatic as well as the approval route of FCCBs, any provision or proviso for issuance of FCCBs.

3. Amendment to the Regulation 21 (2) (iii)

In the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004 (Notification No. FEMA. 120/2004-RB dated July 7, 2004), after Regulation 21 (2) (iii), the following proviso shall be inserted, namely:-

“Provided that under these Regulations, the Reserve Bank may, in consultation with the Government of India, change / prescribe any provision or proviso for issuance of FCEBs.

[F. No. 1/30/EM/2015]

B.P. KANUNGO, Principal Chief General Manager

Corporate Affairs Ministry extends deadline for annual filings to December 30 : 01-12-2015


Giving more time to stakeholders, the Corporate Affairs Ministry has extended the deadline for companies to submit their annual returns and financial statements till December 30.

The previous deadline for making these filings ended on November 30.

“Keeping in view requests received from various stakeholders, it has been decided to relax the additional fees payable on e-forms AOC-4, AOC (CFS) AOC-4 XBRL and MGT-7 up to December 30, 2015, wherever additional fee is applicable,” the Ministry said in a circular issued on Monday.

The last date for submitting the filings has also been extended, it added.

Under the Companies Act, 2013, forms AOC-4, AOC-4 XBRL are for filing of financial statements while MGT-7 pertains to submitting annual returns to the Ministry.

Every company is required to prepare its annual return in the MGT-7 form.

This form is to be used for financial years ending after April 1, 2014 – the day when most provisions of the new companies law came into effect.

Source : The Hindu

Govt. digs into UPA file notings to break GST Bill deadlock : 01-12-2015


Keen on breaking the parliamentary deadlock over the Goods and Services Tax (GST) Bill, the NDA governmentis scouring the file notings made by the UPA Finance Ministers pertaining to the Bill to come up with solutions to the three objections of the Congress. Top sources at the Finance Ministry told The Hindu that “some direction” to proceed could be gauged “from the Congress’s own grappling with the issue.”

“For example, the Congress has demanded that a grievance redress mechanism be set up, with retired judges helming it, to resolve disputes between the States and the Centre on the share of taxes. This could be addressed by empowering the GST council to try and resolve disputes or set up a streamlined mechanism,” said a senior source in the Ministry. This particular solution was “discovered” in the file notings of a UPA Minister. This is part of the set of options that the government will propose to the Congress as it starts negotiating a Bill that could clear both Houses of Parliament.

Setting up of a grievance redress mechanism is one of the three issues flagged by the Congress. The other two are a one percent cess on the manufacturing States and mentioning an 18 per cent cap on tax rates in the Bill itself.

“The other two issues are more complex, but we are committed to a differentiated rate of tax for essential and luxury goods,” the source said. The mentioning of a tax rate cap in the Bill itself is a “non-negotiable” point, according to the government, since any tax incentive or change will have to go through a cumbersome parliamentary process.

The government is waiting for Congress president Sonia Gandhi to return from a trip to the U.S. by week-end to start talks with the party. Union Ministers Arun Jaitley and Nirmala Sitharaman, along with Parliamentary Affairs Minister M. Venkaiah Naidu, have been deputed to speak to Congress leaders, including Mallikarjun Kharge, Ghulam Nabi Azad, Anand Sharma and Jyotiraditya Scindhia.

Mr. Naidu said: “The meeting between the Prime Minister and Congress president Sonia Gandhi has been welcomed across the country. This demonstrates that people want co-operative democracy rather than confrontational politics.”

“For any good work done by the government, by way of passing legislation, the credit should go to both the Treasury and Opposition Benches,” he said, referring to the GST Bill.

Source : The Hindu

Petrol price cut 58p, diesel slashed 25p per litre : 01-12-2015


Oil Marketing Companies (OMCs) today slashed petrol prices by 58 paise per litre and prices of diesel by 25 paise per litre to align domestic rates with global petroleum product prices.

Post today’s revision petrol will be priced at Rs 60.48 per litre while every litre of diesel will cost Rs 46.55 in Delhi.

“The current level of international product prices of Petrol and Diesel and the Rupee-Dollar exchange rate warrant a decrease in prices, the impact of which is being passed on to the consumers with this price revision,” the country’s largest fuel retailer Indian Oil Corporation said in a statement.

It added the movement of prices in the international oil market and the exchange rate shall continue to be monitored closely and developing trends of the market will be reflected in future price changes.

Source : PTI

Fate of GST Bill depends on ‘intolerance’ debate : 30-11-2015


The Congress has decided not to engage with the ruling BJP on the contentious Goods and Services Tax (GST) Bill until the issue of “intolerance” is debated in Parliament from Monday.

The decision to loosen up its demands or resist the Bill will depends upon whether the Congress will come out looking good from the “intolerance” debate, a senior leader told The Hindu .

The Congress’s demands are that the tax cap be fixed at 18 per cent, the 1 per cent inter-State cess be scrapped and independent accountability be ensured. “The debate on intolerance will be crucial, and it has a potential to break whatever little [Prime Minister Narendra] Modi achieved at his meeting with our president [Sonia Gandhi],” he said.

Soon after Mr. Modi and Ms. Gandhi had a meeting on the Bill, Congress vice-president Rahul Gandhi chaired a meeting at his residence. It was attended by senior leader Anand Sharma, the former Finance Minister, P. Chidambaram, and Mallikarjun Kharge, who is leading the party in the Lok Sabha.

Though several newspapers reported that Mr. Gandhi conveyed to Mr. Kharge his displeasure at his being sidelined in the deliberations between Mr. Modi and Ms. Gandhi, Congress spokesperson Randeep Singh Surjewala told The Hindu that the sole aim of the meeting was “to discuss a series of political issues, including the party’s strategy in Parliament.”

“Somebody is misreading it [the meeting],” Mr. Surjewala said. “Rahulji’s stand on the GST has been clear right from day one — the Bill is conceived by the Congress and it should be passed.”

Before Mr. Modi met Ms. Gandhi, a Congress source said some “experienced leaders” had urged caution arguing that since the ruling parties of the “consumer States” were willing to back the Bill, the Congress might lose their support in Parliament, and its influence as the leading party of the Opposition. It was the fear of isolation, the source said, that pushed the former Prime Minister, Manmohan Singh, to engage with the ruling BJP and “act as a bridge” between Mr. Modi and Ms. Gandhi.

Source : The Hindu

Food subsidy bill to hit govt finances : 30-11-2015


The Finance Minister Arun Jaitley and his Budget team will have to do some more financial jugglery as the already stressed exchequer is under further pressure from the food subsidy bill.

The Centre’s subsidy costs in 2016-17 are expected to see a significant rise close to or over Rs. 1,30,000 crore as all 36 States and Union Territories are expected to implement the National Food Security Act by the end of the current fiscal.

From December 1, Andhra Pradesh, Goa, Assam and Odisha are expected to roll out the scheme, taking the total number of States on board to 23, a senior Food Ministry official told BusinessLine . The Ministry expects that the food subsidy outlay for the current fiscal would be about Rs. 1,15,000 crore against the previous year when the total expenditure on food subsidy has been nearly Rs. 1,10,000 crore.

Till now with few States implementing the National Food Security Act, the Finance Ministry had been making significant savings on the Budget food subsidy bill. In 2015-16, the food subsidy is Budgeted at Rs. 1,24,419 crore while it was estimated at Rs. 1,22,676 crore in 2014-15.

Adding to the woes of the Finance Minister, next fiscal, according to analysts, will be the global crude oil prices, which is expected to harden from the prevailing average of about $45 a barrel.

OROP & Pay Commission

The Centre’s fiscal arithmetic for 2016-17 is already under stress from the expected pay out of the One Rank One Pension (OROP) scheme and the recommendations of the Seventh Pay Commission.

Underlining these challenges, Jaitley had said, “I look at the pressures next year, including striking fiscal discipline, satisfying demands for one pension one rank, burden of the Seventh Pay Commission and our commitments to infrastructure and irrigation and continuing to invest in the social sector.” During the current fiscal, the soft crude prices have helped government work on its finances.

The Finance Ministry has factored in hefty savings in its fuel subsidy bill for the fiscal thanks to the softer crude oil prices. The government had Budgeted average cost of $70 per barrel. While the fuel subsidy is Budgeted at Rs. 30,000 crore in 2015-16, the total outlay on major subsidies (food, fuel and petroleum) is estimated at Rs. 2,43,811 crore this fiscal.

Source : Business Standard

‘Exempt SEZs from MAT’ : 30-11-2015


The Centre must exempt all approved special economic zones (SEZs) from levy of minimum alternate tax (MAT) and Dividend Distribution Tax (DDT), industry body Assocham has suggested in a pre-Budget memorandum submitted to Finance Ministry here.

The business of SEZ development has come to a halt ever since the then existing exemption from MAT levy on SEZs was withdrawn from April 1, 2012, it said, adding that because of the adverse tax treatment, many companies had now approached the Commerce Ministry to de-notify them from the SEZs.

Source : PTI

The government’s Plan B for GST : 28-11-2015


The Centre is confident of rolling out a combined goods and services tax (GST) at the national level in time to meet the April 2016 deadline, even before states get their legal structures in order.

“Nothing in the law stops the Centre from doing so in this financial year (FY16),” said an officer in the know of the developments. The plan is a fallback option, to be resorted to only if the government is unable to make the first of the three Constitution amendment Bills sail through in the current session of Parliament. One of the options is to raise both excise and service tax rates in FY16, as these are way below any expected GST rates.

Sources say the government is very serious about meeting the April deadline. Doing so will restore confidence among investors, domestic and foreign, about the government’s ability to make reforms happen, especially when it involves Parliament. The prime minister has already announced to investors in Singapore that GST will happen by April.

DECODING PLAN B
The Centre might roll out the GST Bill even before states gets their legal structures in order

Doing so will restore confidence among investors about the govt’s ability to make reforms happen

Both excise and service tax rates might be raised in FY16 as these are below expected GST rates

The imposition of the Swachh Bharat cess on service tax is one element of this plan

Central excise duty – rounded off to 12.5% for most goods – would also be harmonised soon

From now till March, many elements of the tax will be announced as part of this plan

There is another reason for pushing Plan B. Earlier this year, the government was embarrassed as it could not get amendments to the land Bill passed in Parliament. If the GST Bill slips, too, it will create an impression of a politically weak government at the Centre, which could have a cascading effect on the flow of foreign investments into other sectors.

One element of this plan has already come into practice with the imposition of the Swachh Bharat cess on service tax. This moves the effective service tax rate closer to the expected GST rate. At some time, the cess levied on all services will be merged with the tax.

The central excise duty, currently rounded off to 12.5 per cent for most goods, would also be harmonised soon. As there are a few goods on which the excise duty rates are different from the mean rate – like those on cars – the bunching would be more elaborate.

A practical problem that could occur soon will be the demand from business to provide credit for higher tax. These credits are used by enterprises to set off against their other tax liabilities, reducing their payouts. The plan being examined now is to provide them deferred credit wherever the set-offs are not in place.

“All these can be done within FY16, with the Budget as the occasion to complete the exercise,” said a source.

As part of Plan B, a lot of homework has been done on the administrative back-haul of the tax. From now till March, many elements of the tax will be announced through a series of notifications.

A critical element of the GST structure which has come into place is the income tax backbone. The GST Network has already begun harmonising tax applications of all state governments. The work has proceeded without glitches, as there are no political battles being fought over these, said the source. For small or big businesses, this will be the biggest confidence-building measure about the pan-national tax, said the source. Once the benefits of integrated taxation can be passed on to businesses and consumers, it will goad fence-sitting states to jump in.

The work on Plan B is moving ahead, said the source, to take advantage of the time space between the end of the winter session of Parliament in the third week of December and the beginning of the Budget session in February 2016.

This is despite a meeting on Friday between Prime Minister Narendra Modi and Congress leader Sonia Gandhi. The finance ministry had got the Bill cleared by the Lok Sabha in the past session, but the Bill is pending in the Rajya Sabha, owing to political opposition.

Plan B would, however, continue with some of the concerns raised by tax analysts, including the optional one per cent tax on inter-state movement of goods. While the Centre has claimed it is an optional instrument, the Congress party and experts say it is sure to become mandatory soon.

Source : PTI

GST: Govt positive, Cong seeks assurance on rate : 27-11-2015


Congress seeks cap on GST rate at 18%; doing away with the 1% additional tax; and setting up a dispute redressal authority

The government on Thursday exuded confidence of having the Goods and Services Tax Bill passed, with several Opposition parties coming out in open support.

The government assured the Congress, which is insisting its concerns over the Bill should be addressed, that it will engage in consultations.

On a day that the Lok Sabha discussed the Commitment to the Constitution – the Rajya Sabha was adjourned over the death of a sitting member – Bahujan Samaj Party supremo Mayawati told reporters, “The government is assuring us that the GST Bill will strengthen the economy. So we support it.”

Praful Patel and Tariq Anwar of the Nationalist Congress Party also extended support to the tax reform, saying, “The GST Bill should be passed in this session.” Anwar added the government should look into issues being raised by the Opposition.

Congress president Sonia Gandhi was overheard in Parliament corridors that the three points raised on the Bill by her party must be addressed. The Congress has sought a cap on the GST rate at 18 per cent; doing away with the one per cent additional tax; and setting up a dispute redressal authority.

A Congress leader said, “We are awaiting a response from the government on the issues raised by us.” Asked if there was a possibility of the Congress walking out, he said it was unlikely and the possibility of the party voting against the Bill was remote.

Dismissing finance minister Arun Jaitley’s claim that he had spoken to a host of Congress leaders, the party said Jaitley had not held any official consultations.

Finance ministry officials insist that an explicit cap cannot be stipulated in the Constitutional Amendment Bill, but the Congress wants no room for arbitrary tax increases. The gulf can only be bridged once the government gets back to the Opposition.

With most parties on board, the All India Anna Dravida Munnetra Kazhagam has lodged its opposition to the Bill.

Source : PTI

No. 29 Dated: 26-11-2015


RBI/2015-16/248
A.P. (DIR Series) Circular No. 29

November 26, 2015

To,
All Authorised Dealer Category – I Banks

Madam/ Sir

Import of Goods into India – Evidence of Import

Attention of the Authorised Dealers is invited to para A.10.1 of A.P. (DIR Series) Circular No. 106 dated June 19, 2003 in terms of which an importer has to submit as evidence of import, (a) the exchange control copy of the Bill of Entry for home consumption; (b) the exchange control copy of the Bill of Entry for warehousing, in the case of 100% Export Oriented Units (EOUs); or (c) Customs Assessment Certificate or Postal Appraisal Form as declared by the importer to the Customs Authorities.

2. With the establishment of Free Trade Warehousing Zones / SEZ Unit warehouses, imported goods can be stored therein, for re-export / re-selling purposes for which Customs Authorities issue Ex-Bond Bill of Entry. AD banks are advised to consider the Bill of Entry issued by Customs Authorities named as Ex-Bond Bill of Entry or by any other similar nomenclature, as evidence for physical import of goods.

3. Further, in cases where goods have been imported through couriers, the Courier Bill of Entry, as declared by the courier companies to the Customs Authorities, may also be considered as evidence of import of goods.

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

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

Yours faithfully,

(A K Pandey)
Chief General Manager

No. 189/8/2015 Dated: 26-11-2015


Circular No.189/8/2015-Service Tax

F. No. 354/279/2015-TRU
Government of India
Department of Revenue
Central Board of Excise & Customs
New Delhi
New Delhi, the 26th November, 2015
To
Principal Chief Commissioners of Customs and Central Excise(All)
Principal Chief Commissioners of Central Excise & Service Tax (All)
Principal Director Generals of Goods and Service Tax/System/CEI
Director General of Audit/Tax Payer Services,
Principal Commissioners/ Commissioners of Customs and Central Excise (All)
Principal Commissioners/Commissioners of Central Excise and Service Tax (All)
Principal Commissioners/Commissioners of Service Tax (All)
Principal Commissioners/Commissioners LTU/Central excise/Service Tax (Audit)
Madam/Sir,

Sub: Clarification regarding leviability of service tax in respect of Seed Testing with effect from 01.07.2012-reg.

It has come to the notice of the Board that certain field formations have taken a view that all activities incidental to seed testing are leviable to service tax and only the activity in so far it relates to actual testing has been exempted in the Negative List.

2. The matter has been examined. In this regard, Negative list entry under Clause (d) of section 66D of the Finance Act, 1994 is reproduced as under :
“(d) services relating to agriculture or agricultural produce by way of—
(i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing; “

2.1 Term ‘agriculture ‘ has been defined under section 65B clause (3) as under:-
(3) “agriculture” means the cultivation of plants and rearing of all life-forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products;

2.2 Term ‘agriculture produce ‘ has been defined under section 65B clause (5) as under:-
(5) “agricultural produce” means any produce of agriculture on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market;

2.3 There is no doubt that seed is not covered under the definition of agriculture produce. All services relating to agriculture by way of agriculture operations directly relating to production of agriculture produce including testing is covered. Testing and certification can be done as per the Act and rules made there under in this regard. Testing cannot stand in isolation of certification and other ancillary activities. Testing cannot be random, somebody has to register for testing. If certificate is not received and seeds are not tagged, testing is irrelevant. Therefore, all processes are a part of the composite process and cannot be separated from testing.

2.4 “Agricultural operations” have not been defined in the Chapter V of the Finance Act, 1994 and an inclusive and indicative list of such operations has been given. Thus it has been defined as “Agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing”. The exemption is thus not limited to the specified operations. The word ‘seed’ from testing in agricultural operations was deleted so as to broaden the scope of coverage of the negative list entry and to cover any testing in agricultural operations in negative list, which are directly linked to production of agriculture produce and not to limit its scope only to seeds.

3.0 It may be recalled that prior to introduction of Negative List, the services [technical testing and analysis and technical inspection and certification of seeds], rendered by notified Central/ State Seed Testing Laboratories /Agency were exempt from Service Tax [notification No.10/2010-Service Tax]. This notification was rescinded by another notification [No.34/3012-Service Tax, dated 20-06-2012], w.e.f. 01-07-2012, when the Negative List entry came into force. The intent of rescinding the said notification was not to withdraw the above stated exemption but the said exemption was being subsumed elsewhere. The relevant entry in the Negative list as on 01.07.2012 read as under:-
(d) services relating to agriculture or agricultural produce by way of—
(i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing;

3.1 Further, in the subsequent Budget 2013-14, the word “seed” prefixed to “seed testing” was omitted w.e.f. 10.05.2013. The intent was clarified by the Joint Secretary (Tax Research Unit) vide Budget D.O.F. No. 334/3/2013-TRU, New Delhi, dated February 28, 2012, in para 1 (iii) of the letter that the negative list entry in sub-clause (i) of clause (d) of section 66D is being modified by deleting the word “seed”. This will allow the benefit to all other testing in relation to “agriculture” or “agricultural produce”.

4. In view of the above, it is clarified that all testing and ancillary activities to testing such as seed certification, technical inspection, technical testing, analysis, tagging of seeds, rendered during testing of seeds, are covered within the meaning of ‘testing’ as mentioned in sub-clause (i) of clause (d) of section 66D of the Finance Act, 1994. Therefore, such services are not liable to Service Tax under section 66B of the Finance Act, 1994.
All concerned are requested to acknowledge the receipt of this circular.

Difficulty if any, in the implementation of the circular should be brought to the notice of the Board. Hindi version would follow.

Yours faithfully,

(Ravindra Kumar)
Technical Officer (TRU)

Congress, government say ready for GST discussion : 26-11-2015


The government and the main opposition, the Congress, on Wednesday were on the same page on the crucial goods and services tax (GST) Bill as far as talks were concerned. On the eve of the winter session of Parliament, Finance Minister Arun Jaitley assured the Congress it would hold consultations with opposition parties over the crucial GST Bill. The Congress told the government it had made its main concerns clear and wanted the government to respond to those, implying it was open to negotiations.

Addressing reporters after an all-party meeting, Leader of the Opposition in the Rajya Sabha Ghulam Nabi Azad said, “The government has never discussed with us on the GST. We have made clear our concerns and it is now for the government to get back to us. We are open for discussion.”

The Congress had asked for capping the GST rate at 18 per cent, doing away with an one per cent additional tax and setting up of a dispute redressal authority.

Describing Congress’ concerns as “legitimate”, Azad said, “We want a GST tax that is not just pro-industry but pro-trade and pro-consumer as well.” “Even in the last session (monsoon) we had asked for a discussion but the government did not hear us.”

As the finance minister was quoted in the media as saying that the Congress’ demands were “preposterous”, Azad asked the FM for a clarification. Jaitley assured him that the government would discuss and consult with them.

Prime Minister Narendra Modi, who made a brief appearance at the all-party meeting, made a strong pitch for an early passage of the GST Bill, saying it would be in the interest of the nation.

In a related development, finance ministry sources on Wednesday ruled out incorporating GST rates in the Constitution amendment Bill, which was one of the demands of the Congress. Jaitley had on Tuesday called this demand “preposterous”.

“Putting the rates in the Constitution amendment Bill is out of the question. GST rates will be dynamic and cannot be static. The rates will be change year to year. Within a year also it may change twice,” a finance ministry official said. Each time you change the rates, you have to go back and amend the Constitution, the official added. “Let me tell you this was not even part of the draft Bill that was approved by Mr (P) Chidambaram. It is the first time this has come up.”

Congress sources said the party was willing to compromise if the government responded with some structured constructive feedback on their demands.

For instance, the party would be open for negotiations on the 18 per cent cap on GST, after deliberating on the government’s response.

Source : Business Standard

Notification No. : 45/2015 Dated: 24-11-2015


[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)

NOTIFICATION
No. 45/2015-Central Excise
New Delhi, the 24th November, 2015

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), the Central Government, on 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. 22/2003-Central Excise, dated the 31st March, 2003, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 265(E), dated the 31st March, 2003, namely:-

In the said notification, in Paragraph 6, for the second proviso, the following proviso shall be substituted, namely:-

“Provided further that where such articles (including rejects, waste, scrap and remnants) are either non excisable or such articles (including rejects, waste, scrap and remnants) other than articles falling under heading/tariff item 8901, 8902 00 10, 8905 10 00 or 8906 if imported, are leviable to nil rate of duty of customs specified under First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and nil additional duty leviable under section 3 of the said Customs Tariff Act, read with exemption notification in this regard , if any, no exemption in respect of inputs utilized for the purpose of processing, manufacture, production or packaging of such articles (including rejects, waste, scrap and remnants) shall be available under this notification”.

[F.No. 354/166/2014-TRU]

(K. Kalimuthu)
Under Secretary to the Government of India

Note.- The principal notification No. 22/2003-Central Excise, dated the 31st March, 2003 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 265(E), dated the 31st March, 2003 and last amended by notification No. 30/2015-Central Excise, dated the 25th May, 2015, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 419 (E), dated the 25th May, 2015.

Notification No. : 44/2015 Dated: 24-11-2015


[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)

NOTIFICATION
No. 44/2015-Central Excise

New Delhi, the 24th November, 2015

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

(i) in serial number 306B, in column (3), the following Explanation shall be inserted, namely:-
“Explanation.- Nothing contained in this exemption shall have effect on or after the 24th day of November, 2015.”;

(ii) after serial number 306B and the entries relating thereto, the following serial number and the entries shall be inserted, namely:-

“306C Any Chapter Raw materials and parts, for use in the manufacture of goods falling under heading/tariff item 8901, 8902, 8904 00 00, 8905 (except tariff item 8905 20 00) or 8906

Explanation.- For the purposes of this entry, it is clarified that in the case of steel already procured under Sl.No.306B above and lying unutilized,- the unit will furnish a separate bond to the jurisdictional Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, giving details of such goods and also undertake to utilize the same for manufacture of goods falling under heading/tariff item 8901, 8902, 8904 00 00, 8905 (except tariff item 8905 20 00) or 8906; and in the event of failure to use such goods for the specified purpose, the unit shall pay on demand, an amount equal to the duty payable on such goods but for the exemption under this notification.
Nil 2 and 3”.
[F.No. 354/166/2014-TRU]

(K. Kalimuthu)
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. 43/2015-Central Excise, dated the 6th November, 2015, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 844(E), dated the 6th November, 2015.

Real estate FDI ease not to change much on ground : 24-11-2015


The recent liberalisation of foreign direct investment (FDI) regulations will not result in immediate investments as fund managers remain bearish on the domestic residential real estate sector.

The recent liberalisation of foreign direct investment (FDI) regulations will not result in immediate investments as fund managers remain bearish on the domestic residential real estate sector. A number of fund managers concurred that though the reforms do help as far as ease of doing business is concerned but is not sufficient to pull the sector out of slowdown. “I will say that both the entry and exit guidelines are a step in the right direction but I doubt if this will immediately lead to a flurry of FDI investments because of the lacklustre market conditions,” said Vikas Chimakurthy, director at Kotak Realty. For funds to actively scout for projects, core fundamentals have to improve, Chimakurthy added.

That a number of overseas funds burnt their fingers, having invested during the peak period of 2005-2006 is a major overhang fund managers are still grappling with. “The track record of funds making money from India has not been great. In some cases, fund managers have struggled to recover their principal sum. Large number of investments have not met their return expectations,” said Prakash Kalothia, managing director at Sun Apollo India Real Estate Fund. Around 10 years back when FDI policy was first liberalised, a number of funds like Morgan Stanley, Goldman Sachs, Citigroup, Wachovia and Lehman Brothers invested heavily. But after the 2008-2009 crisis, some of these funds shut shop overnight and for those that remained, the project underwriting assumptions made suddenly looked unrealistic due to several factors such as cost overruns, execution delays and confusion regarding put-and-call options. Hence international funds are jittery about investing in a market that is squeezed off demand. As Chimakurthy pointed out, asset prices have largely remained stable across markets, with even a downward bias in some pockets.

It must be said though that domestic PE funds are on a rampage to lap up distressed projects, in sharp contrast to international funds, mainly armed with structured debt or mezannine finance. According to property consulting firm, Cushman and Wakefield, PE investments last year increased by 80% comparable annually to $2.4 billion, only 30% of which came via FDI. This year too the trend is no different. Investments in the second quarter was pegged at just over $1 billion (18 deals), the FDI portion comprised only 31%.

These investments typically are highly collaterized and also bear pre-determined terms of exit, often exceeding 25%. While some funds are digging these investments, others say higher returns can be generated should the demand improve.

Source : PTI

Notification No. : 45/2015 Dated: 24-11-2015


[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)

NOTIFICATION
No. 45/2015-Central Excise
New Delhi, the 24th November, 2015

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and sub-section (3) of section 3 of the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), the Central Government, on 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. 22/2003-Central Excise, dated the 31st March, 2003, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 265(E), dated the 31st March, 2003, namely:-

In the said notification, in Paragraph 6, for the second proviso, the following proviso shall be substituted, namely:-

“Provided further that where such articles (including rejects, waste, scrap and remnants) are either non excisable or such articles (including rejects, waste, scrap and remnants) other than articles falling under heading/tariff item 8901, 8902 00 10, 8905 10 00 or 8906 if imported, are leviable to nil rate of duty of customs specified under First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and nil additional duty leviable under section 3 of the said Customs Tariff Act, read with exemption notification in this regard , if any, no exemption in respect of inputs utilized for the purpose of processing, manufacture, production or packaging of such articles (including rejects, waste, scrap and remnants) shall be available under this notification”.
[F.No. 354/166/2014-TRU]

(K. Kalimuthu)
Under Secretary to the Government of India

Note.- The principal notification No. 22/2003-Central Excise, dated the 31st March, 2003 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 265(E), dated the 31st March, 2003 and last amended by notification No. 30/2015-Central Excise, dated the 25th May, 2015, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 419 (E), dated the 25th May, 2015.

Notification No. : 44/2015 Dated: 24-11-2015


[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)

NOTIFICATION
No. 44/2015-Central Excise

New Delhi, the 24th November, 2015

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

(i) in serial number 306B, in column (3), the following Explanation shall be inserted, namely:-
“Explanation.- Nothing contained in this exemption shall have effect on or after the 24th day of November, 2015.”;

(ii) after serial number 306B and the entries relating thereto, the following serial number and the entries shall be inserted, namely:-

“306C Any Chapter Raw materials and parts, for use in the manufacture of goods falling under heading/tariff item 8901, 8902, 8904 00 00, 8905 (except tariff item 8905 20 00) or 8906
Explanation.- For the purposes of this entry, it is clarified that in the case of steel already procured under Sl.No.306B above and lying unutilized,- the unit will furnish a separate bond to the jurisdictional Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, giving details of such goods and also undertake to utilize the same for manufacture of goods falling under heading/tariff item 8901, 8902, 8904 00 00, 8905 (except tariff item 8905 20 00) or 8906; and in the event of failure to use such goods for the specified purpose, the unit shall pay on demand, an amount equal to the duty payable on such goods but for the exemption under this notification.

Nil 2 and 3”.
[F.No. 354/166/2014-TRU]

(K. Kalimuthu)
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. 43/2015-Central Excise, dated the 6th November, 2015, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 844(E), dated the 6th November, 2015.

Subramanian panel to submit GST report by December 5 : 24-11-2015


The Arvind Subramanian-led panel on recommending revenue-neutral rates for the proposed Goods and Service Tax (GST) would submit its report in the first week of December, senior policymakers said on Monday.

The government was in constant talks with members of the Opposition in a bid to pass the constitutional amendments to GST in the Rajya Sabha, they said.

Just two days before the crucial winter session of Parliament, Finance Minister Arun Jaitley met Chief Economic Advisor Subramanian, Minister of State for Finance Jayant Sinha, Revenue Secretary Hasmukh Adhia and other officials.

“We discussed the broad contours of what needs to be done,” Adhia told reporters after the meeting. “The Subramanian-led committee has asked for some more time. They have already collated all the data that they need. They should submit the report by December 4 or 5.”

Sinha said: “We had a consultation with the chief economic advisor and his committee that has been working on revenue-neutral rates. They have pulled together a lot of data from many different sources, so we have a comprehensive set of numbers. We have finalised parameters that will be necessary to establish the rates. That is now being looked at. We will have something by the first week of December.”

Officials did not comment on the likely rate. But there are various suggestions being floated by stakeholders. While a sub-panel of the Empowered Committee of state finance ministers had suggested almost 27 per cent, it was deemed too high. Experts had suggested to a Rajya Sabha select panel that the rates should be within 20 per cent to make India’s tax rates competitive with other markets. Congress, on the other the hand, wanted GST to be within 18 per cent.

“The finance minister has already said several times that our goal is to be able to come up with a reasonable rate that will be good for the economy and that’s what the CEA and his committee have taken under advisement. I am sure they will consider that as they put together their analysis,” Sinha said.

When asked if the constitutional amendment Bill will be passed soon, he said: “We are in continuous consultation with our colleagues in the Opposition. We are trying to talk with them about all of the aspects of GST… We all recognise how important this is for the economy, for India, and so we are in continuous discussion to see that it gets passed.”

Sinha said the government was working to ensure a consensus on GST and that it was aware of the demands raised by the Congress on 18 per cent rate in the Constitution amendment Bill, a dispute resolution mechanism and the removal of the 1 per cent manufacturing levy. “What the actual rate is in any case will be established not by the constitutional amendment but by the GST Bill, though of course we have had some inputs that there should be a rate that is fixed in the Constitution amendment itself. So that is an item under discussion. So as of now, our view is that it should be in the GST Bill and not in Constitution amendment,” he added.

Source : Business Standard

Notification No. : F.No.01/34/2013-CL-V- Part-I Dated: 16-11-2015


Companies (Management and Administration) Third Amendment Rules, 2015 – F.No.01/34/2013-CL-V- Part-I – Dated 16-11-2015 – Companies Law

GOVERNMENT OF INDIA

MINISTRY OF CORPORATE AFFAIRS

Notification

New Delhi, 16.11.2015

G.S.R. (E).-In exercise of the powers conferred under sub-sections (2) and (3) of section 92 read with sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Management and Administration) Rules, 2014, namely:-

1. Short title and commencement.-

(1) These rules may be called the Companies (Management and Administration) Third Amendment Rules, 2015.

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

2. In the Companies (Management and Administration) Rules, 2014, for Form No. MGT-7, the following form shall be substituted, namely:-

FAQs On SBC


SWACHH BHARAT CESS (SBC)

FREQUENTLY ASKED QUESTIONS (FAQ)

Background:

Chapter VI (Section 119) of the Finance Act 2015 contains provisions for levy and collection of Swachh Bharat Cess (SBC). Now the Government has announced 15th November, 2015 as the date from which the provisions of Section 119 would come into effect (notification No.21/2015-Service Tax, dated 6th November, 2015 refers). Simultaneously, Government has also notified levy of Swachh Bharat Cess at the rate of 0.5% on all taxable services. Effectively, the rate of SBC would be 0.5% and new rate of service tax plus SBC would be 14.5%. As such SBC translates into a tax of 50 paisa only on every one hundred rupees worth of taxable services. The proceeds from this cess will be exclusively used for Swachh Bharat initiatives.

In this context, the relevant Chapter of the Finance Act, 2015 is reproduced below:-

“CHAPTER VI

SWACHH BHARAT CESS

119. (1) This Chapter shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

(2) There shall be levied and collected in accordance with the provisions of this Chapter, a cess to be called the Swachh Bharat Cess, as service tax on all or any of the taxable services at the rate of two per cent. on the value of such services for the purposes of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto.

(3) The Swachh Bharat Cess leviable under sub-section (2) shall be in addition to any cess or service tax leviable on such taxable services under Chapter V of the Finance Act, 1994, or under any other law for the time being in force.

(4) The proceeds of the Swachh Bharat Cess levied under sub-section (2) shall first be credited to the Consolidated Fund of India and the Central Government may, after due appropriation made by Parliament by law in this behalf, utilise such sums of money of the Swachh Bharat Cess for such purposes specified in sub-section (2), as it may consider necessary.

(5) The provisions of Chapter V of the Finance Act, 1994 and the rules made thereunder, including those relating to refunds and exemptions from tax, interest and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Swachh Bharat Cess on taxable services, as they apply in relation to the levy and collection of tax on such taxable services under Chapter V of the Finance Act, 1994 or the rules made thereunder, as the case may be.”

On this issue, Hon’ble FM in his speech for Budget 2015-16 has stated as under:- 

“10. The third is ‘Swachh Bharat’ which we have been able to transform into a movement to regenerate India. I can speak of, for example, the 50 lakh toilets already constructed in 2014-15, and I can also assure the Members of this august House that we will indeed attain the target of building six crore toilets. But, Madam, Swachh Bharat is not only a programme of hygiene and cleanliness but, at a deeper level, a programme for preventive health care, and building awareness.”

“123. —-It is also proposed to have an enabling provision to levy Swachh Bharat Cess at a rate of 2% or less on all or certain services if need arises. This Cess will be effective from a date to be notified. Resources generated from this cess will be utilised for financing and promoting initiatives towards Swachh Bharat.”

Q.1 What is Swachh Bharat Cess (SBC)?

Ans. It is a Cess which shall be levied and collected in accordance with the provisions of Chapter VI of the Finance Act, 2015,called Swachh Bharat Cess, as service tax on all the taxable services at the rate of 0.5% of the value of taxable service.

Q.2 What is the date of implementation of SBC?

Ans. The Central Government has appointed 15th day of November, 2015 as the date from which provisions of Swachh Bharat Cess will come into effect (notification No.21/2015-Service Tax, dated 6th November, 2015 refers).

Q.3 Whether SBC would be leviable on exempted services and services in the negative list?

Ans. Swachh Bharat Cess is not leviable on services which are fully exempt from service tax or those covered under the negative list of services.

Q.4 Why has SBC been imposed?

Ans. SBC has been imposed for the purposes of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto.

Q. 5 Where will the money collected under SBC go?

Ans. Proceeds of the SBC will be credited to the Consolidated Fund of India, and the Central Government may, after due appropriation made by Parliament, utilise such sums of money of the SBC for the purposes of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto.

Q.6 How will the SBC be calculated?

Ans. SBC would be calculated in the same way as Service tax is calculated. Therefore, SBC would be levied on the same taxable value as service tax.

Q. 7 Whether SBC would be required to be mentioned separately in invoice?

Ans. SBC would be levied, charged, collected and paid to Government independent of service tax. This needs to be charged separately on the invoice, accounted for separately in the books of account and paid separately under separate accounting code which would be notified shortly. SBC may be charged separately after service tax as a different line item in invoice. It can be accounted and treated similarly to Education cesses.

Q. 8 Whether separate accounting code will be there for Swachh Bharat Cess?

Ans. Yes, for payment of Swachh Bharat Cess, a separate accounting code would be notified shortly in consultation with the Principal Chief Controller of Accounts. These are as follows:-

Swachh Bharat Cess
(Minor Head)
Tax Collection Other Receipts Penalties Deduct Refunds
0044-00-506 00441493 00441494 00441496 00441495

Q. 9 What would be effective rate of service tax and SBC post introduction of SBC?

Ans. Effective rate of service tax plus SBC, post introduction of SBC, would be [14% + 0.5%].

Q.10 Whether SBC is a ‘Cess’ on tax’ and we need to calculate SBC @ 0.50% on the amount of service tax like we were earlier doing for calculating Education Cess and SHE Cess?

Ans. No, SBC is not a cess on Service Tax. SBC shall be levied @ 0.5% on the value of taxable services.

Q.11 Whether SBC is levied on all or selected services?

Ans. The Central Government was empowered to impose SBC either on all or some of the taxable services. Vide notification No 22/2015-ST dated 6-11-2015, Government has notified that SBC shall be applicable on all taxable services except services which are either fully exempt from service tax under any notification issued under section 93(1) of the Finance Act, 1994 or are otherwise not leviable to service tax under section 66B of the Finance Act, 1994.

Q.12 How will the SBC be calculated for services under reverse charge mechanism?

Ans. In case of reverse charge under section 68(2) of the Finance Act, 1994, the liability has been shifted from service provider to the service recipient. As per section 119 (5) of the Finance Act, 2015, the provisions of Chapter V of the Finance Act, 1994, and the rules made thereunder are applicable to SBC also. Thus, the reverse charge under section 68(2) of the Finance Act, 1994, is made applicable to SBC. In this context, to clarify, Government has issued notification No. 24/2015-Service Tax dated 12th November, 2015 to provide that reverse charge under notification No.30/2012-Service Tax dated 20th June, 2012 shall be applicable for the purpose of levy of Swachh Bharat Cess mutatis mutandis.

Q.13 How will SBC be calculated for services where abatement is allowed?

Ans. Taxable services, on which service tax is leviable on a certain percentage of value of taxable service, will attract SBC on the same percentage of value as provided in the notification No. 26/2012-Service Tax, dated 20th June, 2012. So, this notification would apply for SBC also in the same manner as it applies for service tax.

For example, in the case of GTA, [Service Tax + SBC]% would be (14% Service Tax + 0.5% SBC) X 30% = 4.35% (4.20%+0.15%)

Q.14 Whether Cenvat Credit of the SBC is available?

Ans. SBC is not integrated in the Cenvat Credit Chain. Therefore, credit of SBC cannot be availed. Further, SBC cannot be paid by utilizing credit of any other duty or tax.

Q.15 What would be the point of taxation for Swachh Bharat Cess?

Ans. As regards Point of Taxation, since this levy has come for the first time, all services (except those services which are in the Negative List or are wholly exempt from service tax) are being subjected to SBC for the first time. SBC, therefore, is a new levy, which was not in existence earlier. Hence, rule 5 of the Point of Taxation Rules would be applicable in this case. Therefore, in cases where payment has been received and invoice is raised before the service becomes taxable, i.e. prior to 15th November, 2015, there is no lability of Swachh Bharat Cess. In cases where payment has been received before the service became taxable and invoice is raised within 14 days, i.e. upto 29th November, 2015, even then the service tax liability does not arise. Swachh Bharat Cess will be payable on services which are provided on or after 15th Nov, 2015, invoice in respect of which is issued on or after that date and payment is also received on or after that date. Swachh Bharat Cess will also be payable where service is provided on or after 15th Nov, 2015 but payment is received prior to that date and invoice in respect of such service is not issued by 29th Nov, 2015.

Q.16 How would the tax (Service Tax and SBC) be calculated on services covered under Rule 2A, 2B or 2C of Service Tax (Determination of Value) Rules, 2006.?

Ans. The tax (Service Tax and SBC) on services covered by Rule 2A, 2B or 2C of Service Tax (Determination of Value) Rules, 2006, would be computed by multiplying the value determined in accordance with these respective rules with [14% + 0.5%]. Therefore, effective rate of Service Tax plus SBC in case of original works and other than original works under the works contract service would be 5.8% [(14% + 0.5%)*40%] and 10.15% [(14% + 0.5%)*70%] respectively. Similar, would be the tax treatment for restaurant and outdoor catering services.

Q.17 How would the tax be calculated on restaurant services covered under Service Tax (Determination of Value) Rules, 2006.?

Ans. Swachh Bharat Cess would be calculated on the value arrived at in accordance with the Service Tax (Determination of Value) Rules, 2006. For example, the effective Swachh Bharat Cess in respect of services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, having the facility of air–conditioning or central air-heating in any part of the establishment, would be 0.5% of 40% of the total amount, i.e, 0.2% of the total amount. The cumulative service tax and Swachh Bharat Cess liability would be [14% ST + 0.5% SBC] of 40% of the total amount, i.e., 5.8% of the total amount charged.

Q.18 Whether SBC would be applicable on services covered by Rule 6 of Service Tax Rules (i.e. air travel agent, life insurance premium, purchase and sale of foreign currency and services by lottery distributors/selling agents)

Ans. Sub-rule (7D) to rule 6 has been inserted vide notification 25/2015-Service Tax, dated 12th November, 2015 so as to provide that the person liable for paying the service tax under sub- rule (7), (7A), (7B) or (7C) of rule 6 of Service Tax Rules, shall have the option to pay SBC as determined as per the following formula:-

Service Tax liability [calculated as per sub-rule (7), (7A), (7B) or (7C)] X 0.5%/14%

The option under this sub-rule once exercised, shall apply uniformly in respect of such services and shall not be changed during a financial year under any circumstances.

Q. 19 How would liability be determined in case of reverse charge services where services have been received prior to 15.11.2015 but consideration paid post 15.11.2015?

Ans. In respect of reverse charge mechanism, SBC liability is determined in accordance with Rule 7 of Point of Taxation Rules, as per which, point of taxation is the date on which consideration is paid to the service provider. Thus, SBC liability in such case will be 0.5% X Value of taxable service.

Q.20 Does a person providing both exempted and taxable service and reversing credit @ 7% of value of exempted service under Rule 6 of Cenvat Credit Rules, does he need to reverse the SBC also?

Ans. As SBC is not integrated in the Cenvat Credit chain and reversal under Rule 6 is payment of amount equal to 7% of the value of exempted services, hence, reversal of SBC is not required under Rule 6 of Cenvat Credit Rules, 2004.

Swachh Bharat Cess – FAQ adds to confusion : 16-11-2015


Taxindiaonlinelogo-jpg        NOVEMBER 16, 2015

By S Sivakumar, LL.B, FCA, FCS, ACSI, MBA and R Dakshina Murthy, B.Com, LL.B, ML, Advocates, Bangalore

TO confuse and when asked to clarify, to confuse more, seems to the motto of the Central Board of Excise and Customs. How else can the Board explain the utter confusion that it has created, by the issuance of Notifications bearing Nos.23 to 25/2015-ST dt.12.11.2015 and the FAQ on SBC.

Before we get into a discussion on these clarificatory notifications, let us take a look at Section 119 of the Finance Act, 2015 which deals with Swachh Bharat Cess, which reads as under:

“CHAPTER VI

SWACHH BHARAT CESS


119. (1) This Chapter shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

(2) There shall be levied and collected in accordance with the provisions of this Chapter, a cess to be called the Swachh Bharat Cess, as service tax on all or any of the taxable services at the rate of two per cent.on the value of such services for the purposes of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto.

(3) The Swachh Bharat Cess leviable under sub-section (2) shall be in addition to any cess or service tax leviable on such taxable services under Chapter V of the Finance Act, 1994, or under any other law for the time being in force.

(4) The proceeds of the Swachh Bharat Cess levied under sub-section (2) shall first be credited to the Consolidated Fund of India and the Central Government may, after due appropriation made by Parliament by law in this behalf, utilise such sums of money of the Swachh Bharat Cess for such purposes specified in sub-section (2), as it may consider necessary.

(5) The provisions of Chapter V of the Finance Act, 1994 and the rules made thereunder, including those relating to refunds and exemptions from tax, interest and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Swachh Bharat Cess on taxable services, as they apply in relation to the levy and collection of tax on such taxable services under Chapter V of the Finance Act, 1994 or the rules made thereunder, as the case may be.”
(emphasis supplied by us)

A bare reading of the above statutory provision makes it crystal clear that the SBC is collected as service tax and all the provisions as to levy and collection of service tax on taxable service is applicable to SBC. Thus, in effect, there is no difference between the service tax and SBC, in our opinion.
This being the case, the views taken by the Board in its FAQs section in Sl.No.7 reproduced below, would seem to be ultra vires of Section 119.

Q. 7 Whether SBC would be required to be mentioned separately in invoice?

Ans. SBC would be levied, charged, collected and paid to Government independent of service tax. This needs to be charged separately on the invoice, accounted for separately in the books of account and paid separately under separate accounting code which would be notified shortly. SBC may be charged separately after service tax as a different line item in invoice. It can be accounted and treated similarly to Education cesses.

In our view, the cess of 0.5% can be added to 14% and the overall service tax rate of 14.5% can be indicated, perhaps, with the following sentence – “service tax rate includes 0.5% towards SBC which is not cenvatable”.

Be that as it may….the question that next arises is whether, SBC is cenvatable. The Board, in its FAQ No. 14, has responded as under:

Q.14 Whether Cenvat Credit of the SBC is available?

Ans. SBC is not integrated in the Cenvat Credit Chain. Therefore, credit of SBC cannot be availed. Further, SBC cannot be paid by utilizing credit of any other duty or tax.

We find that this view is legally unacceptable. Once, Section 119 has stated that SBC will be levied and collected as service tax, the substantive law related to cenvatability of the SBC paid on input services cannot be questioned, on the basis that, Rule 3(1) of the Cenvat Credit Rules, 2004 does not mention SBC. As we know, the Cenvat Credit Rules, 2004 have been issued in terms of the powers conferred by Section 37 of the Central Excise Act, 1944 and Section 94 of the Finance Act, 1994. In the light of Section 119 of the Finance Act, 1994, with SBC being treated as service tax, there is no need for a separate mention of SBC in Rule 3(1) of the Cenvat Credit Rules, 2004 for the service receiver to avail of the cenvat credit of the SBC paid. And, we also need to bear in mind the well-established legal dictum that the Act would prevail over the Rules, in the event of a dispute.

Further even sub section (5) of Section 119 specifies that the provisions of Chapter V of the Finance Act, 1994 and the rules made thereunder apply in realtion to the levy and collection of SBC on taxable services as they apply in relation to levy and collection of tax on such taxable services. Once the SBC is charged and collected as service tax automatically the provisions of cenvat credit rules is applicable. Furtherin answer to question no.6 it has been clarified that ”SBC would be calculated in the same way as service tax is calculated. Therefore SBC would be levied on the same taxable value as service tax“.

We also find that, the levy of SBC in terms of the input services consumed by exporters of goods and services without allowing the benefit of cenvat credit, would clearly be violative of Article 286 of the Constitution, in terms of which, no law of a State shall impose, or authorise the imposition of a tax on the sale of goods where such sale takes place in the course of export of good out of, the territory of India. Denial of cenvat credit of the SBC paid on input services and consequently the refund thereof, vis-à-vis the exporters of goods (and services) could mean that the SBC component is to be exported, which is impermissible.

It is to be noted that conceptually the SBC is different from Education Cess. The former is to be treated as tax, in terms of Section 119 of the Finance Act, 2015, while education cess is a tax on tax. To treat education cess and SBC as equal in law, would be a mistake. We have reproduced Section 130 of the Finance Act, 2007, in terms of which, it is clear that, the secondary education cess (as well as the primary education cess) is a tax on tax.

130. (1) The Secondary and Higher Education Cess levied under section 126, in the case of all services which are taxable services, shall be a tax (in this section referred to as the Secondary and Higher Education Cess on taxable services) at the rate of one per cent., calculated on the tax which is levied and collected under section 66 of the Finance Act, 1994.

(2) The Secondary and Higher Education Cess on taxable services shall be in addition to the tax chargeable on such taxable services, under Chapter V of the Finance Act, 1994 and the Education Cess chargeable under section 95 of the Finance (No. 2) Act, 2004. (3) The provisions of Chapter V of the Finance Act, 1994 and the rules made thereunder, including those relating to refunds and exemptions from tax and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Secondary and Higher Education Cess on taxable services, as they apply in relation to the levy and collection of tax on such taxable services under Chapter V of the Finance Act, 1994 or the rules made thereunder, as the case may be.

In the above context, the question No.10 of the Frequently Answered Questions issued by CBEC is reproduced

Q.10 Whether SBC is a “Cess”on tax and we need to calculate SBC @ 0.5% on the amount of service tax like we were earlier doing for calculating education cess and SHE Cess?

Ans. No, SBC is not a cess on Service Tax. SBC shall be levied @0.5% on the value of taxable services.

Hence it is clear that the Government has given only the nomenclature as Cess but actually the SBC is imposed and collected as service tax on the taxable services.

Yet another area in which the CBEC has erred is in respect of the applicability of the Point of Taxation Rules vis-à-vis the SBC. Question No. 15 of the FAQs and the CBEC’s answer are given below:

Q.15 What would be the point of taxation for Swachh Bharat Cess?

 

Ans. As regards Point of Taxation, since this levy has come for the first time, all services (except those services which are in the Negative List or are wholly exempt from service tax) are being subjected to SBC for the first time. SBC, therefore, is a new levy, which was not in existence earlier. Hence, rule 5 of the Point of Taxation Rules would be applicable in this case. Therefore, in cases where payment has been received and invoice is raised before the service becomes taxable, i.e. prior to 15th November, 2015, there is no lability of Swachh Bharat Cess. In cases where payment has been received before the service became taxable and invoice is raised within 14 days, i.e. upto 29th November, 2015, even then the service tax liability does not arise. Swachh Bharat Cess will be payable on services which are provided on or after 15th Nov, 2015, invoice in respect of which is issued on or after that date and in payment is also received on or after that date. Swachh Bharat Cess will also be payable where service is provided on or after 15th Nov, 2015 but payment is received prior to that date and invoice in respect of such service is not issued by 29th Nov, 2015.

In our opinion, the above referred view of the CBEC vis-à-vis the POT Rules in the context of the introduction of SBC is incorrect. In terms of Section 66B of the Finance Act, 1994, the charging section, the levy of service tax is on the value of service provided or agreed to be provided in the taxable territory and its collection may be fixed or shifted to any stage or point, in any manner, as prescribed by the Rules made in this behalf. It is then clear that the CBEC’s view that, SBC can be levied in respect of services provider on or before 15-11-2015 in cases where invoices are not raised within 14 days or when the payment received on or after 15-11-2015, goes against the charging Section 66B, for the simple reason that SBC was not applicable when the taxable services were rendered, i.e when the taxable event took place.

Before concluding…

 

The Board’s clarifications in respect of services for which abatement is claimed as well as in respect of service tax liability on the service receiver under the Reverse Charge Mechanism, are on expected lines. The Government for the purpose of collecting taxes is considering the SBC as service tax and has included the said SBC amount for calculating services under reverse charge mechanism/works contract and other services. When it comes to including the SBC for granting abatement the Government intends to include the same so that they get more revenue but when it comes granting cenvat credit they treat that the SBC is not cenvatable. This discriminative approach of the Government amounts to“Heads I win tails you lose”.

Cess, as commonly understood, is always calculated on the basic tax. This logic was clear in the context of the levy of primary and education cesses which were levied on the service tax collected. It is perhaps for the first time that one is coming across a cess being levied on the value of the services. May be, because of this, that the Parliament mentioned SBC as service tax. Given this, our great Babus in the Finance Ministry are precluded from treating SBC as not forming part of the service tax, insofar as the credit mechanism is concerned. In our strong view, it is legally impermissible for the Board to state that, SBC cannot be paid through cenvat credit or for that matter, cenvat credit cannot be taken on the SBC element and this does not even need an amendment to the Cenvat Credit Rules.

One is rather amused by the reference to 14 days, in Question No. 15 of the FAQs. Does the Board not remember that, the time limit of 14 days for issuance of the invoice, vis-à-vis Rule 3 of the Point of Taxation Rules, 2011 was increased to 30 days with effect from 1-4-2012.

It seems that the Board firmly believes that that the best way to clarify would be to create more confusion. This is what is seemingly achieved by the issuance of the clarificatory notifications and FAQ, which as aforesaid, go beyond the statutory provisions. This is one clear instance of how the Babus are capable of creating confusion under the pretext of ‘ease of doing business’, even going against the statute laid down by the Parliament. This does not augur well, especially, at a time when India is desperately seeking foreign investment by promising ‘ease of doing business’ in India.

Notification No. : 25/2015 Dated: 12-11-2015


Seeks to provide composition rate for Swachh Bharat Cess as applicable to ST under sub-rules 7,7A,7B,7C of rule 6 of STR, 1994 – 25/2015 – Dated 12-11-2015 – Service Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION No. 25/2015-Service Tax

New Delhi, the 12th November, 2015

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 (Second Amendment) Rules, 2015.

(2)   They shall come into force on the 15th day of  November, 2015.

2. In the Service Tax Rules, 1994, in rule 6, after sub-rule (7C), the following sub-rule  shall be inserted, namely:-

“(7D) The person liable for paying the service tax under sub-rule (7), (7A), (7B) or (7C) of rule 6, shall have the option to pay such amount as determined by multiplying total service tax liability calculated under sub-rule (7), (7A), (7B) or (7C) of rule 6 by 0.5 and dividing the product by 14 (fourteen), during any calendar month or quarter, as the case may be, towards the discharge of his liability for Swachh Bharat Cess instead of paying Swachh Bharat Cess at the rate specified in sub-section (2) of section 119 of the Finance Act, 2015 (20 of 2015) read with notification No.22/2015-Service Tax, dated the 6th November, 2015, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 843 (E), dated the 6th November, 2015, and the option under this sub-rule once exercised, shall apply uniformly in respect of such services and shall not be changed during a financial year under any circumstances.”

3.  This notification shall come into force from the 15th day of November, 2015.

[F. No. 354/129/2015 - TRU]

(K. Kalimuthu)

Under Secretary to the Government of India

Notification No. : 24/2015 Dated: 12-11-2015


Seeks to provide that provisions of notification No. 30/2012 – Service Tax dated the 20th June,2012 shall be applicable for the purposes of Swachh Bharat Cess – Applicability on reverse charge – 24/2015 – Dated 12-11-2015 – Service Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION No. 24 /2015-Service Tax

New Delhi, the 12th November, 2015

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) read with sub-section (5) of section 119 of the Finance Act, 2015 (20 of 2015), the  Central Government, being satisfied that it is necessary in the public interest so to do, hereby provides that notification No. 30/2012 – Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 472 (E), dated the 20th June, 2012shall be applicable for the purposes of Swachh Bharat Cess mutatis mutandis.

 

[F. No. 354/129/2015 - TRU]

(K. Kalimuthu)

Under Secretary to the Government of India

Notification No. : 23/2015 Dated: 12-11-201


Seeks to amend notification No.22/2015-ST dated the 6th November, 2015 so as to specify that Swachh Bharat Cess will be calculated on abated value. – 23/2015 – Dated 12-11-2015 – Service Tax

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)

NOTIFICATION No. 23 /2015-Service Tax

New Delhi, the 12th November, 2015

G.S.R.…(E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) read with sub-section (5) of section 119 of the Finance Act, 2015 (20 of 2015), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 22/2015-Service Tax, dated the 6th November, 2015, published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i) vide number G.S.R. 843 (E), dated the 6th November, 2015, namely:-

In the said notification, after the proviso, the following shall be inserted, namely:-

“Provided further that Swachh Bharat Cess shall be leviable only on that percentage of taxable value which is specified in column (3) for the specified taxable services in column (2) of the Table in the notification No. 26/2012-Service Tax, dated 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i) vide number G.S.R. 468 (E), dated the 20th June, 2012.

Explanation.- It is hereby clarified that value of taxable services for the purposes of the Swachh Bharat Cess shall be the value as determined in accordance with the Service Tax (Determination of Value) Rules, 2006.”

[F.No. 354/129/2015 - TRU]

 

(K. Kalimuthu)
Under Secretary to the Government of India

Sanctioning Refund claims on provisional basis – an escape route? 12-11-2015


Taxindiaonlinelogo-jpg

By S Sivakumar, LL.B, FCA, FCS, ACSI, MBA, Advocate

THE Government has come out with a Circular No.187/6/2015-Service Tax dated November 10, 2015 to provide for the payment of 80% of the quarterly refund claimed by services exporters, on a provisional basis. In this article, I have attempted to bring out some of the lacunae in the otherwise well intentioned process initiated by the Government.

The Circular talks of a certificate to be provided, in the prescribed format (Annexure-1) by the claimant’s statutory auditors if the claimant is a company, and in cases where the claimant is a non-company, by a chartered accountant. A reading of the Annexure-1 makes it clear that, most statutory auditors and CAs would find it very difficult to give a certificate on the lines of the format prescribed, as they are required to certify, interalia, that the exporter are eligible to claim the refund in terms of Rule 5 of the Cenvat Credit Rules, 2004 and that the exporter has also filed the refund claim within the prescribed time limit. The reference it seems, is to the one year time limit prescribed by Section 11B of the Central Excise Act, 1944. While services exporters have been taking the view that the limitation should commence from the end of the relevant quarter, the Department is sticking to its stand that the limitation is to be calculated vis-à-vis the beginning of the quarter. Thus, as per the Department, the due date for filing refund in respect of the quarter ended, let’s say, September 30, 2013 is 1 st September 2014. This interpretation could create issues in the issuance of the certificate. Moreover, the Department is also not agreeing to the law laid down in several CESTAT decisions to the effect that, in the case of services exporters, the relevant date for the purpose of Section 11B would be the date of realization of the export proceeds and this could create issues vis-à-vis the format of the certificate prescribed in Annexure-1.

Moreover, the onus of certifying the correctness of the refund claim cannot be passed on the claimant’s auditors. Chartered Accountants, can only certify based on the records and documents produced to them. The format of the certificate as prescribed does not provide for any disclaimer by the CAs, which may make the whole exercise unworkable. Moreover, the statutory auditors cannot be expected to take a call on several contentious issues that govern the cenvat credit process, which as everybody knows, has seen unprecedented litigation. The CA profession’s professional ethics would perhaps, not allow, for such a blanket certificate to be provided and it would seem that, the Department would reject any claim which might contain a CA certificate that is not exactly on the lines of the format prescribed.

Nonetheless the circular states, in Para 3, that the CA certificate and the self-certificate, etc. are additional documents to be filed, i.e. in addition to the documents that are to be filed. A lot of issues could arise here inasmuch as there is no standard list of documents that need to be filed by the exporters that has been prescribed by the CBEC. It is left entirely to the whims and fancies of the respected Asst/Deputy Commissioners to prescribe their own set of documents, while processing refund claims. In some cases, I have come across cases where the Departmental officers have asked for copies of all bank statements of the exporter and in the case of one of my clients, I might have to hire a truck to deliver copies of these statements to the Department. In many cases, the Department also insists on original invoices to be filed. Hence, a lot of disputes could arise here. It would have been better if the Circular only stipulated the requirement of the certificates from the auditors and the claimants as the Department could reject claims under this circular on the basis that some of the documents originally required have not been filed.

In terms of Para 2.2, the circular is applicable in respect of claims filed on or before 31-3-2015, which have not been ‘disposed of’, in whole or in part, by way of an adjudication order. It would then seem obvious that the benefit of this circular is applicable even in respect of cases where show cause notices have been issued and personal hearings concluded but, in respect of which, adjudication orders have not yet been passed. I don’t know how this could work from a practical perspective, given the fact that adjudication proceedings are underway in respect of tens of thousands of refund claims filed by exporters.

In terms of Para 4 of the circular, the Department will have to issue a show cause notice, if it finds that either the whole or the part of the refund granted to the claimant on a provisional basis is improper, on the basis that the exporter is ineligible for the refund. This is fine as the exporter will have the opportunity to contest the issues raised by the Department in the adjudication and appellate proceedings. There seems to be a dichotomy vis-à-vis this view inasmuch as in Annexure-2, the exporter is required to undertake to pay back the differential amount upon intimation about its inadmissibility, along with the applicable interest thereon.

Before concluding…

One cannot complain about the noble intention of the Government to reduce the woes of the service exporters, whose refund claims are pending disposal for several years now. Hailing from Bangalore, which perhaps has one of the largest chunk of refund claimants, I can understand the difference that this circular could make to services exporters. But, my fear is that, this circular, in its current form, may not make a big difference, as theDepartmental officers would still find enough reasons to deny the benefit of the provisional refund to services exporters.

Realising the difficulty of exporters, the CBEC had allowed for any auditor to certify the Form-A forming part of the refund claim, in terms of the Notification No. 27/2012-CE(NT) dated 18-6-2012. Given this, one does not understand the insistence on the statutory auditors to sign the required certificate prescribed under this circular.

It would seem that the Babus sitting in Delhi are apparently disconnected from the realities insofar as the processing of the refund claims by the Department is concerned. This Circular seems theoretical, to say the least, as it does not address the fundamental issues concerning the refund process.

In addition to initiating this process involving provisional refunds Board should also insist that refund claims are processed within a time frame of 6 months from the date of filing of the claims. Expeditious disposal of the refund claims is the only panacea to the problems faced by services exporters.

No. 187/6/2015 Dated: 10-11-2015


Speedy disbursal of pending refund claims of exporters of services under rule 5 of the CENVAT Credit Rules, 2004 – Dated 10-11-2015 – Service Tax

Circular No. 187/6/2015-Service Tax

F. No. 137/62/2015-Service Tax

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

Service Tax Wing

New Delhi, dated 10th November, 2015

To

All Principal Chief Commissioners of Central Excise

All Chief Commissioners of Central Excise/Service Tax

Principal Directors General of Goods & Services Tax/Systems/ Central Excise Intelligence

Director General of Audit/Tax Payer Services

All Principal Commissioners/Commissioners of Central Excise/Service Tax

All Commissioners of Central Excise/Service Tax(Audit)/ Principal  Commissioners/Commissioners  LTU,  Joint  Secretary  TRU-I/TRU-II/Review Commissioner Central Excise/Legal/PAC/Taxpayer Services

Madam/Sir

Subject: Speedy disbursal of pending refund claims of exporters of services under rule 5 of the CENVAT Credit Rules, 2004

The Board has been issuing instructions from time to time relating to the sanction and disbursal of refund claims under various notifications.  A simplified procedure for sanction of refund for select categories of exporters was outlined vide Circular No. 828/5/2006-CX dated 20-4-2006 issued from F. No. 268/4/2005-CX-8. This year having been declared as the Year of Taxpayer Services, the Board has accorded primacy to speedy sanction of refunds in case of export of services. Keeping in mind the various legal changes in service tax since 2006 and the various representations received in this regard, I am directed to inform you that the following scheme has been drawn up to fast track sanction of refund of accumulated CENVAT credit to exporters of services. This scheme is not a substitute for the various notifications but is meant to complement them and is aimed at enabling ease of doing business.

2.0    Applicability of the scheme

2.1    This scheme is applicable to service tax registrants who are exporters of services, with respect to refund claims under rule 5 of the CENVAT Credit Rules, 2004, which have been filed on or before 31-3-2015, and which have not been disposed of as on date of the issue of this circular. Such registrants will be referred to as ‘claimants’ in the subsequent paragraphs.

2.2  The phrase ‘disposed of ’ in this context refers to either sanction of refund or denial, either in whole or in part, by way of an adjudication order. Refunds which had been finalized earlier by issuance of an adjudication order but have been remanded back to the original sanctioning authority will not be covered under this scheme since re-examination of such claims will have to be done strictly in terms of the remand order of the Commissioner (Appeals)/ CESTAT/ High Court.

3.0   Additional documents to be submitted (i.e. in addition to those required to be filed along with the claim)

3.1  A certificate from the statutory auditor in the case of companies, and from a chartered accountant in the case of assessees who are not companies, in the format given in Annexure-1.

3.2  An undertaking from the claimant in the format given in Annexure-2.

4.0    Operation of the scheme

4.1    On receipt of the documents referred to in paragraph 3.1 and 3.2 above in respect of pending claims, the jurisdictional Deputy/Assistant Commissioner will give a dated acknowledgement to the claimant. He will then make a provisional payment of 80% (eighty per cent) of the amount claimed as refund, within five working days of the receipt of the documents.

4.2    The letter intimating the provisional payment should be in the format given in Annexure-3. It is clarified that this payment of 80% of the refund amount shall be purely provisional, based on the documents referred to in paragraphs 3.1 and 3.2 above and without prejudice to the department’s right to check the correctness of the claim in terms of the relevant notification and recover any amount which has been provisionally paid. It is also clarified that the decision to grant provisional payment is an administrative order and not a quasi-judicial order and should not be subjected to review.

4.3   After  making  the  provisional  payment,  the  jurisdictional  Deputy/Assistant Commissioner shall undertake checking the correctness of the refund claim in terms of the relevant notification.

4.4    During the course of verification, it may appear that a part of the amount claimed as refund is inadmissible. In such cases, a show cause notice (SCN) has to be issued asking the claimant to show cause why the inadmissible amount should not be denied and wherever relevant, why any amount which has been provisionally paid should not be recovered. However, prior to the issuance of such a SCN, the claimant may be intimated about the inadmissible amount so that he has an opportunity to avail of the provisions of section 73(3) of the Finance Act, 1994. A speaking, appealable order will have to be passed with respect to the SCN. This order will be reviewed by the jurisdictional Commissioner.

4.5    If during review of the refund order, any further amount is found to be inadmissible, then, apart from filing an appeal for setting aside or modifying the relevant portion of the order, a SCN will also have to be issued for the amount not covered by the original SCN. However, prior to the issue of such a SCN, the claimant may be intimated about the inadmissible amount so that he has an opportunity to avail of the provisions of section 73(3) of the Finance Act, 1994.

5.0    Monitoring and reporting

5.1    An MIS report in the format specified in Annexure-4 may be sent by the tenth of every month by email to commr.st-cbec@nic.in

5.2    Principal Commissioners/Commissioners should ensure that the provisional payment of refunds is done strictly in terms of the time lines specified and that there are no complaints regarding delays. They should also ensure that the staff dealing with refunds are adequately familiarised about this scheme so that it operates smoothly.

6.0    Publicity

6.1    Principal Chief Commissioners/Chief Commissioners should ensure that the contents of this circular are brought to the notice of the claimants as well as the departmental officers.

Yours faithfully,

(Himani Bhayana)

Under Secretary (Service Tax)

 

Swachh Bharat Cess – An impatient & hurried imposition : 09-11-2015


Taxindiaonlinelogo-jpg        NOVEMBER 08, 2015

By S Sivakumar, LL.B, FCA, FCS, ACSI, MBA, Advocate

THE Government seems to have taken everybody by an unpleasant surprise, by announcing the introduction of the Swachh Bharat Cess (‘SBC’) at the rate of 0.5% on all taxable services, with effect from November 15, 2015, which incidentally, is a Sunday. TIOL had carried the text of Notifications 21/2015 and 22/2015, as usual, with lightning speed.

Most of us felt that the SBC would be levied only on a select band of services.

Be that as it may….

The fact that the SBC is getting introduced with effect from November 15, 2015 could mean that the service providers would have to be clear with their arithmetic, vis-à-vis the SBC. Thus, in the case of a monthly invoice to be raised for November 2015, the service provider would have to work out the SBC only for the 16 days representing the period November 16 to 30, 2015. Thus, the effective SBC for November 2015 would be 0.267% on the monthly value of services rendered for November 2015.

In terms of services where abatement is availed (eg. Short term accommodation services, etc), the SBC would be applicable on the value attributable to the ‘service element’. Thus, in the case of short term accommodation services, the SBC would be applicable on 60% of the value of services. Similar would be the logic in the case of a works contractor who has opted to pay service tax under Rule 2A of the Service Tax (Determination of Value) Rules, 2006.

In terms of the Point of Taxation Rules, no SBC would be leviable in cases where the service is rendered prior to 15-11-2015 and the invoice is raised prior to 15-11-2015 and when the service is rendered prior to 15-11-2015 and the payment is also received prior to 15-11-2015 despite that the invoice might be raised on or after 15-11-2015. Similarly, when the invoice is raised prior to 15-11-2015 and the payment is received prior to 15-11-2015, there would be no SBC even if the service is rendered on or after 15-11-2015, in this case.

Of course, the SBC would also be applicable on the service tax payable under the reverse charge mechanism as well.

Taking this discussion forward…. the big problem for the service providers and especially the corporates would be to change their accounting systems to provide for SBC to be separately shown in the invoices. This could be a big issue for the big corporates using ERP packages like SAP, etc. Merging the SBC with the service tax rate and increasing the service tax rate to 14.5% would be a hugely welcome business friendly step from the Government, but this seems unlikely.

The earlier Government had collected thousands of crores of rupees as primary and secondary education cesses. Nobody has a clue as to how this money had been actually spent. The SBC is very likely to meet a similar fate.

The other issue, of course, is that, it seems that cenvat credit of the SBC paid on input services might not be applicable, after all. This could very unfair, especially, at a time when the Central Government is trying to get GST implemented, under which, all taxes and cesses are expected to be cenvatable.

On a larger issue… is levying SBC only on services justified? Does the Government think that the salary earners, who are the largest consumers of services, should be squeezed further by levying SBC. The effective difference between the overall central excise duty and service tax is now, a hefty 2%, which seems unjustified.

Before concluding…

Would the heavens fall if the Government levies SBC with effect from December 1, 2015. Why is the Government harassing the assessees by bringing in the SBC from the middle of the month?

With GST around the corner, as the Government would seem to claim, where is the tearing hurry to introduce the SBC? With service tax collections during FY 2015-16 being pegged at around Rs 2,10,000- crores, the annual targeted collection of SBC could be around Rs 1,049 crores and the target for the November 15, 2015 to March 31, 2016 could be only around Rs 450 crores. This is obviously not a gargantuan amount but certainly can bring hordes of disputes. Why this tearing hurry then?

So also, being a cess, the SBC would not get shared with the States. Would the States then levy SBC on their VAT collections and do their bit?

Notification No. : 43/2015 Dated: 6-11-2015


Seeks to further amend notification No. 12/2012-Central Excise, dated 17.03.2012 – 43/2015 – Dated 6-11-2015 – Central Excise – Tariff

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(Department of Revenue)

Notification No. 43/2015-Central Excise

New Delhi, the 6th November, 2015

G.S.R.    (E). - In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, 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 G.S.R. 163(E), dated the 17th March, 2012, namely: -

In the said notification, in the Table,-

(i) in serial number 70,-

(a) against item (i) of column (3), for the entry in column (4), the entry “Rs.7.06 per litre” shall be substituted;

(b) against item (ii) of column (3), for the entry in column (4), the entry “Rs.8.24 per litre” shall be substituted;

(ii) in serial number 71,-

(a) against item (i) of column (3), for the entry in column (4), the entry “Rs.4.66 per litre” shall be substituted;

(b) against item (ii) of column (3), for the entry in column (4), the entry “Rs.7.02 per litre” shall be substituted.

2.         This notification shall come into force with effect from the 7th day of November, 2015.

[F. No.354/123/2014-TRU]

(K. Kalimuthu)

Under Secretary to the Government of India

Note.- The principal notification No. 12/2012-Central Excise, dated the 17th March, 2012 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 163(E) dated the 17th March, 2012 and was last amended vide notification No.42/2015-Central Excise, dated the 19th October, 2015 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 791(E) dated the 19th October, 2015.

 

Notification No. : 22/2015 Dated: 6-11-2015


Swachh Bharat Cess – Effective Rate of Swachh Bharat Cess is 0.5 of the value of taxable services w.e.f. 15-11-2015 – 22/2015 – Dated 6-11-2015 – Service Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 22/2015-Service Tax

New Delhi, the 6th November, 2015

G.S.R. 843(E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) read with sub-section (5) of section 119 of the Finance Act, 2015 (20 of 2015), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts all taxable services from payment of such amount of the Swachh Bharat Cess leviable under sub-section (2) of section 119 of the said Act, which is in excess of Swachh Bharat Cess calculated at the rate of 0.5 percent. of the value of taxable services:

Provided that Swachh Bharat Cess shall not be leviable on services which are exempt from service tax by a notification issued under sub-section (1) of section 93 of the Finance Act, 1994 or otherwise not leviable to service tax under section 66B of the Finance Act, 1994.

This notification shall come into force from the 15th day of November, 2015.

[F. No. 354/129/2015 - TRU]

(K. Kalimuthu)

Under Secretary to the Government of India

Notification No. : 21/2015 Dated: 6-11-2015


Swachh Bharat Cess comes into force w.e.f. 15-11-2015 – 21/2015 – Dated 6-11-2015 – Service Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 21/2015-Service Tax

New Delhi, the 6th November, 2015

G.S.R. 842(E).- In exercise of the powers conferred by sub-section (1) of section 119 of the Finance Act, 2015 (20 of 2015), the Central Government hereby appoints the 15th  day of November, 2015 as the date with effect from which the provisions of Chapter VI of the said Act, shall come into force.

 [F.No. 354/129/2015 - TRU]

(K Kalimuthu)

Under Secretary to the Government of India

No. 16/2015 Dated: 6-11-2015


Prescribed time limit in passing order u/s 12AA of the Income-tax Act, 1961 – Order-Instruction – Dated 6-11-2015 – Income Tax

Instruction No. 16/2015

F. No. 197/38/2015-ITA.I

Government of India

Ministry of Finance

Department of Revenue

(Central Board of Direct Taxes)

(ITA-I Division)

North Block, ITA.I Division

Dated, the 6th November, 2015

To

All the Principal Chief Commissioners of Income-tax

All the Chief Commissioners of Income-tax

Chief Commissioner of Income-tax (Exemptions)

All Directors General of Income-tax

Sir/Madam,

Sub:-  Following the prescribed Time limit in passing order u/s 12AA of the Income-tax Act, 1961.

Sub-section (2) of Section 12AA of the Income-tax Act. 1961 prescribes that every order granting or refusing registration under clause (b) of sub-section (1) of that Section shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) or clause (aa) of the sub-section (1) thereof. Thus while processing the application u/s 12AA of the Act, the time limit of six months has to be adhered to by the Commissioner of Income Tax (Exemptions). However, it has been brought to the notice of the Board that the said time limit has not been observed in some cases.

2.   The undersigned is directed to convey that the aforesaid time limit of six months is to be strictly followed by the Commissioner of Income Tax (Exemptions) while passing order u/s 12AA.   The CCIT (Exemptions) may monitor the adherence of prescribed time limit and initiate suitable administrative action in case any laxity in adhering to the same is noticed.

(Deepshikha Sharma)

Director to the Government of India

Service Tax on Yoga – different asanas (postures) by two Ministries : 05-11-2015


Taxindiaonlinelogo-jpgNOVEMBER 05, 2015

By S Sivakumar, LL.B., FCA, FCS, ACSI, MBA, Advocate

AS per the renowned Indologist Max Mueller, yoga is one of the six systems of the Hindu philosophy. The PM’s love for Yoga is well known and he succeeded in even getting the UN General Assembly to adopt June 21 as the international yoga day. While almost the whole world now knows yoga, thanks to the PM’s efforts, our great tax Babus continue to be in a state of confusion insofar as the levy of service tax on yoga related activities is concerned.

The Central Government issued Notification No. 20/2015-ST dated October 21, 2015 and amended paragraph 2, Clause 2(k)(ii) of the Mega Exemption Notification No. 25/2012-ST dated 20-6-2012, in terms of which, for the words “religion or spirituality”, the words“religion, spirituality or yoga” shall be substituted. The direct impact arising out of this amendment is that, yoga related activities when rendered by charitable institutions which are registered under Section 12AA of the Income tax Act, 1961 would be exempted from the levy of service tax. By implication, our great Babus in the Finance Ministry hold the view that, the benefit of exemption from levy of service tax would not be available to service providers who are not charitable institutions registered under Section 12AA.

This is what the entry in Mega Exemption notification 25/2012-ST looks after the amendment -

…it is necessary in the public interest so to do, hereby exempts the following taxable services from the whole of the service tax leviable thereon under section 66B of the said Act, namely:-

4. Services by an entity registered under section 12AA of the Income Tax Act, 1961 (43 of 1961) by way of charitable activities;

2.   Definitions. - For the purpose of this notification, unless the context otherwise requires, -

(k) “charitable activities” means activities relating to -

(ii) advancement of [religion, spirituality or yoga];

It would also be useful to take a look at the following Press release by the Ministry of Youth Affairs and Sports which clearly recognizes yoga as a Sports discipline.

Press Information Bureau
Government of India
Ministry of Youth Affairs and Sports

01-September-2015 15:39 IST

Categorization of sports disciplines – Sports Ministry recognizes ‘Yoga’ as a sports discipline

The categorization of various Sports disciplines was reviewed and the revised categories of sports disciplines and the scale of financial assistance admissible to each category was conveyed to IOC and all recognized National Sports Federations on 23rd March, 2015. It was also conveyed that ‘General’ category of sports disciplines shall be retained. Criteria for inclusion in this category and financial assistance to be provided will be separately issued.

it has now been decided by the Ministry of Youth Affairs and Sports that sports disciplines included in the multidiscipline mega events like Olympics, Asian Games, Commonwealth Games etc and which have obtained a ranking upto 8th in individual events and upto 10th in team events in Olympics/Asian Games/CWG or their respective Asian and World Championships shall be placed in ‘General’ category. Financial assistance for this category will be as under:-

i. National Championships are to be funded.

ii. One international event in India in a year, can be funded.

iii. Maximum of one foreign exposure each in Senior & Junior categories can also be funded during a year.

Based on the past performance in major international events, it has been decided to upgrade the sport of Fencing from ‘Others’ to ‘General’ category.

It has also been decided to place ‘University Sports’ in the ‘Priority’ category.

It has further been decided to recognize ‘Yoga’ as a sports discipline and to place it in the ‘Priority’ category.

Thus, while for the Sports Ministry, yoga is sports, it is not so for the all-powerful Babus in the Finance Ministry. To treat yoga as sports has significant ramifications, in terms of Sl No. 8 of the Mega Exemption Notification No. 25/2012-ST dated 20-6-2012, which exempts services by way of training or coaching in recreational activities related to arts, culture or sports.

Thus, a legally sustainable view can be taken by any service provider who is providing training in yoga, that the activity is covered by Sl. No. 8 of the Mega Exemption Notification, in the light of the press release of the Ministry of Youth Affairs and Sports Ministry reproduced above. However, it would be better if the Finance Ministry can follow the view taken by the Sports Ministry and declare yoga as a sport so that, the benefit of the exemption from levy of service tax is available to all those who teach and propagate this great discipline, which originated in India.

Before concluding….

The word ‘sport’ has not been defined in service tax law. As per the Oxford Dictionary, ‘sport’ is a competitive activity involving physical effort and skill.

The Oxford English Dictionary defines yoga as a system involving breathing exercises and the holding of particular body positions, based on Hindu philosophy. Thus, it would seem that, the decision of the Sports Ministry to treat yoga as a sports discipline is well founded, unlike the decision of the Finance Ministry to club yoga with religion and spirituality. In my view, in the light of the Sport Ministry circular, yoga is clearly covered under Sl No. 8 of the Mega Exemption Notification.

While on the subject… it would seem that, the Finance Ministry’s decision to extend the benefit of exemption from the levy of service tax in respect of activities related to ‘yoga’ only to charitable institutions could go against Article 14 of the Constitution, as the Government could be seen to be discriminating between charitable institutions and non-charitable institutions, insofar as yoga is concerned.A

Notifications on ease of doing biz by month-end : 05-11-2015


The government would issue notifications to reduce clearances for projects, to improve the ease of doing business, by November 30, Urban Development Minister Venkaiah Naidu said on Wednesday.

Addressing a session at the National Strategy Day on India, organised here by the World Economic Forum and the Confederation of Indian Industry, the minister acknowledged the critical role the private sector played in bridging the enormous funding gap in infrastructure. Special purpose vehicles would be set up to promote infrastructure development in urban areas. The Centre would provide seed-financing to municipal bodies through these SPVs and these funds would be used to raise commercial finance from banks, he said.

Founder and Managing Partner of Pacific Paradigm Advisors Punita Sinha said the system of infrastructure financing followed earlier was not tailored to the needs to the sector. Short-term debt financing was being used to finance long-term projects, which was not sustainable. Sovereign wealth funds and pension funds, which are now entering the market, have a longer term view of the market and can be tapped to raise long-term debt.

Sumit Mazumdar, present CII chief, said road projects where 90 per cent of the land has been acquired have been awarded. This was a departure from the past, when the contract-winner had to buy land and get clearances.

Addressing another session, Chief Minister of Maharashtra Devendra Fadnavis said the process of calculating minimum support prices does not take into account the differences in costs across states. Simply taking the average costs of cultivation across states was not the best way. Cost differentials across states have to be accounted for, he added.

On farmer suicides, Fadnavis said developmental initiatives undertaken by his government would ensure assured irrigation to farmers and link farmers to the post-harvest supply chains. Fadnavis said 500,000 farmers have been integrated with the supply chain through these initiatives and the state government was planning to take it to 2.5 million over five years.

Source : PTI

GST rollout is only a matter of time, says Jaitley : 05-11-2015


Finance Minister Arun Jaitley on Wednesday said the constitutional amendment Bill on a national goods and services tax (GST) would be cleared in the Rajya Sabha when put to vote. He also said reforms such as those relating to restructuring of debt of power distribution companies, draft bankruptcy code, a road map on phasing out corporate tax exemptions would be announced shortly.

Later in the day, the Bankruptcy Law Committee report was presented to Jaitley. Besides, power reforms are expected to come up in the Cabinet on Thursday. Interacting with Klaus Schwab, founder and executive chairman of the World Economic Forum (WEF) here, Jaitley said there was room for consensus on some provisions of the land Bill; the government had allowed an ordinance on this to be lapsed.

Pointing out that power was a stressed sector, Jaitley said the government would announce restructuring of discoms’ debt in the next couple of days. “Once that happens, I am quite sure the private sector will also start participating.”

He said the country was generating more power than it needed. “For the first time in history, we have surplus resource. Generation companies are facing difficulty because there are no takers for the power.” On GST, he said, “I think (introduction of) GST is only a question of time, since obstruction won’t continue indefinitely. As and when it is put to vote, I see GST becoming a reality.” The Congress and some parties had opposed the legislation in its present form in the Rajya Sabha, where the government does not have the numbers to get it passed. But Jaitley said within months the numbers in the Upper House would tilt in favour of the ruling combine. Results of the Bihar Assembly elections, due on Sunday, can change the equation in the Rajya Sabha.

At the event organised by the WEF, he said any increase in interest rate by the US Federal Reserve would impact capital flows to the country initially, but these would stabilise later. Turmoil is the new normal in these days of integrated globalisation, he said.

Source : Business Standard

GST will be passed soon: Jaitley : 04-11-2015


Finance Minister Arun Jaitley on Wednesday asserted that a new goods and services tax (GST)would be passed in the Rajya Sabha whenever it is put on vote.

At the National Strategy Day on India, organised by the World Economic Forum, Jaitley said a consensus could be built on some aspects of the land acquisition Bill as well though an ordinance on this was allowed to lapse.

The Finance Minister also said the government would announce the restructuring of debt of power distribution companies in a few days.

Also, a draft on the roadmap to phase out corporation tax exemptions will be put in the public domain shortly, he said. However, reduction of corporate tax rate will begin from the next financial year.

He also said signs of recovery in some segments of manufacturing were visible. This is also reflected in the indirect-tax collections rising 13.5% in the first 10 months of the current fiscal without factoring in additional measures, such as a hike in excise duty on oil in phases, increase in service tax rate from June, and the removal of excise duty sops to auto and capital goods sector.

With these measures, indirect tax mop-up rose 36.5% during this period.

Source : Financial Express

FinMin to ease transfer pricing rules : 04-11-2015


The finance ministry is streamlining safe harbour rules and advance agreements, two mechanisms to determine the price of services rendered by a multinational to its subsidiary in India.

Safe harbour rules - directives on margins the tax authorities should accept for the transfer price declared by an assessee – have drawn a tepid response since they were introduced a couple of years ago. There is also a huge backlog in advance pricing agreements (APAs), an ahead-of-time understanding between a taxpayer and the tax authority on an appropriate transfer pricingmethodology.

ALIGNING INDIAN TAXATION WITH BEST PRACTICES
Safe harbour rules

  • Government looking at lowering safe harbour margins to make it attractive for companies to opt for it
  • Government to make safe harbour definition unambiguous bringing in more clarity

Advance Pricing Agreement

  • With close to 550 cases pending, government looking at expediting clearances through:
  • Sector-specific approach to cases
  • Increasing manpower and filling up vacancies

The move would simplify the tax regime, reduce litigation and help improve the business environment, a finance ministry official said.

The steps will involve lowering the margins in safe harbour rules and definitions will be reworked to remove ambiguities. India announced the safe harbour rules in 2013, but the high margins of up to 25 per cent on total operational profits have made it unattractive for companies to use them.

FinMin to ease transfer pricing rules

“We are addressing issues related to transfer pricing to align it with best practices. We are revising the safe harbour rules that will include revisiting the definition and revising the margins, considered high by companies,” said a tax official.

Information technology (IT) and information technology-enabled services (ITeS) companies with transactions of up to Rs 500 crore have a safe harbour operating margin of 20 per cent and those with transactions above Rs 500 crore have a margin of 22 per cent. Knowledge process outsourcing companies have a safe harbour operating margin of 25 per cent.

Experts argue there is ambiguity in the definition of IT, ITeS and knowledge process outsourcing companies with a lot of overlap. Moreover, the margins decided in tribunals or in advance pricing agreements turn out much lower, ranging between 15 and 18 per cent.

“The definitions under the safe harbour rules are fuzzy and sometimes overlap, creating confusion over what rate should apply and which company will fall under which sector. We are expecting clarity on the definition,” said Rahul Garg, leader, direct tax, PwC.

Manisha Gupta, partner, Deloitte Haskins & Sells, said the safe harbour margins were high. “The government agrees to far lower rates at tribunals and in advance pricing agreements,” she said.

The lowering of safe harbour rates will ease the advance pricing agreement backlog. The government introduced the advance pricing scheme in 2012 and there are over 500 applications pending.

“We are considering sector-wise handling of cases by officers to expedite decisions,” the tax official said. “We have already made a request for an increase in manpower to clear the backlog. We expect a decision soon,” he added.

India has the highest incidence of transfer pricing litigation worldwide. The number of cases scrutinised has quadrupled from 1,061 in 2005-06 to 4,290 in 2014-15.

Among measures recently introduced, the government said an officer would be assigned not more than 50 important and complex transfer pricing cases. Officers typically audit more than 70 cases at a time.

Besides, the tax department has incorporated range and multi-year data in transfer pricing calculations to bring Indian laws in line with international practices. Earlier, single-year data and the arithmetic mean were used to arrive at transfer pricing.

Earlier this year, the finance ministry allowed rollback advance pricing agreements so that multinational companies could settle taxes for previous years as well.

“The burden on tribunals, high courts, Supreme Court and even on the APA team can be substantially reduced if the Indian government revamps the safe harbour rules (that is, devising calibrated and more reasonable margins for the sector consistent with the margins finally arrived at post-tribunal orders/MAP/APA and providing clarifications on what constitutes software development activities, KPO, contract R&D,” said a Deloitte & Taxsutra report on transfer pricing.

Approximately over 40 per cent of APA applications are from the IT/ITeS sector. Up to September 2015, more than 575 APA applications have been filed with the APA authorities. Fourteen of theseAPAs have been concluded, of which 12 are unilateral and two bilateral (with Japan and the UK).

Source : PTI

CMs’ panel for lower burden on Centre : 04-11-2015


The Centre’s fund share in centrally sponsored schemes(CSS) might come down if it accepts the recommendations of a high-powered panel of chief ministers on rationalisation such programmes.

The panel has favoured lowering the number of central schemes to 30 from 72 and earmarking 25 per cent of allocation in a scheme as flexi-fund, which would be spent in accordance with the finance ministry’s guildelines.

To ensure the states spend their share of the funds, the panel suggested the Centre release its share after the states submit utilisation certificates for the instalment prior to the previous tranche.

PANEL RECOMMENDATIONS
  • In core category, Centre-state share to be 60:40 for general category states
  • In core-of-core, Centre to fully fund schemes
  • In optional schemes, sharing ratio to be 50:50
  • The panel also wants Centre’s share in mid-day meal scheme to be altered
  • The panel submitted its report recently to the PM
  • NITI Aayog to monitor rollout of all schemes
  • Revamped funding pattern of the centrally sponsored schemes would be implemented from 2015-16

After the increased devolution to the states through the 14th Finance Commission, the 2015-16 Budget assistance to state plans was reduced from Rs 3.38 lakh crore in 2014-15 to Rs 2.05 lakh crore in 2015-16. The amount for centrally sponsored schemes was reduced from Rs 2.52 lakh crore to Rs 1.69 lakh crore.

The CMs’ panel also recommended classifying all central schemes into three categories – core, core-of-core and optional.

In the first, the fund-sharing pattern between the Centre and states would be 60:40 for general category states. For the eight Northeastern and three Himalayan states, this ratio would be 90:10.

All core-of-core schemes would be fully funded by the Centre. In schemes categorised as optional, the fund-sharing pattern between the Centre and states would be 50:50 for general category states and 80:20 for Northeastern and hilly states. Funds for the optional schemes would be allocated to states as a lump sum and states would be free to choose which optional scheme they want to adopt. According to the panel’s report, the NITI Aayog would frame the criteria for lump sum allocations and would monitor the implementation of all the schemes.

The panel submitted its report recently to Prime Minister Narendra Modi. The report has not yet been accepted by the Centre.

The mid-day meal scheme has been classified as core (60:40 sharing pattern). The Centre has reduced its allocation but would release the amount only after the states issue utilisation certificates.

The third tranche of funding for this scheme is believed to be pending from the Centre. The first two tranches for 2015-16 were released under the old sharing pattern, officials clarified.

In a statement in February, the government had said it would fully support the mid-day meal scheme, pending the report from the chief minister’s panel. Till now, officials said, the cooking cost was being shared by the Centre and state governments in the ratio of 75:25. The Centre bears the cost of foodgrain.

Other major programmes for social protection and inclusion have been classified as core-of-core schemes: The Mahatma Gandhi National Rural Employment Guarantee Act, National Social Assistance Plan and the National Programme for Persons with Disabilities would continue to be 100 per cent funded by the Centre.

Housing for All, Law and Order and Justice Delivery System, Pradhan Mantri Krishi Sinchaee Yojana, Krishi Unnati Yojana and Swachh Bharat Abhiyan would be part of the core scheme segment. The Centre would give 60 per cent of the funds for these.

The chief ministers’ panel was headed by Shivraj Singh Chouhan (Madhya Pradesh) and included Vasundhara Raje Scindia (Rajasthan), Mufti Mohammad Sayeed (Jammu & Kashmir), Raghubar Das (Jharkhand), Okram Ibobi Singh (Manipur) and K Chandrashekhar Rao (Telangana).

Source : Business Standard

Corporate tax could be cut to 25% earlier than expected: Revenue Secy Hasmukh Adhia : 03-11-2015


Government could cut corporate tax to 25 percent from 30 percent before a previous deadline of four years, and will provide a roadmap for ending corporate tax exemptions shortly, Revenue Secretary Hasmukh Adhia said on Monday.

Finance Minister Arun Jaitley, while presenting his annual budget in February, announced that the government would gradually pare corporate tax by 5 percentage points during the next four years and roll back various tax exemptions.

Source : Business Standard

Arun Jaitley to open WEF India summit on November 4 : 03-11-2015


Finance Minister Arun Jaitley will open the World Economic Forum (WEF) India summit on November 4, an event that will see participation of more than 250 stakeholders and leaders, including Union Ministers.

The theme of the meet is ‘Delivering Growth in the New Context’.

WEF, along with the Confederation of Indian Industry (CII), will host the National Strategy Day on India here on November 3-4.

While Arun Jaitley will deliver the opening address on November 4, Minister of State for Power, Coal, New and Renewable Energy Piyush Goyal will give away the India Social Entrepreneur of the Year 2015 Award on November 3.

“Bringing together more than 250 national stakeholders and leaders from government, including 8 ministers, business and civil society, under a new meeting format, participants will engage in an intense one-day dialogue looking at the fast-changing economic, political and social landscape in India,” WEF said in a statement today.

Besides Goyal, Urban Development, Housing and Urban Poverty Alleviation as well as Parliamentary Affairs Minister M Venkaiah Naidu, Minister of State for Finance Jayant Sinha and Maharashtra Chief Minister Devendra Fadnavis, among others, will be present.

ICICI Bank MD and CEO Chanda Kochhar, Cargill India Chairman Siraj Azmat Chaudhry, Hindustan Power Chairman Ratul Puri, National Skill Development Agency Chairman Subramanian Ramadorai, Jubilant Bhartia Group Founder and co-Chairman Hari Bhartia, Hindustan Construction Company Chairman and MD Ajit Gulabchand, will also participate.

Participants will deliberate on forces of change in India in the context of five of WEF’s global challenges — agriculture and food security, environment and resource security, employment, skills and human capital, long-term investing, infrastructure and urban development and financial inclusion.

Viraj Mehta, Head of India and South Asia, WEF, said India’s continued economic growth relies on the continued success of its efforts to address challenges of sustainable urbanisation, social inclusion, clean energy access and infrastructure deficit.

Source : PTI

Notification No. : S.O. 2835(E) Dated: 9-10-2015


Set up a sector specific Special Economic Zone for granite processing industries sector in SIPCOT Industrial Growth Centre, Bargur, Uthangarai and Pochampalli Taluk, Krishnagiri District in the State of Tamil Nadu – S.O. 2835(E) – Dated 9-10-2015 – Special Economic Zone

MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

NOTIFICATION

New Delhi, the 9th October, 2015

S.O. 2835(E).-Whereas, M/s. State Industries Promotion Corporation of Tamil Nadu Limited had proposed under section 3 of the Special Economic Zones Act, 2005 (28 of 2005), (hereinafter referred to as the said Act) to set up a sector specific Special Economic Zone for granite processing industries sector in SIPCOT Industrial Growth Centre, Bargur, Uthangarai and Pochampalli Taluk, Krishnagiri 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 an area of 153.83.0 hectares at the above Special Economic Zone vide Ministry of Commerce and IndustryNotifications Numbers S.O. 595 (E) dated 15th March, 2010;

And, whereas, M/s. State Industries Promotion Corporation of Tamil Nadu has now proposed for de-notification of 58.29.0 hectares at the above Special Economic Zone;

And, whereas, the State Government of Tamil Nadu has given its “No Objection” to the proposal vide letter No. 5387/MIB.1/2015-1, dated 15th July, 2015;

And, whereas, the Development Commissioner, Madras Special Economic Zone has recommended the proposal for de-notification of an area of 58.29.0 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 58.29.0 hectares, thereby making resultant area as 95.54.0 hectares, comprising the survey numbers and the area given below in the table, namely:-

TABLE

S.No.

Name of the Village

Survey No.

Area to de-notified (in Hectares)

1

Balethottam village of Pochampalli Taluk

641 Part

0.00.5

2

642 Part

0.01.0

3

643 Part

1.84.5

4

726 Part

6.26.5

5

Olaipatti village of Uthangarai Taluk

1 Part

0.35.5

6

2 Part

2.78.0

7

3 Part

2.31.0

8

4 Part

1.98.0

9

7 part

1.56.5

10

21 Part

1.99.0

11

22

2.97.0

12

23 Part

25 Part

26

0.34.0

13

3.62.0

14

3.95.0

15

27 Part

2.83.0

16

28 Part

3.15.0

17

29 Part

2.45.5

18

30

2.39.0

19

31 Part

5.04.0

20

32 Part

1.58.0

21

33 Part

3.27.0

22

49 Part

0.52.0

23

50 Part

0.32.0

24

59 Part

3.61.0

25

60 Part

3.14.0

Total

58.29.0 hectares

Total Area of SEZ after above deletion

95.54.0 hectares

[F. No. F.1/44/2009-SEZ]

Dr. GURUPRASAD MOHAPATRA, Jt. Secy.

Experts urge clarity on software payment tax : 02-11-2015


The justice R V Easwar committee on the Income Tax Act set up last week would do well to clarify whether payments for software should attract income tax or service tax, and make safe harbour profit margins more realistic, tax experts said. Tax demands based on ‘excessive’ advertising and promotional spending were also a cause for concern for the industry and the committee could address this issue as well, they added.

Addressing specific issues being fought in courts for decades without resolution, as well as the trust deficit between tax payers and the administration, would help in avoiding far-fetched tax claims that eventually fail the test of judicial scrutiny, tax experts who FE spoke to said.

At present, about 77,000 tax disputes are pending in various courts involving a total demand of Rs 1,87,000 crore.

Making the systemic changes would also help in improving the current situation of direct tax arrears having surpassed the annual revenue collection target for the department. Arrears have now crossed Rs 8.3 lakh crore, way above the Rs 7.9-lakh crore direct tax collection target set for this fiscal. Besides disputes in courts, the total tax arrears would also include, cases that are pending before the commissioner (appeals), dispute resolution panels and cases where demands are not recoverable or have been raised against future tax liability.

The justice R V Easwar committee on the Income Tax Act set up last week would do well to clarify whether payments for software should attract income tax or service tax, and make safe harbour profit margins more realistic, tax experts said. Tax demands based on ‘excessive’ advertising and promotional spending were also a cause for concern for the industry and the committee could address this issue as well, they added.

Addressing specific issues being fought in courts for decades without resolution, as well as the trust deficit between tax payers and the administration, would help in avoiding far-fetched tax claims that eventually fail the test of judicial scrutiny, tax experts who FE spoke to said.

At present, about 77,000 tax disputes are pending in various courts involving a total demand of Rs 1,87,000 crore.

Making the systemic changes would also help in improving the current situation of direct tax arrears having surpassed the annual revenue collection target for the department. Arrears have now crossed Rs 8.3 lakh crore, way above the Rs 7.9-lakh crore direct tax collection target set for this fiscal. Besides disputes in courts, the total tax arrears would also include, cases that are pending before the commissioner (appeals), dispute resolution panels and cases where demands are not recoverable or have been raised against future tax liability.

Source : The Economic Times

No. 18/2015 Dated: 2-11-2015


Interest from Non-SLR securities of Banks – Circular – Dated 2-11-2015 – Income Tax

F.No.279/Misc.140/2015/ITJ

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DIRECTORATE OF INCOME-TAX

LEGAL AND RESEARCH

CIRCULAR NO 18/2015

New Delhi, Dated November 02, 2015

Subject: Interest from Non-SLR securities of Banks-reg.

It has been brought to the notice of the Board that in the case of Banks, field officers are taking a view that, “expenses relatable to investment in non-SLR securities need to be disallowed u/s 57(i) of the Act as interest on non-SLR securities is income from other sources.”

2. Clause (id) of sub-section (1) of Section 56 of the Act provides that income by way of interest on securities shall be chargeable to income-tax under the head “Income from Other Sources”, if, the income is not chargeable to income-tax under the head “Profits and Gains of Business and Profession”.

3. The matter has been examined in light of the judicial decisions on this issue. In the case of CIT Vs Nawanshahar Central Cooperative Bank Ltd. [2007] 160 TAXMAN 48(SC) = 2005-TIOL-94-SC-IT, the Apex Court held that the investments made by a banking concern are part of the business of banking. Therefore, the income arising from such investments is attributable to the business of banking falling under the head “Profits and Gains of Business and Profession”.

3.2 Even though the above mentioned decision was in the correct of co-operative societies/Banks claiming deduction under section 80P (2)(a)(i) of the Act, the principle is equally applicable to all banks/commercial banks, to which Banking Regulation Act, 1949 applies.

4. In the light of the Supreme Court’s decision in the matter, the issue is well settled. Accordingly, the Board has decided that no appeals may hence forth be filed on this ground by the officers of the Department and appeals already filed, if any, on this ground before Courts/Tribunals may be withdrawn/ not pressed upon. This may be brought to the notice of all concerned.

(D.S. Chaudhary)

CIT (A&J), CBDT

Ease of doing business: Ranking should have been much higher, says Jaitley : 02-11-2015


The Finance Minister Arun Jaitley on Sunday said that Government was working hard to address two critical areas — enforcement of contracts and bankruptcy law — that came in the way of a better ranking for the country in the World Bank’s ‘ease of doing business’ index.

Although the World Bank had upped India’s position by twelve positions in its latest ‘Doing Business’ report, Jaitley felt the ranking should have moved “significantly higher” going by the number of steps taken (by the Modi-led Government) in last seventeen months.

In the Doing Business 2016 report, India was ranked 130th position out of 189 countries, twelve places higher than 142nd rank in last year’s edition.

The improvement, however, looks modest if one were to compare it with the recalculated 2015 ranking of 134, based on a new methodology.

“I understand that all steps have not been factored in since the World Bank criteria has a cut-off date and it also waits for announcements to translate into action before they can be factored”, Jaitley said in a Facebook blog post.

Although the “push up” numerically is modest, it marks the reversal of an adverse trend, he said.

Jaitley said the Government’s recent move to issue ordinance to amend the Arbitration Law and constitute commercial division in all High Courts would improve the enforceability of contracts where India’s ranking is relatively poor.

It is reckoned that setting up commercial divisions in High Courts would help in quicker adjudication of all investment related matters, thereby improving enforceability of contracts.

Bankruptcy Law

Jaitley said that the ease of opening business must also be accompanied by an ease in exiting. For this, the framework of the Bankruptcy Law is being readied. Dispute resolutions with regard to public projects require a quicker settlement mechanism. The same is being worked out, Jaitley said.\

Indications are that the Government would in the upcoming winter session of Parliament introduce necessary bankruptcy code.

FDI Conditions

Jaitley also said that time has come to examine whether some of the conditionalities on which FDI investment is permitted, have become “anachronic”.

“We need to cut down on the number of permissions required so that the time lag between the decision to invest and the actual investment can be shortened significantly”.

Jaitley wanted States to realise that local laws which enable availability of land, environmental permissions, sanction of building plans need a relook

Pat for States

Jaitley said an equally encouraging factor is that the States have also altered their work culture. Investment is the starting point of all economic activity. An investment friendly State will be a natural destination. This realisation has donned upon the States. Competitive federalism can be seen.

“The Gujarat model of Global Investors Meet has been replicated in Tamil Nadu, Madhya Pradesh, West Bengal and in Punjab. Rajasthan, this month, would be wooing global investors”.

Telangana and Andhra Pradesh have been reaching out to investors globally. Three States with a significant tribal population – Chhattisgarh, Jharkhand and Odisha, figure in the top six States in the World Bank Ease of Doing Business rankings. The work culture is changing in most States, Jaitley said.

Source : PTI

Notification No. : F. No. 4(19)-W&M/2014 Dated: 30-10-2015


Sovereign Gold Bonds Scheme, 2015 – F. No. 4(19)-W&M/2014 – Dated 30-10-2015 – Income Tax

Government of India

Ministry of Finance

Department of Economic Affairs

New Delhi, dated the October 30, 2015

Notification

G.S.R. (E). -  In exercise of the powers conferred by clause (iii) of section 3 of the Government Securities Act, 2006 (38 of 2006), the Central Government hereby makes the following Scheme, namely: -

1. Short title and commencement.-

(1) This scheme may be called the Sovereign Gold Bonds Scheme, 2015.

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

2. Definition.–– In this Scheme, unless the context otherwise requires, -

(a) “Form” means a form appended to this Scheme;

(b) “receiving office” means the offices or branches of Nationalised Banks, Scheduled Private Banks, Scheduled Foreign Banks as specified in Annexure I to this Scheme and designated Post Offices as may be notified;

(c) “Stock Certificate” means the Gold Bond issued in the form of Government of India Stock in accordance with section 3 of the Government of India Securities Act, 2006.

3. Eligibility for Investment.–– (1) The Gold Bonds under this Scheme may be held by a person resident in India, being an individual, in his capacity as such individual, or on behalf of minor child, or jointly with any other individual.

Explanation. – For the purposes of this paragraph,  -

(i) the expression “person” shall have the same meaning as defined in clause (u) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999);

(ii) the expression “person resident in India” shall have the same meaning as defined in clause (v) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999).

4. Form of subscription and pricing.–– (1) Subscription shall be in the form of denominated units of one gram of Gold or multiples thereof:

Provided that the minimum limit of subscription in the Bond shall be of two grams and maximum limit of subscription shall be of five hundred grams per person per fiscal year:

Provided further that in case of joint holding, the above limits shall be applicable to the first applicant only.

(2) The issue price of Gold Bonds shall be made in Indian Rupees on the basis of simple average of closing price of gold of 999 purity of previous week (Monday to Friday) published by the India Bullion and Jewelers’ Association Limited.

5. Procedure for making application for subscription to Gold Bonds.– (1) Every Subscriber who is desirous of making subscription to the Gold Bonds shall apply to any receiving office in Form ‘A’ or in any other form as near as thereto, stating clearly the grams of gold and full name and address of the applicant.

(2) Every application shall contain such documents and particular as specified in the instructions contained in the Application Form.

(3) On receipt of an application under sub paragraph 1, the receiving office shall issue an acknowledgment receipt in Form ‘B’, if all requirements of the application are fulfilled.

(4) An incomplete application is liable to be rejected if all requirements of the application are not fulfilled within period specified in paragraph 6.

6. Date and form of issue of Gold Bonds.–– (1) The Gold Bonds shall be issued on the 26th day of November, 2015 in the form of a Stock Certificate as specified in Form ‘C’.

(2) The Gold Bonds shall be eligible to be converted into De-mat form.

7. Period of subscription.–– the Subscription of the Gold Bond under this Scheme shall open on and from the 5th day of November, 2015 and shall closed on the 20st day of November, 2015;

Provided that the Central Government may, with prior notice, close the Scheme before the period specified above.

8. Interest.–– (1) The interest on the Gold Bonds shall commence from the date of its issue and shall have a fixed rate of interest at 2.75 percent per annum on the amount of initial investment.

(2) The interest shall be payable in half-yearly rests and the last interest shall be payable along with the principal on maturity.

9. Receiving Offices.–– The receiving office specified in Annexure I shall be authorised to receive applications for the Bonds either directly or through agents.

10. Payment Options.–– (1) All payments for Gold Bond shall be accepted in Indian Rupees through cash or demand draft or cheque or electronic banking.

(2) Where payment is made through cheque or demand draft, the same shall be drawn in favour of the receiving office.

11. Redemption.–– (1) The Gold Bond shall be repayable on the expiration of eight years from the 26th November, 2015, the date of the issue of Gold Bonds:

Provided that premature redemption of Gold Bond may be permitted after fifth year from the date of issue of such Gold Bond on the date on which interest is payable.

(2) On maturity, the Gold Bonds shall be redeemed in Indian Rupees and the redemption price shall be based on simple average of closing price of gold of 999 purity of previous week (Monday to Friday) published by the India Bullion and Jewelers’ Association Limited.

(3) The receiving office shall inform the investor of the date of maturity of the Gold Bond one month before its maturity.

12. Eligibility for Statutory Liquidity Ratio.–– The investment in the Gold Bonds under this Scheme shall be eligible for Statutory Liquidity Ratio.

13. Loan against Bonds.–– (1) The Gold Bonds under this Scheme may be used as collateral security for any loan.

(2) The Loan to Value ratio as applicable to any ordinary gold loan mandated by the Reserve Bank of India shall also apply to the Gold Bond under this Scheme.

(3) The lien on the bond shall be marked in the depository by the authorised banks.

14. Tax Treatment.–– The interest on the Gold Bond shall be taxable as per the provisions of theIncome-tax Act, 1961 (43 of 1961) and the capital gains tax shall also remain the same as in the case of physical gold.

15. Nomination.–– Nomination and its cancellation shall be made in Form ‘D’ and Form ‘E’, respectively, in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated the 1st December, 2007.

16. Transfer of Gold Bonds.––The Gold Bonds in the form of Stock Certificate is transferable by execution of an Instrument of transfer as in Form ‘F’, in accordance with the provisions of the Government Securities Act, 2006 (38 of 2006) and the Government Securities Regulations, 2007, published in part III, Section 4 of the Gazette of India dated the 1st December, 2007.

17. Trade of Gold Bonds.––The Gold Bonds shall be eligible for trading from such date as may be notified by the Reserve Bank of India.

18. Commission for distribution.––Commission for distribution shall be paid at the rate of rupee one per hundred of the total subscription received by the receiving offices on the applications received and receiving offices shall share at least 50% of the commission so received with the agents or sub agents for the business procured through them.

19. All other terms and conditions specified in the notification of Government of India in the Ministry of Finance (Department of Economic Affairs) vide number F. No.4(13) W&M/2008, dated the 8th October, 2008 shall apply to the Gold Bond issued under this scheme.

By Order of the President of India

[F. No. 4(19)-W&M/2014]

(Prashant Goyal)

Joint Secretary to the Government of India

Notification No. : 87/2015 Dated: 30-10-2015


Notification No. 01/2015, dated the 1st January, 2015 superseded, CBDT directs specified Income-tax authorities to be subordinate of Income-tax authorities mentioned under the Table – 87/2015 – Dated 30-10-2015 – Income Tax

MINISTRY OF FINANCE

(Department of Revenue)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 87/2015

New Delhi, the 30th October, 2015

INCOME-TAX

S.O. 2965 (E) -  In exercise of the powers conferred by section 118 of the Income-tax Act, 1961 (43 of 1961) and in supersession of the notification of the Government of India in the Ministry of Finance, Department of Revenue, published in the Gazette of India, Extraordinary, Part-II, section 3, sub-section (ii), vide number S.O. 14(E), dated the 1st January, 2015 (No. 1/2015, dated the 1st January, 2015), the Central Board of Direct Taxes hereby directs that the Income-tax authorities specified in column (2) of the Table below shall, for the purposes of the functions under section 144C of the said Act, be subordinate to the Income-tax authority specified in column (1) of the said Table, namely:-

TABLE

Income-tax Authority

Income-tax Authorities

(1)

(2)

Principal Chief Commissioner of Income-tax (International Taxation) Commissioners of Income-tax being Members of Dispute Resolution Panel-1, Delhi and Dispute Resolution Panel-2, Delhi
Chief Commissioner of Income-tax (international Taxation)(West Zone), Mumbai Commissioners of Income-tax being Members of Dispute Resolution Panel-1, Mumbai, Dispute Resolution Panel-2, Mumbai and Dispute Resolution Panel-3, Mumbai
Chief Commissioner of Income-tax(International Taxation)(South Zone), Bengaluru Commissioners of Income-tax being Members of Dispute Resolution Panel-1, Bengaluru and Dispute Resolution Panel-2, Bengaluru

[F.NO.500/25/2014-SO/FT&TR-2(1)]

RAJAT BANSAL,

Jt. Secy. (FT&TR-II)

No. 1011/18/2015-CX Dated: 30-10-2015


Clarification regarding Self-sealing and self-Examination of Bulk cargo – Dated 30-10-2015 – Central Excise

Circular No. 1011/18/2015-CX

F. No. 96/108/2014-CX.I

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

New Delhi, the 30th October, 2015

To,

Principal Chief Commissioners / Chief Commissioners of Central Excise (All),

Principal Commissioner of Central Excise (holding charge of Chief Commissioner) (All),

Web-master, CBEC

Madam/Sir,

Subject: – Clarification regarding Self-sealing and self-Examination of Bulk cargo -reg

References have been received from trade as well as from field formations regarding problems faced by trade in sealing of Bulk Cargo for export under bond under Notification No. 42/2001-Central Excise (N.T.), dated 26.06.2001. It has been pointed out that bulk cargo for e.g. coal, iron-ore, alumina Concentrate, heavy machinery etc. are difficult to seal in packages or container and hence a suggestion has been made that there is a need to prescribe procedure for export of such goods.

2. The matter has been examined. Notification No.42/2001-Central Excise (N.T.), dated 26.06.2001, has been amended vide Notification No. 23/2015, dated 30.10.2015 thereby exempting bulk cargo from sealing in packages or container. The Principal Chief Commissioner/ Chief Commissioner of Central Excise has been empowered to grant exemption from self-sealing of bulk cargo for export on case to case basis.

3. In the said Notification, in paragraph 2, in sub-paragraphs (ii) and (iii), after clause (a) occurring in both sub-paragraph , following proviso shall respectively be inserted, namely:-

Provided that where the nature of goods is such that the goods cannot be sealed in a package or a container such as coal or ore, etc., exemption from sealing of package or container may be granted by the Principal Chief Commissioner or Chief Commissioner of Central Excise subject to safeguard as may be specified by him in the permission.

The safeguards shall, inter-alia, include the following:-

  1. method of verification of quantity and quality of goods including testing of goods where necessary at the place of removal or despatch and at the port of export or SEZ, where the goods are received;
  2. no remission of duty shall be allowed for loss of goods within transit;
  3. permission shall be given on case to case basis for a specified period not exceeding one year at a time and may be withdrawn in case of misuse; and
  4. any additional safeguards as may be specified ” .

4. In this regard, following procedures is prescribed while allowing export without sealing in packages or container:-

  1. The assessee who desires to avail facility of export of bulk cargo without sealing shall write to the Principal Chief Commissioner/ Chief Commissioner of Central Excise with a copy to jurisdictional Assistant/ Deputy Commissioner of Central Excise, giving details of bulk cargo to be exported with proper justification regarding difficulties faced by him in sealing of the cargo.
  2. The Jurisdictional Assistant/ Deputy Commissioner after receipt of such application from the exporter shall forward it to the Principal Commissioner/ Commissioner with his comments within fifteen days of receipt of such application with due verification as needed.
  3. The Jurisdictional Principal Commissioner/ Commissioner of Central Excise forward all such application to the Principal Chief Commissioner/ Chief Commissioner of Central Excise with his recommendation within three weeks of receipt of the application with report from the Assistant/ Deputy Commissioner. The jurisdictional Principal Commissioner/ Commissioner of Central Excise shall also consult the Principal Commissioner/ Commissioner having jurisdiction over the port of export or Development Commissioner of SEZ where the goods are received and incorporate the inputs appropriately in his recommendation.
  4. Principal Chief Commissioner/ Chief Commissioner of Central Excise shall grant or reject the request for waiver of sealing of bulk cargo with in fifteen days of receipt of the application from the Principal Commissioner/ Commissioner of Central Excise.

5. The final decision taken on the application shall be communicated to the applicant in writing and in cases where the permission is granted, conditions and safeguards prescribed shall be clearly mentioned.

6. Difficulty experienced, if any, in implementing the circular should be brought to the notice of the Board. Hindi version will follow.

(Santosh Kumar Mishra)

Under Secretary to the Government of India

No. 24 Dated: 29-10-2015


Subscription to National Pension System by Non-Resident Indians (NRIs) – Circular – Dated 29-10-2015 – FEMA

RBI/2015-16/216

A.P. (DIR Series) Circular No. 24

October 29, 2015

To,

All Authorised Dealer Category – I Banks

Madam/Sir

Subscription to National Pension System by Non-Resident Indians (NRIs)

Attention of Authorised Dealers Category – I (AD Category – I) banks is invited to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000,notified vide Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time.

2. With a view to enabling NRIs’ access to old age income security, it has now been decided, in consultation with the Government of India, to enable National Pension System (NPS) as an investment option for NRIs under FEMA, 1999. Accordingly, NRIs may subscribe to the NPS governed and administered by the Pension Fund Regulatory and Development Authority (PFRDA), provided such subscriptions are made through normal banking channels and the person is eligible to invest as per the provisions of the PFRDA Act.

3. The subscription amounts shall be paid by the NRIs either by inward remittance through normal banking channels or out of funds held in their NRE/FCNR/NRO account. There shall be no restriction on repatriation of the annuity/ accumulated savings.

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

5. Reserve Bank has since amended the subject Regulations accordingly through the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Ninth Amendment) Regulations, 2015 which have been notified vide Notification No. FEMA.353/2015-RB dated October 6, 2015, vide G.S.R. No. 759 (E) dated October 6, 2015.

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

Yours faithfully

(B. P. Kanungo)

 Principal Chief General Manager

No. 23 Dated: 29-10-2015


No fresh permission/ renewal of permission to LOs of foreign law firms- Supreme Court’s directions – Circular – Dated 29-10-2015 – FEMA

RBI/2015-16/215

A. P. (DIR Series) Circular No. 23

October 29, 2015

To,

All Category – I Authorised Dealer Banks

Madam / Sir,

No fresh permission/ renewal of permission to LOs of foreign law firms- Supreme Court’s directions

The Hon’ble Supreme Court vide its interim orders dated July 4, 2012 and September 14, 2015, passed in the case of the Bar Council of India vs A.K. Balaji & Ors., has directed RBI not to grant any permission to any foreign law firm, on or after the date of the said interim order, for opening of Liaison Office (LO) in India. Hence, no foreign law firm shall be permitted to open any LO in India till further orders/notification in this regard. However, foreign law firms which have been granted permission prior to the date of interim order for opening LOs in India may be allowed to continue provided such permission is still in force. No fresh permission/ renewal of permission shall be granted by RBI/AD banks respectively till the policy is reviewed based on, among others, final disposal of the matter by the Hon’ble Supreme Court.

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

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

Yours faithfully,

(A. K. Pandey)

 Chief General Manager

No. F.No.225/207/2015/ITA.II Dated: 29-10-2015


Corrigendum with reference to order under Section 119 of the Income-tax Act, 1961 dated 01.10.2015 – Order-Instruction – Dated 29-10-2015 – Income Tax

F. No. 225/207/2015/ITA.II

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, Dated: October 29, 2015

Corrigendum with reference to order under Section 119 of the Income-tax Act, 1961 dated 01.10.2015

Vide order under Section 119 of the Income-tax Act, 1961 (‘Act’) dated 01.10.2015 in file of even number, Central Board of Direct Taxes had extended the ‘due-date’ for E-filing Return of Income from 30thSeptember, 2015 to 31st October, 2015 in case of income-tax assessees which are covered under clause (a) of Explanation 2 to sub-section (1) of section 139 of the Act. In this regard, clarification has been sought whether the said extension is also applicable to the requirement to obtain and furnish ‘reports of audit’ under various provisions of the Act. It is hereby clarified that the “due-date” for obtaining and E-filing reports of audit under various provisions of the Act pertaining to such Returns of income also stands extended till 31.10.2015 vide the said order.

Ankita Pandey

DCIT-OSD (ITA.II)

Notification No. : 86/2015 Dated: 29-10-2015


Transfer pricing – Computation of Arm s length price – Notified percentage under third proviso to section 92C – 86/2015 – Dated 29-10-2015 – Income Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(Department of Revenue)

NOTIFICATION NO. 86/2015

New Delhi, the 29th October, 2015

S.O. (E) – In exercise of the powers conferred by the third proviso to sub-section (2) of section 92C of theIncome-tax Act, 1961 (43 of 1961) read with proviso to sub-rule (7) of rule 10CA of the Income-tax Rules, 1962, the Central Government hereby notifies that where the variation between the arm’s length price determined under section 92C and the price of which the international transaction or specified domestic transaction has actually been undertaken does not exceed one percent of the latter in respect of wholesale trading and three percent of the latter in all other cases, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm’s length price for Assessment Year 2015-2016.

Explanation – For the purposes of this notification, “wholesale trading” means an international transaction or specified domestic transaction of trading in goods, which fulfils the following conditions, namely : -

  1. purchase cost of finished goods is eighty percent or more of the total cost pertaining to such trading activities; and
  2. average monthly closing inventory of such goods is ten percent or less of sales pertaining to such trading activities.

[F. No. 500/1/2014-APA-II]

(Anchal Khandelwal)

Under Secretary to the Government of India

No. 1010/17/2015-CX Dated: 23-10-2015


Revised monetary limits for arrest in Central Excise and Service Tax – Dated 23-10-2015 – Central Excise

Circular No. 1010/17/2015-CX

F. No. 96/54/2014-CX.1

Government of India

Department of Revenue

Central Board of Excise & Customs New Delhi

New Delhi, the 23rd October, 2015

All Principal Chief/Chief Commissioners of Central Excise & Customs,

All Principal Chief/Chief Commissioners of Central Excise,

All Principal Chief/Chief Commissioners of Service Tax,

All Principal Director/Directors General.

Sir/Madam,

Sub: Revised monetary limits for arrest in Central Excise and Service Tax – reg.

Kind attention is invited to circular number 1009/16/2015-CX dated 23.10.2015 on the subject of prosecution under the Central Excise Act, 1944 and the Finance Act, 1994 (Service Tax cases). Revised monetary limits have been prescribed in the circular for launching prosecution. Prosecution can now be launched where evasion of Central Excise duty or Service Tax or misuse of Cenvat Credit in relation to offences specified under sub-section (1) of Section 9 of the Central Excise Act, 1944 or sub-section (1) of section 89 of the Finance Act, 1994  is rupees one crore or more.

2. Consequently, it has been decided to revise the limits for arrests in Central Excise and Service tax. Henceforth, arrest of a person in relation to offences specified under clause (a) to (d) of sub-section (1) of Section 9 of theCentral Excise Act, 1944 or under clause (i) or (ii) of sub-section (1) of section 89 of the Finance Act, 1994, may be made in cases where the evasion of Central Excise duty or Service Tax or the misuse of Cenvat Credit is equal to or more than rupees one crore. Central Excise circular no. 974/08/2013-CX and Service Tax circular no. 171/6 /2013-ST both dated 17-7-2015 stand amended accordingly.

3. Difficulty if any, in the implementation of the circular should be brought to the notice of the Board. Hindi version would follow.

Yours faithfully,

(ROHAN)

Under Secretary to the Govt. of India

Gifts received in professional capacity are taxable : 28-10-2015


Be cautious of the expensive gifts you receive at workplace during the festival season. While most don’t declare gifts received at work, some of them could be taxable. Though people don’t disclose non-cash gifts as nothing is recorded in the book of accounts, such gifts are taxable, says Vikram Ramchand, CIO and co-founder of Makemyreturns.com.

For example, if a sales and marketing manager receives a gift from an advertising company or an employee in the administrative department gets a gift from a vendor, they are supposed to disclose it in their income tax returns and pay relevant tax. The same goes for professionals such doctors, lawyers, and chartered accountants.

Source : PTI

Transfer pricing: Aligning Indian taxation with global standards : 28-10-2015


Transfer pricing deals with fixing the price of goods or services transferred between two related entities, either cross-border or domestic, for determining profit and levying of taxes. It is among the top causes of tax-related disputes in India

India has the highest such litigation cases across the globe

The number of cases scrutinised has nearly quadrupled from 1,061 in 2005-06 to 4,290 in 2014-15. So far, Indian courts (including tribunals) have delivered about 1,800 TP rulings. During FY15, the number of rulings pronounced rose 40 per cent compared to FY14

TP involves high costs and low gains for the government, about 70% of the cases across the Supreme Court, high courts and tribunals have been adjudicated in favour of taxpayers

To avoid disputes, the government has devised several rules to determine an arm’s length price (ALP), or the price at which such transactions would have been priced had they been unrelated entities

STEPS TAKEN TO REDUCE TRANSFER PRICING DISPUTES

Advance pricing agreement (APA) rollback

The government has said APAs entered into for future transactions may be applied to international transactions undertaken in the preceding four years, under specified circumstances. The first APA with a rollback provision was signed in August this year, with a US multinational company.

Transfer pricing: Aligning Indian taxation with global standards

Only risk-based assessment on transfer pricing

CBDT has asked transfer pricing and assessment officers to take up cases based on risk assessment, instead of the transaction threshold of Rs 15 crore. Risk assessment allows authorities to look only at international transactions prone to tax evasion. Before transferring a case to the transfer pricing officer, an assessment officer must be satisfied that there is income or potential income arising from the case

Limiting cases handled by each officer

A transfer pricing officer (TPO) will be assigned a specified number of ‘important and complex’ cases, not exceeding 50. As of now, each TPO audits about 70 cases at a time. The government will frame guidelines to determine ‘complex and important’ cases

Range and multiple year concepts

The government incorporates a range concept and the use of multi-year data in transfer pricing calculations to reduce litigation and bring Indian laws in line with international ones. Earlier, single-year data would be considered and the arithmetic mean would be used

How will it work

Tax authorities will accept a price if it falls within a range, after comparing the price with that of comparable companies

How will it help

It will improve reliability of analysis undertaken for computation of ALP and reduce adjustments to cases in which transfer prices are outside the range. Multiple-year data will take care of price fluctuations

Source : Business Standard

No. 14/2015 Dated: 28-10-2015


Relaxation of additional fees and extension of last date of filing of AOC-4, AOC-4 XBRL and MGT-7 E-Forms under the Companies Act, 2013 – Dated 28-10-2015 – Companies Law

General Circular No. 14/2015

F. No.01/34/2013-CL.V

Government of India

Ministry of Corporate Affairs

5th  Floor, A wing, Shastri Bhawan

Dr. Rajendra Prasad Road, New Delhi

Dated: 28th October, 2015

To

All Regional Directors,

All Registrar of Companies,

All stakeholders

Subject : Relaxation of additional fees and extension of last date of filing of AOC-4, AOC-4 XBRL and MGT-7 E-Forms under the Companies Act, 2013 – reg.

Sir,

In continuation of this Ministry’s General Circular No.10/2015 dated 13.07.2015, keeping in view the request received from various stakeholders, it has been decided to relax the additional fee payable on forms AOC-4 and AOC-4 XBRL upto 30th November, 2015. The additional fee requirement for MGT-7 E-Form is also relaxed for all such forms filed till 30th November, 2015, wherever additional fee is applicable.

2. This issues with the approval of competent authority.

Yours faithfully,

(K.M.S. Narayanan)

Assistant Director

Tel : +911123387263

India aspires to grow much faster: Jaitley : 27-10-2015


India wants its economy to grow much faster, Finance Minister Arun Jaitley said on Tuesday, as Asia’s third-largest economy eyes new opportunities for trade and economic cooperation with Africa.

“India today aspires to grow much faster. We are not satisfied with present growth rates,” Jaitley told a seminar held before a major India-Africa summit to which all of the continent’s 54 countries have been invited.

India has decided to set up a project development company in Africa, Jaitley said in a speech to the event organised by Exim Bank. India’s annual trade with Africa has grown to $72 billion but lags China’s $200 billion.

Source : PTI

Will GST end anomalies associated with decade old VAT regime? : 27-10-2015


Taxindiaonlinelogo-jpgBy S Sivakumar, LL.B., FCA, FCS, ACSI, MBA, Advocate

WHEN the VAT regime was introduced on a nationwide basis in 2005, many of us believed that there would be near uniformity in terms of commodity taxation across the various States. At least, this was what was promised and this was the basis on which the VAT regime was sought to be implemented, on the basis of the so called ‘national consensus’.

This is what the then FM had stated in his Budget Speech for 2005-06:

93. In a remarkable display of the spirit of cooperative federalism, the States are poised to undertake the most important tax reform ever attempted in this country. All States have agreed to introduce the value added tax (VAT)with effect from April 1, 2005. VAT is a modern, simple and transparent tax system that will replace the existing sales tax and eliminate the cascading effect of sales tax. It is in force in more than 130 countries ranging from Sri Lanka to China. India too has a VAT at the Central level (CENVAT), but only for goods.

94. In the medium to long term, it is my goal that the entire production–distribution chain should be covered by a national VAT, or even better, a goods and services tax, encompassing both the Centre and the States.

95. The Empowered Committee of State Finance Ministers, with the solid support of the Chief Ministers, has laboured through the last 7 years to arrive at a framework acceptable to all States. The Central Government has promised its full support and has also agreed to compensate the States, according to an agreed formula, in the event of any revenue loss. I take this opportunity to pay tribute to the Empowered Committee, and wish the States success on the introduction and implementation.

After about 10 years of experience with the VAT regime, one finds that this objective of achieving near uniformity in commodity taxation has remained unfulfilled to a large degree, mainly due to the reluctance of the States to arrive at a common understanding as to the tax rates to be applied for taxing sale of commodities. Thus, you have a situation when writing pens are exempted from VAT in Tamil Nadu, charged to VAT @ 5.5% in Karnataka and charged to tax @ 14.5% in Delhi. Imagine the plight of a pan India seller of branded pens being forced to work with rates varying from 0% to 14.5%. This kind of a wide difference in terms of the VAT rates being charged by the different States is found in quite a number of commodities. Originally, it was agreed that the maximum VAT rate would be 12.5%. But, in order to augment the tax revenues, many States have gone ahead and increased the VAT rates and the peak rates hover at around 14.5% in many States.

Talking of near uniformity in taxation of commodities across India… a works contractor in Maharashtra would pay 1% VAT under a composition scheme (on the entire value including the land component) while his counterpart in Karnataka would have to pay 4% on the same activity on the construction value. A works contractor in Tamil Nadu might pay 2%. It is tragic that the VAT regime that was hailed as the reform of the century at the time it was introduced in 2005 has not even managed to merge taxes such as entry tax into the single VAT rate. Speaking specially of Bangalore City where I live, a manufacturer who is located at, let’s say, at Bommasandra which is about 20 KMs from the City will have to pay entry tax if he buys machines from the City as the manufacturer is located in another local area and the entry tax law requires tax to be paid by the assessee who occasions movement of specified goods into his local area from another local area. So much, for the effectiveness of the VAT system that has been in vogue for the last 10 years, in terms of which, apart from entry tax, taxes such as luxury tax and entertainment tax continue to be levied by the same State Government that levies VAT.

If this is the situation insofar as VAT rates are concerned, there is no semblance of ‘uniformity’ in so far as the VAT related procedures are concerned. Many States insist on a pre-deposit of between 30% to 50% for accepting appeals, with the balance of the disputed VAT to be secured by bank guarantees. In a state like Karnataka, the Commissioner or the Additional Commissioner of Commercial Taxes can overrule the appellate decision of a Joint Commissioner of Commercial Taxes (Appeals), making the Departmental appellate system a farce.

One major failure of the VAT system has been the fact that the so-called all powerful ‘Empowered Committee’ does not have teeth in imposing its writ on the States. After all, under the Constitutional scheme of things, the States are empowered to levy sales tax at their discretion and the Centre can only watch them from the sidelines. With a similar structure that is inevitable under the proposed GST regime, we would be day dreaming to expect near uniformity in so far as the State levies are concerned.

I am not sounding like a pessimist, but only cautioning against the likely pitfalls that the GST regime is likely to encounter. In a complicated industry like real estate, it is anybody’s guess as to how the current system of allowing a builder in Maharashtra to pay VAT @ 1% under the composition scheme can be fitted into the GST scheme.

In my view, what needs to be tried before proceeding with the implementation of the GST regime in its current avatar, would be to merge all taxes levied by the State Government (VAT, entry tax, octroi, luxury, entertainment tax, state excise, etc) under a single state VAT tax and similarly, merge the central levies like central excise duty, service tax, special auxiliary duties, etc. under a single central VAT tax. We should probably run this system for about a year or two and strive for near uniformity in the commodity taxation across the States and then proceed with the implementation of the GST regime as proposed, on a nationwide basis.

Before concluding…

Achieving a near uniform system of indirect taxation is the main objective of the proposed GST regime. Given our not so happy experience with the VAT regime even after 10 years, which involved only the States taxing commodities, we must expect many more issues to crop up under the GST regime given the fact that services will also get taxed at the hands of the States, not to talk of the Central Government also getting into the battlefield. To expect that the States would accept a uniform system of taxing commodities and services would be to expect the impossible, going by the VAT experience.

One would expect the Centre to proceed with caution, vis-à-vis the GST implementation, in terms of getting the States to accept uniform tax rates, etc. With not even the drafts of the proposed GST statutes and the Rules in public domain, it is anybody’s guess as to whether the 2016 deadline can be met. What is more important is to get a successful GST regime with near uniformity in tax rates and procedures rather than one which could end up as another nightmare which the VAT regime has managed to give over the past decade

‘Sin tax’ for alcohol, tobacco industries in GST regime : 26-10-2015


The alcohol and tobacco industries will likely pay more taxes towards an additional ‘sin tax’ under the proposed goods and services tax (GST) structure. However, the govt has not specified the rate at which this ‘sin tax’ would be levied. Here are top 5 key takeaways from the proposed move:

1. ‘Sin tax’ is a globally prevalent practice under which products like alcohol and tobacco attract higher rates of tax

2.  Typically, ‘sin tax’ is an excise tax that is levied on products and services considered to be bad for health or society such as alcohol, tobacco and gambling

3. These additional taxes are also seen as efforts to discourage people from the use of such products or services

4. Such taxes are often the most common measures by the governments to shore up their tax revenues as people generally refrain from opposition to such levies, as they are indirect in nature and affect only their end users

5. Govt is waiting for comments and suggestions from the industry. After making necessary changes based on those suggestions, a final report would be placed before the GST council before the final GST law is framed.

Source : PTI

Relaxed tax residency rules to help MNCs : 26-10-2015


Foreign companies with Indian shareholders won’t have to pay taxes here for their worldwide income unless they are managed from India on an everyday basis. If these foreign companies are managed from outside India, whether or not they are promoted by resident Indians, they will have to pay taxes in India only for the income they earn in the country.

This major relaxation is being built into the place of effective management (POEM) rules being finalised by the finance ministry, government sources told FE. The POEM concept that was included in the I-T Act early this fiscal had raised fears among many multinational companies with Indian promoters or major shareholders that New Delhi would lay claim to taxes on their incomes attributable to other geographies.

While Indian-incorporated firms (Indian companies) are taxed at 30% plus dividend distribution tax (DDT), non-resident (foreign) companies are taxed at 40% on Indian income without DDT. Although the tax rates on foreign companies are higher, the prospect of subjecting the worldwide income to taxation here could have potentially hit many MNCs with Indian stakeholders.

The proposed lenient POEM rule, analysts said, would give the likes of UK’s Jaguar Land Rover (which has the Indian parent Tata Motors) a chance to convince the Indian tax authorities that the UK firm’s commercial decisions are taken by the local management there and avoid paying taxes for the income in the UK and elsewhere in India.

Similarly, foreign subsidiaries of state-owned oil companies such as ONGC Videsh’s Imperial Energy incorporated in Cyprus and ONGC Nile Ganga doing oil exploration in Sudan, Syria and Venezuela can potentially show that their managerial and commercial decisions are ‘in substance’ made at the local level although OVL, the Indian holding company, is under the direct administrative control of the government of India. The same is true for HPCL’s Singapore subsidiary Prize Petroleum International.

“Putting a management in place is a shareholder decision, not a management decision. Promoters getting into any other role would amount to overstepping shareholder rights, going by the strict interpretation of law. The POEM as a principle must cover only management decisions,” said Rahul Garg, leader, direct tax, PwC India.

According to experts, seeking permission from an Indian parent on a decision taken by an overseas subsidiary to see if it is in line with the global policy of the parent may not ordinarily amount to the parent exercising management control, unlike the parent passing on a centrally taken decision to the foreign associate. However, where the senior management of foreign associates of Indian firms are based in India or have common board members based in India, the overseas entity may find it hard to prove that management decisions are taken from outside India. Also, foreign associates of Indian companies lacking skilled managerial personnel or do not assume business risks on its own, could have a tough time convincing the taxman in India that they are not Indian residents.

Prior to the Finance Act, 2015, a company was considered an Indian resident if its control and management were wholly in India throughout the financial year. Since some Indian companies sought to avoid resident status and taxes on their worldwide income by holding one or two board meetings outside India, the government changed the residence definition saying that any company, the ‘place of effective management’ of which is in India, would also be a resident company. Tax residence is a place from where key management and commercial decisions necessary for running the company are, in substance, made. According to experts, this OECD definition of tax residence relies on the substance of the organisation’s structure than its legal form. The government is bringing out clarifications as there is not much global guidance on the concept.

Here and there:

* Mere shareholder rights with Indians won’t result in resident status
* Only managerial decisions taken here will make foreign firms Indian residents and liable to pay tax for entire global income here
* Foreign firm has to prove management independence to avoid tax residence if board members are common with that of Indian ones

Source : The Hindu

No. PRESS RELEASE Dated: 26-10-2015


Inauguration of PAN Camps by Hon’ble Finance Minister at remote locations – Circular – Dated 26-10-2015 – Income Tax

Dated: 26-10-2015

To

All The Pr.CCsIT/CCsIT

The Pr. DGsIT/DGsIT

Sir/Madam,

Subject: Inauguration of PAN Camps by Hon’ble Finance Minister at remote locations – reg.

The Hon’ble Finance Minister, Government of India is inaugurating PAN camp for receiving PAN applications at remote locations at 4:00 P.M. on 27-10-2015 through video conferencing. All the Pr.CCsIT/CCsIT/Pr.DGsIT/DGsIT are requested to attend video conference at their respective places. The Pr.CsIT/CsIT(Appeal) posted at the station may also attend the video conference.

(Nishi Singh)

Pr.DGIT(Systems)

New Delhi

Notification No. : S.O. 2979 (E) Dated: 26-10-2015


Set up a sector specific Special Economic Zone for pharmaceuticals at Plot No.C-21, MIDC, Shendre Five Star Industrial Area, District Aurangabad in the State of Maharashtra – S.O. 2979 (E) – Dated 26-10-2015 – Special Economic Zone

MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

NOTIFICATION

New Delhi, the 26th October, 2015

S.O. 2979 (E).-Whereas, M/s. Ajanta Projects (India) Limited, a private organization in the State of Maharashtra, 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 pharmaceuticals at Plot No.C-21, MIDC, Shendre Five Star Industrial Area, District Aurangabad in the State of Maharashtra;

And, Whereas, the Central Government, in exercise of the powers conferred by sub-section (1) of section 4 of the said Act read with rule 8 of the Special Economic Zone Rules 2006, had notified an  area of 100.00 hectares vide Ministry of Commerce and Industry Notification Number S. O. 2503(E) dated 22nd October, 2008;

And, Whereas, the name of the SEZ was changed from M/s. Ajanta Projects (India) Pvt. Ltd to M/s. Inspira Infra (Aurangabad) Ltd vide Ministry of Commerce and Industry letter dated 27th March, 2012;

And, Whereas, M/s Inspira Infra (Aurangabad) Ltd. has proposed to de-notify the entire area of 100.00 hectares of the above Special Economic Zone;

And, Whereas, the State Government of Maharashtra has given its “No Objection” to the proposal vide letter no. SEZ-1814/CR-41/ 2013/Ind-2 dated 12th May, 2015.

And, Whereas, the Development Commissioner, SEEPZ Special Economic Zone has recommended the proposal for de-notification of the entire area of 100.00 Hectares of the Special Economic Zone;

Now, Therefore, in exercise of the powers conferred by first proviso to rule 8 of the Special Economic Zones Rules 2006, the Central Government hereby rescinds the above notification except as respects things done or omitted to be done before such rescission.

[F. No. F.1/94/2007-SEZ]

BHUPINDER S. BHALLA, Jt. Secy.

Notification No. : S.O. 2978(E) Dated: 26-10-2015


Set up a sector specific Special Economic Zone for information technology and information technology enabled services including electronic hardware at villages B.M. Kaval and Rachanamadu, Kangeri Hobli, District Bangalore in the State of Karnataka – S.O. 2978(E) – Dated 26-10-2015 – Special Economic Zone

MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

NOTIFICATION

New Delhi, 26th October, 2015

S.O. 2978(E).-Whereas, M/s. Bhuvana Comforts Private Limited, a private organization in the State of Karnataka, 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 information technology and information technology enabled services including electronic hardware at villages B.M. Kaval and Rachanamadu, Kangeri Hobli, District Bangalore in the State of Karnataka;

And, Whereas, the Central Government, in exercise of the powers conferred by sub-section (1) of section 4 of the said Act read with rule 8 of the Special Economic Zone Rules 2006, had notified an area of 12.4851 hectares vide Ministry of Commerce and Industry Notification Number S. O. 374(E) dated 05th March, 2012;

And, Whereas, M/s. Bhuvana Comforts Private Limited has proposed to de-notify the entire area of 12.4851 hectares of the above Special Economic Zone;

And, Whereas, the State Government of Karnataka has given its “No Objection” to the proposal vide letter no. I&C/SEZ/ Bhuvana Comforts/NOC/2015-16 dated 25th May, 2015.

And, Whereas, the Development Commissioner, Cochin Special Economic Zone has recommended the proposal for de-notification of the entire area of 12.4851 Hectares of the Special Economic Zone;

Now, Therefore, in exercise of the powers conferred by first proviso to rule 8 of the Special Economic Zones Rules 2006, the Central Government hereby rescinds the above notification except as respects things done or omitted to be done before such rescission.

[F. No. F.1/7/20011-SEZ]

BHUPINDER S. BHALLA, Jt. Secy.

No. 1010/17/2015-CX Dated: 23-10-2015


Revised monetary limits for arrest in Central Excise and Service Tax – Dated 23-10-2015 – Service Tax

Circular No. 1010/17/2015-CX

F. No. 96/54/2014-CX.1

Government of India

Department of Revenue

Central Board of Excise & Customs New Delhi

New Delhi, the 23rd October, 2015

All Principal Chief/Chief Commissioners of Central Excise & Customs,

All Principal Chief/Chief Commissioners of Central Excise,

All Principal Chief/Chief Commissioners of Service Tax,

All Principal Director/Directors General.

Sir/Madam,

Sub: Revised monetary limits for arrest in Central Excise and Service Tax – reg.

Kind attention is invited to circular number 1009/16/2015-CX dated 23.10.2015 on the subject of prosecution under the Central Excise Act, 1944 and the Finance Act, 1994 (Service Tax cases). Revised monetary limits have been prescribed in the circular for launching prosecution. Prosecution can now be launched where evasion of Central Excise duty or Service Tax or misuse of Cenvat Credit in relation to offences specified under sub-section (1) of Section 9 of the Central Excise Act, 1944 or sub-section (1) of section 89 of the Finance Act, 1994  is rupees one crore or more.

2. Consequently, it has been decided to revise the limits for arrests in Central Excise and Service tax. Henceforth, arrest of a person in relation to offences specified under clause (a) to (d) of sub-section (1) of Section 9 of theCentral Excise Act, 1944 or under clause (i) or (ii) of sub-section (1) of section 89 of the Finance Act, 1994, may be made in cases where the evasion of Central Excise duty or Service Tax or the misuse of Cenvat Credit is equal to or more than rupees one crore. Central Excise circular no. 974/08/2013-CX and Service Tax circular no. 171/6 /2013-ST both dated 17-7-2015 stand amended accordingly.

3. Difficulty if any, in the implementation of the circular should be brought to the notice of the Board. Hindi version would follow.

Yours faithfully,

(ROHAN)

Under Secretary to the Govt. of India

No. 1009/16/2015-CX Dated: 23-10-2015


Central Excise – Guidelines for launching of Prosecution under the Central Excise Act, 1944 and Finance Act, 1994 regarding Service tax- – Dated 23-10-2015 – Service Tax

Circular No. 1009/16/2015-CX

F. No. 96/54/2014-CX.1

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

New Delhi, dated the 23rd October, 2015

To

Principal Chief Commissioner/ Chief Commissioner of Central Excise (All),

Principal Chief Commissioner/ Chief Commissioner of Central Excise and Service Tax (All),

Madam/ Sir,

Sub:   Central Excise – Guidelines for launching of Prosecution under the Central Excise Act, 1944 and Finance Act, 1994 regarding Service tax-reg.

I am directed to refer to following circulars/instructions issued by the Board regarding guidelines for launching of prosecution under the Central Excise Act, 1944 and the Finance Act, 1994:

(1) Circular No. 15/90-CX.6 dated 09.08.1990 issued from F. No.  218/7/89-CX.6.

(2) Circular No. 30/30/94-CX dated 04.04.1994 issued from F. No. 208/20/93/CX.6.

(3) Letter F. No. 208/31/97-CX.6 dated 04.04.1994 regarding enhancement of monetary limit.

(4) Circular No. 35/35/94-CX dated 29.04.1994 issued from F. No. 208/22/93-CX.6.

(5) Letter F. No. 203/05/98-CX.6 dated 06.04.1998 regarding making DG, CEI competent authority to sanction prosecution in respect of cases investigated by DGCEI.

(6) Letter F. No. 208/05/98-CX.6 dated 20.10.1998.

(7) Letter F. No. 208/21/2007-CX.6 dated 15.06.2007.

(8) Circular no 140/9/2011-Service Tax dated 12-5-2011.

In supersession of these instructions and circulars, following consolidated guidelines are hereby issued for launching prosecution under the Central Excise Act, 1944 and the Finance Act, 1994.

3. Person liable to be prosecuted

3.1 Whoever commits any of the offences specified under sub-section (1) of Section 9 of the Central Excise Act, 1944 or sub-section (1) of section 89 of the Finance Act, 1994, can be prosecuted. Section 9AA (1) of Central Excise Act, 1944 provides that where an offence under this Act has been committed by a company, every person who, at the time offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Section 9AA (2) of Central Excise Act, 1944 provides that where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation to Section 9AAprovides that (a) “Company” means anybody corporate and includes a firm or other association of individuals and (b) “director” in relation to a firm means a partner of the firm. These provisions under Section 9AA of Central Excise Act, 1944 have been made applicable to Service Tax also vide Section 83 of the Finance Act, 1994.

4.1 Monetary Limit: In order to optimally utilize limited resources of the Department, prosecution should normally not be launched unless evasion of Central Excise duty or Service Tax, or misuse of Cenvat credit in relation to offences specified under sub-section (1) of Section 9 of the Central Excise Act, 1944 or sub-section (1) of section 89 of theFinance Act, 1994 is equal to or more than Rs. One Crore.

4.2 Habitual evaders: Notwithstanding the above limits, prosecution can be launched in the case of a company/assessee habitually evading tax/duty or misusing Cenvat Credit facility.  A company/assessee would be treated as habitually evading tax/duty or misusing Cenvat Credit facility, if it has been involved in three or more cases of confirmed demand (at the first appellate level or above) of Central Excise duty or Service Tax or misuse of Cenvat credit involving fraud, suppression of facts etc. in past five years from the date of the decision such that the total duty or tax evaded or total credit misused is equal to or more than Rs. One Crore. Offence register (335J) may be used to monitor and identify assessees who can be considered to be habitually evading duty.

4.3 Sanction of prosecution has serious repercussions for the assessee and therefore along with the above monetary limits, the nature of evidence collected during the investigation should be carefully assessed. The evidences collected should be adequate to establish beyond reasonable doubt that the person, company or individual had guilty mind, knowledge of the offence, or had fraudulent intention or in any manner possessed mens-rea (guilty mind) for committing the offence.

5. Authority to sanction prosecution

5.1 The criminal complaint for prosecuting a person should be filed only after obtaining the sanction of the Principal Chief/Chief Commissioner of Central Excise or Service Tax as the case may be.

5.2 In respect of cases investigated by the Directorate General of Central Excise Intelligence (DGCEI), the criminal complaint for prosecuting a person should be filed only after obtaining the sanction of Principal Director General/ Director General, CEI.

5.3 An order conveying sanction for prosecution shall be issued by the sanctioning authority and forwarded to the Commissionerate concerned for taking appropriate action for expeditious filing of the complaint.

6. Procedure for sanction of prosecution

6.1 Prosecution proposal should be forwarded to the Chief Commissioner / Principal Chief Commissioner or Director General / Principal Director General of DGCEI ( in respect of cases booked by DGCEI) after the case has been carefully examined by the Commissioner/ Principal Commissioner or Additional Director General /Principal Additional Director General of  DGCEI who has adjudicated the case. In all cases of arrest, examination of the case to ascertain fitness for prosecution shall be necessarily carried out.

6.2 Prosecution should not be launched in cases of technical nature, or where the additional claim of duty/tax is based totally on a difference of opinion regarding interpretation of law. Before launching any prosecution, it is necessary that the department should have evidence to prove that the person, company or individual had guilty knowledge of the offence, or had fraudulent intention to commit the offence, or in any manner possessed mens rea (guilty mind) which would indicate his guilt. It follows, therefore, that in the case of public limited companies, prosecution should not be launched indiscriminately against all the Directors of the company but it should be restricted to only against persons who were in charge of day-to-day operations of the factory and have taken active part in committing the duty/tax evasion or had connived at it.

6.3 Prosecution should not be filed merely because a demand has been confirmed in the adjudication proceedings particularly in cases of technical nature or where interpretation of law is involved. One of the important considerations for deciding whether prosecution should be launched is the availability of adequate evidence. The standard of proof required in a criminal prosecution is higher as the case has to be established beyond reasonable doubt whereas the adjudication proceedings are decided on the basis of preponderance of probability. Therefore, even cases where demand is confirmed in adjudication proceedings, evidence collected should be weighed so as to likely meet the test of being beyond reasonable doubt for recommending prosecution. Decision should be taken on case-to-case basis considering various factors, such as, nature and gravity of offence, quantum of duty/tax evaded or Cenvat credit wrongly availed and the nature as well as quality of evidence collected.

6.4 Decision on prosecution should be normally taken immediately on completion of the adjudication proceedings. However, Hon’ble Supreme Court of India in the case of Radheshyam Kejriwal [2011(266)ELT 294 (SC)] hasinteralia, observed the following :-

(i) adjudication proceedings and criminal proceedings can be launched simultaneously; (ii) decision in adjudication proceedings is not necessary before initiating criminal prosecution; (iii) adjudication proceedings and criminal proceedings are independent in nature to each other and (iv) the findings against the person facing prosecution in the adjudication proceedings is not binding on the proceeding for criminal prosecution.” Therefore, prosecution may even be launched before the adjudication of the case, especially where offence involved is grave, qualitative evidences are available and it is also apprehended that party may delay completion of adjudication proceedings.

6.5  Principal Commissioner/Commissioner or ADG (Adjudication) acting as adjudicating authority should indicate at the time of passing the adjudication order itself whether he considers the case to be fit for prosecution so that it can be further processed and  sent to Principal Chief Commissioner/ Chief Commissioner or Principal Director General/ Director General of DGCEI, as the case may be, for sanction of prosecution. Where at the time of adjudication proceedings no view has been taken on prosecution by the Adjudicating Authority then the adjudication wing shall re-submit the file within 15 days from the date of issue of adjudication order to the Adjudicating Authority to take view of prosecution. Where, prosecution is proposed before the adjudication of the case, Commissioner/Principal Commissioner or Principal Additional Director General/Additional Director General, DGCEI who supervised the investigation shall record the reason for the same and forward the proposal to the sanctioning authority. The adjudicating authority shall also be informed of the decision to forward the proposal so that there is no need for him to examine the case at the time of passing of adjudication order from the perspective of prosecution. Principal Chief Commissioner/ Chief Commissioner or Principal Director General/ Director General of DGCEI may on his own motion also, taking into consideration the seriousness of an offence, examine whether the case is fit for sanction of prosecution irrespective of whether the adjudicating authority has recommended prosecution.

6.6  In respect of cases investigated by DGCEI, the adjudicating authority would intimate the decision taken regarding fitness of the case for prosecution to the Principal Additional Director General/ Additional Director General of the Zonal Unit or Headquarters concerned, where the case was investigated and show cause notice issued. The officers of unit of Directorate General of Central Excise Intelligence concerned would prepare an investigation report for the purpose of launching prosecution, within one month of the date of receipt of the decision of the adjudicating authority and would send the same to the Director General, CEI for taking decision on sanction of prosecution. The format of investigation report is annexed as Annexure-I to this Circular.

6.7 In respect of cases not investigated by DGCEI, where the Principal Commissioner/Commissioner who has adjudicated the case is satisfied that prosecution should be launched, an investigation report for the purpose of launching prosecution should be carefully prepared within one month of the date of issuance of the adjudication order . Investigation report should be signed by an Assistant/Deputy Commissioner, endorsed by the jurisdictional Principle Commissioner/Commissioner and sent to the Principal Chief/ Chief Commissioner for taking a decision on sanction for launching prosecution. The format of investigation report is annexed as Annexure-I to this circular. A criminal complaint in a court of law should be, filed by the jurisdictional Commissionerate only after the sanction of the Principal Chief / Chief Commissioner or Principal Director General/Director General of DGCEI has been obtained.

6.8 Principal Commissioner/Commissioner or Additional Director General (Adjudication) shall submit a report by 10thof every month to the Principal Chief /Chief Commissioner or the Principal Director General/ Director General of CEI, who is the sanctioning authority for prosecution, conveying whether a view on launching prosecution has been taken in respect of adjudication orders issued during the preceding month.

6.9 Once the sanction for prosecution has been obtained, criminal complaint in the court of law should be filed as early as possible by an officer of the jurisdictional Commissionerate authorized by the Commissioner.

6.10 It has been reported that delays in the Court proceedings are often due to non-availability of the records required to be produced before the Magistrate or due to delay in drafting of the complaint, listing of the exhibits etc. It shall be the responsibility of the officer who has been authorized to file complaint, to take charge of all documents, statements and other exhibits that would be required to be produced before a Court. The list of exhibits etc. should be finalized in consultation with the Public Prosecutor at the time of drafting of the complaint. No time should be lost in ensuring that all exhibits are kept in safe custody. Where a complaint has not been filed even after a lapse of three months from the receipt of sanction for prosecution, the reason for delay shall be brought to the notice of the Principal Chief/ Chief Commissioner or the Principal Director General or Director General of DGCEI by the Principal Commissioner/ Commissioner in charge of the Commissionerate responsible for filing of the complaint.

7.1 Prosecution, once launched, should be vigorously followed. The Principal Commissioner/Commissioner of Central Excise/Service Tax should monitor cases of prosecution at monthly intervals and take the corrective action wherever necessary to ensure that the progress of prosecution is satisfactory. In DGCEI, an Additional/ Joint Director in each zonal unit and DGCEI (Hqrs) shall supervise the prosecution related work. For keeping a track of prosecution cases, a prosecution register in the format enclosed as Annexure-II to this Circular should be maintained in the Prosecution Cell of each Commissionerate. The register shall be updated regularly and inspected by the Principal Commissioner/Commissioner at least once in every quarter of a financial year.

7.2 For keeping a track of prosecution cases, a prosecution register in the format enclosed as Annexure-III to this Circular should be maintained in the Zonal Units of DGCEI and DGCEI (Hqrs.) pertaining to cases investigated by them. :

8.1 Principal Commissioner/Commissioner responsible for the conduct of prosecution or Principal Additional Director General or Additional Director General of DGCEI (in respect of cases booked by DGCEI), should study the judgement of the Court and, where it appears that the accused person have been let off with lighter punishment than what is envisaged in the Act or has been acquitted despite the evidence being strong, appeal should be considered against the order. Sanction for appeal in such cases shall be accorded by Principal Chief/ Chief Commissioner or Principal Director General/ Director General of DGCEI.

9. Publication of names of persons convicted:

9.1 Section 9B of the Central Excise Act, 1944 also made applicable to Service Tax vide section 83 of the Finance Act,1994 grants  power to publish name, place of business etc. of the person convicted under the Act by a Court of Law. The power is being exercised very sparingly by the Courts. It is directed that in deserving cases, the department should make a prayer to the Court to invoke this section in respect of all persons who are convicted under the Act.    :

10.1 Procedure for withdrawal of sanction-order of prosecution

10.1.1  In cases where prosecution has been sanctioned but complaint has not been filed and new facts or evidences have come to light necessitating review of the sanction for prosecution, the Commissionerate or the DGCEI unit concerned should immediately bring the same to the notice of the sanctioning authority. After considering the new facts and evidences, the sanctioning authority namely Principal Chief/ Chief Commissioner or Principal Director General or Director General of DGCEI, if satisfied, may recommend to the Board (Member of the policy wing concerned) that the sanction for prosecution be withdrawn.

10.2 Procedure for withdrawal of Complaint already filed for prosecution

10.2.1  In cases where the complaint has already been filed complaint may be withdrawn as per Circular No. 998/5/2015-CX dated 28.02.2015 which provides that where on identical allegation a noticee has been exonerated in the quasi-judicial proceedings and such order has attained finality, Principal Chief Commissioner/ Chief Commissioner or the Principal Director General/ Director General of DGCEI shall give direction to the concerned Commissionerate to file an application through Public Prosecutor requesting the Court to allow withdrawal of the Prosecution in accordance with law.

11. Transitional Provisions

11.1 All cases where sanction for prosecution is accorded after the issue of this circular shall be dealt in accordance with the provisions of this circular irrespective of the date of the offence. Cases where prosecution has been sanctioned but no complaint has been filed before the magistrate shall also be reviewed by the prosecution sanctioning authority in light of the provisions of this circular.

12. Compounding of offences

12.1 Section 9A(2) of the Central Excise Act, 1944 also made applicable to Service Tax vide section 83 of theFinance Act,1994 provides for compounding of offences by the Principal Chief/ Chief Commissioner on payment of compounding amount. Circular no. 54/2005-Cus dt 30-12-2005 and Circular no 862/20/2007-CX-8 dated 27-12-2007 on the subject of compounding of offences may be referred in this regard which inter alia provides that all persons against whom prosecution is initiated or contemplated should be informed in writing, the offer of compounding.

13. Inspection of prosecution work by the Directorate of Performance Management:

13.1  Director General, Directorate of Performance Management and Chief Commissioners, who are required to inspect the Commissionerates, should specifically check whether instruction contained in this Circular are being followed scrupulously and to ensure that reasons for pendency and non-compliance of pending prosecution cases are looked into during field inspections apart from recording of statistical data.

14.  The field formations may suitably be informed. Receipt of this Circular may please be acknowledged. Hindi version will follow.

Yours faithfully,

(ROHAN)

Under Secretary to the Govt. of India

No. 1009/16/2015-CX Dated: 23-10-2015


Central Excise – Guidelines for launching of Prosecution under the Central Excise Act, 1944 and Finance Act, 1994 regarding Service tax – Dated 23-10-2015 – Central Excise

Circular No. 1009/16/2015-CX

F. No. 96/54/2014-CX.1

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

New Delhi, dated the 23rd October, 2015

To

Principal Chief Commissioner/ Chief Commissioner of Central Excise (All),

Principal Chief Commissioner/ Chief Commissioner of Central Excise and Service Tax (All),

Madam/ Sir,

Sub:   Central Excise – Guidelines for launching of Prosecution under the Central Excise Act, 1944 and Finance Act, 1994 regarding Service tax-reg.

I am directed to refer to following circulars/instructions issued by the Board regarding guidelines for launching of prosecution under the Central Excise Act, 1944 and the Finance Act, 1994:

(1) Circular No. 15/90-CX.6 dated 09.08.1990 issued from F. No.  218/7/89-CX.6.

(2) Circular No. 30/30/94-CX dated 04.04.1994 issued from F. No. 208/20/93/CX.6.

(3) Letter F. No. 208/31/97-CX.6 dated 04.04.1994 regarding enhancement of monetary limit.

(4) Circular No. 35/35/94-CX dated 29.04.1994 issued from F. No. 208/22/93-CX.6.

(5) Letter F. No. 203/05/98-CX.6 dated 06.04.1998 regarding making DG, CEI competent authority to sanction prosecution in respect of cases investigated by DGCEI.

(6) Letter F. No. 208/05/98-CX.6 dated 20.10.1998.

(7) Letter F. No. 208/21/2007-CX.6 dated 15.06.2007.

(8) Circular no 140/9/2011-Service Tax dated 12-5-2011.

In supersession of these instructions and circulars, following consolidated guidelines are hereby issued for launching prosecution under the Central Excise Act, 1944 and the Finance Act, 1994.

3. Person liable to be prosecuted

3.1 Whoever commits any of the offences specified under sub-section (1) of Section 9 of the Central Excise Act, 1944 or sub-section (1) of section 89 of the Finance Act, 1994, can be prosecuted. Section 9AA (1) of Central Excise Act, 1944 provides that where an offence under this Act has been committed by a company, every person who, at the time offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Section 9AA (2) of Central Excise Act, 1944 provides that where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation to Section 9AAprovides that (a) “Company” means anybody corporate and includes a firm or other association of individuals and (b) “director” in relation to a firm means a partner of the firm. These provisions under Section 9AA of Central Excise Act, 1944 have been made applicable to Service Tax also vide Section 83 of the Finance Act, 1994.

4.1 Monetary Limit: In order to optimally utilize limited resources of the Department, prosecution should normally not be launched unless evasion of Central Excise duty or Service Tax, or misuse of Cenvat credit in relation to offences specified under sub-section (1) of Section 9 of the Central Excise Act, 1944 or sub-section (1) of section 89 of theFinance Act, 1994 is equal to or more than Rs. One Crore.

4.2 Habitual evaders: Notwithstanding the above limits, prosecution can be launched in the case of a company/assessee habitually evading tax/duty or misusing Cenvat Credit facility.  A company/assessee would be treated as habitually evading tax/duty or misusing Cenvat Credit facility, if it has been involved in three or more cases of confirmed demand (at the first appellate level or above) of Central Excise duty or Service Tax or misuse of Cenvat credit involving fraud, suppression of facts etc. in past five years from the date of the decision such that the total duty or tax evaded or total credit misused is equal to or more than Rs. One Crore. Offence register (335J) may be used to monitor and identify assessees who can be considered to be habitually evading duty.

4.3 Sanction of prosecution has serious repercussions for the assessee and therefore along with the above monetary limits, the nature of evidence collected during the investigation should be carefully assessed. The evidences collected should be adequate to establish beyond reasonable doubt that the person, company or individual had guilty mind, knowledge of the offence, or had fraudulent intention or in any manner possessed mens-rea (guilty mind) for committing the offence.

5. Authority to sanction prosecution

5.1 The criminal complaint for prosecuting a person should be filed only after obtaining the sanction of the Principal Chief/Chief Commissioner of Central Excise or Service Tax as the case may be.

5.2 In respect of cases investigated by the Directorate General of Central Excise Intelligence (DGCEI), the criminal complaint for prosecuting a person should be filed only after obtaining the sanction of Principal Director General/ Director General, CEI.

5.3 An order conveying sanction for prosecution shall be issued by the sanctioning authority and forwarded to the Commissionerate concerned for taking appropriate action for expeditious filing of the complaint.

6. Procedure for sanction of prosecution

6.1 Prosecution proposal should be forwarded to the Chief Commissioner / Principal Chief Commissioner or Director General / Principal Director General of DGCEI ( in respect of cases booked by DGCEI) after the case has been carefully examined by the Commissioner/ Principal Commissioner or Additional Director General /Principal Additional Director General of  DGCEI who has adjudicated the case. In all cases of arrest, examination of the case to ascertain fitness for prosecution shall be necessarily carried out.

6.2 Prosecution should not be launched in cases of technical nature, or where the additional claim of duty/tax is based totally on a difference of opinion regarding interpretation of law. Before launching any prosecution, it is necessary that the department should have evidence to prove that the person, company or individual had guilty knowledge of the offence, or had fraudulent intention to commit the offence, or in any manner possessed mens rea (guilty mind) which would indicate his guilt. It follows, therefore, that in the case of public limited companies, prosecution should not be launched indiscriminately against all the Directors of the company but it should be restricted to only against persons who were in charge of day-to-day operations of the factory and have taken active part in committing the duty/tax evasion or had connived at it.

6.3 Prosecution should not be filed merely because a demand has been confirmed in the adjudication proceedings particularly in cases of technical nature or where interpretation of law is involved. One of the important considerations for deciding whether prosecution should be launched is the availability of adequate evidence. The standard of proof required in a criminal prosecution is higher as the case has to be established beyond reasonable doubt whereas the adjudication proceedings are decided on the basis of preponderance of probability. Therefore, even cases where demand is confirmed in adjudication proceedings, evidence collected should be weighed so as to likely meet the test of being beyond reasonable doubt for recommending prosecution. Decision should be taken on case-to-case basis considering various factors, such as, nature and gravity of offence, quantum of duty/tax evaded or Cenvat credit wrongly availed and the nature as well as quality of evidence collected.

6.4 Decision on prosecution should be normally taken immediately on completion of the adjudication proceedings. However, Hon’ble Supreme Court of India in the case of Radheshyam Kejriwal [2011(266)ELT 294 (SC)] hasinteralia, observed the following :-

(i) adjudication proceedings and criminal proceedings can be launched simultaneously; (ii) decision in adjudication proceedings is not necessary before initiating criminal prosecution; (iii) adjudication proceedings and criminal proceedings are independent in nature to each other and (iv) the findings against the person facing prosecution in the adjudication proceedings is not binding on the proceeding for criminal prosecution.” Therefore, prosecution may even be launched before the adjudication of the case, especially where offence involved is grave, qualitative evidences are available and it is also apprehended that party may delay completion of adjudication proceedings.

6.5  Principal Commissioner/Commissioner or ADG (Adjudication) acting as adjudicating authority should indicate at the time of passing the adjudication order itself whether he considers the case to be fit for prosecution so that it can be further processed and  sent to Principal Chief Commissioner/ Chief Commissioner or Principal Director General/ Director General of DGCEI, as the case may be, for sanction of prosecution. Where at the time of adjudication proceedings no view has been taken on prosecution by the Adjudicating Authority then the adjudication wing shall re-submit the file within 15 days from the date of issue of adjudication order to the Adjudicating Authority to take view of prosecution. Where, prosecution is proposed before the adjudication of the case, Commissioner/Principal Commissioner or Principal Additional Director General/Additional Director General, DGCEI who supervised the investigation shall record the reason for the same and forward the proposal to the sanctioning authority. The adjudicating authority shall also be informed of the decision to forward the proposal so that there is no need for him to examine the case at the time of passing of adjudication order from the perspective of prosecution. Principal Chief Commissioner/ Chief Commissioner or Principal Director General/ Director General of DGCEI may on his own motion also, taking into consideration the seriousness of an offence, examine whether the case is fit for sanction of prosecution irrespective of whether the adjudicating authority has recommended prosecution.

6.6  In respect of cases investigated by DGCEI, the adjudicating authority would intimate the decision taken regarding fitness of the case for prosecution to the Principal Additional Director General/ Additional Director General of the Zonal Unit or Headquarters concerned, where the case was investigated and show cause notice issued. The officers of unit of Directorate General of Central Excise Intelligence concerned would prepare an investigation report for the purpose of launching prosecution, within one month of the date of receipt of the decision of the adjudicating authority and would send the same to the Director General, CEI for taking decision on sanction of prosecution. The format of investigation report is annexed as Annexure-I to this Circular.

6.7 In respect of cases not investigated by DGCEI, where the Principal Commissioner/Commissioner who has adjudicated the case is satisfied that prosecution should be launched, an investigation report for the purpose of launching prosecution should be carefully prepared within one month of the date of issuance of the adjudication order . Investigation report should be signed by an Assistant/Deputy Commissioner, endorsed by the jurisdictional Principle Commissioner/Commissioner and sent to the Principal Chief/ Chief Commissioner for taking a decision on sanction for launching prosecution. The format of investigation report is annexed as Annexure-I to this circular. A criminal complaint in a court of law should be, filed by the jurisdictional Commissionerate only after the sanction of the Principal Chief / Chief Commissioner or Principal Director General/Director General of DGCEI has been obtained.

6.8 Principal Commissioner/Commissioner or Additional Director General (Adjudication) shall submit a report by 10thof every month to the Principal Chief /Chief Commissioner or the Principal Director General/ Director General of CEI, who is the sanctioning authority for prosecution, conveying whether a view on launching prosecution has been taken in respect of adjudication orders issued during the preceding month.

6.9 Once the sanction for prosecution has been obtained, criminal complaint in the court of law should be filed as early as possible by an officer of the jurisdictional Commissionerate authorized by the Commissioner.

6.10 It has been reported that delays in the Court proceedings are often due to non-availability of the records required to be produced before the Magistrate or due to delay in drafting of the complaint, listing of the exhibits etc. It shall be the responsibility of the officer who has been authorized to file complaint, to take charge of all documents, statements and other exhibits that would be required to be produced before a Court. The list of exhibits etc. should be finalized in consultation with the Public Prosecutor at the time of drafting of the complaint. No time should be lost in ensuring that all exhibits are kept in safe custody. Where a complaint has not been filed even after a lapse of three months from the receipt of sanction for prosecution, the reason for delay shall be brought to the notice of the Principal Chief/ Chief Commissioner or the Principal Director General or Director General of DGCEI by the Principal Commissioner/ Commissioner in charge of the Commissionerate responsible for filing of the complaint.

7.1 Prosecution, once launched, should be vigorously followed. The Principal Commissioner/Commissioner of Central Excise/Service Tax should monitor cases of prosecution at monthly intervals and take the corrective action wherever necessary to ensure that the progress of prosecution is satisfactory. In DGCEI, an Additional/ Joint Director in each zonal unit and DGCEI (Hqrs) shall supervise the prosecution related work. For keeping a track of prosecution cases, a prosecution register in the format enclosed as Annexure-II to this Circular should be maintained in the Prosecution Cell of each Commissionerate. The register shall be updated regularly and inspected by the Principal Commissioner/Commissioner at least once in every quarter of a financial year.

7.2 For keeping a track of prosecution cases, a prosecution register in the format enclosed as Annexure-III to this Circular should be maintained in the Zonal Units of DGCEI and DGCEI (Hqrs.) pertaining to cases investigated by them. :

8.1 Principal Commissioner/Commissioner responsible for the conduct of prosecution or Principal Additional Director General or Additional Director General of DGCEI (in respect of cases booked by DGCEI), should study the judgement of the Court and, where it appears that the accused person have been let off with lighter punishment than what is envisaged in the Act or has been acquitted despite the evidence being strong, appeal should be considered against the order. Sanction for appeal in such cases shall be accorded by Principal Chief/ Chief Commissioner or Principal Director General/ Director General of DGCEI.

9. Publication of names of persons convicted:

9.1 Section 9B of the Central Excise Act, 1944 also made applicable to Service Tax vide section 83 of the Finance Act,1994 grants  power to publish name, place of business etc. of the person convicted under the Act by a Court of Law. The power is being exercised very sparingly by the Courts. It is directed that in deserving cases, the department should make a prayer to the Court to invoke this section in respect of all persons who are convicted under the Act.    :

10.1 Procedure for withdrawal of sanction-order of prosecution

10.1.1  In cases where prosecution has been sanctioned but complaint has not been filed and new facts or evidences have come to light necessitating review of the sanction for prosecution, the Commissionerate or the DGCEI unit concerned should immediately bring the same to the notice of the sanctioning authority. After considering the new facts and evidences, the sanctioning authority namely Principal Chief/ Chief Commissioner or Principal Director General or Director General of DGCEI, if satisfied, may recommend to the Board (Member of the policy wing concerned) that the sanction for prosecution be withdrawn.

10.2 Procedure for withdrawal of Complaint already filed for prosecution

10.2.1  In cases where the complaint has already been filed complaint may be withdrawn as per Circular No. 998/5/2015-CX dated 28.02.2015 which provides that where on identical allegation a noticee has been exonerated in the quasi-judicial proceedings and such order has attained finality, Principal Chief Commissioner/ Chief Commissioner or the Principal Director General/ Director General of DGCEI shall give direction to the concerned Commissionerate to file an application through Public Prosecutor requesting the Court to allow withdrawal of the Prosecution in accordance with law.

11. Transitional Provisions

11.1 All cases where sanction for prosecution is accorded after the issue of this circular shall be dealt in accordance with the provisions of this circular irrespective of the date of the offence. Cases where prosecution has been sanctioned but no complaint has been filed before the magistrate shall also be reviewed by the prosecution sanctioning authority in light of the provisions of this circular.

12. Compounding of offences

12.1 Section 9A(2) of the Central Excise Act, 1944 also made applicable to Service Tax vide section 83 of theFinance Act,1994 provides for compounding of offences by the Principal Chief/ Chief Commissioner on payment of compounding amount. Circular no. 54/2005-Cus dt 30-12-2005 and Circular no 862/20/2007-CX-8 dated 27-12-2007 on the subject of compounding of offences may be referred in this regard which inter alia provides that all persons against whom prosecution is initiated or contemplated should be informed in writing, the offer of compounding.

13. Inspection of prosecution work by the Directorate of Performance Management:

13.1  Director General, Directorate of Performance Management and Chief Commissioners, who are required to inspect the Commissionerates, should specifically check whether instruction contained in this Circular are being followed scrupulously and to ensure that reasons for pendency and non-compliance of pending prosecution cases are looked into during field inspections apart from recording of statistical data.

14.  The field formations may suitably be informed. Receipt of this Circular may please be acknowledged. Hindi version will follow.

Yours faithfully,

(ROHAN)

Under Secretary to the Govt. of India

Notification No. : 20/2015-Service Tax Dated: 21-10-2015


Seeks to further amend notification No. 25/2012-Service Tax dated 20.06.2012 – 20/2015-Service Tax – Dated 21-10-2015 – Service Tax

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION No. 20/2015-Service Tax

New Delhi, the 21st October, 2015

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

1. In the said notification,-

(i) in the opening paragraph, in entry 29, for clause (g), the following clauses shall be substituted, namely-

(g) business facilitator or a business correspondent to a banking company with respect to a Basic Savings Bank Deposit Account covered by Pradhan Mantri Jan Dhan Yojana in the banking company’s rural area branch, by way of account opening, cash deposits, cash withdrawals, obtaining e-life certificate, Aadhar seeding;

(ga) any person as an intermediary to a business facilitator or a business correspondent with respect to services mentioned in clause (g);

(gb) business facilitator or a business correspondent to an insurance company in a rural area; or”

(ii) in paragraph 2,-

(a) after clause (g), the following clause shall be inserted, namely :-

(ga) Basic Savings Bank Deposit Account means a Basic Savings Bank Deposit Account opened under the guidelines issued by Reserve Bank of India relating thereto;”

(b) in clause (k), in sub-clause (ii), for the words religion or spirituality, the words religion, spirituality or yoga shall be substituted.

[F. No. 354/101/2015 -TRU]

(Santosh Kumar Mishra)

Under Secretary to the Government of India

Note:- The principal notification was published in the Gazette of India, Extraordinary, by notification No. 25/2012 – Service Tax, dated the 20th June, 2012, vide number G.S.R. 467 (E), dated the 20th June, 2012 and last amended vide notification No. 12/2015 – Service Tax, dated the 30th April, 2015 vide number G.S.R. 348(E), dated the 30th April, 2015.

No. 22 Dated: 21-10-2015


Annual Return on Foreign Liabilities and Assets (FLA Return) – Reporting by Limited Liability Partnerships – Circular – Dated 21-10-2015 – FEMA

RBI/2015-16/210

A. P. (DIR Series) Circular No. 22

October 21, 2015

To

All Authorised Dealer Category-I banks

Madam / Sir,

Annual Return on Foreign Liabilities and Assets (FLA Return) – Reporting by Limited Liability Partnerships

Attention of Authorised Dealers Category – I (AD Category – I) banks is invited to A.P (DIR Series) Circular No. 145 dated June 18, 2014 prescribing the format for filing of FLA return by Indian companies.

2. In order to capture the statistics relating to Foreign Direct Investments (FDI), both inward and outward, by Limited Liabilities Partnerships (LLPs) in India, it has been decided that henceforth, all LLPs that have received FDI and/or made FDI abroad (i.e. overseas investment) in the previous year(s) as well as in the current year, shall submit the FLA return to the Reserve Bank of India by July 15 every year, in the format as prescribed in the A.P (DIR Series) Circular No. 145 dated June 18, 2014. Since, LLPs do not have21-Digit CIN (Corporate Identity Number), they are advised to enter ‘A99999AA9999LLP999999’ against CIN in the FLA Return.

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

4. Reserve Bank has since amended the subject Regulations accordingly through the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Seventh Amendment) Regulations, 2015 which have been notified through Notification No. FEMA. 351/2015-RB dated September 30, 2015, vide G.S.R. No. 745(E) dated September 30, 2015.

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

Yours faithfully,

(A K Pandey)

 Chief General Manager

Notification No. : F. No. A-35011/29/2012-Adm.III Dated: 21-10-2015


Ministry of Corporate Affairs, Serious Fraud Investigation Office, Additional Director (Capital Market)/Joint Director (Capital Market) and Additional Director (Financial Transactions)/Joint Director (Financial Transactions) Group A Post Recruitment Rules, 2015. – F. No. A-35011/29/2012-Adm.III – Dated 21-10-2015 – Companies Law

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, the 21st October, 2015

G.S.R. 800(E).- In exercise of the powers conferred by sub-section (5) of Section 211 of the Companies Act, 2013 (18 of 2013) and in supersession of the Serious Fraud Investigation Office, Ministry of Corporate Affairs, Additional Director (Capital Market) (Group ‘A’ Post) Recruitment Rules 2006 and the Serious Fraud Investigation Office, Ministry of Corporate Affairs, Additional Director (Financial Transactions) (Group ‘A’ Post) Recruitment Rules,2006, except as respects things done or omitted to be done before such supersession, the Central Government hereby makes the following rules regulating the method of recruitment to the posts of the Additional Director (Capital Market)/Joint Director (Capital Market) and Additional Director (Financial Transactions)/Joint Director (Financial Transactions) in the Ministry of Corporate Affairs, Serious Fraud Investigation Office, namely:-

1. Short title and commencement.-

(1) These rules may be called the Ministry of Corporate Affairs, Serious Fraud Investigation Office, Additional Director (Capital Market)/Joint Director (Capital Market) and Additional Director (Financial Transactions)/Joint Director (Financial Transactions) Group ‘A’ Post Recruitment Rules, 2015.

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

2. Application.–These rules shall apply to the posts specified in column (1) of the Schedule annexed to these rules.

3. Number of posts, classification, pay band and grade pay or pay scale.— The number of said posts, their classification, pay band and grade pay or pay scale attached thereto shall be as specified in columns (2) to (4) of the said Schedule.

4. Method of recruitment, age-limit, educational qualifications, etc.—The method of recruitment, age – limit, educational qualifications and other matters relating thereto shall be as specified in columns (5) to (13) of the afore said Schedule.

5. Disqualifications.— No person, –

(a) who has entered into or contracted a marriage with a person having a spouse living, or

(b) who, having a spouse living has entered into or contracted a marriage with any person, shall be eligible for appointment to the said posts:

Provided that the Central Government may, if satisfied that such a marriage is permissible under the personal law applicable to such person and the other party to the marriage and that there are other grounds for so doing, exempt any person from the operation of this rule.

6. Power to relax .—-Where the Central Government is of the opinion that it is necessary or expedient so to do, it may, by order, for reasons to be recorded in writing and in consultation with the Union Public Service Commission, relax any of the provisions of these rules with respect to any class or category of persons.

7. Saving .—- Nothing in these rules shall affect reservation, relaxation of age-limit and other concessions required to be provided for the Scheduled Castes, the Scheduled Tribes, ex-serviceman and other special categories of persons in accordance with the orders issued by the Central Government from time to time in this regard.

SCHEDULE

Name of post.

Number of post.

Classification.

Pay band and grade pay or pay scale.

Whether selection post or nonselection post.

(1)

(2)

(3)

(4)

(5)

1. Additional Director (Capital Market)/ Joint Director (Capital Market). 1* (2015)

*Subject to variation dependent on workload.

General Central Service, Group- ‘A’ Gazetted, Non-Ministerial. (i)Pay band-4, ₹ 37400-67000 plus grade pay of ₹ 8700 /

(ii)Pay band-3, ₹ 15600-39100 plus grade pay of ₹ 7600

Not applicable.

Age limit for direct recruits.

Educational and other qualifications required for direct recruits.

Whether age and educational qualifications prescribed for direct recruits will apply in the case of promotees.

Period of probation, if any.

(6)

(7)

(8)

(9)

Not applicable

Method of recruitment whether by direct recruitment or by promotion or by deputation or absorption and percentage of the vacancies to be filled by various methods.

In case of recruitment by promotion or deputation or absorption, grades from which promotion or deputation or absorption is to be made.

(10)

(11)

By deputation (including shortterm contract). Deputation (including short-term contract):

Officers of the Central Government or State Governments or Union territories or Public Sector Undertakings or autonomous and statutory bodies:

For the post of Additional Director (Capital Market):

(A) (i) holding analogous post on regular basis in the parent cadre or department; or

(ii) with five years’ service in the grade rendered after appointment thereto on a regular basis in pay band-3, ₹ 15600-39100 with grade pay of ₹ 7600 in the parent cadre or department.

For the post of Joint Director (Capital Market):

(i) holding analogous post on regular basis in the parent cadre or department ;

or

(ii) with five years service in the grade rendered after appointment thereto on a regular basis in pay band-3, ₹ 15600-39100/- with grade pay of ₹ 6600 in the parent cadre or department; and

(B) possessing the following educational qualifications and experience:

Essential:

(i) Chartered Accountant or Company Secretary or Chartered Financial Analyst or Cost and Management Account or Master of Business Administration (Finance) or Post Graduate Diploma in Management (Finance);

(ii) ten years (for the post of Additional Director (Capital Market))/ eight

years (for the post of Joint Director (Capital Market)) experience in the field of regulation of capital market or merchant banking.

Desirable:

(i) Degree in Law from a recognised university;

(ii) should be conversant with tools and techniques of collection of evidence or recording of statement or collection, collation and presentation of best evidence to be used in prosecution proceedings.

Period of deputation (including short-term contract) including period of

deputation( including short-term contract) in another ex-cadre post held

immediately preceding this appointment in the same or some other

organisation or department of the Central Government shall ordinarily not to exceed five years. The maximum age limit for appointment by deputation shall be not exceeding fifty-six years as on the closing date of the receipt of applications.

Note: For purposes of appointment on deputation basis, the service rendered on a regular basis by an officer prior to 1st January, 2006 or the date from which the revised pay structure based on the Sixth Central Pay Commission recommendations has been extended, shall be deemed to be service rendered in the corresponding grade pay or pay scale extended based on the recommendations of the Commission except where there has been merger of more than one pre-revised scale of pay into one grade with a common grade pay or pay scale, and where this benefit will extend only for the post(s) for which that grade pay or pay scale is the normal replacement grade without any up gradation.

If a Departmental Promotion Committee exists, what is its composition Circumstances in which Union Public Service Commission to be consulted in making recruitment.

(12)

(13)

Not applicable.

Consultation with Union Public Service Commission necessary while appointing an officer on deputation (including short-term contract).

(1)

(2)

(3)

(4)

(5)

2. Additional Director (Financial Transactions)/Joint Director (Financial Transactions). 02*

(2015)

*Subject to variation dependent on workload.

General Central Service, Group-‘A’ Gazetted, Non-Ministerial. (i)Pay band-4, ₹ 37400-67000 plus grade pay of ₹ 8700/ (ii) Pay band-3, ₹ 15600-39100 plus grade pay of ₹ 7600. applicable.

(6)

(7)

(8)

(9)

Not applicable.

Not applicable.

Not applicable.

Not applicable.

(10)

(11)

By deputation (including shortterm contract).

By deputation (including short-term contract).

Officers of the Central Government or the State Governments or the Union territories or Public Sector Undertakings or autonomous and statutory bodies:

For the post of Additional Director (Financial Transactions):

(A) (i) holding analogous post on regular basis in the parent cadre

or department ; or

(ii) with five years’ service in the grade rendered after appointment thereto on a regular basis in pay band-3, ₹ 15600-39100 with grade pay of ₹ 7600 in the parent cadre or department.

For the post of Joint Director (Financial Transactions):

(i) holding analogous post on regular basis in the parent cadre or department ; or

(ii) with five years’ service in the grade rendered after appointment thereto on a regular basis in pay band-3, ₹ 15600-39100 with grade pay of ₹ 6600 in the parent cadre or department; and

(B) possessing the following educational qualifications and experience:

Essential:

(A) (i) Chartered Accountant or Cost and Management Accountant or Company Secretary or Chartered Financial Analyst or Master of Business Administration or Master in Business Economics or Post Graduate Diploma in Management (Finance);

(B) ten years (for the post of Additional Director (Financial Transactions)/ eight years (for the post of Joint Director (Financial Transactions)), experience in the field of regulation or operation of Banking sector.

Desirable:

(i) Degree in Law from a recognised university.

Note.1: Period of deputation (including short-term contract) including period of deputation (including short-term contract) in another ex-cadre post held immediately preceding this appointment in the same or some other

organisation or department of the Central Government shall ordinarily not to exceed five years. The maximum age limit for appointment by deputation shall be not exceeding fifty-six years as on the closing date of the receipt of applications.

Note.2: For purposes of appointment on deputation basis, the service rendered on a regular basis by an officer prior to 1st January, 2006 or the date from which the revised pay structure based on the Sixth Central Pay Commission recommendations has been extended, shall be deemed to be service rendered in the corresponding grade pay or pay scale extended based on the recommendations of the Commission except where there has been merger of more than one prerevised scale of pay into one grade with a common grade pay or pay scale, and where this benefit will extend only for the post(s) for which that grade pay or pay scale is the normal replacement grade without any up gradation.

(12)

(13)

Not applicable.

Consultation with Union Public Service Commission necessary while appointing an officer on deputation (including short-term contract).

[F. No. A-35011/29/2012-Adm.III]

MANOJ KUMAR, Jt. Secy.

Notification No. : 85/2015 Dated: 21-10-2015


CORRIGENDUM – NOTIFICATION NO. 78/2015, 12th October, 2015 – 85/2015 – Dated 21-10-2015 – Income Tax

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART –II, SECTION 3, SUB-SECTION (ii)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

(CENTRAL BOARD OF DIRECT TAXES)

(INCOME-TAX)

NEW DELHI

NOTIFICATION NO 85/2015, Dated: October 21, 2015

CORRIGENDUM

S.O. 2888 (E).- In the notification of the Government of India, Ministry of Finance, Department of Revenue(Central Board of Direct Taxes),number 78/2015, dated the 12th October,2015, published vide number S.O.2791(E),dated the 12th October,2015,in the Gazette of India, Extraordinary, Part II, Section 3,Sub-section(ii),at page 3,in line 26,-

(i) for “by vide” read “vide”;

(ii) for “29th October,2015″ read “29th September,2015″ .

F. No. 142/20/2015 –TPL

R. Lakshmi Narayanan

Under Secretary (TPL)

Notification No. : 84/2015 Dated: 20-10-2015


The Income-Tax (17th Amendment) Rules. 2015 – 84/2015 – Dated 20-10-2015 – Income Tax

[TO BE PUBLISHED IN THE GAZETTE OF INDIA. EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (ii)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

 [CENTRAL BOARD OF DIRECT TAXES]

(INCOME-TAX)

Notification

New Delhi the 20th October. 2015

S.O. 2877(E). In exercise of the power conferred by section 295 read with clause (47) of section 10 of tile 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 (17th Amendment) Rules. 2015.

(2) They shall come into force from the 14th day of May. 2015.

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

(1) The Infrastructure Debt Fund shall be set up as a Non-Banking Financial Company conforming to and satisfying the conditions provided by the Reserve Bank of India in the Infrastructure-Debt Fund – Non-Banking Financial Companies (Reserve Bank) Directions, 2011, vide notification No, DNBS 233/CGM (US)-2011, dated the 21st November 2011 as amended vide Notification No. DNBR 020/CGM (CDS) 2015, dated the 14th May, 2015,

(2) The funds of the Infrastructure Debt Fund shall be invested only in Post Commencement Operation Date Infrastructure Projects which have completed at least one year of satisfactory commercial operations that are

(i) Public Private Partnership Projects and are a party to triplicate agreement with the concessionaire and the project authority for ensuring compulsory buy out and termination payment;

(ii) Non-Public Private Partnership Projects and Public Private Partnership Projects and Public Partnership Projects without a project authority, in sectors where there is no project authority”,

[Notification No. 84/2015/ F. No.133/43/201S-TPL]

(R. LAKSHMI NARYANAN) Under Secretary (Tax Policy and Legislation)

Note.- The principal rules were published in the Gazette of India Extraordinary, part III, section 3. sub-section (i), vide notification number S.O. 969(E), dated the 26th March, 1962 and were last amended vide notification number S.O. 2860(E), dated the 19th October, 2015.

Arun Jaitley holds pre-Budget meet with experts : 20-10-2015


Kicking-off preparations for the upcoming Budget, finance minister Arun Jaitley on Monday held a brain storming session with economists on how to increase productivity of the farm sector, improve quality of expenditure and strengthen the financial sector.

“One very important topic that we spent time on is agriculture and what we could do to increase productivity in agriculture,” minister of state for finance Jayant Sinha said after the meeting at Niti Aayog. With two successive deficient monsoons, the government is concerned about its impact on the rural income and demand, which has a multiplier effect on the economy.

In a recent interview to FE, Niti Aayog member Ramesh Chand said that the government has to go beyond providing price support system and focus on the non-price factors such as such as creating irrigation infrastructure, promotion of marketing, widening insurance coverage and use of technology to raise farm productivity. Agriculture GDP grew by a meagre 0.2% in FY15 and the Reserve Bank of India has forecast the sector to grow 1.5% in the current fiscal year, partly due to an expected better performance in the livestock segment.

The pre-Budget meeting, which was attended by Niti Aayog vice-chairman Arvind Panagariya, chief economic adviser Arvind Subramanian and RBI deputy governor Urjit Patel, also dwelt at length on how to make expenditure, particularly public investment, more productive.

“Third major area that we spoke about is obviously the financial sector… more credit for agriculture, MSMEs and what could we do further to strengthen our banks. The final area that we also spent time on is how to ensure we are able to create more jobs for young people, whether it is in the manufacturing sector or the service sector,” Sinha said.
Economists such as Subir Gokarn, director of research at Brookings Institution India, Ajit Ranade, chief economist, Aditya Birla Group, and Rajiv Lall, vice-chairman, IDFC Ltd, participated in the meeting.

“I think we are in a very good shape as far as fiscal management is concerned. That was appreciated by all economists,” Sinha said. Implementation of One Rank One Pension (OROP) and increase in salary bill due to 7th Pay Commission award won’t strain government’s fiscal position this year, he said. The full implementation of OROP and Pay Commission awards may cost the exchequer between R50,000-70,000 crore in FY17, which could put pressure on the finances of the government, officials have said.

The early consultation with economists would help the government prioritise policy measures during the current fiscal year as well as in the budget for next year.

“Obviously, it is very early in the cycle to start the consultation. But we felt that if there were good ideas, we could incorporate them even in this fiscal year. Obviously, for the preparation of the current Budget, we could begin the work on that right now,” the minister said.

Source : PTI

No. 1008/15/2015-CX Dated: 20-10-2015


Clarification regarding tower and blades constitute an essential component of Wind Operated Electricity Generators (WOEG) – Dated 20-10-2015 – Central Excise

Circular No. 1008/15/2015-CX

F.No.201/08/2015-CX.6

Government of India

Ministry of Finance, Department of Revenue

Central Board of Excise and Customs

New Delhi

Dated, the 20th October, 2015

To

Principal Chief Commissioner / Chief Commissioner of Central Excise (All),

Principal Commissioner of Central Excise / Commissioner of Central Excise (All),

Web-master, CBEC

Madam/sir,

Subject: – Clarification regarding tower and blades constitute an essential component of Wind Operated Electricity Generators (WOEG)-reg. 

A large number of references have been received from the trade as well as the field formations to clarify whether exemption Notification No. 12/2012-Central Excise, dated 17.03.2012 covers part/components of Wind Operated Electricity Generators (WOEG). References have been received in relation to tower, tower doors, blades and electrical boxes.

2.  The matter has been examined. In the aforesaid notification serial no. 332 read with List 8 exempts ‘Wind operated electricity generator, its component and parts thereof including rotor and wind turbine controller’ from Central Excise duty. In this regard, attention is invited to the judgement of Hon’ble Supreme Court dated 13th August, 2015 in case of M/s Gemini Instratech Vs Commissioner of Central Excise, Nashik in Civil Appeal No. 1218 of 2006, wherein Hon’ble Apex Court (while deciding the eligibility of wind mill doors and electrical boxes of WOEG  for exemption) has held that-

“ “It is not in dispute that as far as windmill doors or tower doors are concerned, it is a safety device which is used as security for high voltage equipments fitted inside the tower, preventing unauthorized access and preventing entries of reptiles, insects, etc, inside the tower. This, according to us, would be sufficient to make it part of electricity generator. We further find that this was so held by the Commissioner of Central Excise and Customs, Raipur in order–in–original  dated 28.02.2005  as well as by the Commissioner (Appeals),  Raipur vide his orders dated 10.02.2003. The said orders were accepted by the Revenue as it is recorded by the CESTAT that the Revenue could not produce any evidence to show that those orders were challenged by it. Further, since the tower is held as part of the generator, door thereof has to be necessarily a part of the generator. We, therefore, are of opinion that there is no case of interference made out by the Department.                

The appeal is accordingly dismissed” ’’

3.   Ministry of New and Renewable Energy had earlier clarified to CBEC on the subject that the following are parts of Wind Operated Electricity Generators.

i)  Tower: which supports the nacelle and rotor assembly of a wind operated electricity generator.

ii)  Nacelle: which consists of gear-box, generator, yaw components, flexible couplings, brake hydraulics, brake calipers, sensors, nacelle plate, nacelle cover and other smaller components.

iii)  Rotor: consists of blades, hub, nosecone, main shaft, special bearings.

iv)  Wind turbine controller, nacelle controller and control cables.

4. In view of the judgement of Hon’ble Supreme Court and clarification received from the administrative ministry, parts/components referred in Para 3 above may be treated as parts and components of wind operated electricity generators eligible for exemption under serial no. 332 of Notification No. 12/2012-Central Excise, dated 17.03.2012.

5. For any clarification regarding parts and component of WOEG, not covered in para 3 above, opinion of Ministry of New and Renewable Energy would be sought by the Board, if required. Issues relating to exemption of parts and components of WOEG not covered in para 3 above may be referred to Board through the Chief Commissioner concerned, if required.

6. Difficulty experienced, if any, in implementing the circular should be brought to the notice of the Board.  Hindi version would follow.

(Santosh Kumar Mishra)

Under Secretary to the Government of India

PFRDA to seek tax exemption for NPS at withdrawal stage : 20-10-2015


The Pension Fund Regulatory and Development Authority will pitch for tax exemption status at the withdrawal stage under its National Pension System (NPS) product to further expand its subscriber base, a top official has said.

Not having tax exempt status at the withdrawal stage is a clear dampener for NPS and PFRDA will seek this fiscal support from the Government in the run up to budget, R V Verma, Member, PFRDA, toldBusinessLine here.

Portability

To encourage the subscribers of superannuation funds under EPFO to move to NPS, the pension regulator will also seek tax exemption at withdrawal stage for the subscribers who decide to move to NPS, Verma said.

As on date, any subscriber moving from a superannuation fund to another within corporates or under EPFO would not be required to fork out tax at the withdrawal stage.

However, this benefit of tax exemption at withdrawal stage is not available if a subscriber moves from a superannuation fund to NPS, Verma said.

Twin benefits

PFRDA will seek two tax benefits to widen the subscriber base for NPS. One is provide general tax exemption at the withdrawal stage for NPS on the lines of those available for superannuation funds under Employees Provident Fund Organisation.

The second is allow tax exemption at withdrawal stage even for subscribers who have opted to move from a superannuation fund to NPS.

“We will seek a level playing field on taxation front. This will help us grow our subscriber base,” Verma said, adding that PFRDA is particularly focused on corporate and private citizens segments.

In the first week of October, NPS subscriber base had crossed 1 crore mark, while the assets under management of NPS crossed Rs. 1 lakh crore mark.

Verma also said that PFRDA is looking to harmonise the scope of NPS for the government and private/corporate sector by bringing parity in terms of choice of pension fund managers and investment allocation choice.

As on date, NPS subscribers in the government sector do not have the option to decide their own fund managers. The Finance Ministry is looking into providing such a flexibility to such NPS subscribers.

 Source : Business Standard

Notification No. : 83/2015 Dated: 19-10-2015


Income-tax (16th Amendment), Rules, 2015 – 83/2015 – Dated 19-10-2015 – Income Tax

MINISTRY OF FINANCE

(Department of Revenue)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 83/2015

(Income-tax)

New Delhi, the 19th October, 2015

S.O. 2860 (E).- In exercise of the powers conferred by section 92C 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 theIncome-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income-tax (16th Amendment), Rules, 2015.

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

2. In the Income-tax Rules, 1962,-

(l) in rule 10 B, -

(i) in sub-rule (4),-

(a) after the words “relating to the financial year”, the brackets, words, figures and letters “(hereafter in this rule and in rule 10 CA referred to as the ‘current year’)” shall be inserted;

(b) in the proviso, for the words “such financial year”, the words “the current year ” shall be substituted;

(c) after the proviso, the following proviso shall be inserted, namely:-

“Provided further that the first proviso shall not apply while analysing the comparability of an uncontrolled transaction with an international transaction or a specified domestic transaction, entered into on or after the 1st day of April, 2014.”;

(ii) after sub-rule (4), the following sub-rule shall be inserted, namely:-

“(5) In a case where the most appropriate method for determination of the arm’s length price of an international transaction or a specified domestic transaction, entered into on or after the 1st day of April, 2014, is the method specified in clause (b), clause (c) or clause (e) of sub-section (1) of section 92 C , then, notwithstanding anything contained in sub-rule (4), the data to be used for analysing the comparability of an uncontrolled transaction with an international transaction or a specified domestic transaction shall be,-

(i) the data relating to the current year; or

(ii) the data relating to the financial year immediately preceding the current year, if the data relating to the current year is not available at the time of furnishing the return of income by the assessee , for the assessment year relevant to the current year:

Provided that where the data relating to the current year is subsequently available at the time of determination of arm’s length price of an international transaction or a specified domestic transaction during the course of any assessment proceeding for the assessment year relevant to the current year, then, such data shall be used for such determination irrespective of the fact that the data was not available at the time of furnishing the return of income of the relevant assessment year.”;

(II) after rule 10 C, the following rule and illustrations shall be inserted, namely:-

“10 CA. Computation of arm’s length price in certain cases.-(1) Where in respect of an international transaction or a specified domestic transaction, the application of the most appropriate method referred to insub-section (1) of section 92 C results in determination of more than one price, then the arm’s length price in respect of such international transaction or specified domestic transaction shall be computed in accordance with the provisions of this rule.

(2) A dataset shall be constructed by placing the prices referred to in sub-rule (1) in an ascending order and the arm’s length price shall be determined on the basis of the dataset so constructed:

Provided that in a case referred to in clause (i) of sub-rule (5) of rule 10B, where the comparable uncontrolled transaction has been identified on the basis of data relating to the current year and the enterprise undertaking the said uncontrolled transaction, [not being the enterprise undertaking the international transaction or the specified domestic transaction referred to in sub-rule (1)], has in either or both of the two financial years immediately preceding the current year undertaken the same or similar comparable uncontrolled transaction then,-

(i) the most appropriate method used to determine the price of the comparable uncontrolled transaction undertaken in the current year shall be applied in similar manner to the comparable uncontrolled transaction or transactions undertaken in the aforesaid period and the price in respect of such uncontrolled transactions shall be determined; and

(ii) the weighted average of the prices, computed in accordance with the manner provided in sub-rule (3) , of the comparable uncontrolled transactions undertaken in the current year and in the aforesaid period preceding it shall be included in the dataset instead of the price referred to in sub-rule (1):

Provided further that in a case referred to in clause (ii) of sub-rule (5) of rule 10B, where the comparable uncontrolled transaction has been identified on the basis of the data relating to the financial year immediately preceding the current year and the enterprise undertaking the said uncontrolled transaction, [not being the enterprise undertaking the international transaction or the specified domestic transaction referred to in sub-rule (1)], has in the financial year immediately preceding the said financial year undertaken the same or similar comparable uncontrolled transaction then, -

(i) the price in respect of such uncontrolled transaction shall be determined by applying the most appropriate method in a similar manner as it was applied to determine the price of the comparable uncontrolled transaction undertaken in the financial year immediately preceding the current year; and

(ii) the weighted average of the prices, computed in accordance with the manner provided in sub-rule (3) , of the comparable uncontrolled transactions undertaken in the aforesaid period of two years shall be included in the dataset instead of the price referred to in sub-rule (1):

Provided also that where the use of data relating to the current year in terms of the proviso to sub-rule (5) of rule 10 B establishes that,-

(i) the enterprise has not undertaken same or similar uncontrolled transaction during the current year; or

(ii) the uncontrolled transaction undertaken by an enterprise in the current year is not a comparable uncontrolled transaction,

then, irrespective of the fact that such an enterprise had undertaken comparable uncontrolled transaction in the financial year immediately preceding the current year or the financial year immediately preceding such financial year, the price of comparable uncontrolled transaction or the weighted average of the prices of the uncontrolled transactions, as the case may be, undertaken by such enterprise shall not be included in the dataset.

(3) Where an enterprise has undertaken comparable uncontrolled transactions in more than one financial year, then for the purposes of sub-rule (2) the weighted average of the prices of such transactions shall be computed in the following manner, namely:-

(i) where the prices have been determined using the method referred to in clause (b) of sub-rule (1) of rule 10 B , the weighted average of the prices shall be computed with weights being assigned to the quantum of sales which has been considered for arriving at the respective prices;

(ii) where the prices have been determined using the method referred to in clause (c) of sub-rule (1) of rule 10 B , the weighted average of the prices shall be computed with weights being assigned to the quantum of costs which has been considered for arriving at the respective prices;

(iii) where the prices have been determined using the method referred to in clause (e) of sub-rule (1) of rule 10 B, the weighted average of the prices shall be computed with weights being assigned to the quantum of costs incurred or sales effected or assets employed or to be employed, or as the case may be, any other base which has been considered for arriving at the respective prices.

(4) Where the most appropriate method applied is a method other than the method referred to in clause (d) or clause (f) of sub-section (1) of section 92 C and the dataset constructed in accordance with sub-rule (2) consists of six or more entries, an arm’s length range beginning from the thirty-fifth percentile of the dataset and ending on the sixty-fifth percentile of the dataset shall be constructed and the arm’s length price shall be computed in accordance with sub-rule(5) and sub-rule (6).

(5) If the price at which the international transaction or the specified domestic transaction has actually been undertaken is within the range referred to in sub-rule (4), then, the price at which such international transaction or the specified domestic transaction has actually been undertaken shall be deemed to be the arm’s length price.

(6) If the price at which the international transaction or the specified domestic transaction has actually been undertaken is outside the arm’s length range referred to in sub-rule (4), the arm’s length price shall be taken to be the median of the dataset.

(7) In a case where the provisions of sub-rule (4) are not applicable, the arm’s length price shall be the arithmetical mean of all the values included in the dataset:

Provided that, if the variation between the arm’s length price so determined and price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed such percentage not exceeding three percent. of the latter, as may be notified by the Central Government in the Official Gazette in this behalf, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm’s length price .

(8) For the purposes of this rule,-

(a) “the thirty-fifth percentile” of a dataset, having values arranged in an ascending order, shall be the lowest value in the dataset such that at least thirty five percent. of the values included in the dataset are equal to or less than such value:

Provided that, if the number of values that are equal to or less than the aforesaid value is a whole number, then the thirty-fifth percentile shall be the arithmetic mean of such value and the value immediately succeeding it in the dataset;

(b) “the sixth-fifth percentile” of a dataset, having values arranged in an ascending order, shall be the lowest value in the dataset such that at least sixty five percent. of the values included in the dataset are equal to or less than such value:

Provided that, if the number of values that are equal to or less than the aforesaid value is a whole number , then the sixty-fifth percentile shall be the arithmetic mean of such value and the value immediately succeeding it in the dataset;

(c) “the median” of the dataset, having values arranged in an ascending order, shall be the lowest value in the dataset such that at least fifty percent. of the values included in the dataset are equal to or less than such value:

Provided that, if the number of values that are equal to or less than the aforesaid value is a whole number , then the median shall be the arithmetic mean of such value and the value immediately succeeding it in the dataset.

IIIustration 1.- The data for the current year of the comparable uncontrolled transactions or the entities undertaking such transactions is available at the time of furnishing return of income by the assessee and based on the same, seven enterprises have been identified to have undertaken the comparable uncontrolled transaction in the current year. All the identified comparable enterprises have also undertaken comparable uncontrolled transactions in a period of two years preceding the current year. The Profit level Indicator (PLI) used in applying the most appropriate method is operating profit as compared to operating cost (OP/OC). The weighted average shall be based upon the weight of OC as computed below:

Sl. No.

Name

Year 1

Year 2

Year 3 [Current Year]

Aggregation of OC and OP

Weighted Average

1

2

3

4

5

6

7

1 A OC = 100

OP = 12

OC = 150

OP = 10

OC = 225

OP = 35

Total OC = 475

Total OP = 57

OP/OC = 12%
2 B OC = 80

OP = 10

OC = 125

OP = 5

OC = 100

OP = 10

Total OC = 305

Total OP = 25

OP/OC = 8.2%
3 C OC = 250

OP = 22

OC = 230

OP = 26

OC = 250

OP = 18

Total OC = 730

Total OP = 66

OP/OC = 9%
4 D OC = 180

OP = (-)9

OC = 220

OP = 22

OC = 150

OP = 20

Total OC = 550

Total OP = 33

OP/OC = 6%
5 E OC = 140

OP = 21

OC = 100

OP = (-) 8

OC = 125

OP = (-) 5

Total OC = 365

Total OP = 8

OP/OC = 2.2%
6 F OC = 160

OP = 21

OC = 120

OP = 14

OC = 140

OP = 15

Total OC = 420

Total OP = 50

OP/OC = 11.9 %
7 G OC = 150

OP = 21

OC = 130

OP = 12

OC = 155

OP = 13

Total OC = 435

Total OP = 46

OP/OC = 10.57

From the above, the dataset will be constructed as follows:

S.I. No.

1

2

3

4

5

6

7

Values 2.2% 6% 8.2% 9% 10.57% 11.9% 12%

For construction of the arm’s length range the data place of thirty-fifth and sixty-fifth percentile shall be computed in the following manner, namely:

Total no. of data points in dataset * (35/100)

Total no. of data points in dataset * (65/100)

Thus, the data place of the thirty-fifth percentile = 7*0.35 = 2.45.

Since this is not a whole number, the next higher data place, i.e; the value at the third place would have at least thirty five percent. of the values below it. The thirty-fifth percentile is therefore value at the third place, i.e, 8.2%.

The data place of the sixth-fifth percentile is = 7*0.65 = 4.55.

Since this is not a whole number, the next higher data place, i.e; the value at the fifth place would have at least sixty five percent. of the values below it. The sixty-fifth percentile is therefore value at fifth place, i.e, 10.57%.

The arm’s length range will be beginning at 8.2% and ending at 10.57%.

Therefore, if the transaction price of the international transaction or the specified domestic transaction has OP/OC percentage which is equal to or more than 8.2% and less than or equal to 10.57%, it is within the range. The transaction price in such cases will be deemed to be the arm’s length price and no adjustment shall be required.

However, if the transaction price is outside the arm’s length range, say 6.2%, then for the purpose of determining the arm’s length price the median of the dataset shall be first determined in the following manner:

The data place of median is calculated by first computing the total number of data point in the data set * (50/100). In this case it is 7 * 0.5 = 3.5.

Since this is not a whole number, the next higher data place, i.e; the value at the fourth place would have at least fifty percent. of the values below it (median).

The median is the value at fourth place, i.e., 9%. Therefore, the arm’s length price shall be considered as 9% and adjustment shall accordingly be made.

IIIustration 2.- The data of the current year is available in respect of enterprises A , C, E, F and G at the time of furnishing the return of income by the assessee and the data of the financial year preceding the current year has been used to identify comparable uncontrolled transactions undertaken by enterprises B and D.

Further, if the enterprises have also undertaken comparable uncontrolled transactions in earlier years as detailed in the table, the weighted average and dataset shall be computed as below:

Sl. No.

Name

Year 1

Year 2

Year 3 [Current Year]

Aggregation of OC and OP

Weighted Average

1

2

3

4

5

6

7

1 A OC = 100

OP = 12

OC = 150

OP = 10

OC = 225

OP = 35

Total OC = 475

Total OP = 57

OP/OC = 12%
2 B OC = 80

OP = 10

OC = 125

OP = 5

  Total OC = 205

Total OP = 15

OP/OC = 7.31%
3 C OC = 250

OP = 22

OC = 230

OP = 26

OC = 250

OP = 18

Total OC = 730

Total OP = 66

OP/OC = 9%
4 D   OC = 220

OP = 22

  Total OC = 220

Total OP = 22

OP/OC =
10%
5 E     OC = 100

OP = (-) 5

Total OC = 100

Total OP = (-)5

OP/OC = (-)5%
6 F OC = 160

OP = 21

OC = 120

OP = 14

OC = 140

OP = 15

Total OC = 420

Total OP = 50

OP/OC = 11.9 %
7 G OC = 150

OP = 21

OC = 130

OP = 12

OC = 155

OP = 13

Total OC = 435

Total OP = 46

OP/OC = 10.57%

From the above, the dataset will be constructed as follows:

S.I. No.

1

2

3

4

5

6

7

Values (-)5% 7.31% 9% 10% 10.57% 11.9% 12%

If during the course of assessment proceedings, the data of the current year is available and the use of such data indicates that B has failed to pass any qualitative or quantitative filter or for any other reason the transaction undertaken is not a comparable uncontrolled transaction, then, B shall not be considered for inclusion in the dataset. Further, if the data available at this stage indicates a new comparable uncontrolled transaction undertaken by enterprise H, then, it shall be included. The weighted average and dataset shall be recomputed as under:

Sl. No.

Name

Year 1

Year 2

Year 3 [Current Year]

Aggregation of OC and OP

Weighted Average

1

2

3

4

5

6

7

1 A OC = 100

OP = 12

OC = 150

OP = 10

OC = 225

OP = 35

Total OC = 475

Total OP = 57

OP/OC = 12%
2 C OC = 250

OP = 22

OC = 230

OP = 26

OC = 250

OP = 18

Total OC = 730

Total OP = 66

OP/OC = 9%
3 D   OC = 220

OP = 22

OC = 150

OP = 20

Total OC = 370

Total OP = 42

OP/OC =

11.35%

4 E     OC = 100

OP = (-) 5

Total OC = 100

Total OP = (-)5

OP/OC = (-)5%
5 F OC = 160

OP = 21

OC = 120

OP = 14

OC = 140

OP = 15

Total OC = 420

Total OP = 50

OP/OC = 1.9 %
6 G OC = 150

OP = 21

OC = 130

OP = 12

OC = 155

OP = 13

Total OC = 435

Total OP = 46

OP/OC = 10.57%
7 H OC = 150

OP = 12

  OC = 80

OP = 10

Total OC = 230

Total OP = 22

OP/OC = 9.56%

From the above, the dataset will be constructed as follows:

S.I. No.

1

2

3

4

5

6

7

Values (-)5% 9% 9.56% 10.57% 11.35% 11.9% 12%

Illustration 3.- In a given case the dataset of 20 prices arranged in ascending order is as under:

Sl. No.

Profits (in Rs. Thousands)

1

2

1 42.00
2 43.00
3 44.00
4 44.50
5 45.00
6 45.25
7 47.00
8 48.00
9 48.15
10 48.35
11 48.45
12 48.48
13 48.50
14 49.00
15 49.10
16 49.35
17 49.50
18 49.75
19 50.00
20 50.15

Applying the formula given in the Illustration 1, the data place of the thirty-fifth and sixty-fifth percentile is determined as follows:

Thirty-fifth percentile place = 20* (35/100) = 7.

Sixty-fifth percentile place =20* (65 /100) = 13.

Since the thirty-fifth percentile place is a whole number, it shall be the average of the prices at the seventh and next higher, i.e; eighth place. This is (47+48) /2 =Rs. 47,500

Similarly, the sixty-fifth percentile will be average of thirteenth and fourteenth place prices. This is (48.5+49) / 2 = ₹ 48,750

The median of the range (the fiftieth percentile place) = 20* (50/100)= 10

Since the fiftieth percentile place is a whole number, it shall be the average of the prices at the tenth and next higher, i.e; eleventh place. This is (48.35+48.45) / 2 =Rs. 48,400

Thus, the arm’s length range in this case shall be from ₹ 47,500 to ₹ 48,750.

Consequently, any transaction price which is equal to or more than ₹ 47,500 but less than or equal to ₹ 48,750 shall be considered to be within the arm’s length range.”.

F.No.142/25/2015-TPL

(Arju Garodia)

Under Secretary (Tax Policy and Legislation)

Note.- The principal rules were published in the Gazette of India Extraordinary, part III, section 3, sub-section (i), vide notification number S.O. 969(E), dated the, 26th March, 1962 and were last amended vide notification number S.O. 2791 (E), dated the 12th October, 2015.

 

Notification No. : 81/2015 Dated: 19-10-2015


Corrigundum – Notification No. 70/2015 S.O.2915(E) dated 13th November, 2014 – 81/2015 – Dated 19-10-2015 – Income Tax

MINISTRY OF FINANCE

(Department of Revenue)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 81/2015

CORRIGENDA

New Delhi, the 19th October, 2015

(Income-tax)

S.O. 2858(E). - In the notification of the Government of India in the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, number S.O. 2915 (E) dated the 13th November, 2014 published in Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), dated 13th November, 2014, in Schedule- I,––

(i) against serial number 1, in column (2), for “Ahmedabad”, read “Gujarat”;

(ii) against serial number 2, in column (2), for “Bengaluru”, read “Karnataka and Goa”;

(iii) against serial number 3, in column (2), for “Bhopal”, read “Madhya Pradesh and Chhattisgarh”;

(iv) against serial number 4, in column (2), for “Chandigarh”, read “North West Region”;

(v) against serial number 5, in column (2), for “Chennai”, read “Tamil Nadu and Puducherry”;

(vi) against serial number 6, in column (2), for “Hyderabad”, read “Andhra Pradesh, Odisha and Telangana”;

(vii) against serial number 7, in column (2), for “Jaipur”, read “Rajasthan”;

(viii) against serial number 8, in column (2), for “Kochi”, read “Kerala”;

(ix) against serial number 9, in column (2), for “Kolkata”, read “West Bengal, Sikkim and North East Region”;

(x) against serial number 10, in column (2), for “Lucknow”, read “Uttar Pradesh and Uttarakhand”;

(xi) against serial number 11, in column (2), for “Patna”, read “Bihar and Jharkhand”;

(xii) against serial number 12, in column (2), for “Pune”, read “Maharashtra (Except Mumbai)”.

[F. No. 187/37/2014 (ITA.I)]

DEEPSHIKHA SHARMA, Director

No. F. No. 225/267/2015-ITA-II Dated: 19-10-2015


Use of email based communication for paperless Assessment Proceedings- – Circular – Dated 19-10-2015 – Income Tax

F. No. 225/267/2015-ITA-II

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

North Block, New Delhi, Dated the 19th of October, 2015

To

The Principal Chief Commissioners of Income-tax, Delhi / Mumbai / Bengaluru / Ahmedabad / Chennai

Sir/Madam,

Subject: Use of email based communication for paperless Assessment Proceedings-reg.-

In order to improve the taxpayer services, enhance the efficiency and to usher in a paperless environment for carrying out the assessment proceedings, CBDT has decided to initiate the concept of using email for corresponding with taxpayers and sending through emails the questionnaires, notice etc. at the time of scrutiny proceedings and getting responses from them using the same medium on a pilot basis. This would eliminate the necessity of visiting the Income-tax Offices by the taxpayers, particularly in smaller cases, involving limited issues and where taxpayer is able to provide details required by the AO without necessitating his physical presence.

2. Steps are being taken by CBDT to devise suitable mechanism for setting up a standardized platform for making such email based communications between the taxpayer and the Income-tax Department seamless and user friendly. To start with, it has been decided to launch a pilot project in this regard in five non-corporate charges at Delhi, Mumbai, Bengaluru, Ahmedabad & Chennai stations. Initially, 100 cases for e-hearing could be identified in each of these charges and major part of assessment processing should be conducted in electronic mode. Also, the cases covered under the aforesaid pilot project should be those which have been selected for scrutiny on the basis of AIR/CIB information or non-matching with 26AS-data. Consent of taxpayers should also be obtained in the beginning and cases of only willing taxpayers be considered under the pilot project. The officers of the Department, through their official e-mail IDs, can interact with the taxpayers at their e-mail IDs as mentioned in the respective returns of income.

3. Board desires that necessary steps may accordingly be taken for initiating the pilot project on top priority.

(Rohit Garg)

Deputy Secretary to the Government of India

Notification No. : 42/2015 Dated: 19-10-2015


Seeks to further amend Notification No.12/2012-Central Excise dated 17.03.2012 – 42/2015 – Dated 19-10-2015 – Central Excise – Tariff

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No. 42/2015 – Central Excise

New Delhi, the 19th October, 2015

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 second proviso, the following proviso shall be inserted, namely:-

“Provided also that nothing contained in this notification shall apply to goods specified against serial number 113A of the said Table after the 31st day of March, 2016.”;

(B) in the Table, after serial number 113 and the entries relating thereto, the following serial number and entries shall be inserted, namely:-

(1) (2) (3) (4) (5)
“113A 2905 or 3823 11 12 The following goods for use in the manufacture of alkyl esters of long chain fatty acids obtained from vegetable oils, commonly known as bio-diesels, namely:-

(i) RBD Palm Stearin

(ii) Methanol

(iii) Sodium Methoxide

Nil

2″.

[F. No. 332/13/2015-TRU]

Anurag Sehgal

Under Secretary to the Government of India

Note.- The principal notification No. 12/2012-Central Excise, dated the 17 th 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.41/2015-Central Excise, dated the 17th September, 2015 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R.717(E), dated the 17th September, 2015.

Corporate tax rate may fall 1% in FY17 while bigger sops remain : 19-10-2015


Finance minister Arun Jaitley may start with just token measures to phase out corporate tax exemptions in the Budget for FY17 but may nevertheless drop the corporate tax rate by one percentage point.

Finance minister Arun Jaitley may start with just token measures to phase out corporate tax exemptions in the Budget for FY17 but may nevertheless drop the corporate tax rate by one percentage point. While speaking to businesspersons in Pune on Saturday, the finance minister reiterated the government’s resolve to usher in a “reasonable and globally-competitive tax regime”. I will try to bring down corporate tax to 25% in next 3-4 years, and the process of reduction will start next year,” Jaitley said.

According to the finance ministry officials, the big tax breaks may be scrapped only towards the end of the four-year road map announced in last February. The idea is to soften the blow to corporates at a time when the government’s policy priority is to turn the investment cycle.

The corporate tax rate (for domestic companies) was left unchanged at 30% in the last Budget but while presenting it, Jaitley had said that given the rate being higher than the ones prevalent in other major Asian economies, it would be reduced to 25% “over the next four years”. He, however, added that rate cut would be accompanied by “rationalisation and removal of various kinds of tax exemptions and incentives”.

Sources conversant with the budget discussions in the ministry told FE that major incentives like deduction of export profits for SEZ units, accelerated depreciation and weighted deduction of R&D expenses would continue to exist for another two to three years.

The date for the gradual phase-out or grandfathering of these incentives would be aligned with the end of the four-year transition period mentioned by Jaitley, or even get delayed by a another year or so. The revenue foregone on these three incentives was 65% of the revenue loss of Rs 98,408 crore attributable to tax exemptions in FY15.

The finance ministry looks to defer the removal of major tax sops because it feels that given the stuttering economy, the corporates which have been prodded to step up investments, should not be troubled with the prospect of higher tax outgo at this juncture. “The pace of economic recovery in last quarter of the current fiscal would be more or less known at the time the budget FY17 is finalised. It would indeed influence the plan for removing exemptions. Large tax breaks are anyway not likely to be removed immediately,” said a person briefed about the plan. With the incentives, the average effective tax rate for corporates is around 23% at present.

Accelerated depreciation allowed under Section 32 is projected to have cost the exchequer Rs 37,010 crore last fiscal, but its removal is low on priority, sources said, considering its short-term impact on investments. So is the case with weighted deduction for scientific research under Section 35 that cost the exchequer  Rs 8,127 crore last fiscal.

The incentives identified for withdrawal during the four-year period include open-ended ones for which no end date is specified in the Income Tax Act as well as other multi-year tax sops. The latter category of sops, for sure, will not be extended further, the sources said, adding that in case of open-ended ones, terminal dates would be announced.

In case of the tax concessions for SEZ developers and units, the most prominent among open-ended sops, the terminal date (for joining the scheme) would likely be the final year of the Modi government. This means that the concessions, as prescribed under the SEZ Act, would be available for 15 years from that year for SEZ developers and units. Direct tax breaks to SEZ touched Rs 18,394 crore last fiscal, if 18.5% MAT recovered is not taken into consideration.

Another open-ended incentive scheme identified for late withdrawal is section 35AD that allows full or partial deduction of capital expenditure incurred in setting up cross-country natural gas pipelines, hotels, affordable houses, semi-conductor wafer factories, fertilizer plants and container freight stations. The projected revenue forgone for the last fiscal on this count stood at Rs 1,138 crore.

Various incentives given under sections 80IA, 80IAB and 80IB are also identified for phasing out. Some of these for which terminal dates are already announced, cover deduction of profits from certain industrial, infrastructural and other specified businesses while calculating the taxable profits of a company.

While companies developing roads, ports, highways and SEZs enjoy full deduction of profits from these ventures for ten years under section 80IA without an end date specified in the law, most of the deductions allowed under 80IB for opening hotels and convention centres and for producing and refining mineral oil have expired recently but the beneficiaries continue to enjoy it for the remaining period. The government is unlikely to disallow the benefit for the remaining period.

Benefits for industrial units in J&K too expired in 2012. The five-year full deduction of profits from North East units under section 80IE scheduled to end in 2017 is also identified among the exemptions to be removed. The final call, however, is likely to be a political one in the light of how the economy performs.

Under the SEZ Act, developers of these zones are eligible for 100% profit deduction for any consecutive 10 years in a span of 15 years. As for SEZ units, the entire profits can be deducted for the first five years, followed by 50% deduction for the next ten years.

Source : Business Standard

Notification No. : 82/2015 Dated: 19-10-2015


Corrigundum – Notification No. 69/2014 S.O. 2914(E) dated 13th November 2014 – 82/2015 – Dated 19-10-2015 – Income Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

(CENTRAL BOARD OF DIRECT TAXES)

NEW DELHI

(INCOME-TAX)

NOTIFICATION NO. 82/2015

New Delhi, Dated the 19th October, 2015

S.O.   (E) - In the notification of the Government of India in the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, number S.O.2914(E), dated the 13th November, 2014, published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (ii), dated the 13th November, 2014, in the Schedule,-

(I)   against serial number 5, in column (2), for “Chennai”, read “Tamil Nadu and Puducherry”;

(II)  against serial number 8, in column (2), for “Jaipur”, read “Rajasthan”;

(III)  against serial number 11, in column (6),-

  1. against the entries relating to Lucknow, for the existing entries, read-
Lucknow Areas within the limits of following revenue districts of the states of Uttar Pradesh and Uttarakhand:

(i) Lucknow

(ii) Barabanki

(iii) Basti

(iv) Faizabad

(v) Gonda

(vi) Hardoi

(vii) Jaunpur

(viii) Pratapgarh

(ix) Rae Bareilly

(x) Chhatrapati Shahuji Maharaj Nagar (Amethi)

(xi) Sultanpur

(xii) Sitapur

(xiii) Unnao

(xiv) Lakhimpur Kheri

(xv) Bareilly

(xvi) Pilibhit

(xvii) Balrampur

(xviii) Bahraich

(xix) Ambedkar Nagar

(xx) Pithoragarh

(xxi) Udham Singh Nagar

(xxii) Bageshwar

(xxiii) Nainilal

(xiv) Almora

(xxv) Champawat

(xxvi) Shahjahanpur

(xxvii) Allahabad

(xxviii) Azamgarli

(xxix) Chandauli

(xxx) Deoria

(xxxi) Fatehpur

(xxxii) Ghazipur

(xxxiii)Gorakhpur

(xxxiv) Kaushambi

(xxxv) Kushinagar

(xxxvi) Maharajganj

(xxxvii) Mau

(xxxviii)Mirzapur

(xxxix) Sant Ravidas Nagar

(xl) Sonbhadra

(xli) Varanasi

(xlii) Ballia

(xliii) Moradabad

(xliv) Bijnor

(xlv) Jyotiba Phule Nagar i.e., Amroha

(xlvi) Rampur

(xlvii) Badaun

(xlviii) Sant Kabir Nagar

(xlix) Siddhartha Nagar

(i) Srawasti

(ii) Sambhal

(b) against the entries relating to Kanpur, for the existing entries, read-

Kanpur Areas within the limits of following revenue districts of the states of Uttar Pradesh and Uttarakhand:

(i) Banda

(ii) Chitrakut

(iii) Hamirpur

(iv) Jalaun

(v) Ramabai Nagar (Kanpur Dehat)

(vi) Mohoba

(vii) Kannauj

(viii) Meerut

(ix) Baghpat

(x) Ghaziabad

(xi) Muzaffarnagar

(xii) Hapur

(xiii) Agra

(xiv) Etah

(xv) Aligarh

(xvi) Auraiya

(xvii) Hathras

(xviii) Etawah

(xix) Farrukhabad

(xx) Jhansi

(xxi) Lalitpur

(xxii) Mathura

(xxiii) Firozabad

(xxiv) Mainpuri

(xxv) Kanshiram Nagar

(xxvi) Gautam Buddha Nagar

(xxvii) Bulandshaher

(xxviii)Chamoli

(xxix) Dehradun

(xxx) Haridwar

(xxxi) Pauri

(xxxii) Rudraprayag

(xxxiii) Saharanpur

(xxxiv ) Tehri Garhwal

(xxxv) Uttarkashi

(xxxvi) Kanpur

(xxxvii)Shamli

(IV)  against serial number 13, in column (2), for “Patna”, read “‘Bihar and Jharkhand”:

(V)   against serial number 14. in column (2), for “Pune”, read “Maharashtra (Except Mumbai)

[F.NO.187/37/2014 (ITA.I)]

Notification No. : 80/2015 Dated: 14-10-2015


Corrigendum – Notification No. 55/2014 S.O. 2793(E) dated 30th October, 2014 – 80/2015 – Dated 14-10-2015 – Income Tax

MINISTRY OF FINANCE

(Department of Revenue)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 80/2015

(Income-tax)

New Delhi, the 14th October, 2015

S.O. 2829 (E) - In the notification of the Government of India in the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, number S.O.2793(E), dated the 30th October, 2014 published in Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), dated 30th October, 2014, in the Schedule,-

(i) against serial numbers 1 to 26, in column (5), for “Any person responsible for deducting or collecting tax at source for the purposes of Chapter XVII B or XVIIBB located in the territorial area mentioned in column (4)”, read “(a) Any person responsible for deducting or collecting tax at source for the purposes of Chapter XVII B or XVII BB located in the territorial area mentioned in column (4); (b) Any other person located

within the territorial area mentioned in column (4)”;

(ii) against serial number 1, in column (4), in item (a),-

(a) for “Botandm”, read “Botad”;

(b) after “Morbi”, insert “Bhavnagar”.

[F.No.187/39/2014 (ITA.I)]

(Deepshikha Sharma)

Director to the Government of India

Notification No. : 220/2015 Dated: 16-10-2015


Notification u/s 35AC – Notifies the various institutions Approved by the National Committee. – 220/2015 – Dated 16-10-2015 – Income Tax

MINISTRY OF FINANCE

(Department of Revenue)

NOTIFICATION NO. 220/2015

New Delhi, the 16th October, 2015

S.O. 2854(E).-In exercise of the powers conferred by sub-section (I) read with clause (b) of the Explanation to Section 35 AC of the Income Tax Act, 1961 (43 of 1961), the Central Government, on the recommendation of the National Committee for Promotion of Social and Economic Welfare, hereby notifies the institutions approved by the said National Committee, mentioned in column (2) of the Table below, and approves the eligible projects or schemes specified to be carried on by the said institutions and the estimated cost thereof as mentioned in column (3) of the said Table, and also specifies in the column (4) of the Table the maximum amount of such cost which may be allowed as deduction under the said section 35 AC for the period of approval, namely:-

TABLE

Sl. No.

Name of the Institution

Project or scheme and estimated cost thereof

Maximum amount of cost to be allowed as deduction under section 35AC and period of approval

(1)

(2)

(3)

(4)

1

Rural Development Association Wainem, B.P.O. Bungte P.O. Nambol Sardar Hills, Senapati Distt., Manipur- 795134 Educate Rural Manipur ₹ 8.11 crore The Committee recommended approval for the project at the estimated cost of ₹ 8.11 crore for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

2

Kuki Sporting Club Lamulane Jail road, Imphal – 795001 Manipur. Construction of Physical Education Building and Play Ground of Atheltics, Games &Sports, free training for poor and needy students. ₹ 3 Crore . The Committee recommended approval for the project at the estimated cost of ₹ 3 Crore for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

3.

Walawa Taluka Baudh Society, New High School Sangli, 107 North Shivaji Nagar, Sangli – 416416 Maharashtra. Expansion of present activates for School & Colleges Development area in Maharashtra ₹ 8.85 Crore The Committee recommended approval for the project at the estimated cost of ₹ 8.85 Crore for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

4

Shree Vijayalakshmi Charitable Trust, 107-A, Senguptha Street, Ram Nagar, Coimbatore – 641 009, Tamil Nadu. Promoting and Uplifting of poor children by providing scholarship for continuing education “Gift of knowledge”. ₹ 595 Crore. The Committee recommended approval for the project at the estimated cost of ₹ 595 Crore for three financial years commencing with financial year, 2015-16 i.e. 2015-16, 2016-17 and 2017-18.

5.

Mahashakti Foundation At-Madanpur Rampur, Kalahandi Odisha – 766102. Project proposal setting up center for Agricultural and conservation of natural resources research, training and production at Muniguda, Distt., Rayagada, Odisha. ₹ 9.83 Crore. The Committee recommended approval for the project at the estimated cost of ₹ 9.83 Crore for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

6.

Sir Ness Wadia Foundation Nerille House, J.N. Heredica Marg,  Ballard Estate, Mumbai-400001. Integrated Development programme with Special Focus on Income Generating programmes for Youth, Farmers and Women. ₹ 1835.40 lakh The Committee recommended approval for the project at the estimated cost of ₹ 1835.40 lakh for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

7.

Pragati Jubak Sangha (PJS) At-Dolamandop, P.O. Sukleshwore Via-Chandabali, Distt. Bhadrak Odisha -756133. Project proposal seeking financial assistance for establishing rural  hospitalcum- Nursing College and Mobile Medical Health Care Unit for the BPL People of Bhadrak District of Odisha. ₹ 5.93 Crore. The Committee recommended approval for the project at the estimated cost of ₹ 5.93 Crore for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

8.

Satyadarshan Charitable Trust Mrugmal, (Patel Fliyu) Post : Virval, Ta: Dharampur, Dist: Valsad-396050. Establishment, Running and Maintenance ₹ 2.97 Crore. The Committee recommended approval for the project at the estimated cost of ₹ 2.97 Crore for three financial years commencing with financial year, 2015-16 i.e.,  2015-16, 2016-17 and 2017-18.

9.

Dalit Foundation C-58, Basement, South Extension, New Delhi-110049. Comprehensive Program for the Upliftment of Dalit Community through direct intervention, fellowship program and NGO alliance. ₹ 10.12 Crore. The Committee recommended approval for the project at the estimated cost of ₹ 10.12 Crore for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

10.

MAITRI J-92, A. R. D. Comlex, R. K. Puram, Sector-13, New Delhi-110066 Maitri Ghar . ₹ 2.00 Crore. The Committee recommended approval for the project at the estimated cost of ₹ 2.00 Crore for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

11.

TOUCH (Turning Opportunities Upliftment of Child Help) C/o Anandrao Pawar High School, Ground Floor, Vazira, L.T. Road, Borivili (west), Mumbai-400091. Child Development Project – Vihigaon. ₹ 21.78 Lakh. The Committee recommended approval for the project at the estimated cost of ₹ 21.78 Lakh for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

12.

Anita Chanu Weightlifting Academy Luwangsanbam Makha Leikai, B.P.O. Mantripukhri-795002 Manipur. Construction of Girls Hostel and Recreation Hall. ₹ 2.50 Crore. The Committee recommended approval for the project at the estimated cost of ₹ 2.50 Crore for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

13.

Shree Mahavir Charitable Trust, 302, Smrudhi, Opp. Sakar III, B/B C.U. Shah College, Near Income Tax Circle, Off Ashram Road, Ahmedabad-380014. Financial help to needy students of weaker sections of Gujarat. ₹ 6.00 Crore. The Committee recommended approval for the project at the estimated cost of ₹ 6.00 Crore for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

14.

Shree Jain Medical Relief Society 10, Vinayaka Mudali Street, Sowcarpet, Chennai – 600 079. Dialysis Project. ₹ 1.90 Crore. The Committee recommended approval for the project at the estimated cost of ₹ 1.90 Crore for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

15.

St. Jude India Childcare Centres 525,5th floor, Arun Chambers, Tardeo, Mumbai-400034. Provision of free of cost housing for the children suffering from chronic diseases presently focusing on cancer and their parents, to recuperate during their cancer treatment along with providing them with physical and emotional necessities for combatting cancer. ₹ 27.44 Crore. The Committee recommended approval for the project at the estimated cost of ₹ 27.44 Crore for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

16.

Janakalyan Pratisthan, At-Sivananda Nagar PO. Paralakhemundin Distt-Gajapati, Odisha-761200. Community based action for AIDS, T.B & Malaria prevention. ₹ 7.80 Crore. The Committee recommended approval for the project at the estimated cost of ₹ 7.80 Crore for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18

17.

Sakeshwar Gramin Vikas Seva Sanstha C/o Mr. Anirdha Manik Adsul Wagh Mala, Behind Krandikar Hospital, Ahmednagar, Tal/Distt. Ahedmdnagar, Maharashtra. Skill Development, ₹ 53.34 Crore. The Committee recommended approval for the project at the estimated cost of ₹ 53.34 Crore for three financial years commencing with financial year, 2015-16 i.e. 2015-16, 2016-17 and 2017-18.

18.

UMEED 208-216, DDA Commercial Complex, Aurabindo Place Market, Hauz Khas, New Delhi-110016. Poverty Alleviation through Income Generation Programme and Health Care. ₹ 6.62 crore. The Committee recommended approval for the project at the estimated cost of ₹ 6.62 crore for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

19.

Nowrosjee Wadia Maternity Hospital, Achary Donde Marg, Parel- 400012 District Mumbai(MH), India. Upgrading & Modernization of Nowrosjee Wadia Maternity Hospital. ₹ 1912 lakh with corpus fund of ₹ 200 lakh. The Committee recommended approval for the project at the estimated cost of ₹ 1912 lakh with corpus fund of ₹ 200 lakh for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

20.

MESCO Education Society, Natalwala Building,110, V.S. Road, Mahim, Mumbai-400016. School Construction project and conducting/sustaining this Activity in Rural Area. ₹ 12.00 crore. The Committee recommended approval for the project at the estimated cost of ₹ 12.00 crore for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

21.

David Rajasingh Educational & Charitable Trust, Melur, Doraisamypuram Village, Rajapalayam, Virudhunagar District, Tamilnadu-626121 (a) Stella Mary’s Arts & Science College

(b) Stella Mary’s Orphanage Home

(c) Stella Mary’s Free Service Hospital

(d) Stella Mary’s Blind School.

₹ 20.00 crore. (Rs.10 crore+ ₹ 3 crore+Rs.5 crore+Rs.2 crore).

The Committee recommended approval for the project at the estimated cost of ₹ 20.00 crore (Rs.10 crore+ ₹ 3 crore+Rs.5 crore+Rs.2 crore) for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

22

Society for the welfare of weaker Sections Near DFO Office, Parlakhemundi, District Gajapati, Odisha-761200. Hi-Tech Vocational, Agricultural Skill Development Training. ₹ 12.04 crore. The Committee recommended approval for the project at the estimated cost of ₹ 12.04 crore for three financial years commencing with financial year, 2015-16 i.e., 2015-16, 2016-17 and 2017-18.

II. This notification shall remain in force for a period of three years in relation to financial years 2015-16, 2016-17 and 2017-18 in respect of the projects or schemes mentioned at serial numbers 1 to 22 of the Table above.

[F. No. V. 27015/3/2015-SO (NAT. COM)]

MAKKHAN LAL MEENA, Dy. Secy. (National Committee)

No. 15/2015 Dated: 16-10-2015


Revised and Updated Guidance for Implementation of Transfer Pricing Provisions – Order-Instruction – Dated 16-10-2015 – Income Tax

Instruction No. 15/2015

F. No. 500/9/2015-APA-II

Government of India

Ministry of Finance

Department of Revenue Central Board of Direct Taxes

Foreign Tax and Tax Research Division-I

APA-II Section

New Delhi, dated 16th October, 2015

Subject: Revised and Updated Guidance for Implementation of Transfer Pricing Provisions – Regarding

The provisions relating to transfer pricing are contained in Sections 92 to 92F of the Income-tax Act (hereinafter referred to as ‘the Act’). These provisions came into force w.e.f. Assessment Year 2002-2003 and have seen a number of amendments over the years, including the insertion of Safe Harbour and Advance Pricing Agreement provisions and the extension of the  applicability  of  transfer  pricing  provisions  to Specified Domestic Transactions.

2. In terms of the provisions, any income arising from an international transaction or specified domestic transaction between two or more associated enterprises shall be computed having regard to the Arm’s Length Price. Instruction No. 3 was issued on 20th May, 2003 to provide guidance to the Transfer Pricing Officers and the Assessing Officers to operationalise the transfer pricing provisions and to have procedural uniformity.  Due to a number of legislative, procedural and structural changes carried out over the last few years, Instruction No. 3 of 2003 is being replaced with this Instruction to provide updated and adequate guidance on the transfer pricing provisions pertaining to international transactions.

3. Reference to Transfer Pricing Officer (TPO)

3.1 The  power to determine the Arm’s  Length  Price(ALP)  in an international transaction is contained in sub-section (3) of Section 92C of the Act. However, Section 92CA of the Act, inter-alia, provides that where the Assessing Officer (AO) considers it necessary or expedient so to do, he may refer the computation of ALP in relation to an international transaction to the Transfer Pricing Officer (TPO). Sub-section (3) of Section 92CA provides that the TPO, after taking into account the material available with him shall, by an order in writing, determine the ALP in accordance with subsection (3) of Section 92C of the Act. Sub-section (4) of Section 92CA provides that on receipt of the order of the TPO, the AO shall proceed to compute the total income of the taxpayer in conformity with the ALP determined by the TPO. Thus, while the determination of ALP, wherever reference is made to him, is required to be done by the TPO under subsection (3) of Section 92CA read with sub-section (3) of Section 92C, the computation of total income in conformity with the ALP so determined by the TPO is required to be done by the AO under sub-section (4) of Section 92C read with sub-section (4) of Section 92CA of the Act.

3.2 In order to make a reference to the TPO, the AO has to first satisfy himself that the taxpayer has entered into an international transaction with an associated enterprise. One of the sources from which the factual information regarding international transaction can be gathered is Form No. 3CEB filed by the taxpayer, which is in the nature of an accountant’s report containing basic details of an international transaction entered into by the taxpayer during the year and the associated enterprise with which such transaction is entered into, the nature of documents maintained and the method followed. Thus, the primary details regarding such international transactions would normally be available in the accountant’s report. The AO can arrive at a prima facie belief on the basis of these details whether a reference to the TPO is necessary. No detailed enquiries are needed at this stage and the AO should not embark upon scrutinising the correctness or otherwise of the price of the international transaction at this stage. However, in the following situations, the AO must, as a jurisdictional requirement, record his satisfaction that there is an income or a potential of an income arising and/or being affected on determination of the ALP of an international transaction before he proceeds to determine the ALP under sub-section (3) of Section 92C of the Actor to refer the matter to the TPO to determine the ALP under sub-section (1) of Section 92CA of the Act:

a) where the taxpayer has not filed the Accountant’s report under Section 92E of the Act but international transactions undertaken by it come to the notice of the AO;

b) where the taxpayer has not declared one or more international transaction in the Accountant’s report filed under Section 92E of the Act and the said transaction or transactions come to the notice of the AO; and

c) where the taxpayer has declared the international transaction or transactions in the Accountant’s report filed under Section 92E of the Act but has made certain qualifying remarks to the effect that the said transaction or transactions are not international transactions or do not impact the income of the taxpayer.

In all the above situations, the AO must provide an opportunity of being heard to the taxpayer before recording his satisfaction or otherwise.

3.3 The exercise of finding out whether any income arises and/or is affected  or  potentially  arises  and/or is  potentially affected by the determination of the ALP of the international transaction would certainly be a factor, in addition to other factors, in determining whether or not it is necessary or expedient to refer the matter to the TPO. In case no objection is raised by the taxpayer to the applicability of Chapter X [Sections 92 to 92F] of the Act, then the prima-facie view of the AO would be sufficient before referring the international transaction to the TPO for determining the ALP. However, where the applicability of Chapter X [Sections 92 to 92F] of the Act to the facts of the taxpayer’s case is objected to, the assessee’s objection should be considered and specifically dealt with so as to make sufficient compliance with the principles of natural justice.

3.4 Before making a reference to the TPO, the AO has to seek the approval of the Principal Commissioner or Commissioner as provided in the Act. The provisions of Section 92CA of the Act, inter-alia, refer to the international transaction. Hence, all international transactions, in relation to which a reference to the TPO is considered necessary, have to be explicitly mentioned in the letter through which the reference is being made.

3.5 Since transfer pricing cases are now being selected for scrutiny on the basis of risk parameters, there is no requirement of selecting a transfer pricing case for scrutiny on the basis of the value of the international transaction. Consequently, there would be no requirement of referring an international transaction to the TPO for determination of its ALP merely because the value of the international transaction is above a particular limit. In particular, where a case has been selected for scrutiny only on non-TP issues and the case also involves international transactions with AEs, the case shall not be referred to the TPO irrespective of the value of the international   transaction   or   aggregate  value  of   all   international transactions. The only exception to this would be a case selected for scrutiny on non-TP parameters where the AO comes to know that the taxpayer has entered into international transaction or transactions but the taxpayer has either not filed the Accountant’s report under Section 92E or has not disclosed the said international transaction or transactions in the Accountant’s report filed. In such exceptional situations, the AO may refer the matter to the TPO after providing an opportunity of being heard to the taxpayer.

3.6 Since the case will be selected for scrutiny before making the reference to the TPO, the AO may proceed to examine other aspects of the case during the pendency of assessment proceedings but must wait for the report/order of the TPO on the value of international transactions before making final assessment.

4. Role of Transfer PrIcIng Officer

4.1The role of the TPO begins after a reference is received from the AO. In terms of Section 92CA of the Act, this role is limited to the determination of the ALP in relation to international transaction(s) referred to him by the AO. However, if any other international transaction comes to the notice of the TPO during the course of the proceedings before him, then he is empowered to determine the ALP of such other international transactions also by virtue ofsub-sections (2A) and (26) of Section 92CA of the Act. The transfer price has to be determined by the TPO in terms of Section 92C of the Act. The price has to be determined by using any one of the methods stipulated in sub-section (1) of Section 92C and by applying the most appropriate method referred to in sub-section (2) thereof. There may be occasions where application of the most appropriate method provides results which are different but equally reliable. In all such cases, further scrutiny may be necessary to evaluate the appropriateness of the method, the correctness of the data, weight given to various factors and so on. The selection of the most appropriate method will depend upon the facts of the case and the factors mentioned in rules contained in Rule 10C. The TPO, after taking into account all relevant facts and data available to him, shall determine the ALP and pass a speaking order. The TPO, being an Additional/Joint CIT, shall obtain the approval of the jurisdictional CIT (Transfer Pricing) before passing the order. On the other hand, the TPO, being a Deputy/ Assistant CIT, shall obtain the approval of the jurisdictional Additional/Joint CIT before passing the order. The jurisdictional CIT (TP) should assign a limited number of important and complex cases, not exceeding 50, to the Additional/Joint CsIT(TPOs) working in the same jurisdiction. For the selection of such important and complex cases by the CsIT(TP),  the  concerned  CCsIT(International  Taxation)  shall  frame appropriate guidelines.

4.2 The order passed by the TPO should contain details of the data used, reasons for arriving at a certain price and the applicability of methods. It may be emphasised that  the application  of method including the application of the most appropriate method, the data used, factors governing the applicability of respective methods, computation of price under a given method will all be subjected to judicial scrutiny. It is, therefore, necessary that the order of the TPO contains adequate reasons on all these counts. Copies of the documents or the relevant data used in arriving at the arm’s length price should be made available to the AO for his  records  and  use  at  subsequent  stages  of  appellate  or  penal proceedings.

4.3 In addition to the above, the TPO is required to carry out the Compliance Audit of the Advance Pricing Agreements (APAs) entered into by the Board and the taxpayers in accordance with Rule 10 P of the Income-tax Rules.

4.4 The TPO is also required to play an important role in respect of Safe Harbour provisions. Whenever a reference is made to the TPO under subrule (4) or sub-rule (10) of Rule 10 TE of the Income-tax Rules, the TPO has to carefully examine all the facts and circumstances of the taxpayer’s exercise of an option for Safe Harbour and pass an order in writing as mandated in sub-rule (6) or sub-rule (11) of the said Rule, respectively.

5. Role of the AO after Determination of ALP

Under sub-section (4) of Section 92C of the Act, the AO has to compute the total income of the assesse having regard to the ALP determined by him under sub-section (3) of the same Section. Where the determination of ALP is done by the TPO under sub-section (3) of Section 92CA of the Act, the AO has to compute the total income of the assessee under sub-section (4) of Section 92C (read with sub-section (4) of Section 92CA) in conformity with the ALP so determined by the TPO.

6. Maintenance of Data Base

It is to be ensured by the CIT (Transfer Pricing) that the references received from the AOs by the TPOs in his jurisdiction are dealt with expeditiously and accurate record of all events connected with the whole process of determination of ALP is maintained. This record is to be maintained by each TPO in the format enclosed as Annexure-l to this Instruction. This format will serve as an important database for future action and also help in bringing about uniformity in the determination of the ALP in identical or substantially identical cases. The CsIT (TP) must ensure that the separate data maintained  by  all  TPOs  under  their jurisdiction  are consolidated into one report for the entire charge after the completion of each transfer pricing audit cycle.

7. Applicability

The above guidance is applicable only to transfer pricing provisions in respect of international transactions. Similar guidance in respect of transfer pricing provisions pertaining to specified domestic transactions are under consideration of the CBDT. Till such time the guidance pertaining to specified  domestic  transactions is not issued,  paragraph 3.5 of this Instruction shall apply to the effect that where a case has been selected for scrutiny on non-TP parameters and the case also involves specified domestic transactions with AEs, the case shall not be referred to the TPO irrespective of the  value of the specified domestic transaction or aggregate value of all specified domestic transactions. The only exception to this would be a case selected for scrutiny on non-TP parameters where the AO comes to know that the taxpayer has entered into specified domestic transaction or transactions but the taxpayer has either not filed the Accountant’s report under Section 92E of the Act or has not disclosed the said specified domestic transaction or transactions in the Accountant’s report filed. In such exceptional situations, the AO may refer the matter to the TPO after providing an opportunity of being heard to the taxpayer.

8. This Instruction issues under Section 119 of the Act and supercedes  Instruction No. 3 of 2003 with immediate effect.

[Sobhan Kar]

Director (APA), Government of India

Claiming tax benefit on serious ailment expenses made easy : 15-10-2015


Finance Ministry has made it easier to claim tax benefit on expenditure with regard to serious ailments like thalassaemia, cancer, AIDS and haemophilia by doing away with the requirement of obtaining a certificate from a government hospital.

Central Board of Direct Taxes has issued a notification amending Rule 11DD of the Income Tax Act to facilitate this.

The amended rule relaxes the condition of obtaining the certificate for claiming expenditure under section 80DDB in respect of specified ailments from a specialist working in a government hospital, the Finance Ministry said.

“As per amended Rule 11DD, the prescription can be issued by any specialist mentioned in the amended rule.

Henceforth, it will not be mandatory to obtain a certificate from a specialist working in a government hospital,” it said.

Under 80DDB, a deduction of up to Rs 40,000 is allowed for treatment of ailments of serious nature. The deduction is in case of senior citizen is Rs 60,000 and Rs 80,000 for very senior citizen (above age of 80 years). The tax benefit is given to the assessee or dependents. The dependents include spouse, parents, brother and sister.

Under the existing provisions, a certificate in the prescribed form from a specialist working in a government hospital is required. That specialist can be a neurologist, oncologist, urologist, haematologist, immunologist or any other doctor.

The requirement of a certificate from a doctor working in a government hospital was causing undue hardship to the persons intending to claim the deduction.

Government hospitals at many places do not have doctors specialising in such branches of medicine.

“For this and other reasons, it may be difficult for the taxpayer to obtain a certificate from a government hospital.

“In view of the above, it is proposed to amend section 80DDB so as to provide that the assessee will be required to obtain a prescription from a specialist doctor for the purpose of availing this deduction,” the Ministry had said in the Union Budget 2015-16.

The tax benefit was announced by Finance Minister Arun Jaitley in his last Budget speech.

Source : Financial Express

Govt to import more pulses, use price stabilisation fund, says Jaitley : 15-10-2015


With retail prices of some pulses almost doubling in a year, Finance Minister Arun Jaitley announced some measures to address this. Expanding the price stabilisation fund’s coverage and creating a buffer stock are among these.

His announcement came after an inter-ministerial group he chaired had reviewed the situation.

The government had earlier set up a Rs 500-crore price stabilisation fund for onions and potatoes. It was meant for use by state governments, with the user government to bear half the cost of intervention in this regard, with the other half to come from this fund. The idea was to both give a reasonable price to farmers and affordable rates for consumers. It was recently used by the governments of Andhra and Telangana, to check the price of onions.

As mentioned earlier, Jaitley also said the government had decided to create a buffer stock of lentils, mainly through import. Some stock in this regard was available at the Navi Mumbai port, he told reporters, and states would be requested to lift these.

“The principal concern at the moment is on account of prices of tur daal (pigeon pea). India is normally about a little over two million tonnes short on production in pulses; this shortage is made up by imports. We have had a significant amount of import but there is some global shortage, resulting in escalation of global prices,” Jaitley said.

 Adding: “Considerably more will be imported, so that the supply-side problem can be taken care of.”
Sources said a further 2,000 tonnes will be imported, in addition to the 5,000 tonnes at ports and another 2,000 tonnes already in transit.

“As far the otherwise inflation situation in the country is concerned, it is under control,” said Jaitley. “There are only two significant items we have been concerned about. The first was onion (prices), which had shot up because of seasonal variation. Prices have substantially cooled since then and currently it is only pulses whose price needs to be handled. The department of consumer affairs would be the nodal (agency) handling it,” Jaitley said.

Source : Business Standard

Notification No. : 19/2015 Dated: 14-10-2015


No service tax will be levied on the service provided by an Indian Bank or other entity acting as an agent to the Money Transfer Service Operators (MTSO) in relation to remittance of foreign currency from outside India to India from 1.7.12 to 13.10.14 – 19/2015 – Dated 14-10-2015 – Service Tax

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

Notification No. 19/2015-Service Tax

New Delhi, the 14th October, 2015

22 Asvina 1937 Saka

G.S.R. (E).- Whereas, the Central Government is satisfied that in the period commencing on and from the 1st day of July, 2012 and ending with the 13th  day of October, 2014 (hereinafter referred to as the said period) according to a practice that was generally prevalent, there was  non levy of service tax on the services provided by an Indian Bank or other entity acting as an agent to the Money Transfer Service Operators (hereinafter referred to as MTSO),  in relation to remittance of foreign currency from outside India to India (hereinafter referred to as the said practice),  and this service was liable to service tax, which was not being paid according to the said practice.

Now, therefore, in exercise of the powers conferred by section 11C of the Central Excise Act, 1944 (1 of 1944) as made applicable to like matters in Service Tax vide section 83 of the Finance Act, 1994 (32 of 1994), the Central Government hereby directs that the service tax payable under section 66B of the Finance Act, 1994, on the service provided by an Indian Bank or other entity acting as an agent to the MTSO in relation to remittance of foreign currency from outside India to India, in the said period, but for the said practice, shall not be required to be paid.

(Himani Bhayana)

Under Secretary to the Government of India

[F.No. 137/51/2014-Service Tax]

No. 14/2015 Dated: 14-10-2015


Framing of scrutiny assessments in cases of assessees engaged in the business of Mining – Order-Instruction – Dated 14-10-2015 – Income Tax

Instruction No. 14/2015

F. No. 225/259/2015-ITA. II

Government of India

Ministry of Finance

Department of Revenue

(Central Board of Direct Taxes)

North Block, New Delhi

14th October, 2015

To

All Pr. Chief-Commissioners of Income-tax/Chief-Commissioners of Income-tax

All Pr. Directors General of Income-tax/Directors-General of Income-tax

Sir/Madam

Subject: – Framing of scrutiny assessments in cases of assessees engaged in the business of Mining regarding

The assessees engaged in the business of mining are required to file a Annual Return with Indian Bureau of Mines (‘IBM’)(Form H-1 in case of Iron Ore mining and Form H-2 to H-8 in case of mining in other Ores).

2. Follow-up enquiries, in regard to some of the companies which find mention in the report of the Justice M.B. Shah Commission of Enquiry, which was constituted by the Government to probe illegal Iron and Manganese Ore mining, shows that in some cases there were significant differences in figures regarding production and closing stock, as reported in the Annual Return filed with IBM vis-a-vis the details furnished in the Income-tax Return.

3. In this context, I am directed to convey that while scrutinizing the cases of entities engaged in the business of mining, the Annual Returns filed with IBM by the respective assessees should invariably be obtained and compared with the details submitted to the Income-tax Department so as to ascertain whether any suppression of production and discrepancy in stock exists and further necessary action as per provisions of law may be taken.

4. If significant discrepancies between the figures furnished to the mining authorities and the Income-tax Department for other years also come to the notice, then, necessary remedial measures may be taken for all the years concerned.

5. This may be brought to the notice of all concerned for necessary compliance.

(Ankita Pandey)

DCIT (OSD) IT(A-II)

Centre circulates model GST laws among states : 13-10-2015


The Centre and states have completed the drafting of model Goods and Services Tax  (GST) law as well as an integrated-GST (iGST) law, which will be put up in public domain by early November.

According to a government official, the Empowered Committee of state Finance Ministers is likely to meet this month to discuss the legislations — Central GST (CGST), State GST (SGST) and iGST.

“The model GST law and iGST law has been circulated among the states. The Empowered Committee would meet soon to discuss them,” a senior official told PTI.

The CGST will be framed based on the model GST law. Also the states will draft their own SGST based on the draft model law with minor variation incorporating state based exemption.

“Trade and Industry should also be a part of the law because ultimately they would pay the tax. Hence their views are essential. The drafts will be put up on website by first week of November,” the official added.

The drafts of the proposed legislations are based on three principles — definitional clarity, certainty in assessment and promoting ease of doing business, the official said.

The model GST law and iGST law have been drafted by the officials of both Centre and the states, the official added, Although the government had planned to roll out the GST, which is touted as the most comprehensive indirect tax reform since Independence, from April 1, 2016, it seems difficult in view as the Constitution Amendment Bill is stuck in the Rajya Sabha where the ruling National Democratic Alliance does not have a majority.

The government, however, is going ahead with the preparatory work necessary for smooth implementation of the GST, which will subsume various levies like excise, service tax, sales tax, octroi, etc, and will ensure a single indirect tax regime for the entire country.

The government has already put up three reports of empowered committee on GST on refunds, payment process and registration for public comments by October 31.

The date for next meeting of the empowered committee has not been finalised yet. It was scheduled to meet last month but the meeting was deferred.

Source : Business Standard

Notification No. : 353/2015-RB Dated: 6-10-2015


Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Ninth Amendment) Regulations, 2015 – 353/2015-RB – Dated 6-10-2015 – Foreign Exchange Management

RESERVE BANK OF INDIA

(Foreign Exchange Department)

(CENTRAL OFFICE)

NOTIFICATION NO. FEMA. 353/2015-RB

Mumbai, the 6th October, 2015

Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Ninth Amendment) Regulations, 2015

G.S.R. 759 (E).-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), namely:-

1. Short Title & Commencement

(i) These Regulations may be called the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Ninth Amendment) Regulations, 2015.

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

2. Amendment to Schedule 5:-

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), in Schedule 5,

(A) in paragraph 2,

(i) the existing sub-paragraph (3) shall be re-numbered as Paragraph 2C

(ii) after the existing sub-paragraph (2), the following shall be added namely:-

“(3) A Non- Resident Indian may subscribe to National Pension System governed and administered by Pension Fund Regulatory and Development Authority (PFRDA), provided such subscriptions are made through normal banking channels and the person is eligible to invest as per the provisions of the PFRDA Act. The annuity/accumulated saving will be repatriable.”

(iii) after adding sub-paragraph (3) in paragraph 2, the existing paragraph 2C shall be re-numbered as sub-paragraph (4) in Paragraph 2.

(B) In paragraph 3, after the existing sub-paragraph (2), the following shall be inserted namely:-

“(2A) A non-resident Indian who subscribes to the National Pension System, under sub-paragraph (3) of paragraph (2) of this Schedule shall make payment either by inward remittance through normal banking channels or out of funds held in his NRE/FCNR/NRO account.”

[F. No. 1/26/EM/2015]

B.P. KANUNGO, Principal Chief General Manager

No. 1007/14/2015-CX Dated: 12-10-2015


Withdrawal of Order under 37B of Central Excise Act, 1944 on classification of Coconut Oil packed in small containers – Dated 12-10-2015 – Central Excise

Circular No. 1007/14/2015-CX

F. No. 103/01/2015-CX-3

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

New Delhi, 12th October, 2015

To

Principal Chief Commissioner/Chief Commissioner of Central Excise, Customs and Service Tax (All)

Principal Commissioner of Central Excise, Customs and Service Tax (holding charge of Chief Commissioner) (All)

Web Master, CBEC

Madam/Sir

Subject: – Withdrawal of Order under 37B of Central Excise Act, 1944 on classification of Coconut Oil packed in small containers-reg.

Kind attention is invited to Circular No. 890/10/2009 dated 3.6.2009 by which Board (CBEC) issued Order underSection 37B on classification of Coconut Oil packed in containers of the sizes up to 200ml. References have been received on the subject from field formations on need to review the Circular due to judicial pronouncements on the subject. It was directed in the said Circular that coconut oil packed in small container of sizes upto 200 ml shall be classified under Central Excise Tariff heading 3305.

2.     The issue has been examined and it has been noted that there are decisions on the issue by Hon’ble Tribunals/ Courts wherein it has been held that just because the retail packs of Coconut Oil are in sizes of 200 ml or less, the same cannot be presumed to be meant for use as Hair oil and would not be classifiable under heading no. 3305. Following judgments are relevant in this regard: -

3.1   In case of Raj Oil Mills Ltd. vs. Commissioner, Central Excise [2014 (314) ELT 541/2013-TIOL-1609 CESTAT],Hon’ble Tribunal held that edible Coconut Oil in retail packing of 200ml or less is classifiable under Chapter 15covering Animal or Vegetable Fats and Oils and not under Chapter 33 covering Cosmetics and Toilet Preparation. Civil Appeal filed by the department against the order in the Hon’ble Supreme Court has been dismissed on merits.

3.2   In the case of Capital Technologies Ltd. & Ors. vs CCE, Tirupati reported in [2015(321) ELT 479/2011-TIOL-775-CESTAT], Hon’ble Tribunal examined the issue of classification of Coconut Oil packed in retail packs of 50 ml, 100 ml, 200 ml and 500 ml. After discussing the amendments to Chapter note 3 to Chapter 33 and Section Note 2 to Section VI w.e.f 28.02.2005, Tribunal held that the edible coconut oil packed in retail packs ibid would be classifiable as Coconut oil under heading no. 1513 and not as Hair oil under heading no. 3305. Civil Appeal filed by the department against the order has been dismissed by the Hon’ble Supreme Court on facts only.

4.     In view of the judgments of the Hon’ble Courts, the Central Board of Excise & Customs withdraws Circular No. 890/10/2009-CX dated June 03, 2009. The issue of classification may be decided by the field taking into consideration the facts of the case read with the judicial pronouncements.

5.     Difficulty, if any, in implementing the circular should be brought to the notice of the Board. Hindi version would follow.

(Shankar Prasad Sarma)

Under Secretary (CX.3)

Notification No. : 79/2015 Dated: 13-10-2015


Corrigendum – Notification No. 50/2014 S.O.2752(E) dated 22 October 2014 – 79/2015 – Dated 13-10-2015 – Income Tax

MINISTRY OF FINANCE

(Department of Revenue)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 79/2015

(Income-tax)

New Delhi, the 13th October, 2015

In the notification of the Government of India in the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, number  S.O. 2752(E), dated the 22nd October, 2014, published in the Gazette of India. Extraordinary, Part II, section 3, sub-section (ii), dated the 22nd October, 2014, in Schedule-I,-

(I)    against serial number 13, in column (4), in item (b), after sub-item (xxx), insert “(xxxi) Samta”;

(lI)    against serial number 18.-

(a) in column (5).-

(i) in items (a), (b) and (c), for “(a), (b), and (c)”, read “(a) and (b)” respectively;

(ii) after item (d), insert-

“(e) persons being individuals deriving income from sources other than income from business or profession and residing within the territorial areas mentioned in item (c) of column (4)”;

(b) in column (6), after item (b), insert-

“(c) all cases of persons referred to in corresponding item (e) of column (5) whose principal source of income is ‘salary’”;

(III)   against serial number 19. in column (4), in item (a), for “8″, read “18″:

(IV)   against serial number 24, in column (4), in item (b), after sub-item “18. 562122″, insert “19. 562106″;

(V)    against serial number 26, in column (4), in item (b), after sub-item “46. 562163″, insert “41. 562123″

[F. NO. 187/38/2014 (ITA.I)]

DBT administrative control shifts to Cabinet Secretariat : 12-10-2015


In a development that shows the importance of the direct benefits transfer (DBT) scheme in Prime Minister Narendra Modi’s various initiatives, the administrative control of the DBT division has been shifted to the Cabinet Secretariat from the finance ministry’s expenditure department.

Earlier, the DBT administrative team used to report to the expenditure secretary and the finance minister. It now comes under the cabinet secretary and, hence, the Prime Minister himself.

Business Standard has learnt this move happened around the same time the Unique Identification Authority of India (UIDAI)’s administrative control shifted from NITI Aayog to the ministry of communication and information technology.

Sources said since UIDAI is a full-fledged official programme of the government, an amendment to the Government of India (Allocation of Business) Rules, 1961 was required and a notification was issued. However, since DBT is a scheme, no such amendment is required and no notification was issued either. The sources added only an internal government circular was issued regarding the shift in administrative control.

DBT encompasses various government schemes such as directly transferring subsidy amounts to the bank accounts of beneficiaries of liquid petroleum gas and foodgrain subsidies. It also includes directly crediting Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGS) payments directly to bank accounts.

The shift denotes MGNREGS’ renewed importance under the Modi government, which views it as one of the most efficient ways to alleviate rural distress and increase rural consumption.

As reported by Business Standard earlier, faced with rural distress amid a bad monsoon, the Centre wants to revive MGNREGS. With the Opposition accusing the government of not paying enough attention to rural India, a renewed focus on the job guarantee scheme, which had seen a weak performance last year, could help the government improve its pro-poor outreach.

“The progress of DBT will now be more closely monitored by the Prime Minister’s Office. It also means the Centre’s resources will be more readily available for the scheme,” said a senior official.

It should be noted that the administrative staff of DBT, headed by mission director D K Mittal, remains the same. So does its office space at the Shivaji Stadium Complex in New Delhi.

This is the second time the administrative control of DBT has been changed. In July 2013, it had moved from the erstwhile Planning Commission to the finance ministry.

Source : Business Standard

Notification No. : 78/2015 Dated: 12-10-2015


Income-tax (15th Amendment) Rules, 2015 – 78/2015 – Dated 12-10-2015 – Income Tax

Government of India

Ministry of Finance

Department of Revenue

(Central Board of Direct Taxes)

(Income-tax)

NOTIFICATION NO. 78/2015

New Delhi, the 12th October, 2015

S.O. 2791(E). – In exercise of the powers conferred by section 295, read with section 80DDB of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend theIncome-tax Rules, 1962, namely:-

1.       (1) These rules may be called the Income-tax (15th Amendment) Rules, 2015.

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

2.       In the Income-tax Rules, 1962 (hereinafter referred to as the said rules), in rule 11DD, for sub-rules (2) and (3), the following sub-rules shall be substituted, namely:-

“(2) The prescription in respect of the diseases or ailments specified in sub-rule (1) shall be issued by the following specialists:-

(a) for diseases or ailments mentioned in clause (i) of sub-rule (1) – a Neurologist having a Doctorate of Medicine (D.M.) degree in Neurology or any equivalent degree, which is recognised by the Medical Council of India;

(b) for diseases or ailments mentioned in clause (ii) of sub-rule (1) – an Oncologist having a Doctorate of Medicine (D.M.) degree in Oncology or any equivalent degree which is recognised by the Medical Council of India;

(c) for diseases or ailments mentioned in clause (iii) of sub-rule (1) – any specialist having a post-graduate degree in General or Internal Medicine, or any equivalent degree which is recognised by the Medical Council of India;

(d) for diseases or ailments mentioned in clause (iv) of sub-rule (1) – a Nephrologist having a Doctorate of Medicine(D.M.) degree in Nephrology or a Urologist having a Master of Chirurgiae(M.Ch.) degree in Urology or any equivalent degree, which is recognised by the Medical Council of India;

(e) for diseases or ailments mentioned in clause (v) of sub-rule (1) – a specialist having a Doctorate of Medicine (D.M.) degree in Hematology or any equivalent degree, which is recognised by the Medical Council of India:

Provided that where in respect of any diseases or ailments specified in sub-rule (1), the patient is receiving the treatment in a Government hospital, the prescription may be issued by any specialist working full-time in that hospital and having a postgraduate degree in General or Internal Medicine or any equivalent degree, which is recognised by the Medical Council of India.

(3) The prescription referred to in sub-rule(2) shall contain the name and age of the patient, name of the disease or ailment along with the name, address, registration number and the qualification of the specialist issuing the prescription:

Provided that where the patient is receiving the treatment in a Government hospital, such prescription shall also contain the name and address of the Government hospital.”

3.       In the said rules, in Appendix-II, Form No. 10-I shall be omitted.

[F. No.142/20/2015-TPL]

(Arju Garodia)

Under Secretary (TPL)

Note .-The principal rules were published in the Gazette of India vide notification number S.O. 969(E), dated the 26th March, 1962, and was last amended by vide notification number .S.O. 2663(E), dated the 29th October, 2015.

No. PRESS RELEASE Dated: 10-10-2015


Clarification regarding fresh Income tax notice to Nokia India – Circular – Dated 10-10-2015 – Income Tax

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

PRESS RELEASE

New Delhi, 10th October, 2015

Subject: Clarification regarding fresh Income tax notice to Nokia India.

There have been some reports in the media yesterday and today that the Income tax Department has issued fresh demand notice to Nokia India. These reports are erroneous.

An assessment order was passed in the case of Nokia India Pvt Ltd for Assessment Year 2010-11 in August 2015. The tax demand raised by this order was primarily based on issues arising from earlier orders.

The demand arising from the assessment order passed in August 2015, along with the demands raised earlier are already being considered under Mutual Agreement Procedure (MAP) of the India-Finland tax treaty by the Competent Authorities in both countries.

(Shefali Shah)

Pr. Commissioner of Income Tax (OSD)

Official Spokesperson, CBDT

Notification No. : S.O. 2501(E) Dated: 11-9-2015


Set up a sector specific Special Economic Zone for biotech and pharmaceuticals sector at village Hadapsar/Manjri, Village, District-Pune in the State of Maharashtra – S.O. 2501(E) – Dated 11-9-2015 – Special Economic Zone

MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

NOTIFICATION

New Delhi, the 11th September, 2015

S.O. 2501(E).-Whereas, M/s. Serum Bio-pharma Park, a Private Organization of the State of Maharashtra, 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 biotech and pharmaceuticals sector at village Hadapsar/Manjri, Village, District-Pune in the State of Maharashtra;

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 an area of 23.1793 hectares at above Special Economic Zone vide Ministry of Commerce and Industry Notification Number S.O. 1833 (E) dated 29th December, 2005;

And, whereas, M/s. Serum Bio-pharma Park has now proposed for de-notification of 10.7657 hectares at the above Special Economic Zone;

And, whereas, the State Government of Maharashtra has given its “No Objection” to the proposal vide letter No. SEZ-2015/CR-5/Ind-2, dated 12th May, 2015;

And, whereas, the Development Commissioner, SEEPZ Special Economic Zone has recommended the proposal for de-notification of an area of 10.7657 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 10.7657 hectares, thereby making resultant area as 12.4136 hectares, comprising the survey numbers and the area given below in the table, namely:-

TABLE

S. No.

Name of the Village

Survey No.

Area (in hectares)

1

Hadapsar