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78 – 23-6-2016


PERMITTING WRITING OF OPTIONS AGAINST CONTRACTED EXPOSURES BY INDIAN RESIDENTS

A.P. (DIR SERIES 2015-16) CIRCULAR NO.78DATED 23-6-2016

Attention of Authorised Dealer Category – I (AD Cat – I) banks is invited to Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 dated May 3, 2000 (Notification No. FEMA/25/RB-2000 dated May 3, 2000) as amended from time to time and A.P. (DIR Series) circular no. 32 dated December 28, 2010 - Comprehensive Guidelines on Over the Counter (OTC) Foreign Exchange Derivatives and Overseas Hedging of Commodity Price and Freight Risks, as amended from time to time. Attention is also invited to Reserve Bank circular No. DBOD.No.BP.BC. 86/21.04.157/2006-07 dated April 20, 2007 on Comprehensive Guidelines on Derivatives as well as the modifications issued through circular No. DBOD.No.BP.BC. 44/21.04.157/2011-12 dated November 2, 2011.

2. As announced in the Bi-Monthly Monetary Policy Statement on April 7, 2015, in order to encourage participation in the Over the Counter (OTC) currency options market and improve its liquidity, it has been decided to permit resident exporters and importers of goods and services to write (sell) standalone plain vanilla European call and put option contracts against their contracted exposure, i.e. covered call and covered put respectively, to any AD Cat-I bank in India subject to operational guidelines, terms and conditions given in Annex I to this circular.

3. Necessary amendments (Notification No. FEMA 365 /2016-RB dated June 1, 2016) to Foreign Exchange Management (Foreign Exchange Derivatives Contracts) Regulations, 2000 (Notification No. FEMA.25/RB-2000 dated May 3, 2000) (Regulations) have been notified in the Official Gazette vide G.S.R. No. 571 (E) dated June 1st, 2016, a copy of which is enclosed (Annex II).

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

5. The directions contained in this circular have been issued under Sections 10(4) 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.

6. These guidelines will be reviewed after one year based on experience.

Annex I

Writing of Covered Call and Put Currency Option contracts by Indian exporters and importers of goods and services

1. Participants

a. Market-makers: AD Category-I banks in India who have Reserve Bank’s approval to run cross-currency and foreign currency-Indian Rupee options books.
b. Users: Listed companies and their subsidiaries/joint ventures/associates having common treasury and consolidated balance sheet or unlisted companies with a minimum net worth of Rs. 200 crore provided appropriate disclosures are made in the financial statements as prescribed by the Institute of Chartered Accountants of India (ICAI).

2. Product

a. Covered Call: A resident exporter may write (sell) a standalone plain vanilla European call option contract to an AD Category-I bank in India against the cover of contracted exposure arising out of exports of goods and services from India.
b. Covered Put: A resident importer may write (sell) a standalone plain vanilla European put option contract to an AD Category-I bank in India against the cover of contracted exposure arising out of imports of goods and services into India.
c. The use of Covered option shall not be considered as a hedging strategy.
d. Being a combination of an underlying cash instrument and a generic derivative product, covered call and covered put options shall be treated as structured derivative products in terms of the Comprehensive Guidelines on Derivatives issued vide Circular DBOD.No.BP.BC. 86/21.04.157/2006-07 dated April 20, 2007, as amended from time to time.

3. Operational guidelines, terms and conditions

a. All the guidelines governing derivative products in general and structured products in particular of the circular mentioned in para. (2)(d) above and subsequent amendments thereof will apply, mutatis mutandis, to covered options.
b. AD Category-I banks may enter into covered options with their exporter or importer constituents only after obtaining specific approval in this regard from their competent authority (Board/Risk Committee/ALCO) and as per the terms and conditions contained in A.P. (DIR Series) Circular No. 32 dated December 28, 2010, as amended from time to time, on running Cross Currency and Foreign Currency – INR options book.
c. The responsibility of assessing the strength of risk management systems, financial soundness of the option writer shall rest with the concerned AD Cat-I bank. AD Category I banks may stipulate safeguards, such as, continuous profitability, higher net worth, turnover, etc. depending on the scale of forex operations and risk profile of the option writers.
d. Covered options may be written against either a portion or the full value of the underlying.
e. AD Cat-I banks shall treat the exposures against which a covered option has been written as an “unhedged exposure”. Accordingly, the guidelines issued vide Reserve Bank Circular DBOD.No.BP.BC. 85/21.06.200/2013-14 dated January 15, 2014 on Capital and Provisioning Requirements for Exposures to entities with Unhedged Foreign Currency Exposure shall apply.
f. Covered option contracts may be written for a period up to the maturity of the underlying subject to a maximum maturity period of 12 month.
g. Covered options may be freely cancelled and rebooked subject to the verification of the underlying by the AD Cat-I bank concerned.
h. For eligible underlying contracted exposures, the option seller may write the covered option either as a single FCY-INR option or as separate options for the FCY-USD and USD-INR legs.
i. The operational guidelines and terms and conditions as laid down under “Contracted Exposures” – Forward Foreign Exchange Contracts, Cross Currency Options (not involving Rupee) and Foreign Currency-INR Options of the A.P. (DIR Series) No. 32 dated December 28, 2010, as amended from time to time, shall be applicable to covered options to the extent relevant.
j. Except as mentioned in these guidelines, covered options shall not be undertaken in combination with any other derivative or cash instrument.
k. As provided under Comprehensive Guidelines on Derivatives, as amended from time to time, authorised dealers may maintain cash margin/liquid collateral in respect of covered options sold to them by exporters and importers, if necessary.
l. AD Cat-I banks entering into covered options with their constituents may report the same to CCIL’s reporting platform for OTC foreign exchange derivatives in terms of our circular FMD.MSRG.No.75/02.05.002/2012-13 dated March 13, 2013, as amended from time to time.

4. In addition to the above, “General Instructions for OTC forex derivative contracts entered by Residents in India,” as laid down under Section (I)(B) of the A.P. (DIR Series) No. 32 dated December 28, 2010, as amended from time to time, shall be applicable, mutatis mutandis, to covered options.

Annex II

Notification No. FEMA.365/2016-RB June 1, 2016

Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Amendment) Regulations, 2016

In exercise of the powers conferred by clause (h) of sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank hereby makes the following amendments in the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 (Notification No.FEMA 25/2000-RB dated 3rd May 2000) namely:—

Short Title and Commencement

1. (i) These Regulations may be called the Foreign Exchange Management (Foreign Exchange Derivative Contracts) (Amendment) Regulations, 2016.

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

Amendment of Regulations

2. (i) The existing Regulation 4 shall be substituted by the following:

“A person resident in India may enter into a foreign exchange derivative contract in accordance with provisions contained in Schedule I, to hedge an exposure to risk or otherwise, in respect of a transaction permissible under the Act, or rules or regulations or directions or orders made or issued thereunder.”

(ii) In Schedule I, after the existing paragraph ‘B’, the following shall be added, viz.:

“(C) Writing of standalone options against underlying exposure

A person resident in India may enter into cross-currency option contract (not involving the rupee as one of the currencies) and/or foreign currency – rupee option contract with an authorised dealer against an underlying foreign exchange exposure in respect of a transaction for which sale and/or purchase of foreign currency is permitted under the Act or the rules or regulations or directions or orders made or issued thereunder subject to such terms and conditions as may be stipulated by the Reserve Bank from time to time.”

77 [(2)/10(R)] – 23-6-2016


FEM (FOREIGN CURRENCY ACCOUNTS BY A PERSON RESIDENT IN INDIA) REGULATIONS, 2015 – REGULATORY RELAXATIONS FOR STARTUPS

A.P. (DIR SERIES 2015-16) CIRCULAR NO.77[(2)/10(R)]DATED 23-6-2016

Attention of Authorised Dealers Banks is invited to the Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015, notified vide Notification No. FEMA 10(R)/2015-RB dated January 21, 2016 and A.P (DIR Series) Circular No. 51 dated February 11, 2016 with respect to regulatory relaxations for startups.

2. In line with the Government of India’s startup initiative, it has been decided that an Indian startup, having an overseas subsidiary, may open a foreign currency account with a bank outside India for the purpose of crediting to the account the foreign exchange earnings out of exports/sales made by the said startup or its overseas subsidiary. The balances held in such accounts, to the extent they represent exports from India, shall be repatriated to India within the period prescribed for realization of exports, in Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 dated January 12, 2016, as amended from time to time.

3. In addition, payments received in foreign exchange by an Indian startup arising out of sales/export made by the startup or its overseas subsidiaries will be a permissible credit to the Exchange Earners Foreign Currency (EEFC) account maintained in India by the startup.

4. A startup will mean an entity which complies with the conditions laid down in Notification No. GSR 180(E) dated February 17, 2016 issued by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India.

5. Further, the existing facility of opening foreign currency account outside India, available to the Life Insurance Corporation of India or the General Insurance Corporation of India and their subsidiaries for the purpose of meeting the expenditure incidental to the insurance business carried on by them has now been liberalised. Accordingly, any insurance/reinsurance company registered with the Insurance Regulatory and Development Authority of India (IRDA) may open a foreign currency account with a bank outside India to carry out insurance/reinsurance business.

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

7. Reserve Bank has since amended the subject Regulations accordingly through the Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) (Amendment) Regulations, 2016 which have been notified vide Notification No. FEMA 10(R)/(1)/2016-RB dated June 1, 2016, vide G.S.R.No.570(E) dated June 1, 2016. Necessary amendments have also been carried out in Master Direction No. 14 on Deposits and Accounts.

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

Notification No. 11/2016 22-6-2016


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

Notification No j /2016

New Delhi, 22-June, 2016

Procedure for online submission of statement of deduction of tax under sub-section (3) of section 200 and statement of collection of tax under proviso to sub-section (3) of section 206C of the Income-tax Act, 1961 read with rule 31 A(5) and rule 31 AA(5) of the income-tax Rules, 1962 respectively

The provisions relating to the statement of deduction of tax under sub-section (3) of section 200 and the statement of collection of tax under proviso to sub-section (3) of section 206C of the Income-tax Act, 1961 (the Act) are prescribed under Rule 31A and Rule 31AA of the Income-tax Rules, 1962 (the Rules) respectively. As per sub-rule (5) of rule 31A and sub-rule (5) of rule 31AA of the Rules, the Director General of Income-tax (Systems) shall specify the procedures, formats and standards for the purposes of furnishing and verification of the statements and shall be responsible for the day to day administration in relation to furnishing and verification of the statements in the manner so specified.

  1. In exercise of power conferred by sub-rule (5) of rule 31A and sub-rule (5) of rule 31AA of the Rules, the Principal Director General of Income-tax (Systems) hereby lays down the following procedures of registration in the e-filing portal, the manner of the preparation of the statements and submission of the statements as follows:
  2. The deductors/collectors will have the option of online filing of e-TDSITCS returns through e-filing portal or submission at TIN Facilitation Centres. Procedure for filing e­TDSTTCS statement online through e-filing portal is as under:
    1. a.    Registration: The deductor/collector should hold valid TAN and is required to be registered in the e-filing website (https://incometaxindiaefiling.gov.in/) as “Tax Deductor & Collector” to file the “e-TDS/e-TCS Return”.
    2. b.    Preparation: The Return Preparation Utility (RPU) to prepare the TDS/TCS Statement and File Validation Utility(FVU) to validate the Statements can be downloaded from the tin-nsdl website (https://www.tin-nsdl.com/). The statement is required to be uploaded as a zip file and submitted using either Digital Signature Certificate (DSC) or Electronic Verification Code (EVC). For DSC mode, the signature for the zip file can be generated using the DSC Management Utility (available               under                    Downloads         in                the e-Filing  website
      http://incometaxindiaefiling.govin/). Alternatively, deductor/collector can e-Verify using EVC.

Notification No. 49/2016 22-6-2016


[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]

NOTIFICATION

New Delhi, the 22nd June, 2016

INCOME-TAX

S.O. 2179(E).- In exercise of the powers conferred by section 101, 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 (16th Amendment) Rules, 2016.

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

2. In the Income-tax Rules, 1962, in rule 10U,-

(i) in sub-rule (1), in clause (d), for the figures, letters and words “30th day of August, 2010”, the figures, letters and words “1st day of April, 2017” shall be substituted;

(ii) in sub-rule (2), for the figures, letters and words “1st day of April, 2015”, the figures, letters and words “1st day of April, 2017” shall be substituted.

[Notification No. 49/2016/ F. No. 370142/10/2016-TPL]

(Niraj Kumar)

Under Secretary (Tax Policy and Legislation)

Note: The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (ii) vide number S.O. 969 (E) dated the 26th March, 1962 and was last amended vide notification number S.O. 2151(E), dated the 20th June, 2016.

Notification No. 48/2016 20-6-2016


[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

NOTIFICATION

New Delhi, the 20th June, 2016

S.O. 2151(E).-In exercise of the powers conferred by section 285BA read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Government with respect to registration of persons, due diligence and maintenance of information, and the Central Board of Direct Taxes for matters relating to statement of reportable accounts, hereby make the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income–tax (15th Amendment) Rules, 2016.

(2) Save as otherwise provided in these rules, they shall come into force on the date of their publication in the Official Gazette.

2. In the Income-tax Rules 1962 (hereafter referred to as the said rules) in rule 114F, in clause (6), in the Explanation, in clause (D),-

(a) in sub-clause (ii), for the word, brackets and figure “clause (3)”, the words, brackets and figure “clause (3), which is not located in any of the jurisdictions specified by the Central Board of Direct Taxes in this behalf” shall be substituted;

(b) for sub-clause (iii), the following sub-clause shall be substituted, namely:- “(iii) not a withholding foreign partnership or a withholding foreign trust;”,

3. In the said rules, in rule 114H,- (a) in sub-rule (3),- (I) in clause (b), in sub-clause (i), for item (D), the following item shall be substituted, namely:- “(D) in case of U.S. reportable account, any standing instructions to transfer funds to an account maintained in a country or territory outside India and in case of other reportable account, any standing instructions (other than with respect to a depository account) to transfer funds to an account maintained in a country or territory outside India; or”;

(II) in clause (c), in sub-clause (ii), for item (E), the following item shall be substituted, namely:- “(E) in case of U.S. reportable account, any standing instructions to transfer funds currently in effect and in case of other reportable account any standing instructions (other than with respect to a depository account) to transfer funds currently in effect:”;

(III) in clause (d), for sub-clause (ii), the following sub-clause shall be substituted, namely:- “(ii) in case of a U.S. reportable account which is low value account as on the 30th June, 2014, shall be completed by the 30th June, 2016 and in case of other reportable account which is high value account as on the 31st December, 2015, shall be completed by the 31st December, 2016;”; (b) in sub-rule (5), in clause (e), for sub-clause (i), the following sub-clause shall be substituted, namely:-

“(i) review of pre-existing entity accounts with an aggregate account balance or value that exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as on the 30th June, 2014 (in case of a U.S. reportable account) shall be completed by the 30th June, 2016 and review of pre-existing entity accounts with an aggregate account balance or value that exceeds an amount equivalent to two hundred and fifty thousand U.S. dollars as on the, 31st December, 2015 (in case of other reportable account) shall be completed by the 31st December, 2016;”.

4. In the said rules, in Appendix-II, with effect from 1st January, 2017, for Form 61B, the following form shall be substituted, namely:-

Notification No. 47/2016 17-6-2016


[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (ii)]

MINISTRY OF FINANCE

(DEPARTMNET OF REVENUE)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION New Delhi, the 17th June, 2016

No. 47/2016

INCOME TAX

S.O. (E).- In exercise of the powers conferred by sub-section (1F) of section 197A of the Income-tax Act, 1961 (43 of 1961) and in supersession of the notification of the Government of India, Ministry of Finance (Department of Revenue) number S.O. 3069 (E) dated 31st December, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), the Central Government hereby notifies that no deduction of tax under Chapter XVII of the said Act shall be made on the payments of the nature specified below, in case such payment is made by a person to a bank listed in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), excluding a foreign bank, or to any payment systems company authorised by the Reserve Bank of India under Sub-section (2) of Section 4 of the Payment and Settlement Systems Act, 2007 (51 of 2007), namely

(i) bank guarantee commission;

(ii) cash management service charges;

(iii) depository charges on maintenance of DEMAT accounts;

(iv) charges for warehousing services for commodities;

(v) underwriting service charges;

(vi) clearing charges (MICR charges) including interchange fee or any other similar charges by whatever name called charged at the time of settlement or for clearing activities under the Payment and Settlement Systems Act, 2007;

(vii) credit card or debit card commission for transaction between merchant establishment and acquirer bank.

2. This notification shall come into force from the date of its publication in the Official Gazette.

[Notification No. 47/2016/ F. No. 275/53/2012 – IT(B)]

( Sandeep Singh)

Under Secretary to the Govt. of India

To,

The Manager,

Government of India Press, Ring Road,

Mayapuri, New Delhi – 110054

Notification No. 46/2016 17-6-2016


[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (ii)]

 

 

MINSTRY OF FINANCE

(DEPARTMENT OF REVENUE)

(CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION

New Delhi, the 17th June, 2016

No.46 /2016

INCOME-TAX

S.O. (E).-In exercise of the powers conferred by sub-section (1F) of section 197A of the Incometax Act, 1961 (43 of 1961) (hereinafter referred to as the said ‘Act’), the Central Government hereby notifies that no deduction of tax under Chapter XVII of the said Act shall be made on the payments of the nature specified in clause (23DA) of section 10 of the said Act received by any securitisation trust as defined in clause (d) of the Explanation to section 115TC of the said Act.

2. This notification shall come into force from the date of its publication in the Official Gazette.

[Notification No.46 /2016 F.No. 275/16/2016-IT(B)]

(Sandeep Singh)

Under Secretary to the Govt. of India

 

 

To

The Manager,

Government of India Press, Ring Road,

Mayapuri, New Delhi-110054

76 – 16-6-2016


EXIM BANK’S GoI SUPPORTED LINE OF CREDIT OF USD 2 BILLION TO THE GOVERNMENT OF PEOPLE’S REPUBLIC OF BANGLADESH

A.P. (DIR SERIES 2015-16) CIRCULAR NO.76DATED 16-6-2016

Export-Import Bank of India (Exim Bank) has entered into an Agreement dated March 09, 2016 with the Government of the People’s Republic of Bangladesh, for making available to the latter, a Government of India supported Line of Credit (LOC) of USD 2 billion (USD Two billion) for financing various social and infrastructure development projects such as Power, Railways, Road Transportation, Information and Communication Technology, Shipping, Health and Technical Education Sectors in Bangladesh. The goods, machinery, equipment and services including consultancy services from India for exports under this agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this agreement. Out of the total credit by Exim Bank under this agreement, the goods and services including consultancy services of the value of at least 75% of the contract price shall be supplied by the seller from India and the remaining 25% goods and services (other than consultancy services) may be procured by the seller for the purpose of the eligible contract from outside India. Further in case of projects involving civil construction, the eligible goods upto the contract price supplied by the seller from India may be further reduced from 75% to 65% and further reduction can be considered on a case to case basis, provided the sourcing is not from a third country.

2. The credit agreement under the LOC is effective from May 27, 2016 and the date of execution of agreement is March 09, 2016. Under the LOC, the terminal utilization period is 48 months from scheduled completion date of contract in case of project export and 72 months from execution of the Credit Agreement in case of other supply contracts.

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

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

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

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

 

No. 195/05/2016 Dated: 15-6-2016


GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF EXCISE AND CUSTOMS
SERVICE TAX WING
NEW DELHI

CIRCULAR NO

195/05/2016-SERVICE TAX, Dated: June 15, 2016

Subject: Speedy disbursal of pending refund claims of exporters of services under rule 5 of the CENVAT Credit Rules, 2004

I am directed to refer to Board’s circular No. 187/6/2015-Service Tax dated 10th November, 2015 on the above subject and to inform that in the light of some representations received in this context from accounting bodies, industry associations and others, the following points are clarified.

2.0 Applicability of the scheme

2.1 At the outset it is reiterated that 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. It has to operate within the general parameters of the notifications governing such refunds.

2.2 This scheme is applicable only 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 the date of the issue of the circular dated 10-11-2015. As clarified therein, claims which have been remanded are out of the purview of this scheme.

3.0 Additional documents to be submitted (i.e. in addition to those required to be filed along with the claim)

3.1 At the outset, the relevance of the certificate has to be clearly understood. It is not a substitute for verification by the refund sanctioning authority. It will ensure diligence on the part of the claimant and the statutory auditor, which will make him eligible for a provisional payment of 80% of the claimed amount It had been clarified in the circular that the decision to grant provisional payment is an administrative order and not a quasi-judicial order and should not be subjected to review. There is thus no reason to treat either the certificate or the provisional payment with fear or suspicion.

3.2 The certificate has to be furnished by the statutory auditor in the case of companies, and from a chartered accountant in the case of assessees who are not companies, in the prescribed format. The phrase “statutory auditor” will refer to the auditor who prepares the financial statements under the Companies Act 2013. The certificate cannot be furnished by a Cost and Management Accountant or a Company Secretary. In the case of companies, it cannot be furnished by a Chartered Accountant who is not the statutory auditor.

3.3 The certificate has to be given in the format given in Annexure-1 to the circular dated 10-11-2015. During the conference of Service Tax Chief Commissioners and Commissioners in November 2015 itself, it had been clarified that “the averments in Annexure-1 have to be made and any general additional remarks, which do not negate the wording of paragraphs 1.1 to 1.4, may be ignored.” Inspite of this it has been reported that general disclaimers by the auditor are resulting in the rejection of the certificate and consequently the claim for 80% provisional payment.

3.4 It must be understood that auditors while discharging their duties are bound by the provisions of the statute governing them as well as Guidance Notes, Accounting Standards etc relating to their profession. The Institute of Chartered Accountants of India has issued Guidance Notes on reports and certificates issued by auditors. These Guidance Notes relate to situations where the auditor has freedom with respect to the wording of a certificate as well as to situations where he has to adhere to a prescribed format. In both situations the auditor has to indicate the manner in which the audit was done, assumptions, limitations in scope and reference to information and explanations obtained in the certificate. Adherence of the auditors to these requirements should not be considered to be violations of the circular. If at all, by mentioning that they have adhered to the various legal and accounting requirements, they are adding value to their certificate. It is clarified once again that as long as the four points which are contained in Annexure-1 to the circular dated 10-11-2015 are present, the certificate should not be rejected on the ground of any disclaimers which the auditor has to give, owing to the Guidance Notes.

4.0 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.

F.No.137/62/2015-Service Tax

(Rajeev Yadav)
Director (Service Tax)

Notification No. 45/2016 14-6-2016


Government of India

Ministry of Finance

Department of Revenue Central Board of Direct Taxes

Notification No. 45/2016

New Delhi, the 14th June, 2016

CBDT- startup – Tax Exemption on Investments above Fair Market Value

S.O.- In exercise of the powers conferred by the clause (ii) of the proviso to clause (viib) of subsection (2) of section 56 of the Income-tax Act, 1961 (43 of 1961), the Central Government, hereby notifies the ‘classes of persons’ for the purposes of the said clause as being the ‘person’ defined under sub-section (31) of section 2 of the said Act, being resident, who make any consideration exceeding the face value for issues of shares of a ‘startup’ company.

Explanation.-For the purposes of this notification, “startup” shall mean a company in which the public are not substantially interested and which fulfills the conditions specified in the notification of the Government of India, Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, number G.S.R.180(E), dated the 17th, February, 2016, published in the Gazette of India, Extraordinary, part 11, section 3, sub-section (i), dated the 18th February, 2016.

 

(F. No. 173/ 103/2016-ITA-I)

(Rohit Garg)

Deputy Secretary to the Govt. of India

Notification No. : 25/2016 Dated:14-06-2016


[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

25/2016-Central Excise, Dated: June 14, 2016

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) 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.67/95-Central Excises, dated the 16th March, 1995, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 259(E), dated the 16th March, 1986, namely:-

In the said notification, in the proviso, in item (i), for the words ”Free Trade Zone” the words“Special Economic Zone” shall be substituted.

F. No. 354/34/2016-TRU

(Anurag Sehgal)
Under Secretary to the Government of India

Note: The principal notification No.67/95-Central Excises, dated the 16th March, 1995, was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 259(E), dated the 16th March, 1995 and was last amended vide notification No.19/2014-Central Excise, dated the 11th July, 2014, published vide number G.S.R. 450(E), dated the 11th July, 2014.

Notification No. : 24/2016 Dated:14-06-2016


[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

24/2016-Central Excise, Dated: June 14, 2016

In exercise of the powers conferred by sub – section (1) of section 5A of the Centr al 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 136 of the Finance Act, 2001(14 of 2001), 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 Min istry of Finan ce (Department of Revenue), No.214/86 – Central Excise s , dated the 25 th March, 1986 , published in the Gazette of India, Extraordinary, Part II, Section 3, Sub – section (i) vide number G.S.R. 547 (E), dated the 27th March, 1986 , namely: -

In the said notification, for the words “free trade zone”, wherever they occur, the words“Special Economic Zone” shall be substituted.

F. No. 354/34/2016 – TRU

(Anurag Sehgal)
Under Secretary to the Government of India

Note: The principal notification No. 214/86 – Central Excise s , dated the 25th March, 1986 , was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub – section (i), vide number G.S.R. 547(E), dated the 27th March, 1986 and was last amended vide notification No. 48/2006 – Central Excise, dated the 30 th December, 2006, published vide number G.S.R. 804(E), dated the 30 th December, 2006.

1031/19/2016-CX – 14-6-2016


GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF EXCISE AND CUSTOMS
NEW DELHI

CIRCULAR NO

1031/19/2016-CX, Dated: June 14, 2016

Subject: Levy of excise duty on readymade garments and made articles of textiles bearing a brand name or sold under a brand name and having a retail sale price of Rs. 1000 or more – reg.

Representations have been received from the trade regarding the scope of the levy of excise duty on readymade garments and made articles of textiles bearing a brand name or sold under a brand name and having a retail sale price of Rs. 1000 or more in this year’s Budget.

2. The issue raised is whether excise duty would be chargeable on readymade garments or made up articles of textiles which are sold by a retail store which merely affixes the retail sale price on the readymade garments or made up articles of textiles which are purchased by such retail store from the open market.

3. The issue has been examined in the Ministry. The present levy is not on all readymade garments and made ups, and is restricted only to readymade garments and made up articles of textiles bearing a brand name or sold under a brand name and having retail sale price (RSP) of Rs. 1000 or above. Further, to avoid disputes and minimize duty evasion, it has also been provided that affixing a brand name on the product, labeling or relabeling of its containers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to manufacture.

3.1 For this purpose, “Brand name” means a brand name, whether registered or not, that is to say, a name or a mark, such as a symbol monogram, label, signature or invented words or any writing which is used in relation to a product, for the purpose of indicating, or so as to indicate, a connection in the course of trade between the product and some person using such name or mark with or without any indication of the identity of that person.

4. However, such retailer shall not be liable to pay excise duty if:

a) the retail sale price of such readymade garments or made up articles of textiles is less than Rs. 1000, or

b) the aggregate value of clearances for home consumption by such person is less than Rs. 1.5 crore in a year [provided aggregate value of clearances during previous financial year was less than Rs. 4 crore].

5. Further, merely because the outlets [shop] of a retailer, from where readymade garments or made ups are sold, has a name, say, M/s XYZ and Sons, the readymade garments or made ups sold from such outlet [shop] cannot be held as branded readymade garments or made ups and become liable to excise duty. Needless to say, deemed manufacture and liability to excise duty will arise only if such retailer affixes a brand name on the readymade garments and affixes a label bearing the RSP on the packages containing the readymade garments of Rs. 1000 or above.

6. Further, it is hereby directed that field formations shall not visit individual retail outlets or retail chains, except based on specific inputs regarding duty evasion and with the approval of the jurisdictional Commissioner or Additional Director General or above.

7. The above position may be brought to the notice of formations under your charge for strict compliance. Difficulties, if any, faced in the implementation of the instructions may be brought to the notice of the Ministry at an early date.

[F. No. 332/5/2016-TRU]

(Devi Prasad Misra)
Technical Officer (TRU)

GST: With Rajya Sabha poll boost, Arun Jaitley flies to Kolkata : 14-06-2016


Finance minister Arun Jaitley will meet the empowered committee of state finance ministers to discuss the contours of the Goods and Services Tax Bill (GST) at a two-day meeting in Kolkata starting Tuesday. The recent addition to the ruling alliance’s strength in the Upper House and the indications that a clutch of non-NDA parties like Trinamool Congress, CPI(M) and NCP could support the tax reform have brightened the chances of GST Constutional Amendment Bill getting passed by the Rajya Sabha in the monsoon session.

Minister of state for finance Jayant Sinha was quoted as saying on Monday that the new indirect tax regime through GST would be rolled out from April 1, 2017. “If we can pass it in the monsoon session (of Parliament beginning next month), we can implement it in April 1, 2017,” Sinha told a news agency.

Currently, the empowered committee is headed by West Bengal finance minister Amit Mitra, which is likely to talk out issues, including exemptions list and levy of tax over tobacco products.

The Narendra Modi government is targeting to reach a political consensus over the proposed GST, so that it could clear the floors of Parliament in the upcoming session next month.

“Our expectation is that we will get support from many parties. We would like it to be passed with a national consensus, so we would like all parties to approve it. In the Lok Sabha when the Constitution amendment was passed, it was passed unanimously. So, we would like it to be passed in the Rajya Sabha unanimously as well,” Sinha told the news agency.

According to reports, the GST Bill, which is expected to be one of the biggest tax reforms in recent times, has also been discussed at the recently held the BJPnational executive meet in Allahabad.

The Congress has been stubborn in demanding some crucial changes in the GST Constitutional Amendment Bill, including mentioning the GST rate in the Constitution. The government has indicated that it is willing to drop a plan to introduce a 1% tax on inter-state transactions. The tax was mulled in view of the fact that GST would help consuming states more than maufacturing states.

Source : Financial Express

Government drafting separate bankruptcy law for financial companies : Jayant Sinha : 14-06-2016


Having overhauled the century-old bankruptcy laws for companies, the government will now bring a new insolvency law for banks and financial institutions to vest with depositors the first right over assets of a defunct entity.

In an interview to PTI, Minister for State for Finance Jayant Sinha said the new legislation that is in the process of being drafted will help in quick winding up of stressed banks, NBFCs and microfinance institutions while safeguarding the interest of small savers.

“We are also looking at additional legislation for resolution of bankruptcy in financial firms,” he said.

Last month, Parliament passed the Insolvency and Bankruptcy Code that unifies more than four overlapping sets of laws and aims to slash time taken to wind up a dying company or recover dues from a defaulter.

The inability to shut loss-making firms and collect dues had locked up funds at banks and damped lending and investment. The government is setting up infrastructure to operationalise the law, he said.

Financial firms, Sinha said, “by their characteristics, have depositors of money as well. So we have to come up with appropriate resolution processes for orderly winding down of financial firms. It will be a new law.

“We are working on that as well. So this is more in terms of the structural reforms we are doing which is to look at the resolution and insolvency process”.

The new law will deal with financial institutions including banks, NBFCs, and other financial institutions that have money deposited, he said.

Asked whether the depositors would have first charge on liquidation, he said, “let’s wait for that legislation to be drafted, but obviously yes depositor money is first in line We are working on that”.

Sinha said the government is also planning to come out with comprehensive law — Enforcement of Security Interest and Recovery of Debt Laws and Miscellaneous Provisions (Amendment) Bill, 2016 — to amend the debt recovery laws with an overall objective of improving the ease of doing business.

“We are making amendments to the DRT and Sarfaesi Act,” he said.

The bill, which was introduced in the Lok Sabha last month, seeks to amend four legislations — Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002, the Recovery of Debts due to Banks and Financial Institutions Act, 1993, the Indian Stamp Act, 1899 and the Depositories Act, 1996.

Source : PTI

 

DCB Bank launches Aadhaar-based ATM in Bengaluru; to expand facility : 14-03-2016


DCB Bank, on Monday, launched a “card-less and PIN-less” ATM in Bengaluru. The ATM accepts Aadhaar number and Aadhaar fingerprint (biometric) instead of ATM / debit card and PIN to dispense cash from the bank account.

Launching the facility, Nasser Munjee, Chairman, DCB Bank, said, “Bengaluru is an important centre for us. We are delighted to launch first Aadhaar-based ATM, a unique and transformative facility for users. These ATMs are testimony to our commitment to invest in customer facing technology and promote a new way of banking.”

The bank had, in April launched a pilot Aadhaar-based ATM in Mumbai. This was followed by launch of Aadhaar-based ATMs in Odisha and Punjab.

“Now the bank plans to upgrade its entire 400-plus ATMs to provide Aadhaar-based functionality in the next six months. Currently, only DCB Bank customers will be able to use this facility,” Munjee said.

Nandan Nilekani, Chairperson and Co-founder of EkStep Foundation, a non-profit literacy organisation, after inaugurating the facility said, “I am delighted that DCB Bank is launching an Aadhaar-based ATM in Bengaluru, the first such facility in the city. I am confident the ATM will provide Aadhaar cardholders a convenient way to withdraw cash.”

Source : Economic Times

Notification No. S.O. 2137(E) 13-06-2016


SECTION 4 OF THE SPECIAL ECONOMIC ZONES ACT, 2005 – SALITRE DEVELOPERS PVT. LTD.

NOTIFICATION NO. SO 2137(E) [F.NO.F.1/9/2016-SEZ]DATED 13-6-2016

Whereas, M/s. Salitre Developers Private. Ltd. has 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 IT/ITES at Outer Ring Road, Rachanahalli Village, Nagavara, District- Bangalore, in the State of Karnataka;

And, whereas, the Central Government is satisfied that requirements under sub-section (8) of section 3 of the said Act, and other related requirements are fulfilled and it has granted letter of approval under sub-section (10) of section 3 of the said Act for development, operation and maintenance of the above sector specific Special Economic Zone on 21st April, 2016;

Now, therefore, the Central Government, in exercise of the powers conferred by 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, hereby notifies the 4.05 hectares area at above location with survey numbers given in the table below as a Special Economic Zone, namely:

TABLE

S.No. Name of Village Survey No. Area (in hectares)
1. Rachanahalli, Nagavara 8/4P 0.19
2. 8/5P 0.27
3. 31/1P 0.07
4. 31/2P 0.07
5. 31/3P 0.08
6. 31/4P 0.23
7. 31/5P 0.27
8. 44/2P 0.39
9. 44/3P 0.83
10. 45/1P 0.48
11. 45/2P 0.87
12. 46/1P 0.06
13. 46/2P 0.05
14. 46/3P 0.08
15. 47/2B P 0.12
Total 4.05

And, therefore, the Central Government, in exercise of the powers conferred by sub-section (1) of section 13 of the Special Economic Zones Act, 2005 (28 of 2005), hereby constitutes a Committee to be called the Approval Committee for the above Special Economic Zone for the purposes of section 14 of the said Act consisting of the following Chairperson and Members, namely:—

1. Development Commissioner of the Special Economic Zone Chairperson ex officio;
2. Director or Deputy Secretary to the Government of India, Ministry of Commerce and Industry, Department of Commerce or his nominee not below the rank of Under Secretary to the Government of India Member ex officio;
3. Zonal Joint Director General of Foreign Trade having territorial jurisdiction over the Special Economic Zone Member ex officio;
4. Commissioner of Customs or Central Excise having territorial jurisdiction over the Special Economic Zone or his nominee not below the rank of Joint Commissioner Member ex officio;
5. Commissioner of Income Tax having territorial jurisdiction over the Special Economic Zone or his nominee not below the rank of Joint Commissioner Member ex officio;
6. Director (Banking) in the Ministry of Finance, Banking Division, Government of India Member ex officio;
7. Two officers, not below the rank of Joint Secretary, to be nominated by the State Government Member ex officio;
8. Representative of the Developer of the zone Special invitee

And, therefore, the Central Government, in exercise of the powers conferred by sub-section (2) of section 53 of the Special Economic Zones Act, 2005 (28 of 2005), hereby appoints the 13th day of June, 2016 as the date from which the above Special Economic Zone shall be deemed to be Inland Container Depot under section 7 of the Customs Act, 1962 (52 of 1962).

 

Delhi HC’s decision vis-a-vis levy of ST on sale of unfinished flats – an analysis : 13-06-2016


JUNE 13, 2016

By S Sivakumar, FCA, FCS, MBA, ACSI, Advocate

THE very recent decision of the Delhi High Court in Suresh Kumar Bansal v Union of India 2016-TIOL-1077-HC-DEL-ST is bound to create a fresh set of controversies and confusion, insofar as the levy of service tax on the Realty Sector is concerned. Service tax on the construction of residential complexes that was introduced with effect from June 16, 2005 has continued to confuse the taxpayer and the taxman alike over the years and this decision would seem to add to this confusion.

In a case of the Builder entering into a single and composite agreement of sale of a flat to a prospective buyer, the Delhi High Court has held that, in the absence of a statutory provision or Rule to provide for the ascertaining of the value of the undivided portion of land which cannot be subjected to service tax, service tax cannot be levied. This decision has been rendered in the context of the service tax law that stood in 2011. The Court was not impressed with the argument of the Revenue that as per the abatement notification, an abatement of 75% of the entire consideration including the value of the undivided interest in land and consequently, provides for the levy of service tax only on 25% of the entire consideration. The Court has taken the view that, the in the absence of a machinery provision in the statute or in the Rules providing for a mechanism for deducting the value of the land, the very levy of service tax on the sale of an unfinished flat, in terms of a composite agreement, is invalid . The Court has referred to several decisions of the Supreme Court including the landmark decision rendered in Larsen & Toubro Ltd v State of Karnataka 2013-TIOL-46-SC-CT- LB rendered in September 2013.

Be that as it may…what are the possible implications arising out of this decision, on the Realty Sector. To my mind, this decision will apply only in cases of composite agreements involving also sale of land and not to composite works contracts, as is clear from Para 45 and other paras of the decision. Thus, this decision will not have a bearing on a large number of Builders who are following the practice of entering into two separate agreements, viz. one, for the sale of the undivided portion of the land and another, for rendering the construction services. The two agreement system, as we know, is followed by a very large portion of the Realty Sector and especially, in the South. The construction agreement is considered as a ‘works contract’ within the meaning of the VAT laws of the States and is consequently subjected to the levy of VAT. Many States allow the Builders to opt for what is known as the Composition Scheme allowing the Builders to pay VAT at a certain percentage of the construction value (like, in Karnataka) or, at a certain percentage of the total value including the value of the land (like, in Maharashtra). Levy of service tax in these cases of works contracts is largely governed by the provisions contained in Rule 2A of the Service Tax (Determination of Value) Rules, 2006 in terms of which, post 1-7-2012, service tax is levied on 40% of the construction value when the VAT on the value of the goods transferred in the course of execution of the works contract, i.e. the construction activity, is not paid on the actual value of such goods. It is clear that, in these cases, it cannot be said that the service tax rules do not provide for a machinery provision for determining the goods portion involved in the execution of the works contracts.

Taking this discussion further…many Builders who enter into two agreements, as stated above, have also opted to pay service tax on the basis of the abatement notification, in terms of which, they pay service tax on 25% / 30% of the total consideration including the value of the land. The relevant abatement notification does not specify that the option to pay service tax on 25% / 30% of the total consideration is applicable only when the Builder enters into a composite agreement and accordingly, both before 1-7-2012 and thereafter, many Builders have been paying service tax on the basis of the abatement notification, even when they enter into two separate agreements, viz. one, for the sale of the undivided interest in land and another, for rendering the construction services. In these cases also, this decision of the Delhi High Court would not apply, on facts, in my view.

It seems to me that the High Court has proceeded on the basis that a composite agreement for sale of an unfinished flat is not a works contract

In my view, even when a composite agreement of sale of an unfinished flat is entered into, it would be a case of a works contract from the VAT law point of view, as was held by the Apex Court in Larsen & Toubro Limited v State of Karnataka and this decision of the Supreme Court was, as a matter of fact, has been referred to in this decision, at several places. I am a bit surprised to note that the Delhi High Court has thought it fit not to consider the impact arising out of the binding precedent in Larsen & Toubro Limited v State of Karnataka, in this present decision, as is clear from Para 23 which is reproduced below.

Quote :

23. Although such composite contracts for development of complex and sale of units therein would fall within the scope of works contract as held by the Supreme Court in Larsen and Toubro v. State of Karnataka (supra), we do not propose to examine whether services involved in construction of complexes is exigible to service tax as services in relation to execution of a works contract falling within the scope of Section 65(105)(zzzza) of the Act or under Section 65B (44) after the amendments brought about in the Act by virtue of Finance Act, 2012 – the said controversy is outside the scope of the present petitions and it would not be appropriate for us to examine it in these petitions [See Hindustan Polymers Co. Ltd. and Others v. Collector of Central Excise, Guntur: - 2002-TIOL-822-SC-CX.

Unquote :

It seems to me that, a composite agreement to sell a flat, when entered into before the completion of the flat, as are the facts that are applicable in this decision, would very much be a works contract, in terms of the decision of the Supreme Court in Larsen & Toubro v State of Karnataka and if this view had been accepted by the Delhi High Court, the decision could possibly have been different, inasmuch as, Rule 2A of the Service Tax (Determination of Value) Rules, 2006 would have become applicable, as the said Rule is applicable when VAT is paid or payable in terms of the VAT law, on a works contract. Once an agreement can be treated as a works contract under the VAT law, it should also be treated as a works contract under the service tax law. Therefore, in my view, the legal distinction between a composite agreement involving sale of an unfinished flat and a composite works contract involving development of and sale of a flat, is largely not that relevant, at least, insofar as the levy of VAT and service tax is concerned, in the light of the decision of the Supreme Court in Larsen & Toubro Ltd v State of Karnataka.

The impact of this decision would also be diluted in the post 1-7-2012 era inasmuch as the distinction between ‘construction of complex services’ and ‘works contract services’ has got blurred, due to the introduction of the negative list based service tax law. What can be subjected to tax is the ‘service element’ in the execution of a works contract, even when the benefit of the abatement notification No. 25/2012-ST dated 20-6-2012 is availed by the Builder.

Before concluding….

Most national newspapers have carried reports that the Delhi High Court has struck down the service tax levy on sale of flats. The heat is already being faced by Developers/Builders as many flat buyers are asking for service tax not to be charged (or worse… for service tax already collected, to be refunded).

While allowing the writ petitions, the High Court has ordered the Department to examine whether the builder has collected any amount as service tax from the Petitioners for taxable service as defined in Section 65(105)(zzzh) of the Finance Act, 1994 (as it then existed) and has deposited the same with the respondent authorities and if so to refund to the Petitioners with interest at the rate of 6% from the date of deposit till the date of refund. I would wonder if the Builder had availed of cenvat credit and remitted the balance service tax liability, as is very likely to be the case. This decision could create a lot of difficulties in these situations.

The Centre is bound to take this decision to the Supreme Court and might also ask for a stay of this decision.

Even otherwise, if the laws that are being framed are held fragile, it would not be long before we once again have retrospective legislations becoming the order of the day!

Centre plans to use unclaimed provident fund money to boost its flagship schemes : 13-06-2016


The government is considering using more than Rs 43,000 crore of unclaimed provident fund money to provide a fillip to its flagship schemes such as Swachh Bharat Abhiyan and Housing for All.

Officials said the idea is being firmed up at the government’s think tank NITI Aayog, which has been entrusted with not just monitoring but also implementation of key schemes so that the projects are not delayed due to insufficient fund flow. “We are looking into the proposition of taking a  loan from EPFO’s unclaimed kitty to partially pump money into some of our schemes,” asenior official of NITI Aayog told ETon condition of anonymity.

The proposal is still at a nascent stage and it is yet to be decided whether this would be in the form of a loan or bonds, the official said. The Employees’ Provident Fund Organisation recently committed itself to crediting interest into the unclaimed accounts with effect from this year, reversing the decision of the previous UPA government.

“We are open to the proposal of lending money to the Centre from the unclaimed PF amount provided we earn higher rate of interest on it,” a senior labour ministry official said, requesting not to be identified. “We have the flexibility of parking money anywhere, but it has to backed by some security because this is workers’ money which can be claimed at any time,” he said.

The EPFO has invested the provident fund corpus of more than.`7 lakh crore in government securities, bonds, debts and equity as per the investment pattern notified by the Centre from time to time. The Narendra Modi-led NDA government has set for itself robust targets, all of which will require large sums of money to be implemented in a time-bound manner. These include Rs 2 lakh crore for constructing 12 crore toilets across India by 2019 under Swachh Bharat Abhiyan and Rs 6 lakh crore to build 6 crore houses under Housing for All by 2022.

Since the government does not have enough funds at its disposal to run some of its biggest programmes, it is scouting for money from agencies including World Bank and other financial institutions.

Source : The Hindu

IRDA approves a slew of new products : 13-06-2016


Insurance regulator IRDA has ramped up new product clearances, signalling its commitment to improve life insurance penetration in the country.

New insurance product approvals grew 46 per cent in 2015-16 to 227 from 155 in previous fiscal, official data showed.

Although IRDA has been driving change in the insurance sector, the level of life insurance penetration has been low. The country’s life insurance penetration had dipped to 2.6 per cent in 2014-15 from 2.8 per cent in 2013-14.

IRDA has been working on several fronts to improve protection levels in the country.

First, the regulator made it mandatory for life insurance players to offer life cover, five times the annual premium and subsequently raised it to ten times. This was done so that consumers had access to products that assured a higher quantum of protection.

Second, IRDA ensured that new insurance products filed for approval were quickly approved.

Protection space

Commenting on the product approvals, Sandeep Batra, Executive Director, ICICI Prudential Life Insurance, said this is a reflection of insurers getting more simple and sharper products in the protection space.

A number of product approvals by the IRDA in recent times have been in the protection space, he said.

With the large protection gap and IRDA supporting higher protection for the Indian population there is still ample scope for growth, Batra told BusinessLine.

A major area of concern for the insurance regulator has been the ‘mortality protection gap’.

Mortality protection gap is the difference between the actual insurance cover required as against the current cover. The regulator has been making efforts to increase awareness on the importance of protection.

Falling premium rates

Another life insurance industry honcho pointed out that IRDA was willing to walk the extra mile in improving levels of protection. There is need to remove misconception that IRDA is not keen to give product approvals, the top official said.

An important factor that is aiding the improvement in protection is the fall in ‘premium rates’ in recent decade. “Product support has been there from IRDA. The regulator has been supporting the industry in terms of innovation it wants to do,” said another private life insurance player.

Source : PTI

Sebi to relax REIT, portfolio manager norms to woo investors : 13-06-2016


To deepen Indian capital markets, regulator Sebi has lined up wide-ranging relaxations to its norms for REITs while an easier set of compliance rules is in the works for foreign fund managers keen to relocate to India.

Among the changes, which would be considered by Sebi at its next board meeting scheduled for this week, the regulator is looking to make Real Estate Investment Trusts (REITs) more attractive to investors by allowing them to invest a large portion of funds in under-construction assets.

Besides, REITs would be allowed to have a larger number of sponsors, while regulations regarding the minimum public offer size and related party transactions could also be eased, a senior official said.

With regard to foreign fund managers willing to relocate to Indian shores, the Sebi board will consider allowing them to function as ‘Portfolio Managers’ under a simpler regulatory regime, a move that will make it easier for such entities to operate  in India.

Besides, an existing Sebi-registered Portfolio Manager will also be allowed to act as Eligible Fund Manager (EFM) with prior intimation from Sebi and subject to certain conditions.

The Securities and Exchange Board of India (Sebi) would also present its annual accounts for the fiscal 2015-16 before its board, which comprises of nominees from the government and RBI in addition to the whole-time and independent members.

Regarding REITs, Sebi plans to remove the restriction on the SPV (Special Purpose Vehicle) to invest in other SPVs holding the assets, which in turn would allow REITs to invest in a holding company owning stake in SPVs.

It is being proposed that the REIT would hold controlling interest and at least 50 per cent equity in the holding company. The holding company can in turn hold controlling interest and at least 50 per cent equity in underlying SPV.

Another proposed move is to allow the REITs to have up to five sponsors, as against the current norm for maximum three.

Sebi also plans to rationalise the requirements under the related party transactions, under which approval of 60 per cent unitholders apart from related parties, is required for passing a related party transaction.

Further, approval is required of 75 per cent unitholders, apart from related parties, for passing special resolutions such as change in investment manager,  investment strategy and delisting of units.

Another current provision requires that units offered to the public should be at least 25 per cent. This would be aligned with Sebi regulations about the public offer size of 25 per cent, or 10 per cent initially with an eventual raising of public holding to 25 per cent.

One of the major proposals relate to allowing REITs to invest up to 20 per cent in under-construction projects.

Existing regulations require at least 80 per cent of the value of REIT assets should be invested, in proportion to the holding of the REITs, in completed and rent-generating assets.

Source : Economic Times

India plans to levy 25% tax on sugar exports: Ram Vilas Paswan : 10-06-2016


India plans to impose a 25 per cent tax on sugar exports to maintain adequate supplies of the sweetener in the local market, food minister Ram Vilas Paswan tweeted on Thursday evening.

Source : PTI

GST final draft goes to state Finance Ministers’ Committee : 10-06-2016


A group of central and state government officials set up to frame the law for the proposed goods and services tax (GST) has submitted its final draft that could be taken up at a meeting of the empowered committee of state finance ministers next week.

“The final draft is done… The empowered committee can now take a call,” a government official privy to the development told et. The draft law may be made public after it’s deliberated by the empowered panel headed by West Bengal  finance minister Amit Mitra.

The government is expected to make a renewed push for the passage of the constitutional amendment bill to roll out GST in the upcoming monsoon session of Parliament, armed with more members in the Rajya Sabha and a broad-based national support for this reform.

The constitutional amendment will merely allow for this single tax, which is not possible under the current structure of taxation. At present states are not empowered constitutional to tax services and the central government cannot tax goods sold in retail.

The constitutional amendment will seek to change this, empowering both the states and centre to levy this tax. The Narendra Modi government has been seeking to persuade Congress to drop its resistance to GST and help get parliamentary approvals. 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, which has more numbers in the upper house, has set four conditions for backing the Bill.

The main opposition party wants the rate to be capped at 18 per cent in the Constitution amendment bill itself and the 1 per cent levy on inter-state sales to be scrapped. It also wants an independent dispute settlement mechanism and voting power of threefourths for states in place of the two-thirds suggested.

The government is not inclined to impose a constitutional cap on the rate, which will make the tax rigid as it can then be only changed through a constitutional amendment.

In what could help get Congress on board, the GST law could have rates enshrined in it after the council decides on the tax rate. Tax-related decisions including exemption for a good or service or inclusion will also rest with the proposed council.

The government has already indicated that it is willing to drop the proposed up to 1 per cent tax on inter-states sales.

Source : Economic Times

Japan may seek WTO help to resolve India steel tariff dispute : 20-06-2016


Japan said it may ask the World Trade Organization (WTO) to help resolve a dispute related to India’s “safeguard” tariffs on the import of hot-rolled steel.

Prompted by massive steel exports from the China, the world’s top producer, countries including the United States and Australia as well as the European Union have imposed duties on steel imports. As the second-largest global steel producer, Japan’s own exports are potentially under pressure because of these protectionist stances.

India has extended its safeguard import taxes on some steel products until March 2018, in a bid to stop cheap overseas purchases from flooding its market and bolster the domestic steel sector.

Japan will make repeated requests to the Indian authorities to ensure the consistency of their measures with the WTO agreements, the Japanese Ministry of Economy, Trade and Industry (METI) said in its annual report on unfair trade on Wednesday.

The India safeguard tariffs were placed as one of the priority issues that the METI will be working on, said Osamu Nishiwaki, director of rules and dispute settlement at METI, on Thursday.

“We will step up our bilateral discussions with India over the safeguard measures,” he said.

Asked whether Japan may consider bringing the issue to the WTO soon, Nishiwaki said it will depend on the results of the bilateral talks.

Japan exported about 1.25 million tonnes of hot-rolled steel to India in 2015, or about 10 percent of its total hot-rolled exports of 13 million last year, according to the Japan Iron and Steel Federation.

Japan earlier criticized India’s tariffs and a decision to put minimum prices on imported iron and steel at a WTO meeting in April.

The METI report on Wednesday also identified Vietnam’s safeguard measures against semi-finished steel products and steel bars as policies that may not be consistent with international rules.

Vietnam began provisionally imposing additional tariffs of about 23 percent on semi-finished steel products and 14 percent on steel bars from March, the report said.

The global trade dispute over steel escalated last month after the U.S. slapped Chinese steelmakers with final import duties of 522 percent on cold-rolled flat steel.

Still, Chinese steel exports rose 3.7 percent to 9.42 million tonnes in May from the previous month, customs data showed on Wednesday, as mills continued to ship output abroad.

Source : Business Standard

F. No. 278A/21/2015-Legal – 9-6-2016


GOVERNMENT OF INDIA  MINISTRY OF FINANCE  DEPARTMENT OF REVENUE  CENTRAL BOARD OF EXCISE AND CUSTOMS  NEW DELHI

CIRCULAR NO 1031/19/2016-CX, Dated: June 14, 2016

Subject: Levy of excise duty on readymade garments and made articles of textiles bearing a brand name or sold under a brand name and having a retail sale price of Rs. 1000 or more – reg.

Representations have been received from the trade regarding the scope of the levy of excise duty on readymade garments and made articles of textiles bearing a brand name or sold under a brand name and having a retail sale price of Rs. 1000 or more in this year’s Budget.

2. The issue raised is whether excise duty would be chargeable on readymade garments or made up articles of textiles which are sold by a retail store which merely affixes the retail sale price on the readymade garments or made up articles of textiles which are purchased by such retail store from the open market.

3. The issue has been examined in the Ministry. The present levy is not on all readymade garments and made ups, and is restricted only to readymade garments and made up articles of textiles bearing a brand name or sold under a brand name and having retail sale price (RSP) of Rs. 1000 or above. Further, to avoid disputes and minimize duty evasion, it has also been provided that affixing a brand name on the product, labeling or relabeling of its containers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to manufacture.

3.1 For this purpose, “Brand name” means a brand name, whether registered or not, that is to say, a name or a mark, such as a symbol monogram, label, signature or invented words or any writing which is used in relation to a product, for the purpose of indicating, or so as to indicate, a connection in the course of trade between the product and some person using such name or mark with or without any indication of the identity of that person.

4. However, such retailer shall not be liable to pay excise duty if:

a) the retail sale price of such readymade garments or made up articles of textiles is less than Rs. 1000, or

b) the aggregate value of clearances for home consumption by such person is less than Rs. 1.5 crore in a year [provided aggregate value of clearances during previous financial year was less than Rs. 4 crore].

5. Further, merely because the outlets [shop] of a retailer, from where readymade garments or made ups are sold, has a name, say, M/s XYZ and Sons, the readymade garments or made ups sold from such outlet [shop] cannot be held as branded readymade garments or made ups and become liable to excise duty. Needless to say, deemed manufacture and liability to excise duty will arise only if such retailer affixes a brand name on the readymade garments and affixes a label bearing the RSP on the packages containing the readymade garments of Rs. 1000 or above.

6. Further, it is hereby directed that field formations shall not visit individual retail outlets or retail chains, except based on specific inputs regarding duty evasion and with the approval of the jurisdictional Commissioner or Additional Director General or above.

7. The above position may be brought to the notice of formations under your charge for strict compliance. Difficulties, if any, faced in the implementation of the instructions may be brought to the notice of the Ministry at an early date.

[F. No. 332/5/2016-TRU]

(Devi Prasad Misra)
Technical Officer (TRU)

75 – 9-6-2016


EXIM BANK’S GoI SUPPORTED LINE OF CREDIT OF USD 24.00 MILLION TO GOVERNMENT OF REPUBLIC OF COTE D’LVOIRE

CIRCULAR A.P. (DIR SERIES 2015-16) CIRCULAR NO.75DATED 9-6-2016

Export-Import Bank of India (Exim Bank) has entered into an Agreement dated September 22, 2015 with the Government of the Republic of Cote d’Ivoire for making available to the latter, a Government of India supported Line of Credit (LOC) of USD 24.00 million (USD Twenty Four million) for financing Electricity Interconnection Project between Cote d’Ivoire and Mali. The goods, machinery, equipment, and services including consultancy services from India for exports under this Agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this Agreement. Out of the total credit by Exim Bank under this Agreement, the goods and services including consultancy services of the value of at least 75% of the contract price shall be supplied by the seller from India and the remaining 25% goods and services may be procured by the seller for the purpose of the eligible contract from outside India.

2. The credit agreement under the LOC is effective from May 26, 2016. Under LOC, the last date for disbursement will be 60 months after the scheduled completion date of the project.

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

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

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

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

 

 

Notification No : 9/2016 Dated: 9-6-2016


Simplification of procedure for Form No. 15G & 15H – Clarifications – 9/2016 – Dated 9-6-2016 – Income Tax

 

F. No. DGIT(S)/CPC(TDS)/DCIT/15GH /2016-17/4539

Government of India

Ministry of Finance

Central Board of Direct Taxes

Directorate of Income-tax (Systems)

New Delhi

Notification No. 9/2016

New Delhi, 9th  June, 2016

Subject: Simplification of procedure for Form No. 15G & 15H -  Clarifications- reg.

The existing provisions of section  197A of the Income-tax Act,  1961 (‘the Act’) inter alia provide that tax shall not be deducted, if the recipient of certain payment on which tax is deductible furnishes to the payer a self-declaration in Form No.15G/15H in accordance with provisions of the said section. The manner of filing such declarations and the particulars have been laid down in Rule 29C of the Income-tax Rules, 1962 (‘the Rules’) w.e.f  1.10.2015 videNotification No.76/2015 dated 29.09.2015.

2.  As per sub-rule (7) and (8) of rule 29C of the Rules notified vide aforesaid notification, the Principal Director General of Income-tax (Systems) is required to specify the procedures, formats and standards for the purposes of furnishing and verification of the declaration and allotment of unique identification number. In pursuance of the same, Principal Director General of Income-tax (Systems) has issued Notification No. 4/2015 dated 1st December, 2015 to notify the procedure, formats and standards.

3. Representations have been received for clarification on the following issues:

(a) Due date for quarterly uploading of 15G/H declarations by payers on e-filing portal,

(b) The manner for dealing with Form 15G/15H received by payer during the period from 1.10.2015 to 31.3.2016.

4. In this regard, it is hereby specified that:

a) The due date for quarterly furnishing of 15G/15H declarations received by the payer from 1.4.2016 onwards shall be as given below:

SI. No

Date of ending of the quarter of the financial year

Due Date

(1)

(2)

(3)

1.

30th  June 15th  July of the financial year

2.

30th  September 15th  October of the financial year

3.

31st  December 15th  January of the financial year

4.

31st March 30th  April of   the   financial  year immediately following the financial year in which declaration is made.

(b) The payer shall furnish 15G/15H declarations received during the period from 1.10.2015 to 31.3.2016 on e-filing portal (http://incometaxindiaefiling.gov.in) in the  given format on or before 30th June, 2016.

(S. Thuingaleng)

Dy. Commissioner of Income Tax(CPC-TDS)

O/o The Pr. Director General of Income-tax (Systems)

Arun Jaitley holds meet to review status of actions taken for NIIF operationalization : 09-06-2016


The second meeting of the Governing Council of National Investment and Infrastructure Fund (NIIF) was held under the chairmanship of Union Finance Minister Arun Jaitley today to review the status of actions taken for the operationalization of the NIIF and to provide the road map for further activities.

The council was apprised of the interactions that have been held with a large number of long-term investors, sovereign wealth funds, pension funds from across the globe, seeking to invest in the NIIF.

These include the discussions held during the India Investment Summit held earlier in February this year and during investment meetings led by the Finance Minister in Australia, United States and Japan.

They were informed of the follow-up action being taken for investments with some of these investors.

The progress of discussions to follow up on the MoUs with several investors such as ADIA from UAE, RUSNANO OJSC from Russia and Qatar Investment Authority, Qatar, were also placed before the members.

They also discussed the guidelines for investment of the corpus of NIIF including the Investment Policy.

The council was also apprised of the status of the various establishment activities of the NIIF since its last meeting held in December 2015.

These inter-alia included finalization of office spaces and other compliance activities.

It was also appraised of the refinement in the structure of NIIF carried out pursuant to discussions with the investors.

The NIIF would have various sector-specific or investor-specific close ended schemes (funds) and each fund may issue various classes of units.

The government along with other investors would subscribe to the units of various funds.

The members were informed that Financial Times (London) has adjudged NIIF as the Most Innovative structure in Asia Pacific under Finance category.

The status of projects shortlisted for initial investment by the NIIF and the selection process of Chief Executive Officer (CEO) of NIIF Ltd. were also placed before the council.

It was also informed that a core team has been put in place to carry-out the activities of the NIIF.

Source : Financial Express

Govt banks on new PSU norms for higher non-tax revenue : 09-06-2016


The Centre has released a new set of guidelines on capital restructuring of state-owned companies, which will make them more accountable on matters of dividends, buybacks and bonuses, and will help the government meet its non-tax revenue and capital receipts target for the year.

The guidelines, applicable from April 1, make it mandatory for all central public sector enterprises (CPSEs) to pay a minimum annual dividend of 30 per cent of profit after tax, or five per cent of net worth, whichever is higher. If they cannot, they will have to explain to the ministry concerned if they are constrained by capacity to borrow or if the free cash is being put into capital spending and infrastructure.

The guidelines also state that every CPSE with a net worth of at least Rs 2,000 crore, and cash and bank balance of Rs 1,000 crore will exercise the option of buyback of shares.

“It has been observed that CPSEs are not looking into merit-based capital restructuring, including the option of buyback of shares, if they do not have plans to deploy surplus funds optimally for business purposes,” the guidelines state.

There are strict timelines as well. If some companies are exempt from paying the full dividend, then they, through their respective ministries, have to submit their reports of exemption to secretary, department of investment and public asset management (Dipam), and secretary, economic affairs, before the end of the second quarter of a financial year.

Every CPSE has to consider the various parameters to buy back shares, in the first board meeting after the closure of a financial year.

“You, as a PSU, either spend more on formation of assets, or borrow more, or you maximise your investors’ interests by issuing dividends and buybacks,” said a government official.

The consolidated guidelines have been issued by Dipam. In earlier years, these were issued by the department of public enterprises and department of economic affairs.

The government is looking to earn dividends from CPSEs of Rs 53,883 crore in 2016-17, about 20 per cent higher than 2015-16 revised estimates. The total disinvestment target for the year is Rs 56,500 crore, of which Rs 36,000 crore is expected from minority stake sales and buybacks, with the rest from strategic sales. The CPSEs, which have already announced share buybacks include NMDC and MOIL, from which the Centre expects to get Rs 6,500 crore combined, and Coal India, from which the Centre hopes to garner Rs 6,000 crore.

For bonuses, every CPSE with defined reserves and surplus of 10 times or more of its paid-up equity share capital will have to issue bonus shares to shareholders.

Source : PTI

 

Experts want retrospective provisions out of GAAR : 09-06-2016


Ahead of the general anti-avoidance rules (GAAR) on tax kicking in from the next financial year, many feel the government should remove the retrospective provisions in the rules.

A proposed panel of officials that would be set up to decide applicability of GAAR might be used to harass honest taxpayers, said experts.

Although GAAR would be applicable prospectively from April 1, 2017, continued benefits arising out of transactions entered into prior to that would be denied the benefits, they said. GAAR is a set of rules designed to give Indian authorities the right to scrutinise and tax transactions they find are structured solely to avoid taxes. It also gives the tax department the power to override tax treaties. “As GAAR stands, continued benefits such as those of depreciation, interest claims arising out of transactions such as securitisation or sale/sale back, lease in/lease out entered into prior to the Rules coming into force, may be denied. To that extent there is a bit of retroactivity in the provisions,” said Rahul Garg, leader-direct tax, PwC. Another argument was related to the decision-making panel that would decide if GAAR provisions would be applied in a case. Experts said industry representatives or at least officials from theministry of commerce and industry should be part of the panel.

“One would have to keep in mind that even if an investment is made before March 31, 2017, but if certain events such as conversion of debentures to shares, bonus issue, etc, occur after that date, there could still be questions around applicability of GAAR in such cases,” said Rajesh H Gandhi of Deloitte. He added that determining what constitutes commercial substance remained another challenge as no objective tests have been laid down.

“Similarly there could be issues around protection from GAAR when specific anti-avoidance rules in the treaty are complied with, whether treaty benefits would be available on transactions reclassified under GAAR and TDS related penalties against payer if GAAR is invoked against recipient of income. Clarifications on these issues will be welcomed by taxpayers.”

The tax department has sought stakeholders’ feedback on provisions requiring clarity, ahead of the announcement of the guidelines for implementation. The last date for stakeholder to give feedback is June 30. The tax department has, however, asked stakeholders to refrain from giving references of “hypothetical situations”.

Experts also argued for an amendment to ensure that GAAR be implemented prospectively from April 1, 2017, instead of August 2010. India and Mauritius have amended their bilateral tax treaty, giving New Delhi the right to impose capital gains tax on investment in shares. While investments will be exempted till April 2017, 50 per cent of the tax rate, which is 7.5 per cent, would be imposed for two years on those qualifying the limitation of benefits (LOB) condition in Mauritius in the previous year. One of the criteria for LoB is that the company concerned should have invested Rs 27 lakh in the island nation.

Source : Business Standard

No. 22/2016 Dated: 8-6-2016


Amendment in Section 206C vide Finance Act 2016 – Clarifications – Circular – Dated 8-6-2016 – Income Tax

Circular No. 22/2016

F. No 370142/17/2016-TPL

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

(TPL Division)

Dated 8th June 2016

Sub: Amendment in Section 206C vide Finance Act 2016 – Clarifications regarding

Section 206C of the Income-tax Act, 1961  (hereafter referred to as ‘Act’), prior to amendment by Finance Act, 2016, provided that the seller shall collect tax at source at specified rate from the buyer at the time of sale of specified items such as alcoholic liquor for human consumption, tender leaves, mineral being coal or lignite or iron ore etc. It also provided for collection of tax at source at the rate of one per cent on sale in cash of bullion exceeding 2 lakh rupees and jewellery exceeding 5 lakh rupees.

In order to reduce the cash transactions in sale of goods and services. Finance Act 2016 has expanded the scope of section 206C (1 D) to provide that the seller shall collect tax at the rate of one per cent from the purchaser on sale in cash of any goods (other than bullion and jewellery) or providing of any services (other than payment on which tax is deducted at source under Chapter XVII-B) exceeding two lakh rupees.  So far as sale of Jewellery and bullion is concerned, the provisions of sub-section (1D) of section 206C prior to its amendment by the Finance Act 2016 shall continue to apply. Further, with a view to bring high value transactions within the tax net, it has been provided in sub- section (1 F) of section 206C of the Act that the seller who receives consideration for sale of a motor vehicle exceeding ten lakh rupees, shall collect one per cent of the sale consideration as tax from the buyer. Any person who obtains in any sale. the goods of the nature specified in sub-section (I D) or (IF) of section 206C is a buyer. The seller for the purposes of collection of tax under section 206C shall be –

(i) A Central Government or a state Government,

(ii) Any local authority, or corporation or authority established under any Central, State or Provincial Act,

(iii) Any company, firm or cooperative society,

(iv) An individual or Hindu undivided family who is liable to audit as per provisions of section 44AB during the financial year immediately preceding the financial year in which the goods are sold or the services are provided.

The amendments brought in section 206C by Finance Act. 2016 are applicable form 1st June 2016.

In this regard a number of queries have been received about the scope of the provisions and the procedure to be followed. The board has considered the same and decided to clarify the points raised by issue of a circular in the form of questions and answers as follows:

Question 1: Whether tax collection at source (‘TCS’) at the rate of 1%  is on sale of Motor Vehicle  at  retail  level  or  also  on  sale  of motor  vehicles  by  manufacturers  to dealers/distributors.

Answer: To bring high value transactions within the tax net, section 206C of the Act has been  amended to provide that the seller shall collect the tax at the rate of one per cent from the purchaser on sale of motor vehicle of the value exceeding ten lakh rupees.  This is brought to cover all transactions of retail sales and accordingly it will not apply on sale of motor vehicles by manufacturers to dealers/distributors.

Question 2: Whether TCS at the rate of 1% is on sale of Motor Vehicle is applicable only to Luxury Cars?

Answer: No. As per sub section (1 F) of Section 206C of the Act the seller shall collect the tax at the rate of one per cent from the purchaser on sale of any motor vehicle of the value exceeding ten lakh rupees.

Question 3: Whether TCS at the rate of 1% is applicable in the case of sale to Government Departments. Embassies, Consulates and United Nation Institutions for sale of motor vehicle or any other goods or provision of services”

Answer:  Government.  institutions  notified  under  United  Nations  (  Privileges  and Immunities) Act 1947. and Embassies, Consulates. High Commission. Legation, Commission and trade representation of a foreign State and shall not be liable to levy of TCS at the rate of I% under sub-section (1 D) and (1 F) of section 206 C of the Act.

Question 4: Whether TCS is applicable on each sale of motor vehicle or on aggregate value of sale during the year?

Answer:  Tax is to be collected at source at the rate of 1% on sale consideration of a motor vehicle exceeding ten lakh rupees. It is applicable to each sale and not to aggregate value of sale made during the year. This can be explained by way of an illustration:

Illustration: Motor vehicle worth  20  lakh is sold and for which payments are made in instalments, one at the time of booking and the other at the time of delivery . At the time of booking 5 lakh rupees are paid and 15 lakh rupees are paid at the time of delivery. Tax at the rate of 1% on 5 lakh rupees  at the time of booking and at the rate of I % on remaining 15 lakh rupees at the time of delivery shall be collected at source.

Similar will be the position with regard to collection of tax at source under sub-section (1 D) of section 206C.

Question 5: whether TCS at the rate of 1% on sale of motor vehicle is applicable in case of an individual?

Answer:   The definition of “Seller” as given in clause (c) of the Explanation below sub-section (11) of section 206Cshall be applicable in the case of sale of motor vehicles also Accordingly, an individual who is liable to audit as per the provisions of section 44AB of the Act during the financial year immediately preceding the financial year in which the motor vehicle is sold shall be liable for collection of tax at source on sale of motor vehicle by him.

Question 6: How would the provisions of TCS on sale of motor vehicle be applicable in a case where part of the payment is made in cash and part is made by cheque?

Answer: The provisions of TCS on sale of motor vehicle exceeding ten lakh rupees is not dependent on mode of payment. Any sale of Motor Vehicle exceeding ten lakh would attract TCS at the rate of 1%.

Question 7:  As per section 206C(1 D) , tax is to be collected at source at the rate of 1% if sale consideration received in cash exceeds 2 lakh rupees whereas as per section 206C(1F) tax is to be collected at source at the rate of 1% of the sale consideration of a motor vehicle exceeding 10 lakh rupees . Whether TCS will be made under both sub-section(ID) and (IF) of the section 206C @ 2% where part of the payment for purchase of motor vehicle exceeds 2 lakh rupees in cash?

Answer: Sub-section (IF) of the section 206C of the Act provides for TCS at the rate of I% on sale of motor vehicle of value exceeding 10 lakh rupees. This is irrespective of the mode of payment. Thus if the value of motor vehicle is 20 lakh rupees, out of which 5 lakh rupees has been paid in cash and balance amount by way of cheque , the tax shall be collected at source at the rate of 1% on total sale consideration of 20 lakh rupees only under sub-section (IF) of section 206C of the Act. However, if a vehicle is sold for 8 lakh rupees and the consideration is paid in cash, tax shall be collected at source at the rate of 1% on  8 lakh rupees as per sub-section(I D) of section 206C of theAct.

Lakshmi Narayanan

Under Secretary TPL-III

 CBDT

Foreign banks, insurance firms keen to set up shop at GIFT City : 08-06-2016


At least five foreign banks, two Indian insurance companies and many other financial institutions have approached the state-promoted Gujarat International Fin-Tec City (GIFT) City to set up shop in the country’s first International Financial Services Centre (IFSC) being established here.

“Two of these foreign banks are in an advanced stage of discussions. Once they take a decision, they will approach Indian regulators, including the RBI, for a final approval. We expect some action in the next six months, by the time the Vibrant Gujarat Summit is held here in January 2017,” Ajay Pandey, Managing Director and Group CEO, GIFT City, told BusinessLine. He, however, declined to identify the foreign banks at this stage.

On the reasons for an increasing interest evinced by Indian and international financial institutions at GIFT-IFSC, he said, besides being early birds to derive the benefits of being in an emerging global business centre, some of these entities will also save 25-30 per cent in their operational costs, have lower compliance costs, enjoy the best infrastructure in India and a favourable cultural milieu.

The IFSC’s business transaction mark, which was over $100 million in February 2016, is expected to cross the $1-billion mark in the next few weeks.

The banks that have started operations at GIFT IFSC include ICICI Bank, IDBI Bank, YES Bank, Federal Bank and Kotak Bank. India’s largest lender SBI and IndusInd Bank are also expected to start their operations soon. Last week, Singapore International Arbitration Centre (SIAC) signed an agreement for a presence at GIFT-IFSC. Edelweiss and JM Financial have also evinced “substantial” interest, besides a slew of IT players with overseas business interests.

Pandey said New India Assurance and General Insurance Company are also likely to set up operations soon. Stock exchanges with whom MoUs have been signed by GIFT for IFSC operations include BSE, NSE and MCX.

At present, five office towers are coming up at GIFT SEZ. The Hiranandani Group’s tower will be ready by January 2017 where major financial players would move their offices. Besides, Bengaluru’s Brigade Group’s two towers will be ready in the next two years and Ahmedabad’s Savvy Group’s tower will follow. SBI, which will move in its Local Head Office in a 2.20-lakh sq ft area, and Reliance Capital will construct its own towers.

Source : Business Standard

Start-ups writing a new chapter in publishing : 08-06-2016


You might be a housewife trying to publish your first cookbook or a professor looking to print your work. Unlike earlier days, you needn’t wait for your agent to return your call or worry about rejections, for self-publishing platforms are on the rise.

Start-ups such as Notion Press, Pothi.com, Partridge Publishing and CinnamonTeal help not only first-time writers, but also professionals. These start-ups partner with e-commerce platforms and print books only when a customer places an order. It is a win-win situation as books are printed based only on demand, eliminating the need to maintain a warehouse.

Eliminating risk

For authors like Venkat Kumar, who had been trying to publish his short-story collection for two years, the platforms are a boon. “These platforms make it easier to publish books and have a faster turnaround time. If I want to publish by on my own, it will cost over a lakh rupees and entails risk,” Kumar said.

Professionals such as teachers, technocrats and businessmen cash in on these platforms as they understand its utility. Professor Shobana S says self-publishing alleviates the concern of marketing. “I’m working on a book on organic chemistry. Though buyers are limited, I’m not shelling out more in terms of investment and hence they are appealing,” she said.

Jaya Jha, co-founder, Pothi.com says, “The major advantage is, there is no need for a warehouse.” These platforms are driven by wide customer reach and the high comfort level in buying books online. “Most of our authors are from India. But foreign authors too are finding this medium easy to use, considering the high costs of imported editions. We have authors from the US, Australia and European countries,” she adds.

Hurdles ahead

But it is not all rosy as there are hurdles ahead. A major one is the logistics cost as books are not printed in bulk. Sometimes, the cost of shipping is more than the cost of printing. “We need to continuously evaluate our process to bring the cost down,” says Jha.

“We are relying on a completely digital process. E-commerce platforms keep changing the rules for listing products. We have to catch up with them, otherwise we stand the chance of losing to competitors.” The company prints 100 titles per month and have 4,000 titles to its credit. The customer does not have to invest in anything and the company shares the profit with the author.

To keep ahead of the curve, these companies are innovating. Pothi.com has introduced InstaScribe exclusively for publishing e-books. Through this platform, a customer can create an e-book specifically for Kindle, Macbook or Nook. “Right now, it is available for free as we are testing the market. We are working out the details for making it a paid product,” Jha said.

Naveen Valsakumar, co-founder, Notion Press, said, “We need to constantly innovate and keep up with the trends. So we are concentrating on mobile platforms.” With the advent of Kindle and Kindle app the number of people using mobile devices for accessing books has increased. “We are creating books as apps to cater to this crowd.”

For example, the company is now developing a cookbook as an interactive mobile app. Rather than going by recipes, it suggests a suitable recipe as and when the user inputs the ingredients. “This kind of an app will not work with all books. So we are trying to talk with authors and recommend them only when applicable,” Valsakumar said.

Source : PTI

RBI may supply dollars during FCNR redemption : 08-06-2016


The Reserve Bank of India may step in to supply dollars in case of extreme volatlity once a concessional swap facility for non-residents starts to mature in coming months, RBI Governor Raghuram Rajan said on Tuesday, though he warned markets not to be complacent.

Rajan said the outflow from the concessional swap facility to get foreign currency non-resident (bank), or FCNR (B) deposits could be $20 billion.

The RBI governor reiterated the central bank’s commitment t to supply short-term funds into the banking system and said the transmission of policy rate cuts remains a work in progress.

Earlier today, the RBI left its key policy rates unchanged, while cautiously signalling it could cut later this year if monsoon rains, and other factors, dampen upward pressure on food prices.

Source : Economic Times

Central govt staff to go on strike from July 11 : 07-06-2016


About 32 lakh Central Government employees including railways, defence and postal department have decided to go on indefinite strike from July 11, for which they will serve strike notices to their respective departments on June 9.

This has been decided by the Joint Action Committee (NJAC), according to a statement. Shivagopal Mishra, Convenor of NJAC, stated that there has been no action on the Seventh Pay Commission report, six months after its submission. The charter of demands calls for settling issues related to recommendations of the Seventh Pay Commission implementation sent to the Cabinet Secretary on December 10, 2015.

“Remove injustice done in the assignment of pay scales to technical/safety categories in railways, defence and different categories in all Central government establishments,” NJAC has demanded. It has also called for scrapping of PFRDA Act and the new defined contribution pension scheme – National Pension Scheme – and restoring defined benefit schemes of pension/family pension rules. Since 2004, all Central government employees — except defence personnel, who are covered in defined benefit pension scheme – have been shifted to defined contribution scheme.

NJAC is a joint body of federations and unions representing 32 lakh employees in Central government departments, including postal, railway and defence workers. Indian Railways is the largest government employer with 13 lakh employees.

Earlier this year, in February, almost 95 per cent of 9.69 lakh railway employees had voted in favour of an indefinite strike from April 11, which was deferred after the Cabinet Secretary requested the NJAC to do in the backdrop of the then-forthcoming-elections in Tamil Nadu, West Bengal, Assam and Kerala.

Source : Business Standard

Indirect tax row needs resolution : 07-06-2016


In his Budget speech, the finance minister had said, “Litigation is a scourge for a tax-friendly regime and creates an environment of distrust, in addition to increasing the compliance cost on taxpayers and administrative cost for the government. There are about 300,000 tax cases pending with the 1st Appellate Authority, the disputed amount being Rs 5.5 lakh crore. To reduce this number, I propose a new Dispute Resolution Scheme.”

Accordingly, Chapter XI of the Finance Bill proposed anIndirect Tax Dispute Resolution Scheme, taking effect on June 1.

The ministry notified the necessary Rules, prescribing the forms and procedures; the Central Board of Excise and Customs (CBEC) has issued the necessary instructions for implementation.

The scheme is applicable for all orders in respect of any of the provisions of the Customs Act, Central Excise Act or Chapter V of the Finance Act, 1994 (dealing with service tax), which were under challenge before the commissioner (appeals) as on March 1, 2016.

The Scheme is not available if the order was in respect of search and seizure proceedings or narcotic drugs or other prohibited goods or for any offence punishable under the Indian Penal Code, the Narcotic Drugs and Psychotropic Substances Act or the Prevention of Corruption Act. Or where prosecution for a punishable offence has been instituted or a detention order passed under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act.

Under the Scheme, any person can make a declaration to the designated authority before end-December this year, in the prescribed format, giving details of the dispute. A dated acknowledgment will be had within a week.

The declarant should send the copy of declaration and acknowledgement to the commissioner (appeals) in question within 15 days, to enable the latter to suspend the appeal proceedings for 60 days.

The declarant should pay the tax due, with interest, at the prescribed rate; plus an amount equivalent to 25 per cent of the penalty imposed in the original order within 15 days of the acknowledgement. He should intimate the designated authority in the prescribed form within seven days of making such payment.

On getting the proof of payment of tax, interest and reduced penalty, the designated authority must, within 15 days of the receipt of such proof, pass an order of discharge of the dues in the form and manner prescribed. The declarant should send the discharge order to the commissioner (appeals) before the expiry period for suspension of proceedings.

The latter must, within the next seven days, remove the appeal from the list of pending ones with him and intimate the declarant. Thus, the appeal would stand disposed and the declarant shall get immunity from all proceedings under the Act in respect of the indirect tax dispute for which the declaration has been made. CBEC has asked the commissioners to specify any officer not below the rank of assistant commissioner as the designated authority.

The Scheme gives a chance to those who do not expect to succeed in these legal forums to opt for escape.

Source : Economic Times

F. No. 221/01/2016-CX.6 – 6-6-2016


F.No.221/01/2016-CX.6 

GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF EXCISE AND CUSTOMS NEW DELHI

Dated: June 6, 2016

INSTRUCTION

Sub: Instructions on Information returns to be furnished under Notification No. 4/2016-ST dated 15.02.2016 – reg.

Attention is invited to Notification No. 4/2016-ST dated 15.2.2016 by which the ‘Service Tax and Central Excise (Furnishing of Annual Information Return) Rules, 2016′ has been notified.

2. As per Rule 3 of said Rules, a State Electricity Board or an electricity distribution or transmission licensee under the Electricity Act 2003, or any other entity entrusted with such functions by the Central Government or State Government, who is duly authorised by such State Electricity Board or an electricity distribution or transmission licensee or other entity(hereinafter referred to as ‘State Electricity Agency’), as the case may be, shall furnish information return electronically under sub-section (I) of Section 15A of the Central Excise Act, 1944, with regard to certain class of assesses in the form prescribed as Form AIRF along with the Annexure to the said Form (AIRA-II).

3. It may be noted that the said Rules require the Principal Chief Commissioner or the Chief Commissioner of Central Excise and Service Tax in-charge of the Central Excise or Service Tax Zone to identify and intimate the State Electricity Agency, information of such manufacturers, who are using an induction furnace or rolling mill to manufacture goods falling under Section XV of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), whose aggregate value of clearances exceeds one hundred and fifty lakh rupees in the financial year to which the return pertains.

4. In this regard, to maintain uniformity of practice the following procedure is hereby prescribed:-

i. The Principal Chief Commissioner or the Chief Commissioner of Central Excise and Service Tax in-charge of the Central Excise or Service Tax Zone shall nominate an officer to liaison with the officials of the Stale Electricity Agencies to apprise them of the compliance required under the Service Tax and Central Excise (Furnishing of Annual Information Return) Rules, 2016.

ii. It may be conveyed to the State Electricity Agencies that as required under the said rules, an officer is required to be duly authorised by such State Electricity Agency to furnish information return in the format prescribed in the said rules. The procedure for furnishing such return may also he conveyed for ease of compliance.

iii. The Principal Chief Commissioner or the Chief Commissioner of Central Excise and Service Tax shall identify and intimate to such authorised officer, information pertaining to such manufacturers who are using an induction furnace or rolling mill to manufacture goods falling under Section XV of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) whose aggregate value of clearances exceeds one hundred and fifty lakh rupees in the financial year to which the return pertains, by the 30th June of the subsequent financial year.

iv. It may also be noted that till such time the formats for electronic filing of return is not finalised, such returns may be received in a computer readable media (Compact Disc-Read Only Memory (CD-ROM) or a Digital Video Disc (DVD).

5. After receipt of the data, responsibility of its analysis, dissemination to the field formations and monitoring of the action taken, shall rest with the Principal Chief Commissioner / Chief Commissioner of Central Excise and Service Tax.

6. It may also be noted that after receipt and preliminary analysis of the data, Chief Commissioners shall forward detailed views on the format in which data should be collected along with suggestions of checks and verification.

7. Difficulty experienced, if any, in implementing the instruction should be brought to the notice of the Board.

(Shankar Prasad Sarma)
Under Secretary to the Government of India

Notification No : 34/2016 Dated: 6-6-2016


Seeks to amend notification No. 30/2012-Service Tax dated 20th June, 2012, so as to prescribe extent of payment of service tax by a business entity as a recipient of services provided by senior advocates – 34/2016 – Dated 6-6-2016 – Service Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION No. 34/2016-Service Tax

New Delhi, the 6th June, 2016

G.S.R.____(E).- In exercise of the powers conferred by sub-section (2) of section 68 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 30/2012-Service Tax, dated the 20thJune, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 472 (E), dated the 20thJune, 2012, namely:-

1. In the said notification,-

(a) in paragraph I, in clause (A),-

(i) in sub-clause (iv), for item (B), the following item shall be substituted, namely:-

“(B) an individual advocate or a firm of advocates by way of legal services other than representational services by senior advocates, or”;

(ii) for sub-clause (iva), the following sub-clauses shall be substituted, namely:-

“(iva) provided or agreed to be provided by a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, and the senior advocate is providing such services, to such business entity who is litigant, applicant, or petitioner, as the case may be”;

(ivb) provided or agreed to be provided by a director of a company or a body corporate to the said company or the body corporate;”

(b) in paragraph (II):-

(i) in the TABLE, against Sl. No. 5, for the entry under column (2), the following entry shall be substituted, namely:-

“in respect of services provided or agreed to be provided by an individual advocate or firm of advocates by way of legal services, directly or indirectly”;

(ii) after Explanation II., the following shall be inserted, namely:-

“Explanation III. – The business entity located in the taxable territory who is litigant, applicant or petitioner, as the case may be, shall be treated as the person who receives the legal services for the purpose of this notification.”.

[F.No. B-1/7/2016-TRU]

(Anurag Sehgal)

Under Secretary

Note:-The principal notification was published in the Gazette of India, Extraordinary, vide  notification No. 30/2012 – Service Tax, dated the 20thJune, 2012, vide number G.S.R. 472 (E), dated the 20thJune, 2012 and last amended vide notification No. 18/2016-Service Tax, dated the 1st March, 2016 vide number G.S.R. 266, dated the 1st March, 2016.

Notification No : 33/2016 Dated: 6-6-2016


Seeks to amend Service Tax Rules, 1994 so as to specify the business entity as the person liable to service tax in respect of services provided by senior advocates – 33/2016 – Dated 6-6-2016 – Service Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION No. 33/2016-Service Tax

New Delhi, the 6th June, 2016

G.S.R.____(E).-In exercise of the powers conferred by sub-section (1) read with subsection (2) of section 94 of theFinance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend theService Tax Rules, 1994, namely:-

1. These rules may be called the Service Tax (Fourth Amendment) Rules, 2016.

2. In the Service Tax Rules, 1994, in rule 2, in sub-rule (1), in clause (d), in sub-clause(i),-

(a) in item (D), for sub-item (II), the following sub-item shall be substituted, namely:-

“(II) an individual advocate or a firm of advocates by way of legal services other than representational services by senior advocates;”

(b) after item (D), the following item shall be inserted, namely:-

“(DD) in relation to service provided or agreed to be provided by a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, and the senior advocate is providing such services, the recipient of such services, which is the business entity who is litigant, applicant, or petitioner, as the case may be”.

[F. No. B-1/7/2016-TRU]

(Anurag Sehgal)

Under Secretary

Note:- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section-3, Sub-section (i) by 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. 31/2016-Service Tax, dated the 26th May, 2016 vide number G.S.R. 554(E), dated the 26th May, 2016.

Notification No : 32/2016 Dated: 6-6-2016


Seeks to amend notification No. 25/2012 – Service Tax, dated the 20th June, 2012, so as to exempt the legal services provided by senior advocates to a business entity with a turnover up to rupees ten lakh in the preceding financial year – 32/2016 – Dated 6-6-2016 – Service Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION No. 32/2016-Service Tax

New Delhi, the 6th June, 2016

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 20thJune, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 467 (E), dated the 20thJune, 2012, namely:-

1. In the said notification, in the first paragraph, in entry 6, for clause (c), the following clause shall be substituted, namely:-

“(c) a senior advocate by way of legal services to-

(i) any person other than a business entity; or

(ii) a business entity with a turnover up to rupees ten lakh in the preceding

financial year;”.

[F. No. B-1/7/2016-TRU]

(Anurag Sehgal)

Under Secretary

Note:-The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 25/2012 – Service Tax, dated the 20th June, 2012, vide number G.S.R. 467 (E), dated the 20th June, 2012 and last amended vide notification number 26/2016 – Service Tax, dated the 20th May, 2016 vide number G.S.R. 538, dated the 20thMay, 2016.

Directorate of Revenue Intelligence may be authorised to probe export frauds in SEZs : 06-06-2016


The Directorate of Revenue Intelligence may soon be authorised to probe export-import frauds in Special Economic Zones.

At a recent meeting of intelligence agencies, the DRI raised the issue of misuse of SEZ units to commit import and export frauds worth crores of rupees and suggested empowering a central agency to probe such offences.

Various SEZ units are under the scanner of intelligence agencies for alleged misuse of incentives and grants for committing such fraud, official sources said.

The Directorate General of Foreign Trade ( DGFT ) has received a “self-contained proposal” from Directorate General of Export Promotion regarding operationalisation of relevant provisions of the Special Economic Zones Act, 2015 dealing with notification of offences, enforcement authorities and modalities thereof, the sources said.

At a recent meeting of Economic Intelligence Council headed by Finance Minister Arun Jaitley, the DGFT has been asked to examine the proposal and “issue appropriate notifications to enable officers to investigate offences”, they said.

Sources said it has been decided to authorise a central agency to probe offences in the Special Economic Zones, which are designated areas created for promotion of exports and to attract foreign investment, among others.

The SEZs get special incentives and tax benefits including exemption from sales tax and service tax.

According to the latest Commerce Ministry data, there are 330 notified SEZs across the country. The export by these units in 2015-16 stood at Rs 3,41,685 crore.

“There are reports that some people are misusing SEZs for committing import and export fraud. The agencies are facing problem in the absence of relevant provisions to check such activities,” a source said.

He said the government is considering authorising officers of the DRI, the lead agency under the Finance Ministry to check customs duty fraud, to take action in cases of misuse of SEZ units to commit fraud.

Various central government departments are adopting a coordinated approach to check cases of tax evasion, black money and fraud.

As much as Rs 50,000 crore of evasion in indirect tax — comprising service tax, excise and customs duty — has been unearthed by the government agencies in the last two years.

 

Source : Business Standard

Anti-dumping duty imposed on import of chemical from US, China : 06-06-2016


Anti-dumping duty of $0.277- 0.404 per kilogram has been imposed on a compound, used in the pharmaceutical industry, imported from the us and China to protect domestic makers from cheap shipments.

The Central Board of Excise and Customs ( CBEC ) has imposed definitive anti-dumping on import of Methyl Acetoacetate from the two countries for five years.

The duty has been slapped following recommendation by the Directorate General of Anti-dumping and  Allied Duties ( DGAD ).

The DGAD, after an investigation into the imports, said in its final findings that the chemical has been exported to India from the two countries below normal values and the domestic industry has suffered material injury .

“The material injury has been caused by the dumped imports of subject goods from the subject countries,” it said, while recommending the levy on imports of the chemical “in order to remove injury to the domestic industry.”

In January last year, DGAD had initiated a probe to ascertain if the chemical was being dumped in the country. The probe followed a petition by Laxmi Organic Industries.

In January last year, DGAD had initiated a probe to ascertain if the chemical was being dumped in the country. The probe followed a petition by Laxmi Organic Industries.

Methyl Acetoacetate is used in industries like pharmaceuticals, agrochemicals and polymers, among others.

Source : PTI

Cyprus says ‘very close’ to revising tax treaty with India : 06-06-2016


In a step forward, Cyprus has said it is “very close” to revising the bilateral tax treaty with India as the island nation has accepted “in principle” proposals made by the Indian side on taxing capital gains.

Cyprus, a source of significant foreign fund flows into the country, said rising importance of India, both as the “largest emerging economy and a major security player in the new geopolitical chess game, necessitated a serious re-appraisal and upgrading of the bilateral  relationship”.

As part of larger efforts to curb illicit fund flows, Indian government has been working on revising tax treaties with various countries, including Cyprus and Singapore. Last month, India announced revising taxation agreement with Mauritius — a major source of FDI — that would allow levy of capital gains tax on investments coming from that nation.

“Cyprus and India are very close to concluding a revised Double Taxation Agreement. The Cyprus authorities have expressed their readiness to the Indian authorities to finalise the revised agreement.

“After final and formal approval by both sides, the new agreement will be ready for finalisation, signing and entry into force,” a Cyprus government official told PTI.

Responding to a query on whether both sides have been able to resolve pending issues related to taxation, the official said, the Cyprus authorities have accepted the main proposals submitted by the Indian side, as an indication of good faith.

“The few pending issues, including on source-based taxation of capital gains from alienation of shares, have been accepted by both sides, in principle. Therefore, they are expected to be formally agreed upon soon,” the Cyprus foreign ministry  official said in e-mailed responses.

Source : Economic Times

Infra projects: RBI eases refinancing norms for NBFCs : 03-06-2016


To encourage infrastructure financing, RBI today eased norms for NBFCs to refinance such projects and provide longer repayment tenures.

“NBFCs may refinance any existing infrastructure and other project loans by way of take-out financing, without a pre-determined agreement with other lenders, and fix a longer repayment period, the same would not be considered as restructuring if… Such loans should be ‘standard’ in the books of the existing lenders and should have not been restructured in the past,” RBI said in a notification.

Another condition is that such loans should be substantially taken over from the existing financing lenders. Also, the repayment period should be fixed by taking into account the life cycle of the project and cash flows from the project.

In cases where the aggregate exposure of all institutional lenders is minimum Rs 1,000 crore, the refinancing by NBFCs will not be considered as restructuring in the books of the existing as well as taking over lenders if the project has started commercial operation after achieving Date of Commencement of Commercial Operation (DCCO).

Further, a lender who has extended only working capital finance for a “project may be treated as a ‘new lender’ for taking over part of the project term loan as required under the guidelines”.

The provisions are already applicable for banks.

Source : Business Standard

Competition Commission gives green signal to five deals : 03-06-2016


New Delhi, Jun 2 () Competition Commission today said it has cleared five merger and acquisition transactions, including the Edelweiss’ purchase of mutual fund business of JP Morgan in India.

The watchdog keeps a tab on unfair business practices across sectors and deals beyond a certain threshold requiring its approval.

Competition Commission of India (CCI) has approved five deals, according to five separate tweets by the regulator.

Edelweiss’ purchase of JP Morgan’s Indian mutual fund business, Yokohama Rubber’s acquisition off-highway-tyre manufacturer Alliance Tire Group (ATG), and AkzoNobel buying industrial coatings business of BASF SE are among the deals that have received green signal from CCI.

Two other transactions are the merger of Dr Wolfgang Porsche Holding GmbH andFerdinand Porsche Familien-Holding GmbH, and acquisition of Lanxess India pigment dispersion business by Clariant Chemical (India).

In January, CCI streamlined rules and procedures for filings pertaining to merger and acquisitions.

The regulator had amended the combination regulations for the fifth time to make it more user friendly, amid concerns expressed in certain quarters about some existing requirements.

From omitting certain requirements to simplifying existing norms, a slew of changes were effected by way of the amendment.

Among others, CCI has started giving an opportunity to the parties concerned before deciding on invalidating a notice. It has powers to reject an application if it is found to be incomplete.

Besides, acquisition of less than ten per cent of the total shares or voting rights of an enterprise should be treated as solely an investment subject to certain conditions. PRJ RAM ANU

Source : Times of India

Public sector banks delay plans to raise capital : 03-06-2016


(PSBs), which are starved for equity capital, are refusing to tap the markets to raise funds, despite having all the necessary approvals in place. State Bank of India (SBI), Bank of India, United Bank, Oriental Bank of Commerce, Union Bank and IDBI Bank have had the permissions for more than a year or more but they have refrained from raising capital via the qualified institutional placement (QIP) route.

Arun Tiwari, chairman and managing director of Union Bank, points out that even though they have the approvals to raise Rs 1,386 crore via QIP, they haven’t done it as yet because they do not need the funds now. “The credit growth in the system has been low and the areas that we are growing in don’t require as much capital. Therefore, the need for capital-raising hasn’t come yet,” he said.

The credit growth in the banking system has been in the range of 8.5-11 per cent for almost two financial years now. And the PSBs, excluding SBI, seem to be the worst affected. According to Reserve Bank of India data, during the January-March quarter, bank credit of PSBs — excluding SBI and its associates — grew by a mere 1.4 per cent, compared with 7.8 per cent in the corresponding period in FY15.

Another reason, experts point out, which is stopping the lenders from approaching the market is the stress on the balance sheet, which may deter potential investors. In fact in the last one year, the quantum of bad loans on the book of PSBs has close to doubled, with the tally of bad loans for the listed PSBs (including SBI & associates) at Rs 5.81 lakh crore at the end of March 2016, compared with about Rs 3 lakh crore at the end of March 2015.

Bankers also admit that all this combined with the volatility in the market has also deterred them from entering the capital markets.

Rama Rao, executive director, Vijaya Bank, explained that the present share value of the bank is at a discount to its book value and therefore it may not be lucrative to raise capital now. “It will make sense to tap the market when the price improves. The bank may look at raising equity capital from market at the end of the financial year,” he said.

Also, recently with the banking regulator allowing banks to include certain items such as property value, foreign exchange for calculation of its Tier-I capital, lenders may find them on a slightly stronger footing as far as capital base is concerned.

Source : Economic Times

Notification No: 44/2016 Dated: 2-6-2016


Corrigendum – Notification Number 33/2016, dated the 19th May, 2016 – 44/2016 – Dated 2-6-2016 – Income Tax

 

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No.44/2016

THE INCOME DECLARATION SCHEME, 2016

CORRIGENDUM

New Delhi, the 02nd June, 2016

S.O. 1950(E). –  In the notification of the Government of India, Ministry of Finance, Department of Revenue (Central Board of Direct Taxes), number 33/2016, dated the 19th May, 2016, published vide number S.O. 1831(E), dated the 19th May, 2016, in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), at page 21, in line 12, for “rule 4” read “rule 3(2)”.

[F. No.142/8/2016-TPL]

(Dr. T.S. Mapwal)

Under Secretary to the Government of India

Notification No : 43/2016 Dated: 2-6-2016


Income tax (14th Amendment) Rules, 2016 – 43/2016 – Dated 2-6-2016 – Income Tax

 

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

NOTIFICATION NO. 43/2016

New Delhi, the 02nd  June, 2016

S.O. 1949(E)- In exercise of the powers conferred by section 295 read with sub-section (2) of section 14A of theIncome-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following rules further to amend theIncome-tax Rules, 1962, namely:-

1.   (1) These rules may be called the Income–tax (14th Amendment) Rules, 2016.

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

2. In the Income-tax Rules 1962, in rule 8D,-

(I) for sub-rule (2), the following sub-rule shall be substituted, namely:- “(2) The expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts, namely:- (i) the amount of expenditure directly relating to income which does not form part of total income; and

(ii) an amount equal to one per cent of the annual average of the monthly averages of the opening and closing balances of the value of investment, income from which does not or shall not form part of total income:

Provided that the amount referred to in clause (i) and clause (ii) shall not exceed the total expenditure claimed by the assessee.”;

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

 [F.No. 370142/7/2016-TPL]

(Dr. T.S. Mapwal)

Under Secretary to Government of India

Note:- The principal rules were published vide Notification S.O. 969 (E), dated 26th March, 1962 and last amended by Income-tax (13th Amendment) Rules, 2016 vide Notification S.O.1923(E), dated 31.05.2016.

Notification No: 42/2016 Dated: 2-6-2016


Cost Inflation Index for Financial Year notified as 1125 – Amendments in Notification Number S.O. 709(E), dated the 20th August, 1998 – 42/2016 – Dated 2-6-2016 – Income Tax

MINISTRY OF FINANCE

(Department of Revenue)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 42/2016

New Delhi, the 2nd June, 2016

INCOME-TAX

S.O.1948(E).-In exercise of the powers conferred by clause (v) of the Explanation to section 48 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes, published in the Gazette of India, Extraordinary, vide number S.O. 709(E), dated the 20th August, 1998, namely:-

2. In the said notification, in the Table, after serial number 35 and the entries relating thereto, the following serial number and entries shall be inserted, namely:-

Sl. No.

Financial Year

Cost Inflation Index

(1)

(2)

(3)

“36

2016-17

1125”.

[F.No.142/5/2016-TPL]

PRAVIN RAWAL, Director

Note:- The principal notification was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section(ii), vide number S.O.709(E), dated the 20th August, 1998 and last amended vide number S.O.2031(E), dated the 24th July,2015.

Notification No : 41/2016 Dated: 2-6-2016


Section 10(46) of the Income-tax Act, 1961 Central Government notifies Uttar Pradesh State AIDS Control Society a body constituted by the Government of Uttar Pradesh in respect of the following specified income arising to that Society – 41/2016 – Dated 2-6-2016 – Income Tax

 

MINISTRY OF FINANCE

(Department of Revenue)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION 41/2016

New Delhi, the 2nd June, 2016

S.O. 1945(E).-In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, the Uttar Pradesh State AIDS Control Society, a body constituted by the Government of Uttar Pradesh, in respect of the following specified income arising to that Society, namely:-

“Grant received from National Aids Control Organisation, Government of India and interest received on deposits with Banks.”

2. This notification shall be deemed to have been applied for the period from 1st June, 2011 to 31st March, 2013 and the financial years 2013-2014, 2014-2015 and 2015-2016.

3. This notification shall be effective subject to the following conditions, namely:-

(a) the Uttar Pradesh State AIDS Control Society does not engage in any commercial activity;

(b) the activities and the nature of the specified income of the Uttar Pradesh State AIDS Control Society remain unchanged throughout the financial years; and

(c) the Uttar Pradesh State AIDS Control Society files return of income in accordance with the provision ofclause (g) of sub-section (4C) of section 139 of the Income-tax Act, 1961.

4. The grants received by the said Society shall be received and applied in accordance with the prevailing rules and regulations.

[F. No.196/87/2012-ITA-I]

DEEPSHIKHA SHARMA, Director

Notification No : 40/2016 Dated: 2-6-2016


Section 10(46) of the Income-tax Act, 1961 Central Government notifies Pollution Control Board, Assam a body constituted by the Government of Assam in respect of the following specified income arising to that Board – 40/2016 – Dated 2-6-2016 – Income Tax

MINISTRY OF FINANCE

(Department of Revenue)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION  NO. 40/2016

New Delhi, the 2nd June, 2016

S.O. 1944(E).-In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, the Pollution Control Board, Assam, a body constituted by Government of Assam, in respect of the following specified income arising to that Board, namely:-

(a) consent fees;

(b) analysis fees;

(c) reimbursement of the expense received from Central Pollution Control Board towards National Air Monitoring Programmes, global environment monitoring system and monitoring of India National Aquatic resources and like schemes;

(d) authorisation fees;

(e) cess re-imbursement and cess appeal fees;

(f) fees received under the RTI Act, 2005;

(g) public hearing fees;

(h) interest on loans & advances given to staff of the board;

(i) misc. income such as sale of old or scrap items, tender fees & other matters relating thereto

and

(j) interest on deposits.

2. This notification shall be effective subject to the conditions that the Pollution Control Board, Assam,-

(a) shall not engage in any commercial activity;

(b) activities and the nature of the specified income remain unchanged throughout the financial years; and

(c) shall file return of income in accordance with the provision of clause (g) of sub-section (4C) section 139of the Income-tax Act, 1961.

3. This notification shall be deemed to have been apply for the Financial Year 2015-2016 and shall apply with respect to the Financial Years 2016-2017, 2017-2018, 2018-2019 and 2019-20.

[ F.No.196/03/2016-ITA-I]

DEEPSHIKHA SHARMA, Director

Sebi, NCDEX tighten risk management mechanism : 02-06-2016


The Securities and Exchange Board of India (Sebi) and the National Commodity & Derivatives Exchange (NCDEX) seem to have learnt some lessons from the suspension of futures trading in castor seed on January 27 this year.

Both are strengthening the risk management and surveillance mechanism at their level. While Sebi has set up a task force and risk management committee, which is considering the methodology for handling default by members, among others, the NCDEX has strengthened mandi-level surveillance, which influences futures the most.

NCDEX, a leading agri-centric commodity derivative exchange, had in January suspended all contracts of castor seed, which was among the top five volume gainers, “to protect the integrity of the market”. Sebi handled this episode professionally and the commodity derivatives market witnessed how the regulator managed the crisis swiftly without impacting the market’s integrity. The measures taken following the episode will shape the way the commodities derivatives market would be regulated in future.

Sebi’s whole-time member Rajeev Kumar Agarwal, who is also in charge of commodity derivatives at Sebi, said: “Sebi followed a multi-pronged approach. It examined the issue from the angle of systemic risk, governance of the exchange, market integrity and investor grievance. A task force was set up to examine systemic issues, including risk management at exchanges. The board of the exchange was advised to fix responsibility if there have been any lapses in risk management and an interim order debarring 22 entities was passed to take care of market integrity aspect. NCDEX also has been directed to address grievance and facilitate the sale of stocks of those who were on sale side and did not get the opportunity to give delivery and to consider monetary compensation.”

What went wrong with castor futures

Castor prices were rising through December due to the impact of draught and also because new crop arrivals would start only after February. Sensing that the prices went up too much, some players, especially those who were having naked short positions in the market found out that in the past few months one foreign bank and a couple of non-banking financial companies were withdrawing lines of credit from all borrowers.

Ruchi Soya, the largest exporter of castor from India, was one of them. It had to manage funds to return that prematurely. Towards the end of 2015, Ruchi is said to have picked up huge deliveries of castor seeds on the NCDEX platform.

This financial crunch further strengthened the belief that it’s better to remain short in the February contract to ensure one big competitor is badly hurt. When bears were having the upper hand, NCDEX was forced to suspend trading on castor seed contracts.

Going by Sebi’s interim order issued by whole-time member Rajeev Agarwal, Ruchi manipulated the system and built positions using some players as their front.

Now, all of them came under the regulator’s net and barred by Sebi from dealings in the securities market. This was one of the fastest regulatory actions in commodity manipulation in recent times and Sebi has signalled the market how decisively it can act.

Ruchi Soya declined to comment on any of these issues. When contacted, an NCDEX spokesperson, too, declined to comment on the castor seed episode. The exchange did its internal audit and found that it needs to include surveillance of the physical market (mandi) because most of the developments impacting derivatives were happening outside the futures market. It immediately tightened its mandi-level surveillance team by appointing 11 more persons. It buttressed the core surveillance team, too, by hiring persons with forensic skills. Sebi is in touch with the management of the exchange. The exchange’s board has ordered a forensic audit report of the whole episode, which is expected to be submitted to the board in the next few days.

How Sebi handled the episode

1. Systemic aspect: Before the castor seed episode came to light, the regulator reduced position limits. Trading in the forward segment was suspended. After the castor seed issue, it further tightened position limits for agricultural commodities and restricted netting of positions

Its task force is also considering liquidity-linked initial margins, concentration margins, methodology for handling of member default and norms for default waterfall.

2. Governance aspect: Sebi has asked the exchange’s board to examine the role of the management in suspension of castor seed Contracts thoroughly and fix responsibility for failure in assessing the situation,

3. Market integrity aspect: 22 entities were debarred from the market vide an interim order.

4. Public grievances aspect: The exchange was advised to resolve the grievances of hedgers. Following this, the exchange in consultation with brokers’ association facilitated liquidation of stocks of hedgers and compensated of losses arising out of suspension of castor seed contracts.

THE CASTOR SEED CATASTROPHE: A TIMELINE

* 27 January: Suspension of castor seed contracts

* 29 January: Settlement price for outstanding positions announced

* 17 February: Constitution of a special cell for redressal of castor participants’ grievances

* 18 February: offered NeML platform to sell castor seed stocks to help genuine sellers who could not give delivery

* 2 March: Restraining order against Trading members and their defaulting clients

* 6 May: Exchange announces close out price to compensate genuine hedgers

Source : Economic Times

Notification No. 10(R)/(1)/2016-RB 1-6-2016


RESERVE BANK OF INDIA
(FOREIGN EXCHANGE DEPARTMENT)
(CENTRAL OFFICE)

FEMA NOTIFICATION

10 (R)/(1)/2016-RB, Dated: June 1, 2016

Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) (Amendment) Regulations, 2016

G.S.R.No.570(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), the Reserve Bank of India makes the following amendments in the Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) Regulations, 2015 [ Notification No. FEMA 10(R)/2015-RB dated January 21, 2016 ], namely:

1. Short Title & Commencement:-

(i) These Regulations may be called the Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) (Amendment) Regulations, 2016.

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

2. Amendment to Regulation 5

A. The existing sub-regulation (E) shall be re-numbered as (F).

B. In the re-numbered regulation (F), the existing sub-regulation (3) shall be substituted by the following namely:

“Insurance/reinsurance companies registered with Insurance Regulatory and Development Authority of India (IRDA) to carry out insurance/reinsurance business may open, hold and maintain a Foreign Currency Account with a bank outside India for the purpose of meeting the expenditure incidental to the insurance/reinsurance business carried on by them and for that purpose, credit to such account the insurance/reinsurance premia received by them outside India.”

C. After the existing sub-regulation (D), the following shall be inserted namely:-

“(E) Accounts in respect of Startups

An Indian startup or any other entity as may be notified by the Reserve Bank in consultation with the Central Government, having an overseas subsidiary, may open a foreign currency account with a bank outside India for the purpose of crediting to it foreign exchange earnings out of exports/ sales made by the said entity and/ or the receivables, arising out of exports/ sales, of its overseas subsidiary.

Provided that the balances in the account shall be repatriated to India within the period prescribed in Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 dated January 12, 2016, as amended from time to time, for realization of export proceeds.

Explanation: For the purpose of this sub-regulation a ‘startup’ means an entity which complies with the conditions laid down in Notification No. G.S.R 180(E) dated February 17, 2016 issued by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India.”

3. Amendment to Schedule 1

In Paragraph 1, in sub-paragraph (1), after the existing clause (vi), the following shall be inserted namely:-

“vii) Payments received in foreign exchange by an Indian startup, or any other entity as may be notified by the Reserve Bank in consultation with the Central Government, arising out of exports/ sales made by the said entity or its overseas subsidiaries, if any.

Explanation: For the purpose of this schedule a ‘startup’ means an entity which complies with the conditions laid down in Notification No. G.S.R 180(E) dated February 17, 2016 issued by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India.”

(J. K. Pandey)
General Manager (Officer- in- charge)

Foot Note:- The Principal Regulations were published in the Official Gazette vide G.S.R. No.96 (E) dated January 21, 2016 in Part II, Section 3, sub-Section (i).

F No 1080/06/DLA/IDRS/2016 – 1-6-2016


F.No.1080/06/DLA/IDRS/2016
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF EXCISE AND CUSTOMS
DIRECTORATE OF LEAGAL AFFAIRS
NEW DELHI

Dated: June 1, 2016

INSTRUCTION

Sub: Indirect Tax Dispute Resolution Scheme, 2016.

The Chapter XI of the Finance Act, 2016 (28 of 2016) comprising of section 212 to 218, is in respect of the Indirect Tax Dispute Resolution Scheme, 2016. The said scheme allows the party in appeal before the Commissioner (Appeals) on 1st March 2016, to file a declaration before the Designated Authority for the purpose of availing the benefit of the scheme.

2. As per clause (e) to sub-section (1) to section 213 of the Finance Act, 2014, the“designated authority” means an officer not below the rank of Assistant Commissioner who is authorised to act as Assistant commissioner by the Commissioner for the purposes of this Scheme;. As per the said clause (e) every Commissioner is required to authorize an officer not below the rank of Assistant Commissioner to function as Assistant Commissioner, Designated Authority for the purpose of this scheme. Accordingly you may get the Designated Authority, specified in your jurisdiction by the concerned Commissioners at the earliest. The details of Designated Authority so specified must be communicated to Commissioner Directorate of Legal Affairs.

3. The Indirect Tax Dispute Resolution Scheme Rules, 2016 has been notified by Notification No. 29/2016-CE(NT) dated 31st May 2016. These rules provide for the forms to be used for making the scheme operational. Following Forms have been prescribed by the said Rules:

(a) Form 1, has been prescribed for making declaration under the scheme.

(b) Form 2, is the form in which the designated authority shall give the acknowledgement about the receipt of declaration by him. Once such an acknowledgement has been given by the designated authority, the proceedings before the Commissioner (Appeals) shall remain suspended for sixty days, and the Commissioner will not proceed any further with the appeal till expiry of said sixty days.

(c) Form 3, is the form to be filed by the declarant giving the details of the amounts deposited by him as required under the scheme. Declarant has to deposit the sums required to be deposited by him within fortnight of the receipt of the dated acknowledgement and report the details of deposit made within seven days of making the deposit to the designated authority.

(d) Form 4, is the form in which the said designated authority shall pass an order of discharge of dues in respect of the case before Commissioner (Appeals) for which the declaration has been made in Form 1.

4. Commissioner will on receipt of the order in Form 4 from the declarant shall match the same with the copy received directly from the designated authority and shall remove the appeal from his pendency as being disposed off. Since the Commissioner (Appeals) has not decided on the issues raised in appeal, said disposal of appeal shall have no binding precedent value.

5. You should publicize the scheme in your jurisdiction so as to make it a success.

6. Any further issue which is noticed by you while making the scheme operational in your jurisdiction should be brought to the notice of board for suitable clarification.

(Sanjiv Srivastava)
Commissioner (DLA)

No. [F.NO.279/MISC/M-61/2016, Dated: 1-6-2016


Designated Authority – Under Direct Tax Dispute Resolution Scheme, 2016 – Order-Instruction – Dated 1-6-2016 – Income Tax

 

Designated Authority – Under Direct Tax Dispute Resolution Scheme, 2016

LETTER [F.NO.279/MISC/M-61/2016,]

Dated 1-6-2016

The Direct Tax Dispute Resolution Scheme 2016 (hereinafter referred to as the Scheme) introduced vide Finance Act, 2016 (28 of 2016), provides to the “declarant” a mechanism to resolve disputes pending before Commissioners of Income Tax (Appeals) as on 29-2-2016 and pertaining to “disputed tax” and/or “specified tax”.

2. The Scheme also provides for the notification of the “designated authority” by the Principal Chief Commissioners of Income Tax.

3. Considering the requirements of the scheme, administrative efficiency, convenience of tax payers and equitable distribution of work, the Principal Chief Commissioners of Income Tax addressed above will notify that the jurisdictional Principal Commissioner of Income Tax or the Commissioner of Income Tax, as the case may be, who exercises jurisdiction under section 120 of the Act, as notified by the CBDT from time to time over such “declarant”, shall be the “designated authority” as referred to in the Scheme.

4. It may be ensured that the notification is issued immediately and encompasses all Principal Commissioners of Income Tax (including Central) and Commissioners of Income Tax (TDS) & (Exemptions) in the Region. Compliance in this regard may be reported by 2-6-2016.

Narendra Modi likely to hold conference with top CBDT, CBEC brass : 01-06-2016


Prime Minister Narendra Modi is expected to hold a conference with the top brass of the IT department, Customs and Central Excise from across the country in June on a host of issues related to taxpayer services and effective implementation of taxation laws and government policies.

Officials said Modi, along with Finance Minister Arun Jaitley , is expected to hold the interaction with the Directors General and Principal Chief Commissioners of the two large departments working  under the Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs (CBEC) during their annual brainstorming and discussion conference in the national capital here on June 16-17.

This will be the first time that the two boards administering direct taxes (CBDT) and indirect taxes (CBEC) under the Finance Ministry will be holding their annual officers conference at the same time.

Earlier these two boards used to hold this separately with the chief guest being the Finance Minister.

While the itinerary and other fine details for the two-day conference are still being worked out, it is expected that Modi will be the keynote speaker to inaugurate the session at Vigyan Bhavan here, while Jaitley would be the lead speaker where he would talk to the top brass of the two boards.

The meetings, they said, have been planned in such a way that the sessions are divided into two broad subjects of government’s plans of financial inclusion and ensuring a transparent tax regime for businesses and foreign investors and the second being solution finding modules to issues and challenges being faced by the departments.

Modi, in his recent review meetings with the CBDT and CBEC has been reiterating the need to reduce taxpayers’ grievances and ensure a quick resolution  of these issues.

He is also expected to outline the government’s goals and aims vis-a-vis some flagship programmes like ‘Make in India’ and ‘Startup India’, they said.

Source : Business Standard

Non-financial companies hold key to corporate bond market: Crisil : 01-06-2016


Making it mandatory for non-financial companies to raise a portion of their funds from the sale of corporate bonds could help in developing the market , credit rating agency Crisil BSE 0.71 % said.

A conducive macro-economic environment , the passing of the Bankruptcy Act 2016, favourable regulations and elevated stress at public sector banks all support India’s corporate bond market. However, in order .

to develop the market needs more issuers beyond the financial sector, said Pawan Agrawal, chief analytical officer, Crisil.

“In many emerging economies, low inflation volatility, strong creditor rights, transitioning from bank loans to bonds and developing facilitative infrastructure have gone a long way in deepening corporate bond markets,” Crisil said.

India needs Rs 43 lakh crore (around $650 billion) for infrastructure building in the next five years to 2020, Crisil  estimated. Additionally, public sector banks need to raise Rs 1.7 lakh crore (around $25 billion) of Tier I capital by March 31, 2019, to conform to Basel III regulations adding that these needs augur well for the development of the corporate bond market.

However, public sector bank profitability has fallen due to rising non performing assets (NPAs) which means that their ability to raise money from the capital markets has diminished. “Additionally, higher provisioning has weakened  their ability to offer competitive interest rates, and if credit demand grows faster, their capital needs will be even higher,” Crisil said.

Source : PTI

Direct tax dispute resolution scheme kicks off today : 01-06-2016


A new dispute settlement scheme will kick in on Wednesday, providing companies such as Vodafone and Cairn that have been hit by retrospective amendment to India’s incometax law to tax indirect transfers an opportunity for resolution .

The Direct Tax Dispute Resolution Scheme, unveiled in this fiscal’s budget , allows for settlement of cases pending in various courts, tribunals, arbitration or mediation under the Bilateral Investment Protection Agreement (BIPA).

The scheme provides an opportunity for settlement of cases emanating from retrospective amendment of tax laws, with the companies required to pay just the basic tax demand and get a waiver on interest and penalty.

In his budget speech on February 29, finance minister Arun Jaitley had said, “To give an opportunity to the past cases, which are ongoing under the retrospective amendment, I propose ‘one time’ scheme of dispute resolution for them in which subject to their agreeing to withdraw any pending case in any court or tribunal or any proceeding for arbitration, mediation, etc under BIPA, they can settle the case by paying only the tax arrears in which case liability of the interest and penalty shall  be waived.”

A finance ministry statement said the one-time tax dispute resolution scheme shall come into force on June 1 and declarations under the scheme may be made on or before December 31.

The Central Board of Direct Taxes notified the rules and forms on May 26. Besides this scheme, a 6% equalisation levy on cross-border digital transactions will come into force on Wednesday.

These rules were notified by the revenue department earlier in the month, a CBDT statement said. The levy will apply only to business-to-business transactions.

Source : Economic Times

F. NO. B-1/19/2016-TRU


F. NO. B-1/19/2016-TRU
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
(TAX RESEARCH UNIT)
NEW DELHI

INSTRUCTION

Dated: May 31, 2016

Subject: - Enactment of Finance Bill, 2016 – reg.

The Finance Bill, 2016 received the assent of the President on 14.5.2016. Consequently, Finance Act (28 of 2016), 2016 has been published in the Gazette of India Extraordinary, Part II, Section 1. The same may be accessed at www.egazette.nic.in.

2. Certain amendments made in the Union Budget 2016-17 have come into force from the date when the Finance Bill, 2016 received the assent of the President of India. As a result, these amendments have come into effect from 14.5.2016. Some of these include notification Nos. 13/2016–ST, 14/2016–ST and certain entries in notification Nos. 9/2016–ST and 10/2016-ST, all dated 1.3.2016.

3. The above may be taken note of. This issues with the approval of the competent authority.

(Abhishek Verma)
Technical Officer (TRU)

No. F. No. B-1/19/2016 -TRU Dated: 31-5-2016


F. NO. B-1/19/2016-TRU
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
(TAX RESEARCH UNIT)
NEW DELHI

INSTRUCTION

Dated: May 31, 2016

Subject: - Enactment of Finance Bill, 2016 – reg.

The Finance Bill, 2016 received the assent of the President on 14.5.2016. Consequently, Finance Act (28 of 2016), 2016 has been published in the Gazette of India Extraordinary, Part II, Section 1. The same may be accessed at www.egazette.nic.in.

2. Certain amendments made in the Union Budget 2016-17 have come into force from the date when the Finance Bill, 2016 received the assent of the President of India. As a result, these amendments have come into effect from 14.5.2016. Some of these include notification Nos. 13/2016–ST, 14/2016–ST and certain entries in notification Nos. 9/2016–ST and 10/2016-ST, all dated 1.3.2016.

3. The above may be taken note of. This issues with the approval of the competent authority.

(Abhishek Verma)
Technical Officer (TRU)

Notification No : 39/2016 Dated: 31-5-2016


Income-tax (13th Amendment) Rules, 2016 – 39/2016 – Dated 31-5-2016 – Income Tax

 

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 39/2016

New Delhi, 31st May, 2016

S.O. 1923 (E) – In exercise of the powers conferred by section 200 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) Theses rules may be called the Income-tax (13th Amendment) Rules, 2016.

(2) They shall come into force form the 1st day of June, 2016.

2.  In the Income-tax Rules, 1962, in rule 29B, in rule 31A, in sub-rule (4A), for the words “seven days”, the words “thirty days” shall be substituted;

[F. No. 142/29/2015-TPL]

(R. LAKSHMI NARAYANAN)

UNDER SECRETARY, (TAX POLICY AND LEGISLATION

FM promises structural reforms, infra spending to boost growth : 31-05-2016


Wooing Japanese investors, Finance Minister Arun Jaitley today promised more structural and market-oriented reforms as well as stepping up infrastructure spending to accelerate economic growth beyond the current 7.6 per cent.

He also promised to reform the tax structure to make it simpler, predictable and stable.

Speaking at ‘The Future of Asia’ Conference organised by Nikkei Inc here, he said India has been the fastest growing major economy in the last two years despite global slowdown.

“We had a back to back 7.2 per cent and 7.6 per cent growth rate in the last two years. This was notwithstanding the global slowdown which has also adversely impacted the trade in India,” said Jaitley, who is on a six-day tour of Japan to attract investments.

The country has been able to perform despite adversities in two consecutive bad monsoons and some stress in the Indian private sector, the Finance Minister added.

“But then notwithstanding these adversities, a series of structural reforms, coupled with a large amount of enhanced public spending and a FDI, we maintained a reasonably respectable growth rate,” he said.

Jaitley said a very large number of reforms have taken place over the last few years. “The objective has been to bring about structural reforms in India, and I think the consistency of that direction has helped in restoring the credibility of the Indian economy,” he said.

In the last two years, 101 legislations have been passed in Parliament but there remain some which require a lot more time to build a larger consensus, he said alluding to the Goods and Services Tax (GST) Bill that is stuck in the Rajya Sabha for months now.

He expressed hope the GST Bill will be passed by the Upper House in the ensuing monsoon session of Parliament.

On things to come, he said, “The direction that I have indicated is of more structural reforms, more market-oriented reforms and the future direction of stepping up infrastructure spending, concentrating on rural areas and social security, I think this direction will consistently be maintained.”

While India started reforms in 1991, the second generation of reforms were unveiled when the BJP-led government came to power in 2014, he said. “We have opened out more sectors in the economy. While opening out to both international and domestic investments, we removed the unnecessary conditionalities, we eased the process of doing business in India. It is far easier than what it was years ago.” .

Source : The Hindu

Modi govt’s good luck with oil prices getting over? Here’s how crude impacts under-recoveries : 31-05-2016


A couple of years into its tenure, the Narendra Modi government seems to be losing the grace of its lucky stars, reports Siddhartha Saikia in New Delhi. Benign Brent crude has bountifully helped the government in fiscal management but last Thursday, when the government celebrated its second anniversary, the global benchmark went up 31 cents to go past the $50 per barrel mark, for the first time in 2016. Crossing this level is seen by many analysts as a signal that prices are rising. Brent crude, which touched $50.05 a barrel on Thursday morning, slid to $49.27 on Monday, but that was barely seen as a solace.

The budgeted petroleum subsidy of Rs 26,947 crore for 2016-7 will suffice to keep retail prices of subsidised LPG and kerosene at the current levels only if the average price of Indian basket of crude for the year is around $45 per barrel, analysts said.

(The price of the Indian basket of crude, according to the Petroleum Planning and Analysis Cell under the oil ministry, stood at $47.23 per barrel on Thursday, compared with $46.74 per barrel on the previous day.)

According to an estimate, if the Indian basket crude price is $50 a barrel (and assuming Rs 67 to a dollar), the annual subsidy required on domestic LPG would be Rs 17,000 crore at the current level of subsidised price and consumption; this would, however, more than double if crude touches $70. As for PDS kerosene, the subsidy figures corresponding to crude at $50 and $70 would be Rs 14,000 crore to Rs 19,000 crore, respectively. Put differently, every $1 per barrel rise in the price of the Indian basket of crude oil will inflate the oil marketing companies’ under-recovery on domestic LPG by Rs 7 a cylinder and PDS kerosene by 40 paise per litre.

During FY16, petroleum under-recovery stood at Rs 27,571 crore — Rs 16,056 crore on domestic LPG and Rs 11,496 crore on PDS kerosene. The finance ministry’s revised estimate of oil subsidy last year was higher at Rs 30,000 crore, as some arrears too were paid.

The silver lining is that unauthorised use of subsidised cooking gas has been substantially curbed. “While increase in crude oil price will put pressure on current account deficit and fiscal deficit, success of initiatives such as GiveItUp and direct benefit transfer of LPG would help government manage the subsidy outgo,” said Anish De, partner and head of oil and gas, KPMG in India.

The average Indian basket of crude price in FY16 was $42 a barrel, said K Ravichandran, senior VP and co-head, corporate sector ratings at Icra, adding, “Budgeted subsidy should be sufficient up to a crude price of $45 per barrel.”

Several hikes in excise duty on petrol and diesel effected last year would garner Rs 70,000 crore in the full year. In a recent interview to FE, revenue secretary Hasmukh Adhia said that the government could consider downward revision of excise duty on petrol and diesel if crude hardens.

This, he said, would help control the inflation.

Source : PTI

Government announces rules for equalisation levy : 31-05-2016


The government on Monday announced rules for equalisation levy — or ‘Google tax’ for taxation of payments for international digital services by India . businesses — that was introduced in the budget.

The specified services covered by the levy include online advertising, provision for digital advertising space and any other service to be notified by government. The rules come into effect from June 1.

Finance minister Arun Jaitley had  announced the equalisation levy, emanating out of OECD’s Base Erosion and Profit Sharing project, on payments made by businesses for specific digital services to a non-resident entity not having permanent establishment in India.

The idea is to indirectly tax internet giants for money they make from Indian advertisers, by imposing a levy on the payments these advertisers make.

The levy was structured based on recommendations of a panel set up the Central Board of Direct Taxes and included industry representatives.

Tax experts say businesses will have to start preparing now that the rules have been announced.

“Equalisation levy made various players sit up and take notice, especially since this is India’s first step to tax digital economy , and one of the first few internationally,” said Rakesh Nangia, managing partner at Nangia & Co.

“Now with rules in place, people need to start taking action, since the statement of specified services procured starting June 1, 2016 has to be  reported in the statement to be furnished by June 30, 2017,” he said.

Nangia said rules provide clarity as to how an assessee can appeal against the order of the assessing officer.

Source : Economic Times

No. 12/2016 Dated: 30-5-2016


Admissibility of claim of deduction of Bad Debt under section 36(1) (vii) read with section 36(2) of the Income-Tax Act, 1961 – Circular – Dated 30-5-2016 – Income Tax

Circular No. 12/2016

F. No. 279/Misc./140/2015-ITJ

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, Dated: 30th May, 2016

Subject:- Admissibility of claim of deduction of Bad Debt under section 36(1) (vii) read with section 36(2) of the Income-Tax Act, 1961- reg.

Proposals have been received by the Central Board of Direct Taxes regarding filing of appeals/pursuing litigation on the issue of allowability of bad debt that are written off as irrecoverable in the accounts of the assessee. The dispute relates to cases involving failure on the part of assessee to establish that the debt is irrecoverable.

2. Direct Tax Laws (Amendment) Act, 1987 amended the provisions of sections 36(1)(vii) and 36(2) of the Income Tax Act 1961, (hereafter referred to as the Act) to rationalize the provisions regarding allowability of bad debt with effect from the 1st April, 1989.

3. The legislative intention behind the amendment was to eliminate litigation on the issue of the allowability of the bad debt by doing away with the requirement for the assessee to establish that the debt, has in fact, become irrecoverable. However, despite the amendment, disputes on the issue of allowability continue, mostly for the reason that the debt has not been established to be irrecoverable. The Hon’ble Supreme Court in the case of TRF Ltd. In CA Nos. 5292 to 5294 of 2003 vide judgment dated 9.2.2010 (available in NJRS 2010-LL-0209-8), has stated that the position of law is well settled. “After 1.4.1989, for allowing deduction for the amount of any bad debt or part thereof under section 36(1) (vii) of the Act, it is not necessary for assessee to establish that the debt, in fact has become irrecoverable; it is enough if bad debt is written off as irrecoverable in the books of accounts of assessee. ”

4. In view of the above, claim for any debt or part thereof in any previous year, shall be admissible under section 36(1)(vii) of the Act, if it is written off as irrecoverable in the books of accounts of the assessee for that previous year and it fulfills the conditions stipulated in sub section (2) of sub-section 36(2) of the Act.

5. Accordingly, no appeals may henceforth be filed on this ground and appeals already filed, if any, on this issue before various Courts/Tribunals may be withdrawn/not pressed upon.

6. This may be brought to the notice of all concerned.

(Sadhana Panwar)

DCIT (OSD) (ITJ),

CBDT, New Delh

Investment in farm infrastructure must for 100% FDI in food processing : 30-05-2016


Foreign players looking to invest in the food processing sector will have to mandatorily invest a portion of the funds in building infrastructure at the farm gate level for the benefit of farmers, food processing minister Harsimrat Kaur Badal has said.

Badal said she is pushing for 100% foreign direct investment (FDI) in the food processing sector with a purpose to raise farmers’ income.

“My intention behind proposing this policy was to create ‘swadeshi’ (local) infrastructure at the farm gate level with ‘videshi’ money (foreign investment),” Badal told PTI.

The policy was announced to address the requirements of farmers and food processing industry as lots of fruits and vegetables grown by farmers either do not fetch the right prices or fail to reach the market, she said.

“I feel there should be a rider in the policy to ensure that a certain percentage of FDI inflows is invested on infrastructure at the farm level, directly benefiting the farmers,” she said.

The investment could be on mechanised farming, latest irrigation technologies, seeds, among others, Badal said adding better quality of farm produce is good for processing.

Badal also said the FDI inflow in food processing sector is expected to cross $1 billion in the next two years, helped by reforms in FDI space and streamlining other regulations.

Finance minister Arun Jaitley in Budget 2016-17 had announced 100% FDI in food processing on the food which is produced and processed in India.

The food processing sector attracted FDIs worth $463 million during the April-February period of the last fiscal.

Source : PTI

CSR rules amended to widen canvas for India Inc : 30-05-2016


The Centre has broad-based the entities available for carrying out corporate social responsibility (CSR) activities.

India Inc can now get CSR implemented through a foundation or trust or society set up by the Centre, State government or any entity established under the Act of Parliament or State legislature.

This could be done without having to worry about existence of three year track record in undertaking similar projects or programmes.

“We have widened the canvas for corporates. They need not bother about floating their own foundations or trusts or society for undertaking CSR. They can now use the vehicles set up by the Central, State governments or entities set up by an Act of Parliament or State legislatures to carry out CSR,” a senior corporate affairs ministry (MCA) official said.

There are many States, which have floated charitable foundations pursuing objects enshrined in the CSR legal framework, and these vehicles could now be utilised by companies for CSR implementation.

The latest rule change may also be helpful for corporate houses to reach out to remote areas where government floated society or trust or foundations are already working.

Reacting to this latest MCA move, SN Ananthasubramanian, a Practising Company Secretary, said that this liberalisation is indeed a welcome step.

“It will facilitate companies to undertake permitted activities through State-established entities of repute in particular spheres. This will also further enhance innovative collaborations in hitherto unexplored areas leading to improved social impact,” Ananthasubramanian told BusinessLine.

Source : Business Line

FM Arun Jaitley to visit Japan to deepen bilateral economic ties : 28-05-2016


Finance Minister Arun Jaitley will meet investors in Japan during a six-day visit to the country beginning Sunday, aiming to enhance the bilateral economic engagement between the two Asian partners and boost cooperation among businesses from India and Japan.

The importance of the visit is underlined by a series of significant meetings which are expected to set the pace for an intensified dialogue between businesses on both sides.

Among these engagements are the CEO’s Roundtable on June 1 with the chief executives of Japanese companies and the meeting on the National Investment and Infrastructure Fund (NIIF) which will involve interaction with banks, insurance companies, asset management companies looking to expand their presence in India as well as discussion with Japan Post and pension funds regarding long-term investment in India.

On June 1, Jaitley will address and interact with the Indian diapsora at ‘The India Club’ at Kobe. The Finance Minister is also slated to deliver a lecture at the Osaka University and attend an India investment promotion seminar on June 2, being organised by CII.

The NIIF has been set up by the government in partnership with institutional investors from India and abroad to attract investments in commercially viable infrastructure projects in roads and highways, railways which has exciting plans to build dedicated freight corridors and logistics hubs, ports with the vast Indian coastline of over 7,000 km, renewable energy and smart cities .

The visit by the high-powered CEOs delegation accompanying Jaitley “comes at a time when India’s experience of strong economic growth, comfortable price situation, low current account deficit, and adherence to fiscal recovery path have projected her as an outpost of opportunity for global investors,” Ficci said.

The delegation will also attend a meeting with JETRO on the May 30, visit DIET, the Japanese Parliament and participate in the NIKKEI Conference. Jaitley will deliver an address on “India’s Economic Performance; An Engine for Growth” as part of the overarching theme of ‘The Future of Asia’.

The delegation will comprise representatives from industry bodies Ficci and CII along with business heads from diversified sectors and senior government officials

Source : PTI

CBDT begins consultation process with stakeholders on GAAR : 28-05-2016


Gearing up to roll out the General Anti-Avoidance Rule (GAAR) from April next to check tax evasion through overseas jurisdictions, the CBDT today initiated a consultation process with general public and all stakeholders on provisions of the new regime.

“The general public and stakeholders are therefore requested to provide their inputs on the provisions of GAAR in respect of which further clarity is required, from its implementation perspective,” said a Central Board of Direct Taxes (CBDT) statement.

GAAR, which seeks to check tax evasion, will come into effect from Assessment Year 2018-19 (Financial Year 2017-18), it said, adding the necessary procedures for application of GAAR and conditions under which it will not apply have already been enumerated in the Income Tax Rules, 1962. The GAAR provisions were incorporated in the Income Tax Act, 1961.

The CBDT, which had received representations from industry associations with regard to implementation of the GAAR, asked the stakeholders to seek clarification by June 30.

The industry wanted the CBDT to issue guidelines so that there is adequate clarity with regard to implementation of GAAR.

To make the whole exercise meaningful, the CBDT said that while seeking clarifications the stakeholders should avoid reference to hypothetical situations.

“If the input relates to interpretation of a specific real world structure or arrangement, the structure should be such… (which) commonly occurs in the sector and involves clarification of general principles of application.

“Further, in relation to such structure, the particular provision and apprehensions or doubts along with basis thereof may also be provided with all the relevant facts,” the CBDT statement said.

GAAR was introduced in his 2012-13 Budget speech by the then Finance Minister Pranab Mukherjee with a view to check tax evasion and avoidance. However, its implementation was repeatedly postponed because of the apprehensions expressed by foreign investors.

GAAR, which was originally to be implemented from April 1, 2014, will now come into effect from April 1 next year. Besides other things, GAAR contains provision allowing the government to prospectively tax overseas deals involving local assets.

The government had earlier proposed imposing GAAR for those claiming tax benefit of over Rs 3 crore. The rules are aimed at minimising tax avoidance for investments made by entities based in tax havens.

Source : Financial Express

FinMin eases reporting rules for FATCA : 28-05-2016


The finance ministry has eased certain rules in reporting by financial institutions to comply with an agreement between India and the US for implementing the Foreign Account Tax Compliance Act (FATCA).

Financial institutions had told the government it was difficult to take physical self-certification from the subscribers. Heeding to the complaint, the ministry allowed obtaining of self-certification through internet banking platform.

The ministry also did away with the requirement of TIN number if a person is in a country where that number is not provided.

There were also queries from financial institutions about valuation of custodial accounts maintained with depositories. The ministry clarified that valuation of securities might be done at the values regularly communicated by depositories to the depository participants and brokers.

“Hopefully, this should help reporting of unlisted securities,” said Bahroze Kamdin, partner, Deloitte Haskins & Sells.

FATCA requires foreign financial institutions (FFI) to report information about financial accounts held by US taxpayers. If the FFI does not comply, the IRS can impose a 30 per cent withholding penalty on US payments made to the FFI.

Source : Business Standard

No. Press Release Dated: 27-5-2016


Clarification for implementation of FATCA and CRS – Circular – Dated 27-5-2016 – Income Tax

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

PRESS RELEASE

New Delhi, 27th May, 2016

Subject: Clarification for implementation of FATCA and CRS –regarding

An Inter-Governmental Agreement between India and USA was signed for implementation of Foreign Account Tax Compliance Act (FATCA). The Government of India has also joined the Multilateral Competent Authority Agreement (MCAA) for Automatic Exchange of Information as per Common Reporting Standard (CRS). To provide guidance for implementation of FATCA and CRS, A Guidance Note was released on 31st August 2015 which was subsequently updated on 31.12.2015. Further, a clarification was issued on 19th February, 2016.

Based on comments and feedback received from the financial institutions, a further clarification has been issued on 26th May, 2016.The same has been placed on the Income-tax website http://www.incometaxindia.gov.in.

(Meenakshi J Goswami)

Commissioner of Income Tax

(Media and Technical Policy)

Official Spokesperson, CBDT

No. 21/2016 Dated: 27-5-2016


Clarification regarding cancellation of registration u/s 12AA of the Income-tax Act, 1961 in certain circumstances – Circular – Dated 27-5-2016 – Income Tax

CIRCULAR NO. 21/2016

F.No.197/17/2016-ITA-I

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

New Delhi, the 27th May, 2016

Subject- Clarification regarding cancellation of registration u/s 12AA of the Income-tax Act, 1961 in certain circumstances – regarding

Sections 11 and 12 of the Income-tax Act, 1961 (‘Act’) exempt income of charitable trusts or institutions, if such income is applied for charitable purpose and such institution is registered under section 12AA of the Act.

2. Section 2(15) of the Act provides definition of “charitable purpose”. It includes “advancement of any other object of general public utility” provided it does not involve carrying on of any activity in the nature of trade, commerce or business etc. for financial consideration. The 2nd proviso to said section, introduced w.e.f 01-04-2009 vide Finance Act 2010, provides that in case where the activities of any trust or institution is of the nature of advancement of any other object of general public utility and it involves carrying on of any activity in the nature of trade, commerce or business; but the aggregate value of receipts from such commercial activities does not exceed ₹ 25,00,000/- in the previous year, the purpose of such trust/institution shall be deemed as “charitable” despite it deriving consideration from such activities. However, if the aggregate value of these receipts exceeds the specified cut-off, the activity would no longer be considered as charitable and the income of the trust/institution would not be eligible for tax exemption in that year. Thus an entity, pursuing advancement of object of general public utility, could be treated as a charitable institution in one year and not a charitable institution in the other year depending on the aggregate value of receipts from commercial activities. The position remains similar when the first and second provisos ofsection 2(15) get substituted by the new proviso introduced w.e.f. 01-04-2016 vide Finance Act, 2015, changing the cut-off benchmark as 20% of the total receipts instead of the fixed limit of ₹ 25,00,000/- as it existed earlier.

3. The temporary excess of receipts beyond the specified cut-off in one year may not necessarily be the outcome of alteration in the very nature of the activities of the trust or institution requiring cancellation of registration already granted to the trust or institution. Hence, section 13 of the Act has been amended vide Finance Act, 2012 by inserting a new sub-section (8) therein to provide that such organization would not get benefit of tax exemption in the particular year in which its receipts from commercial activities exceed the threshold whether or not the registration granted is cancelled. This amendment has taken effect retrospectively from 1st April, 2009 and accordingly applies in relation to the assessment year 2009-10 onwards.

4. In view of the aforesaid position, it is clarified that it shall not be mandatory to cancel the registration already granted u/s 12AA to a charitable institution merely on the ground that the cut-off specified in the provisoto section 2(15) of the Act is exceeded in a particular year without there being any change in the nature of activities of the institution. If in any particular year, the specified cut-off is exceeded, the tax exemption would be denied to the institution in that year and cancellation of registration would not be mandatory unless such cancellation becomes necessary on the ground(s) prescribed under the Act.

5. With the introduction of Chapter XII-EB in the Act vide Finance Act, 2016, prescribing special provisions relating to tax on accreted income of certain trusts and institutions, cancellation of registration granted u/s 12AA may lead to a charitable institution getting hit by sub-section (3) of section 115TD and becoming liable to tax on accreted income. The cancellation of registration without justifiable reasons may, therefore, cause additional hardship to an assesses institution due to attraction of tax-liability on accreted income. The field authorities are, therefore, advised not to cancel the registration of a charitable institution granted u/s 12AA just because the proviso to section 2(15)comes into play. The process for cancellation of registration is to be initiated strictly in accordance with section12AA(3) and 12AA(4) after carefully examining the applicability of these provisions.

6. The above may be brought to the notice of all concerned.

(Deepshikha Sharma)

Director to the Government of India

Notification No : 38/2016 Dated: 27-5-2016


EQUALISATION LEVY RULES, 2016 – 38/2016 – Dated 27-5-2016 – Income Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 38/2016

New Delhi, 27th May, 2016

EQUALISATION LEVY RULES, 2016

S.O. 1905(E) - In exercise of the powers conferred by sub-section (1) and sub-section (2) of section 179 of theFinance Act, 2016 (28 of 2016), the Central Government hereby makes the following rules for carrying out the provisions of Chapter VIII of the said Act relating to Equalisation levy, namely:-

1.  Short title and commencement.

(1) These rules may be called the Equalisation levy Rules, 2016.

(2) They shall come into force on the 1st day of June, 2016.

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

(a)  “Act” means the Finance Act, 2016 (28 of 2016);

(b) “Form” means Forms appended to these rules.

3.  Rounding off of consideration for specified services, equalisation levy, etc.   The amount of consideration for specified services and the amount of Equalisation levy, interest and penalty payable, and the amount of refund due, under the provisions of Chapter VIII of the Act shall be rounded off to the nearest multiple of ten rupees and, for this purpose any part of a rupee consisting of paise shall be ignored and thereafter if such amount is not a multiple of ten, then, if the last figure in that amount is five or more, the amount shall be increased to the next higher amount which is a multiple of ten and if the last figure is less than five, the amount shall be reduced to the next lower amount which is a multiple of ten.

4.  Payment of Equalisation levy.    Every assessee, who is required to deduct and pay equalisation levy, shall pay the amount of such levy to the credit of the Central Government by remitting it into the Reserve Bank of India or in any branch of the State Bank of India or of any authorised Bank accompanied by an equalisation levy challan.

5.  Statement of specified services.  (1) The statement of specified services required to  be furnished under sub-section (1) of section 167 of the Act shall be in Form No. 1, duly verified in the manner indicated therein, and may be furnished by the assessee in the following manner, namely:-

(i) electronically under digital signature; or

(ii) electronically through electronic verification code.

(2) The statement in Form No.1 in respect of all the specified services chargeable to equalisation levy during any financial year shall be furnished on or before the 30th June immediately following that financial year.

(3) The Principal Director-General of Income-tax (Systems) shall, for the purpose of  ensuring secure capture and transmission of data, lay down the specific procedures,  formats and standards and shall also be responsible for evolving and implementing  appropriate security, archival and retrieval policies in relation to furnishing the statement  under sub-rule (1).

Explanation: For the purposes of  this rule “electronic verification code” means a code generated for the purpose of electronic verification of the person furnishing the statement of specified services as per the data structure and standards laid down by the Principal Director- General of Income-tax (Systems).

6.  Time limit to be specified in the notice calling for statement of specified services. Where an assessee fails to furnish the statement within the time specified in sub-rule (2) of rule 5, the Assessing Officer may issue a notice to such person requiring him to furnish, within thirty days from the date of service of the notice, the statement in the Form prescribed in rule 5 and verified in the manner indicated therein.

7.  Notice of demand.    Where any levy, interest or penalty is payable in consequence of any order passed under the provisions of Chapter VIII of the Act, the Assessing Officer shall serve upon the assessee a notice of demand in Form No. 2 specifying the sum so payable:

Provided that where any sum is determined to be payable by the assessee under sub-section (1) of section 168 of the Act, the intimation under the said section shall be deemed to be a notice of demand.

8.  Form of appeal to Commissioner of Income-tax (Appeals). (1) An appeal under sub-section (1) of section 174 of the Act to the Commissioner of Income-tax (Appeals) shall be made in Form No. 3 in the following manner, namely:-

(i) electronically under digital signature; or

(ii) electronically through electronic verification code.

(2) The form of appeal referred to in sub-rule (1), shall be verified by the person who is authorised to verify the statement of specified services under rule 5, as applicable to the  assessee.

(3) Any document accompanying Form No.3 shall be furnished in the manner in which the  Form No.3 is furnished.

(4) The Principal Director General of Income-tax (Systems) shall-

i. lay down the procedure for electronic filing of Form No.3;

ii. lay down the data structure, standards and manner of generation of electronic verification code, referred to in sub rule-(2), for the purpose of verification of the person furnishing the said form; and

iii.  be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the said form so furnished.

9.  Form of appeal to Appellate Tribunal.- An appeal under sub-section (1) or sub-section (2) of section 175 of the Act to the Appellate Tribunal shall be made in Form No.4, and where the appeal is made by the assessee, the form of appeal, the grounds of appeal and the form of verification appended thereto shall be signed by the person specified in Form No.4, as applicable to the assessee.

India seeks fresh treaties with 47 nations : 27-05-2016


India has written to 47 countries to nullify the existing bilateral investment agreements and ink fresh treaties that will make it mandatory for foreign investors to exhaust local judicial remedies before seeking arbitration.

The Narendra Modi-led NDA government has prepared a model draft which will serve as the template for all investment agreements in the future and also for reworking the current ones.

“We have written to 47 countries Treaties that have completed 10 years will be allowed to be lapsed so that a new text can be negotiated,” a government official told ET.

India seeks fresh treaties with 47 nations

Some of the countries that India has written to are European nations with whom treaties were signed earlier. Treaties that have been signed recently such as one with the United Arab Emirates will continue with the existing text and be revised later, the official said.

The Bilateral Investment Promotion Agreements (BIPA) seek to promote investment flows between two nations by assuring fair and equitable treatment on post-establishment basis through reciprocal provisions such as national treatment, most favoured nation treatment and mechanism for dispute resolution. The government amended the text after being dragged into international arbitration by as many as 17 companies or individuals including Deutsche Telekom of Germany , Vodafone International Holdings BV , Sistema of Russia , Children’s Investment Fund and TCI Cyprus Holdings . India even lost an international arbitration case involving White Industries BSE -2.41 % of Australia.

Source : PTI

Amid Swamy offensive, Raghuram Rajan meets PM Modi, FM Jaitley : 27-05-2016


Reserve Bank of India governor Raghuram Rajan met Prime Minister Narendra Modi on Wednesday. Before meeting the PM, the governor had also met finance minister Arun Jaitley, reports fe Bureau in New Delhi.

Official sources told FE that much should not be read in Rajan’s meeting with the PM as he routinely meets him and the finance minister. “The RBI governor meets the PM and FM every two months before the monetary policy is due as a courtesy meeting,” officials aware of the meeting said.

The monetary policy is due on June 7.

There’s widespread speculation in official and industry circles whether Rajan, whose term as the RBI governor ends in September, will be given an extension or not.

When asked, Jaitley on Wednesday had declined to comment. Rajan has recently been attacked by BJP leader Subramanian Swamy, who has accused him of wilfully wrecking the economy and alleging that he is “not fully Indian” since he has been renewing his US green card. Swamy has also written to the PM urging that he be sacked.

However, the BJP has officially distanced itself from Swamy’s comments.

In fact, Jaitley on Thursday told NDTV in an interview that he does not approve of “personal” attacks. “I don’t approve of personal comments against anyone, let alone the RBI governor,” he said when asked about the continuing attack on Rajan in the past few months and whether there was an effort on part of the government to ring-fence the governor.

Source : PTI

74 – 26-5-2016


EXPORT DATA PROCESSING AND MONITORING SYSTEM (EDPMS) – ADDITIONAL MODULES FOR CAUTION LISTING OF EXPORTERS, REPORTING OF ADVANCE REMITTANCE FOR EXPORTS AND MIGRATION OF OLD XOS DATA

A.P. (DIR SERIES 2015-16) CIRCULAR NO.74DATED 26-5-2016

Attention of AD Category – I banks is invited to paragraph number C.2, C.15, C.20, C.24 and C.28 of Master Direction No.16 dated January 1, 2016 on Export of Goods and Services.

2. To simplify the procedure for filing returns on a single platform and for better monitoring, it has been decided to integrate the returns related to (a) handling of shipping bills for caution listed exporters; (b) delayed utilisation of advances received for exports; and (c) exports outstanding with Export Data Processing and Monitoring System (EDPMS) which has been in operation since March 1, 2014.

3. Caution/De-caution Listing of Exporters

3.1 To streamline the procedure, cautioning/de-cautioning of exporters has been automated. The AD category – I banks can access the updated list of caution listed exporters through EDPMS on daily basis. The list of all caution listed exporters would also be made available to AD category – I banks through their registered e-mail. Criteria laid down for cautioning/de-cautioning of exporters in EDPMS are as under:

i. The exporters would be caution listed if any shipping bill against them remains open for more than two years in EDPMS provided no extension is granted by AD Category -I bank/RBI. Date of shipment will be considered for reckoning the realisation period.
ii. Once related bills are realised and closed or extension for realisation is granted, the exporter will automatically be de-caution listed.
iii. The exporters can also be caution listed even before the expiry of two years period based on the recommendation of AD banks. The recommendation may be based on cases where exporter has come to adverse notice of the Enforcement Directorate(ED)/Central Bureau of Investigation (CBI)/Directorate of Revenue Intelligence (DRI) /any such other law enforcement agency or the case where exporter is not traceable or not making any serious efforts for realisation of export proceeds. In such cases, AD may forward its findings to the concerned regional office of RBI recommending inclusion of the name of the exporter in the caution list.
iv. Reserve Bank will caution/de-caution the exporters in such cases based on the recommendation of AD Category – I banks.

3.2 AD Category – I banks should follow the procedure mentioned below while handling shipping documents in respect of caution listed exporters:

(a) They will intimate the exporters about their caution listing, giving the details of outstanding shipping bills. When caution listed exporters submit shipping documents for negotiation/purchase/discount/collection, etc., the AD Category – I bank may accept the documents subject to following conditions:-
i. The exporters concerned should produce evidence of having received advance payment or an irrevocable letter of credit in their favour covering the full value of the proposed exports;
ii. In case of usance bills, the relative letter of credit should cover full export value and also permit such drawings. Besides, the usance bills should also mature within prescribed realisation period reckoned from date of shipment.
iii. Except under the above mentioned conditions given in 3.2 (a) (i) and (ii), AD banks should not handle the shipping documents of caution listed exporters.
(b) AD Category – I banks should obtain prior approval of the Reserve Bank for issuing guarantees for caution-listed exporters.

4. Reporting of Advance Remittance for Exports

4.1 Presently the export data in EDPMS is being captured only from the shipping bills generated. It has now been decided to capture the details of advance remittances received for exports in EDPMS. Henceforth, AD Category – I banks will have to report all the inward remittances including advance as well as old outstanding inward remittances received for export of goods/software to EDPMS. Further, AD Category – I banks need to report the electronic FIRC to EDPMS wherever such FIRCs are issued against inward remittances.

4.2 A quarterly return is presently being submitted by AD Category – I banks for delay in utilization of advances received for export in terms of A. P. (DIR Series) circular No. 74 dated February 9, 2015. It has been decided that AD category – I banks will upload the particulars of all the overdue export advances into the system and discontinue submission of quarterly return henceforth.

5Export Outstanding Statement (XOS)

With effect from March 01, 2014, details of all export outstanding bills can be obtained from the EDPMS. AD category – I banks were, however, required to report the old outstanding bills prior to March 01, 2014 in XOS on half yearly basis as at the end of June and December every year. To reduce the reporting burden of AD Category – I banks, it is decided to migrate the XOS data reported by the AD banks for half year ended December 2015 onwards to EDPMS and discontinue separate reporting of XOS for the subsequent periods. AD category – I banks are required to mark off/close the XOS data pertaining to pre March 01, 2014 as and when amount has been realised.

6. The above proposed enhancements in EDPMS were demonstrated to the staff of AD Category -I banks and the necessary background documents were also shared with them via e-mail. All the message formats and documents relating to EDPMS enhancements are also available on the website (https://edpms.rbi.org.in).

7. AD category -I banks may carry out appropriate changes in their IT system/operating procedure immediately.

8. The above enhancements in the EDPMS will be effected from June 15, 2016. All subsequent transactions have to be reported in EDPMS as per revised message format. AD category -I banks may note to process the transactions only if they are appearing in the EDPMS.

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

10. Master Direction No. 16/2015-16 dated January 1, 2016 and Master Direction No. 18/ 2015-16 dated January 1, 2016 are being updated to reflect the changes.

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

 

73 – 26-5-2016


FOREIGN EXCHANGE (COMPOUNDING PROCEEDINGS) RULES, 2000 – COMPOUNDING OF CONTRAVENTIONS UNDER FEMA, 1999

A.P. (DIR SERIES 2015-16) CIRCULAR NO.73, DATED 26-5-2016

Attention of Authorised Dealers is invited to paragraph number 7 and 8 of the Master Direction on Compounding of Contraventions under FEMA, 1999 issued vide FED Master Direction No.4/2015-16 dated January 1, 2016.

2. In terms of the Foreign Exchange (Compounding Proceedings) Rules, 2000, effective from June 1, 2000, Reserve Bank is empowered to compound contraventions relating to rule 7, 8 and 9 of and the third schedule to the Foreign Exchange Management (Current Account Transactions) (FEMCAT) Rules, 2000. With a view to providing comfort to individuals and corporate community by minimizing transaction costs and the same time taking a serious view of wilful, malafide and fraudulent transactions, the Reserve Bank was, vide GSR 609 (E) dated September 13, 2004 empowered to compound all the contraventions of Foreign Exchange Management Act, 1999 (FEMA) except section 3(a) of FEMA.

3. To ensure more transparency and greater disclosure, it has now been decided as hereunder:

I. Public disclosure of Compounding Orders

For disseminating the information pertaining to compounding orders, it has been decided to host the compounding orders passed on or after June 1, 2016 on the Bank’s website (www.rbi.org.in). The data on the website will be updated at monthly intervals in the following format:

Sr. No. Name of Applicant Amount imposed under the compounding order Whether the amount imposed has been paid Download order

Accordingly, a new sub-para no.8.6 is being added in the Master Direction on Compounding.

II. Public disclosure of guidelines on the amount imposed during compounding

As per provisions of section 13 of FEMA the amount imposed can be up to three times the amount involved in the contravention. However, the amount imposed is calculated based on guidance note given in the Annex. Now it has been decided to put the guidance note on the Bank’s website for information of general public. It may, however, be noted that the guidance note is meant only for the purpose of broadly indicating the basis on which the amount to be imposed is derived by the compounding authorities in Reserve Bank of India. The actual amount imposed may sometimes vary, depending on the circumstances of the case taking into account the factors indicated in paragraph 7.3 of the abovementioned Master Direction. This new provision is being inserted as sub-para 7.4 in the Master Direction on Compounding and the subsequent sub-paragraph renumbered accordingly.

4. Authorised Dealers may bring the contents of this circular to the notice of their constituents and customers concerned.

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).

ANNEX

Guidance Note on computation of the amount imposed under the Foreign Exchange (Compounding Proceedings) Rules 2000

Ref : A.P. (DIR Series) Circular No. dated May 26, 2016

I. Computation Matrix

Type of contravention Existing Formula
[1] Reporting Contraventions Fixed amount : Rs10000/- (applied once for each contravention in a compounding application) + Variable amount as under:
(A) FEMA 20 Upto 10 lakhs: 1000 per year
Para 9(1)(A), 9(1)(B), part B of FC(GPR), FCTRS (Reg. 10) and taking on record FCTRS (Reg. 4) Rs.10-40 lakhs: 2500 per year
(B) FEMA 3 Rs.40-100 lakhs: 7000 per year
Non-submission of ECB statements Rs.1-10 crore 50000 per year
(C) FEMA 120 Rs.10 -100 Crore : 100000 per year
Non-reporting/delay in reporting of acquisition/setup of subsidiaries/step down subsidiaries /changes in the shareholding pattern Above Rs.100 Crore : 200000 per year
(D) Any other reporting contraventions (except those in Row 2 below)
(E) Reporting contraventions by LO/BO/PO As above, subject to ceiling of Rs.2 lakhs. In case of Project Office, the amount imposed shall be calculated on 10% of total project cost.
[2] AAC/ APR/ Share certificate delays Rs.10000/- per AAC/APR/FCGPR (B) Return delayed.
In case of non-submission/ delayed submission of APR/ share certificates (FEMA 120) or AAC (FEMA 22) or FCGPR (B) Returns (FEMA 20) Delayed receipt of share certificate – Rs.10000/-per year, the total amount being subject to ceiling of 300% of the amount invested.
[3] Rs.30000/- + given percentage:
A] Allotment/Refunds
Para 8 of FEMA 20/2000-RB (non-allotment of shares or allotment/ refund after the stipulated 180 days) 1st year : 0.30%
1-2 years : 0.35%
B] LO/BO/PO 2-3 years : 0.40%
(Other than reporting contraventions) 3-4 years : 0.45%
4-5 years : 0.50%
>5 years : 0.75%
(For project offices the amount of contravention shall be deemed to be 10% of the cost of project).
[4] All other contraventions except Corporate Guarantees Rs.50000/- + given percentage:
1st year : 0.50%
1-2 years : 0.55%
2-3 years : 0.60%
3-4 years : 0.65%
4-5 years : 0.70%
> 5 years : 0.75%
5] Issue of Corporate Guarantees without UIN/without permission wherever required /open ended guarantees or any other contravention related to issue of Corporate Guarantees. Rs.500000/- + given percentage:
1st year : 0.050%
1-2 years : 0.055%
2-3 years : 0.060%
3-4 years : 0.065%
4-5 years : 0.070%
>5 years : 0.075%
In case the contravention includes issue of guarantees for raising loans which are invested back into India, the amount imposed may be trebled.

II. The above amounts are presently subject to the following provisos, viz.

(i) the amount imposed should not exceed 300% of the amount of contravention
(ii) In case the amount of contravention is less than Rs. One lakh, the total amount imposed should not be more than amount of simple interest @5% p.a. calculated on the amount of contravention and for the period of the contravention in case of reporting contraventions and @10% p.a. in respect of all other contraventions.
(iii) In case of paragraph 8 of Schedule I to FEMA 20/2000 RB contraventions, the amount imposed will be further graded as under:
a. If the shares are allotted after 180 days without the prior approval of Reserve Bank, 1.25 times the amount calculated as per table above (subject to provisos at (i) & (ii) above).
b. If the shares are not allotted and the amount is refunded after 180 days with the Bank’s permission: 1.50 times the amount calculated as per table above (subject to provisos at (i) & (ii) above).
c. If the shares are not allotted and the amount is refunded after 180 days without the Bank’s permission: 1.75 times the amount calculated as per table above (subject to provisos at (i) & (ii) above).
(iv) In cases where it is established that the contravenor has made undue gains, the amount thereof may be neutralized to a reasonable extent by adding the same to the compounding amount calculated as per chart.
(v) If a party who has been compounded earlier applies for compounding again for similar contravention, the amount calculated as above may be enhanced by 50%.

III. For calculating amount in respect of reporting contraventions under para 1.1 above, the period of contravention may be considered proportionately {(approx. rounded off to next higher month ÷ 12) × amount for 1 year}. The total no. of days does not exclude Sundays/holidays.

IV. Illustrations in respect of few sample cases are appended.

■■

 

72 – 26-5-2016


MEMORANDUM OF PROCEDURE FOR CHANNELING TRANSACTIONS THROUGH ASIAN CLEARING UNION (ACU)

A.P. (DIR SERIES 2015-16) CIRCULAR NO.72DATED 26-5-2016

Attention of Authorised Dealer Category-I Banks is invited to the Memorandum containing detailed procedural instructions for channeling transactions through the Asian Clearing Union (ACU) (Memorandum ACM) issued on February 17, 2010, as amended from time to time. In terms of paragraph 11 of the Memorandum the minimum amounts and the multiples in which Reserve Bank receives and pays U.S. Dollar/Euro is $ 25,000/€ 25,000 and $ 1,000/€ 1,000, respectively.

2. In view of the understanding reached amongst the members of the ACU during the44rth Meeting of the ACU Board of Directors in June, 2015, it has been decided to revise the minimum amount and the multiples in which Reserve Bank will receive and pay for the purpose of funding or for repatriating the excess liquidity in the ACU Dollar and ACU Euro accounts to $ 500 /€ 500.

3. AD Category-I Banks may bring the contents of this circular to the notice of their constituents concerned.

4. The directions contained in this circular have been issued under section 10(4) and11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.

 

Notification No: 31/2016 Dated: 26-5-2016


Service Tax (Third Amendment) Rules, 2016 – 31/2016 – Dated 26-5-2016 – Service Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION No. 31/2016-Service Tax

New Delhi, the 26th May, 2016

G.S.R….(E).-In exercise of the powers conferred by sub-section (1) read with sub-section (2) of section 94 of theFinance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend theService Tax Rules, 1994, namely:-

1. (1) These rules may be called the Service Tax (Third Amendment) Rules, 2016.

(2) These rules shall come into force from the 1st day of June, 2016.

2. In the Service Tax Rules, 1994, in rule 6,

(i) in sub-rule (7D), for the figures “0.5” the words “effective rate of Swachh Bharat Cess” and for the words, figures and brackets “14 (fourteen)”, the words and figures “rate of service tax specified in section 66B of the Finance Act, 1994” shall be substituted;”;

(ii) after sub-rule (7D), the following sub-rule shall be inserted, namely:-

”(7E) 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 effective rate of Krishi Kalyan Cess and dividing the product by rate of service tax specified in section 66B of the Finance Act, 1994, during any calendar month or quarter, as the case may be, towards the discharge of his liability for Krishi Kalyan Cess instead of paying Krishi Kalyan Cess at the rate specified in sub-section (2) of section 161 of the Finance Act, 2016 (28 of 2016) 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.”

[F.No. B-1/18/2016 - TRU]

(Anurag Sehgal)

Under Secretary

Note:-The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) bynotification No. 2/94-Service Tax, dated the 28th June, 1994 vide number G.S.R. 546 (E), dated the 28th June, 1994and last amended vide notification No. 20/2016-Service Tax, dated the 8th March, 2016 vide number G.S.R. 283(E), dated the 8th March, 2016.

Notification No: 30/2016 Dated: 26-5-2016


Seeks to amend notification No. 12/2013- ST, dated the 1st July, 2013 so as to inter alia allow refund of Krishi Kalyan Cess paid on specified services used in an SEZ – 30/2016 – Dated 26-5-2016 – Service Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION No. 30/2016-Service Tax

New Delhi, the 26th May, 2016

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 161 of the Finance Act, 2016 (28 of 2016), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes following further amendments in thenotification of the Government of India in the Ministry of Finance (Department of Revenue), No. 12/2013-Service Tax, dated the 1st July, 2013, published in the Gazette of India, Extraordinary, vide number G.S.R. 448(E), dated the 1st July, 2013, namely:-

In the said notification, in paragraph 3, in sub-paragraph (III),-

(i) for clause (b), the following clause shall be substituted, namely:-

“(b) the SEZ Unit or the Developer shall be entitled to refund of-

(i) the service tax paid on the specified services on which ab-initio exemption is admissible but not claimed, and

(ii) the amount distributed to it in terms of clause (a).”;

(ii) in clause (ba),

(a) in item (i), after the words “Swachh Bharat Cess”, the words “and Krishi Kalyan Cess” shall be inserted;

(b) in item (ii) for the words “by effective rate of Swachh Bharat Cess”, the words “by sum of effective rates of Swachh Bharat Cess and Krishi Kalyan Cess” shall be substituted.

This notification shall come into force from the 1st day of June, 2016.

[F.No. B-1/18/2016 - TRU]

(Anurag Sehgal)

Under Secretary

Note:-The principal notification was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) by notification No. 12/2013-Service Tax, dated the 1st July, 2013, published in the Gazette of India, Extraordinary, vide number G.S.R. 448(E), dated the 1st July, 2013 and last amended vide notification No. 02/2016-Service Tax, dated the 3rd February, 2016 vide number G.S.R. 140(E), dated the 3rd February, 2016.

Notification No: 29/2016 Dated: 26-5-2016


Seeks to amend notification No. 39/2012- ST, dated the 20th June, 2012 – 29/2016 – Dated 26-5-2016 – Service Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION No. 29/2016-Service Tax

New Delhi, the 26th May, 2016

G.S.R. —(E).- In exercise of the powers conferred by rule 6A of the Service Tax Rules, 1994, the Central Government, hereby makes following amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 39/2012- Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, vide number G.S.R. 481(E), dated the 20th June, 2012, namely:-

In the said notification, in Explanation 1, after clause (d), the following clause shall be inserted, namely:-

“(e) Krishi Kalyan Cess as levied under sub-section (2) of section 161 of the Finance Act, 2016 (28 of 2016).”.”

This notification shall come into force from the 1st day of June, 2016.

[F.No. B-1/18/2016 - TRU]

(Anurag Sehgal)

Under Secretary

Note:-The principal notification was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) by notification No. 39/2012-Service Tax, dated the 20thJune, 2012 vide number G.S.R. 481(E), dated the 20th June, 2012 and last amended vide notification No. 03/2016-Service Tax, dated the 3rd February, 2016 vide number G.S.R. 141(E)., dated the 3rd February, 2016.

Notification No : 28/2016 Dated: 26-5-2016


Krishi Kalyan Cess – Exempts such taxable services – 28/2016 – Dated 26-5-2016 – Service Tax

 

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION No. 28/2016-Service Tax

New Delhi, the 26th May, 2016

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 161 of the Finance Act, 2016 (28 of 2016), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts such taxable services from whole of Krishi Kalyan Cess leviable thereon which are either exempt from the whole of service tax by a notification or special order issued under sub-section (1) or as the case may be under sub-section (2) of section 93 of theFinance Act, 1994 or otherwise not leviable to service tax under section 66B of the Finance Act, 1994:

Provided that Krishi Kalyan 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 Krishi Kalyan Cess shall be the value as determined in accordance with the Service Tax (Determination of Value) Rules, 2006.

This notification shall come into force from the 1st day of June, 2016.

[F.No. B-1/18/2016 - TRU]

(Anurag Sehgal)

Under Secretary

Notification No : 27/2016 Dated: 26-5-2016


Seeks to provide that provisions of notification No. 30/2012 – Service Tax dated the 20th June,2012 shall be applicable for the purposes of Krishi Kalyan Cess – 27/2016 – Dated 26-5-2016 – Service Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION No. 27/2016-Service Tax

New Delhi, the 26th May, 2016

G.S.R.….(E).-In exercise of the powers conferred by sub-section (2) of section 68 of the Finance Act, 1994 (32 of 1994) read with sub-section (5) of section 161 of the Finance Act, 2016 (28 of 2016), 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, 2012 shall be applicable mutatis mutandis for the purposes of Krishi Kalyan Cess.

This notification shall come into force from the 1st day of June, 2016.

[F.No. B-1/18/2016 - TRU]

(Anurag Sehgal)

Under Secretary

No. F. No. 504/632/2015-FT & TR-III(1) Dated: 26-5-2016


Clarifications for implementation of FATCA and CRS – Circular – Dated 26-5-2016 – Income Tax

F. No. 504/632/2015-FT & TR-III(1)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

(Foreign Tax & Tax Research Division)

Dated 26th May, 2016

Subject: Clarifications for implementation of FATCA and CRS-reg

Pursuant to the consultations held with Financial Institutions  (FIs) regarding implementation of FATCA and CRS, the following clarifications are issued.

Obtaining Self-Certification

2.1  Financial institutions are in the process of carrying out the due diligence of financial accounts and obtaining self-certification from the account holders. Representatives of FIs have informed that there are large number of financial accounts and it is practically very difficult to physically obtain the self-certification from the account holders. It has been requested to provide alternative channels to obtain self-certification.

2.2  In view of the above, it has been decided that self-certification can also be obtained through Internet Banking platform from the user account where the customer has transaction rights.

Tax Identification Number (TIN)

3.1  Several queries have been received on TIN. It is again clarified that TIN is not required to be collected by the Fis if TIN  (including its functional equivalent) is not issued by the relevant country or territory outside India in which the person is resident for tax purposes.

3.2  It is also clarified that TIN is not required to be collected by the FIs even from a person (resident for tax purposes in a country or territory outside India ) who may be eligible to obtain a TIN (or the functional equivalent) in his country or territory of residence, but has not yet obtained a TIN. However, in this case, FIs may note down this fact and seek TIN from the person after he obtains the same.

Account Balance/value

4.1  As per Rules, account balance or value of the financial account has to be reported. Queries have been received regarding account balance of a custodial account. The custodial account of the customer maintained with the Depository/ Depository Participant/broker contains various kinds of securities.  It has been requested to issue valuation guidelines to determine the account balance/value for the purpose of reporting.

4.2 In this regard, it has been decided that valuation of securities may be done at the values regularly communicated by Depository (CDSL/NSDL) to the depository participants/brokers.

Procedure for furnishing the report

5.1  In respect of the procedure for registration and submission of report under FATCA and CRS,  a new Notification No. 4 dated 06.04.2016 has been issued by the Principal Director General of Income Tax (Systems) which is available on the website of Income tax Department www.incometaxindia.gov.in.

5.2  The  Systems  Directorate  has  also  released  a  User  Manual  for Registration, Upload & View of Form 61 B which can be found on

http://incometaxindiaefiling.gov.in/eFiling/Portal/StaticPDF/Registration_Upload Form61Form61B_ Form15CC.pdf?0.5419367604612912

(Gaurav Sharma)

Under Secretary, FT&TR-111(l)

Sebi to draft proposals on high frequency trading soon : 26-05-2016


The head of India’s capital markets regulator said on Wednesday it would increase monitoring of brokers and auditors and issue draft proposals for high frequency trading, laying out an ambitious agenda for itself in the year ahead.

It will also seek a better arbitration mechanism for investors, take a closer look at cyber-security, and focus on the implementation of recent regulations such as disclosure rules for listed companies, Securities and Exchange Board of India Chairman U.K. Sinha said.

The government in February extended Sinha’s tenure by another year. He has been at the helm since 2011, a period during which SEBI has made it a priority to enhance market supervision, crack down on trading violations and shore up the confidence of retail investors.

That is an approach that will continue, Sinha said during an interaction with media at the SEBI headquarters in MUMBAI.

He said there  would be “monitoring of compliance by intermediaries,” including brokers and “oversight of gatekeepers” such as auditors to prevent companies from engaging in deceitful activity.

SEBI will also aim to reduce the number of listed companies, Sinha said, estimating India had several thousand companies in exchanges including regional ones, many of which hardly trade or have been suspended for years.

The regulator would also issue a discussion paper on high frequency trades in the next three to four months, Sinha added, with a focus on ensuring that retail or other investors who do not have access to algorithimic trading are not disadvantaged.

Source : Economic Times

No. 194/04/2016 Dated: 26-5-2016


Accounting code for payment of Krishi Kalyan Cess – Dated 26-5-2016 – Service Tax

Circular No. 194/04/2016-ST

F. No. 354/31/2016-TRU

Government of India

Ministry of Finance

Department of Revenue

(Tax Research Unit)

Dated the 26th May, 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)

Madam/Sir,

Subject: Accounting code for payment of Krishi Kalyan Cess – regarding.

Chapter VI of the Finance Act, 2015 will come into effect from 1st June, 2016. Krishi Kalyan Cess is leviable on all taxable services, other than services which are fully exempt from Service Tax or services which are otherwise not liable to Service Tax under section 66B of the Finance Act, 1994, at the rate of 0.5%.

2. Accordingly, accounting codes have also been allotted by the Office of the Controller General of Accounts for the new Minor Head “507-Krishi Kalyan Cess” and new Sub-heads as under:

S.No Krishi Kalyan Cess (Minor Head) Tax Collection Other Reciepts (Interest) Deduct Refunds Penalties
1 0044-00-507 00441509 00441510 00441511 00441512

4. All concerned are requested to acknowledge the receipt of this circular.

5. Trade Notice/ Public Notice to be issued. Wide publicity through local news media including vernacular press may be given. Hindi version shall follow.

Yours faithfully,

(Abhishek Chandra Gupta)

Technical Officer (TRU)

Notification No : 35/2016 Dated: 26-5-2016


The Direct Tax Dispute Resolution Scheme Rules, 2016 – 35/2016 – Dated 26-5-2016 – Income Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION NO. 35/2016

New Delhi, the 26th May, 2016

The Direct Tax Dispute Resolution Scheme Rules, 2016

S.O. 1903 (E). - In exercise of the powers conferred by sub-sections (1) and (2) of section 211 of the Finance Act, 2016, (28 of 2016), the Central Government hereby makes the following rules, namely :

1. Short title and commencement.-

(1) These rules may be called the Direct Tax Dispute Resolution Scheme Rules, 2016.

(2) They shall come into force on the 1st day of June, 2016.

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

(a) “Scheme” means the Direct Tax Dispute Resolution Scheme, 2016, specified under Chapter X of the Finance Act, 2016 (28 of 2016);

(b) “section” means section of the Finance Act, 2016 (28 of 2016);

(c) “Form” means the Forms appended to these rules;

(d) all other words and expressions used in these rules but not defined in these rules and defined in the Scheme under Chapter X of the Finance Act, 2016 (28 of 2016), shall have the same meanings respectively as assigned to them in that Scheme.

3. Form of declaration and undertaking under section 203.- (1) The declaration under sub-section (1) of section 203 shall be made in duplicate in Form-1 to the designated authority and verified in the manner specified therein.

(2) The undertaking referred to in sub-section (4) of section 203 shall be furnished in Form-2 alongwith the declaration and verified in the manner specified therein.

(3) The declaration under sub-rule (1) and the undertaking under sub-rule (2), as the case may be, shall be signed by the declarant or any person competent to verify the return of income on his behalf in accordance with section 140 of the Income-tax Act, 1961.

(4) The designated authority on receipt of declaration shall issue a receipt in acknowledgement thereof.

4. Form of certificate under sub-section (1) of section 204.- The designated authority shall issue a certificate referred to in sub-section (1) of section 204 in Form-3.

5. Intimation of payment.- The detail of payments alongwith proof thereof, made pursuant to the certificate issued by the designated authority shall be furnished by the declarant to the designated authority in Form-4.

6. Order under sub-section (2) of section 204.- The order by the designated authority under sub-section (2) of section 204 in respect of tax arrear shall be in Form-5 and in respect of specified tax shall be in Form-6.

Notification No : 34/2016 Dated: 26-5-2016


Appoints the 31st day of December, 2016 as the date on or before which a person may make a declaration to the designated authority in respect of tax arrear or specified tax under the Direct Tax Dispute Resolution Scheme, 2016 – 34/2016 – Dated 26-5-2016 – Income Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION NO. 34/2016

New Delhi, the 26th May, 2016

S.O. 1902(E).- In exercise of the powers conferred by section 202 of the Finance Act, 2016 (28 of 2016), the Central Government hereby appoints the 31st day of December, 2016 as the date on or before which a person may make a declaration to the designated authority in respect of tax arrear or specified tax under the Direct Tax Dispute Resolution Scheme, 2016.

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

(Dr. T.S. Mapwal)

Under Secretary to the Government of India

Govt plans GST roll-out from April 2017 : 26-05-2016


The Union government is confident it would be able to garner an adequate number of votes in the Rajya Sabha to ensure the passage of the Constitution amendment Bill on goods and services tax (GST) during the forthcoming monsoon session of Parliament. Based on this, it has already begun working on a timeline that envisages roll-out of the GST regime from April 2017.

Top government sources told Business Standard that all political parties other than the Congress and the All India Anna Dravida Munnetra Kazhagam (AIADMK) have supported the GST Bill. AIADMK leaders are understood to have indicated that their members in the Rajya Sabha would not come in the way of the passage of the Constitution amendment Bill on GST. The understanding is that AIADMK members in the Upper House would abstain at the time of voting. This is expected to help the government as the Congress, whose strength is already reduced, would be further isolated, paving the way for the passage of the Bill.

According to the current government thinking, the Constitution amendment Bill is likely to be taken up for discussion and voting in the Rajya Sabha during the very first week of the monsoon session. This will give adequate time for the Bill to be sent to states, so that at least half of them could approve it. Once that is obtained, the government plans to introduce two GST Bills, whose passage should not be a problem as these would be money Bills, for which the Rajya Sabha’s approval is not mandatory. These Bills could be approved by Parliament either in the winter session or in the first half of the Budget session next year.

The government’s confidence on rolling out GST from April also stems from its internal assessment that most chief ministers are in favour of the new tax regime that would introduce uniform rates and improve the ease of doing business.

Source : Business Standard

No. 20/2016 Dated: 26-5-2016


E-filing of appeals: Extension of time limit – Circular – Dated 26-5-2016 – Income Tax

Circular No. 20/2016

F. No. 279/Misc/M-54/2016/ITJ

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, Dated: 26th May, 2016

Subject:  E-filing of appeals: Extension of time limit – reg.

Rule 45 of the Income Tax Rules, 1962, mandates compulsory e-filing of appeals before Commissioners of Income Tax (Appeals) with effect from 01.03.2016 in respect of persons who are required to furnish return of income electronically. It has come to the notice of the Central Board of Direct Taxes (hereinafter referred to as the Board) that in some cases the taxpayers who were required to e-file Form 35, were unable to do so due to lack of knowledge about e-filing procedure and/or technical issues in e-filing.  Also, the EVC functionality for verification of e-appeals was made operational from 12.05.2016 for individuals and from 19.05.2016 for other persons. Word limit for filing grounds of appeal and mapping of jurisdiction of Commissioners of Income Tax (Appeals) were also a cause of grievance in some cases.

2.  The matter has been examined by the Board. While the underlying issues relating to e-filing of appeals have since been addressed and resolved, in order to mitigate any inconvenience caused to the taxpayers on account of the new requirement of mandatory e-filing appeals, it has been decided to extend the time limit for filing of such e-appeals. E-appeals which were due to be filed by 15.05.2016  can be filed up to  15.06.2016. All e-appeals filed within this extended period would he treated as appeals filed in time.

3.  In view of the extended window for filing e-appeals, taxpayers who could not successfully e-file their appeal and had filed paper appeals are required to file an e-appeal in accordance with Rule 45 before the extended period i.e. 15.06.2016. Such e-appeals would also be treated as appeals filed within time.

(Sadhana Panwar)

DCIT (OSD) (ITJ),

CBDT, New Delhi

Notification No. S.O. 1996(E) 25-05-2016


SECTION 4 OF THE SPECIAL ECONOMIC ZONES ACT, 2005 – ANDHRA PRADESH INDUSTRIAL INFRASTRUCTURE CORPORATION LTD.

NOTIFICATION NO.SO 1996(E) [F.NO.F.1/45/2008-SEZ]DATED 25-5-2016

WHEREAS, M/s. Andhra Pradesh Industrial Infrastructure Corporation Limited, a fully owned State Industrial Promotion Organisation in the State of Andhra Pradesh, 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 and information technology enabled servies sector at Gambheeram Village, Anandapuram Mandal, Visakhapatnam District, in the State of Andhra Pradesh;

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 20-76 hectares at above Special Economic Zone vide Ministry of Commerce and Industry Notification Number S.O. 1041(E), dated 24th April, 2009;

AND, WHEREAS, M/s. Andhra Pradesh Industrial Infrastructure Corporation Limited has now proposed for full de-notification of 20.76 hectares areat at the above Special Economic Zone;

AND, WHEREAS, the State Government of Andhra Pradesh has given its “No Objection” to the proposal vide their letter No. 1676/ITE and C/IT Prom/2008, dated 30th July, 2015;

AND, WHEREAS, the Development Commissioner, Visakhapatnam Special Economic Zone has recommended the proposal for full de-notification 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.

 

Notification No.: 26/2016 Dated: 20-5-2016


Seeks to amend Notification No. 25/2012- Service Tax dated 20.06.2012 – 26/2016 – Dated 20-5-2016 – Service Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION No. 26/2016-Service Tax

New Delhi, the 20th May, 2016

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) and sub-section (2A) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with section 83 of theFinance 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 amendment 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:-

In the said notification, in Entry 48, the following Explanation shall be inserted, namely:-

“Explanation.- For the purposes of this entry, it is hereby clarified that the provisions of this entry shall not be applicable to the following services, namely:-

(a) services specified in sub-clauses (i),(ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994;

(b) services by way of renting of immovable property.”.

[F. No. 334/8/2016 -TRU]

(Mohit Tiwari)

Under Secretary to the Government of India

Note:- The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 25/2012 – Service Tax, dated the 20th June, 2012, vide number G.S.R. 467 (E), dated the 20th June, 2012 and was last amended vide notification number 22/2016 – Service Tax, dated the 13th April, 2016 vide number G.S.R. 419(E), dated the 13th April, 2016.

Notification No : 37/2016 Dated: 27-5-2016


Central Government appoints the 1st day of June, 2016 as the date on which Chapter VIII (EQUALISATION LEVY) of the Finance Act 2016 shall come into force – 37/2016 – Dated 27-5-2016 – Income Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 37/2016

New Delhi, the 27th May, 2016

S. O. 1904 (E) – In exercise of powers conferred by sub-section (2) of section 163 of the Finance Act 2016 (28 of 2016), the Central Government hereby appoints the 1st day of June, 2016 as the date on which Chapter VIII of the said Act shall come into force.

[F. No. 370142/12/2016-TPL]

(Lakshmi Narayanan)

Under Secretary (Tax Policy and Legislation)

No. 19/2016 Dated: 25-5-2016


Jurisdiction of income-tax authorities – Circular – Dated 25-5-2016 – Income Tax

Circular No. 19/2016

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

(Income-Tax)

New Delhi, the 25th May, 2016

Income Declaration Scheme, 2016, introduced vide Finance Act, 2016 (28 of 2016), provides an opportunity to persons who have not paid full taxes in the past to come forward and declare their undisclosed income. Rule 4 of the Income Declaration Scheme Rules, 2016 provides that a declaration of income or income in the form of investment in any asset u/s 183 shall be made in the prescribed manner to the Principal Commissioner or the Commissioner who exercises jurisdiction over the declarant.

2. It is, therefore, clarified that the jurisdictional Principal Commissioner or the Commissioner, as the case may be, who exercises jurisdiction u/s 120 of the Income-tax Act, 1961, as notified by CBDT from time to time over such declarant, shall be the Principal Commissioner or the Commissioner as referred to in section 186 of the Income Declaration Scheme 2016 to whom declaration under 183 of that Scheme is to be made.

Note: Notifications of the Government of India, Central Board of Direct Taxes, pertaining to the jurisdiction u/s 120of the Income-tax Act, 1961 - Published in the Gazette of India, Extraordinary, Part-II Section 3, Sub-section (ii)-S.O. 2752 (E) dated 22.10.2014, S.O. 2754 (E) dated 22.10.2014, S.O.2814 (E) dated 03.11.2014, S.O. 2885 (E) dated 12.11.2014, S.O. 3244 (E) dated 19.12.2014, S.O. 2911 (E) dated 13.11.2014, S.O. 2922 (E) dated 15.11.2014, S.O. 2915 (E) dated 13.11.2014, S.O. 3911 (E) dated 16.12.2014, S.O. 355 (E) dated 05.02.2015, S.O. 2812 (E) dated 13.10.2015.

Deepshikha Sharma

Director to the Government of India

UAE tightens norms for import of vegetables from India : 25-04-2016


Amid quality concerns, the United Arab Emirates (UAE) has tightened norms for import of chili peppers, mango and cucumber from India from May onwards. The Arab nation has now made it mandatory for Indian exporters to furnish a pesticide residue analysis report for each consignment of shipment of these products.

In a latest circular, the agri-export promotion body Agricultural and Processed Food Products Export Development Authority (APEDA) has advised exporters to “strongly adhere to the import requirement of the UAE and not make any shipments without violating the stipulated conditions.”

 In a recent communication, the UAE has informed that “fruits and vegetables coming from India showed high levels of pesticide residues exceeding the permitted limits of in accordance with international standards adopted by Codex Alimentarius Commission.”

 ”In light of this, it has been decided by the UAE that for the sake of the health and safety of consumers, it will not allow the shipment of chili peppers, mango and cucumber without accompanying a residue analysis report with each consignment with effect from May 1,” APEDA said in the circular.

In the 2015-16 fiscal, India had exported 2,62,158 tonnes of fresh vegetables and 48,591 tonnes of fruits to the UAE, as per the APEDA data.
Source : Times of India

World Bank group launches Pandemic Emergency Finance Facility : 25-05-2016


The World Bank Group has launched the much anticipated Pandemic Emergency Finance Facility (PEF) — a new financing mechanism to quickly mobilise funds to tackle global disease outbreaks and create a new insurance market for pandemic risk.

PEF is expected to bring the much needed coordination and speed for future global disease outbreak response efforts.

“Pandemics pose some of the biggest threats in the world to people’s lives and to economies, and for the first time we will have a system that can move funding and teams of experts to the sites of outbreaks before they spin out of control,” Jim Yong Kim, President of the World Bank Group, said in a statement.

“This facility addresses a long, collective failure in dealing with pandemics. The Ebola crisis in Guinea, Liberia and Sierra Leone taught all of us that we must be much more vigilant to outbreaks and respond immediately to save lives and also to protect economic growth.”

The PEF facility launch announcement came few days ahead of the May 26-27 Summit of Group of Seven Leaders in Ise-Shima, Japan. G7 leaders had urged the World Bank Group to develop the initiative during their May 2015 summit in Schloss-Elmau, Germany.

Japan — which holds the G7 Presidency — became the first donor to the PEF initiative and committed $ 50 million.

“Japan is proud to support the Pandemic Emergency Financing Facility, which prevents pandemics from undermining important development achievements”,” said Deputy Prime Minister and Minister of Finance of Japan Taro Aso.

“Innovative financing for crisis responses by PEF, together with financing for preparedness and prevention in peacetime, including through IDA, are important to mitigate human and social losses and to help quickly recover in the event of a crisis. It is cost-effective and should be emphasized at all stages of economic development.”

Source : Economic Times

Reserve Bank India caps customer liability in fraudulent deals : 24-05-2016


The Reserve Bank India has decided to cap the customers’ liability arising out of fraudulent electronic transactions, and has warned banks that they should plug the loophole leading to misselling of insurance products, failing which they would be penalised.

“The RBI is examining whether to issue regulatory directions to reduce the liability of the customer on fraudulent transactions arising out of electronic banking transactions,” said RBI deputy governor SS Mundra , speaking at an event organised by Banking Codes and Standard Board of India. “Between the two — the institution and the customer — the balance of power is skewed. The idea is that the liability for the customer should not go beyond a point,” he said.

At present, BCSBI —a quasi-re Rs 10,000 beyond which a customer is not liable for fraudulent ecommerce transactions, provided the customer has notified the bank about it. Stating that misselling has been rampant on insurance products, he said, “Often higher sales targets, coupled with front-ended high commissions, are the main motives for such misselling. There is no real oversight on unethical selling of third party products.”

Since banks have a huge network of branches, insurance companies have tied up with them to sell their products. Banks earn commission for hard-selling insurance schemes which gives a boost to their bottomline. While directing banks to plug this loophole, Mundra said, “RBI would take strict action, including heavy penalty, if the banking industry continues to harness such unethical and unacceptable practises of misselling third party products. It would be appropriate for the banks to put in place  a system of period inspection on sale of third party products by their own staff or DSAs.” Talking of cyber frauds, he said that it is imperative for banks to have a robust mechanism to prevent incidents of frauds in mobile, net banking and electronic fund transfer to retain customers’ confidence in these delivery channels. These channels are very meaningful in terms of facing competition, reducing cost and improving customer base.

“But if customers’ don’t get confidence in the channels, they may migrate to other banks or use traditional channels which would mean higher operating cost for the banking system,” he said.

Mundra also said that a nodal officer at the bank, appointed for customer grievance, should analyse the root cause to ensure that similar complaints do not arise again.

Source :  PTI

Income Tax department for more information in cases of indirect transfer of assets : 24-05-2016


Indian companies that witness any indirect transfer of assets will now have to lay bare minute details of their holdings to Income Tax Department . The government has unveiled a new stringent reporting framework to plug the gap in the system, after tax authorities faced trouble in sourcing information in a number of high-profile tax cases, dealing with indirect transfers.

The rules prescribe that information and documents are required to be maintained and furnished to the tax  authorities by an Indian entity whose shares are indirectly transferred. Tax experts say companies will have to prepared for exhaustive disclosures. “This information is required to be kept for eight years,” said Rajesh Gandhi, partner at Tax, Deloitte Haskins & Sells LLP. “The extent of the information and documentation required to be kept by the Indian concern seems to be very substantial considering that such information would not be forthcoming quite easily.

Interestingly, any gap in information would make the entire income attributable to assets located in India,” said Amit Maheswari, partner, Ashok Maheshwary & Associates LLP. Exhaustive documentation with a sound underlying basis for valuation in case of unlisted shares would be necessary to substantiate the claim of taxpayers of being not covered under Section 9 that deals with indirect transfers of assets.

The Central Board of Direct Taxes on Monday put out draft rules for public comments on calculation of fair market prices of the value derived from assets held in the country. The draft rules provide for determination of fair value of different assets such as listed and unlisted shares of an Indian entity, partnerships and listed and unlisted shares of a foreign entity The draft rules state that the fair value of an unlisted entity will be determined by a merchant banker or chartered accountant in accordance with any internationally accepted pricing methodology. The CBDT has not prescribed any particular valuation methodology and requires the taxpayer to follow internationally accepted principles. This is in line with the FEMA valuation guidelines. Income attributable to assets located in India will be based on the proportion of fair value of assets situated in India as compared to the total fair value of assets of the foreign entity whose shares are transferred.

Source : The Hindu

Plug loophole leading to misselling of insurance products or else face penalty: RBI to banks : 24-05-2016


The Reserve Bank of India has decided to cap the customers’ liability arising out of fraudulent electronic transactions, and has warned banks that they should plug the loophole leading to misselling of insurance products, failing which they would be penalised.

“The RBI is examining whether to issue regulatory directions to reduce the liability of the customer on fraudulent transactions arising out of electronic banking transactions,” said RBI deputy governor SS Mundra , speaking at an event organised by Banking Codes and Standard Board of India.

“Between the two — the institution and the customer — the balance of power is skewed. The idea is that the liability for the customer should not go beyond a point,” he said.

At present, BCSBI — a quasi-regulatory body — has set a limit of Rs 10,000 beyond which a customer is not liable for fraudulent ecommerce transactions, provided the customer has notified the bank about it.

Stating that misselling has been rampant on insurance products, he said, “Often higher sales targets, coupled with front-ended high commissions, are the main motives for such misselling. There is no real oversight on unethical selling of third party products.”

Since banks have a huge network of branches, insurance companies have tied up with them to sell their products. Banks earn commission for hard-selling insurance schemes which gives a boost to their bottomline.

While directing banks to plug this loophole, Mundra said, “RBI would take strict action, including heavy penalty, if the banking industry continues to harness such unethical and unacceptable practises of misselling third party products. It would be appropriate for the banks to put in place a system of period inspection on sale of third party products by their own staff or DSAs.”

Talking of cyber frauds, he said that it is imperative for banks to have a robust mechanism to prevent incidents of frauds in mobile, net banking and electronic fund transfer to retain customers’ confidence in these delivery channels. These channels are very meaningful in terms of facing competition, reducing cost and improving customer base.

“But if customers’ don’t get confidence in the channels, they may migrate to other banks or use traditional channels which would mean higher operating cost for the banking system,” he said.

Mundra also said that a nodal officer at the bank, appointed for customer grievance, should analyse the root cause to ensure that similar complaints do not arise again.

Source : Economic Times

No. F No 142/26/2015-TPL Dated: 23-5-2016


Manner of determination of fair market value and reporting requirement for Indian concern-Indirect transfer provisions-section 9(1) of the Income-tax Act, 1961-Draft Rule – Order-Instruction – Dated 23-5-2016 – Income Tax

F No 142/26/2015-TPL

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

*******

New Delhi, Dated 23rd May, 2016

Subject: Manner of determination of fair market value and reporting requirement for Indian concern-Indirect transfer provisions-section 9(1) of the Income-tax Act, 1961-Draft Rules-reg.

Under section 9 of the Income-tax Act, 1961 (the Act), income arising from indirect transfer of assets situated in India is deemed to accrue or arise in India. The provisions of section 9(1)(i) of the Act provides that if any share or interest in a foreign company or entity derives its value substantially from the assets located in India, then such share or interest is deemed to be situated in India. Thereby, any income arising from transfer of such share or interest is deemed to accrue or arise in India.

2. The share or interest is said to derive it value substantially from assets located in India, if fair market value (FMV) of assets located in India comprise at least 50% of the FMV of total assets of the company or entity. The computation of FMV of Indian and global assets is to be in the prescribed manner.

3. Further, section 285A of the Act mandates reporting requirement on the Indian concern through or in which the foreign company or entity holds the assets in India. The information to be furnished and its manner is also required to be prescribed.

4. Therefore, the manner of computation of FMV of assets of the foreign company or entity and the reporting requirement by the Indian concern are proposed to be provided through the amendments of the Income-tax Rules, 1962. The draft rules and forms, on which comments and suggestion of stakeholders and general public on the draft rules and forms as above may be sent electronically by 29th May, 2016 at the email address, ustpl1@nic.in in this regard, are as under:

11UB : Fair market value of assets in certain cases

(1) The fair market value of assets (tangible and intangible) as on the specified date, held directly or indirectly by a company or an entity registered or incorporated outside India (hereafter referred to as “foreign company or entity”), for the purposes of clause (i) of sub-section (1) of section 9, shall be computed in accordance with the provisions of this rule.

(2) Where the asset is the share of an Indian company listed on a recognized stock exchange not being the case referred to in sub-rule (2), the fair market value of the share shall be the observable price of such share on the stock exchange:

Provided that where the share is held as part of the shareholding which confers, directly or indirectly, any right of management or control in relation to the aforesaid company, the fair market value of the share shall be determined in accordance with the following formula, namely :-

Fair market value = (A+B) /C

Where,

A= the market capitalisation of the company on the basis of observable price of its shares quoted on the recognised stock exchange;

B= the book value of liabilities of the company as on the specified date;

C= the total number of outstanding shares:

Provided further that where, on the specified date the share is listed on more than one recognized stock exchange, the observable price of the share shall be computed with reference to the recognised stock exchange which records the highest volume of trading in the share during the period which is considered for determining the price.

(3) Where the asset is the share of an Indian company not listed on a recognized stock exchange on the specified date, the fair market value shall be the fair market value on such date as determined by a merchant banker or an accountant in accordance with any internationally accepted pricing methodology for valuation of shares on arm’s length basis and increased by the liability, if any, considered in such determination.

(4) Where the asset is an interest in a partnership firm or in a limited liability partnership or an association of person, the fair market value shall be the proportional enterprise value on the specified date of such firm or limited liability partnership or association of person, as determined by a merchant banker or an accountant in accordance with any internationally accepted valuation methodology as increased by the liability, if any, considered in such determination.

(5) The fair market value of the assets other than those referred to in sub-rules (2), (3) and (4) shall be estimated to be the price it would fetch if sold in the open market on the specified date as determined by a report from a merchant banker or an accountant as increased by the liability, if any, considered in such estimation.

(6) The fair market value of all the assets of the foreign company or the entity shall be determined in the following manner, namely:-

(i) Where the transfer of share of, or interest in, the foreign company or entity is between persons who are not associated persons and the consideration for transfer of share or interest is determined on the basis of a report prepared by an accountant or merchant banker of international repute, then the fair market value of all the assets of the foreign company or the entity shall be the value determined in such report as increased by the aggregate amount of liabilities, if any, that have been reduced for computing the value of assets for determination of such consideration;

(ii) In any other case, -

(a) Where, as on the specified date, the share of the foreign company or entity is listed on a stock exchange, the fair market value of all the assets owned by the foreign company or entity shall be determined in accordance with the following formula, namely:-

Fair market value of all assets = A+B

Where,

A = Market capitalization of the foreign company or entity computed on the basis of the observable price of the share on the stock exchange where the share of the foreign company or the entity is listed;

B = book value of the liabilities of the company or the entity as on the specified date:

Provided that where, as on the specified date, the share is listed on more than one stock exchange, the observable price in the aforesaid formula shall be in respect of the stock exchange which records the highest volume of trading in the share during the period which is considered for determining the price.

(b) Where, as on the specified date, the share in the foreign company or entity is not listed on a stock exchange the value of all the assets owned by the foreign company or entity shall be determined in accordance with the following formula:

Fair market value of all assets = A+B

Where,

A = fair market value of the foreign company or the entity and its subsidiaries on a consolidated basis as determined by a merchant banker or an accountant as per the most appropriate internationally accepted valuation methodology;

B = book value of liabilities of the company or the entity as on the specified date.

(7) The rate of exchange for the calculation in foreign currency, of the value of assets located in India and expressed in rupees shall be the telegraphic transfer buying rate of such currency as on the specified date.

Explanation : For the purposes of this rule and rule 11UC, -

(i) “telegraphic transfer buying rate” shall have the meaning as assigned to it in the Explanation to rule 26;

(ii) “observable price” in respect of a share quoted on a stock exchange is the higher of the following:- (a) the average of the weekly high and low of the closing prices of the shares quoted on the said exchange during the six months period preceding the specified date; or

(b) the average of the weekly high and low of the closing price of the shares quoted on the said exchange during the two weeks preceding the specified date;

(iii) “book value of the liabilities” means the value of liabilities as shown in the balance-sheet of the company or the entity as the case may be, excluding the paid-up capital in respect of equity shares/members’ interest.

(iv) “specified date” shall have the meaning as assigned to it in clause (d) of Explanation 6 to clause (i) of subsection (1) of section 9;

(v) the terms “accountant”, “merchant banker” and “recognised stock exchange” shall have the meaning as assigned to them in rule 11U;

(vi) “balance sheet” ,-

(a) in relation to an Indian company, means the balance-sheet of such company (including the notes annexed thereto and forming part of the accounts) as drawn up on the specified date which has been audited by the auditor of the company appointed under the laws relating to companies in force and where the balance-sheet on the specified date is not drawn up, the balance-sheet (including the notes annexed thereto and forming part of the accounts) drawn up as on a date immediately preceding the specified date which has been approved and adopted in the annual general meeting of the shareholders of the company;

(b) in any other case, means the balance-sheet of the company or entity (including the notes annexed thereto and forming part of the accounts) as drawn up on the specified date or as drawn up on a date immediately preceding the specified date and which has been submitted to the relevant authority outside India under the laws in force of the country in which the foreign company or the entity is incorporated or established.

11UC : Determination of Income attributable to assets in India

(1) The income from transfer outside India of a share of, or interest in, a company or entity referred to in clause (i) of sub-section (1) of section 9, attributable to assets located in India ,shall be determined in accordance with the following formula, namely: –

A x BC

Where

A = Income from the transfer of the share of, or interest in, the company or the entity computed in accordance with provisions of the Act as if such share or interest is located in India.

B = Fair Market Value of assets located in India as on specified date, from which the share or interest referred to in A derives its value substantially, computed in accordance with rule 11UB.

C = Fair Market Value of all the assets of the company or entity as on specified date, computed in accordance with rule 11UB:

Provided that if the transferor of the share of, or interest in, the company or entity fails to provide the information which is necessary for the application of the aforesaid formula then whole of the income from the transfer of such share or interest shall be deemed to be attributable to the assets located in India.

(2) The transferor of the share of, or interest in, a company or entity that derives its value substantially from assets located in India, shall obtain and furnish along with the return of income a report in Form 3CT duly signed and verified by an accountant providing the basis of the apportionment in accordance with the formula and certifying that the income attributable to assets located in India has been correctly computed.

114DB. Information or documents to be furnished under section 285A.

(1) Every Indian concern referred to in section 285A shall, for the purposes of the said section, maintain and furnish the information and documents in accordance with this rule.

(2) The information shall be furnished in Form 49D electronically under digital signature to the Assessing Officer having jurisdiction over the Indian concern within a period of ninety days from the end of the financial year in which any transfer of the share of, or interest in, a company or entity incorporated outside India (hereafter referred to as “foreign company or entity”) referred to in the Explanation 5 to clause (i) of sub-section (1) of section 9 has taken place:

Provided that where the transaction in respect of the share or the interest had the effect of directly or indirectly transferring the right of management or control in relation to the Indian concern, the information shall be furnished in the said form within thirty days of the transaction.

(3) The Indian concern shall maintain the following (an English translation has to be prepared if the documents originally prepared are in foreign languages) and produce the same when called upon to do so by any income-tax authority in the course of any proceeding to substantiate the information furnished under sub-rule (2), namely: -

(i) details of the immediate holding company or entity, intermediate holding company or companies or entity or entities and ultimate holding company or the entity of the Indian concern;

(ii) details of other entities in India of the group of which the Indian concern is a constituent ;

(iii) the holding structure of the shares of, or the interest in, the foreign company or entity before and after the transfer;

(iv) any transfer contract or agreement entered into in respect of the share of, or interest in, any foreign company or entity that holds any asset in India through, or in, the Indian concern;

(v) financial and accounting statements of the foreign company or the entity which directly or indirectly holds the assets in India through, or in, the Indian concern for two years prior to the date of transfer of the share or interest ;

(vi) information relating to the decision or implementation process of the overall arrangement of the transfer;

(vii) information relating to, -

(a) the business operation;

(b) personnel;

(c) finance and properties;

(d) internal and external audit or the valuation report, if any, forming basis of the consideration in respect of share, or the interest, of the foreign company or the entity being transferred and its subsidiaries, which directly or indirectly hold the assets located in India through, or in, the Indian concern;

(viii) the asset valuation report and other supporting evidence to determine the place of location of the share or interest being transferred;

(ix) the details of payment of tax outside India, which relates to the transfer of the share or interest;

(x) the valuation report in respect of Indian assets and total assets duly certified by a merchant banker or accountant with supporting evidence;

(xi) documents which are issued in connection with the transactions under the accounting practice followed.

(4) The Principal Director General of Income-tax (Systems) or Director General Income-tax (Systems), as the case may be, shall specify the procedure for filing of Form No. 49D and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to the information so furnished under this rule.

(5) The information and documents specified in sub-rule (3) shall be kept and maintained for a period of eight years from the end of relevant assessment year.

Explanation: For the purposes of this rule,-

(i) “ultimate holding company or entity” means a company or the entity that has ultimate control of the Indian concern directly or indirectly and such company or entity is not itself controlled by or is subsidiary of any other company or entity ;

(ii) “intermediate holding company or entity” means a company or an entity that has controlling interest in another company or entity and is itself controlled by or is subsidiary of another company or entity;

(iii) “immediate holding company or the entity” means the company or entity that directly maintains the controlling interest in the Indian concern’.

5. The following Forms are proposed to be provided:

No.18/2016 Dated: 23-5-2016


Relaxation for Furnishing of UID in case of Form 15G/ 15H for certain quarters – Circular – Dated 23-5-2016 – Income Tax

Circular No 18/2016

F.No 142/32/2015-TPL

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

(TPL Division)

Dated 23rd , May 2016

Sub: Relaxation for Furnishing of UID in case of Form 15G/ 15H for certain quarters

The existing provisions of section 197A of the Income-tax Act, 1961 (‘the Act’) inter alia provide that tax shall not be deducted, if the recipient of certain payment on which tax is deductible furnishes to the payer a self-declaration inForm No. 15G/ 15H in accordance with provisions of the said section. The manner of filing such declarations and the particulars have been laid down in Rule 29C of the Income-tax Rules, 1962 (‘the Rules’).

The amended Rule 29C which comes into effect from 1St October, 2015 in addition to paper filing, also provides for online filing of self- declaration for non-deduction of tax under section 197A of the Act. In this regard, Notification No.76/2015 dated 29.09.2015 has been issued for E-enablement 8v simplification of procedure for filing self-declaration (Form No.15G/ 15H) and furnishing of such declaration to the Income-tax Department.

Further, as per sub-rule (7) and (8) of rule 29C of the Rules notified vide aforesaid notification, the Pr. DGIT (Systems) is required to specify the procedures, formats and standards for the purposes of furnishing and verification of the declaration and allotment of unique identification number. In pursuance of the same, Pr. DGIT (Systems) has issued Notification No. 4/2015 dated 1st December, 2015 to notify the procedure, formats and standards.

Sub-rule (3) of Rule 29C provides for allotment of Unique identification number to each declaration received inForm 15G/ 15G by the deductor. Further, sub-rule (5) of Rule 29C provides that the payer shall also furnish unique identification number along with the details of the transactions covered under Form 15G/ 15H in quarterly TDS statements in accordance with the provisions of clause (vii) of sub-rule (4) of Rule 31A irrespective of the fact that no tax has been deducted in the said quarter.

Representations have been received that due to operational constraints, the Form 15G/ 15H and the details thereof could not be included in the quarterly statement for the quarter ending 31.12.2015 and 31.3.2016 respectively.

Taking into account the concerns of the stakeholders, the Central Board of Direct Taxes, hereby relaxes the condition of furnishing of Unique identification number allotted by the deductor for the quarter ending 31.12.2015 and 31.3.2016 in the quarterly statement of deduction of tax in accordance with sub-rule (5) of Rule 29C.

Lakshmi Narayanan

Under Secretary TPL-III

CBDT

SBI associate banks staff go on strike against merger : 21-05-2016


Nearly 50,000 employees of five associate banks of State Bank of India have gone on a day-long nationwide strike today to protest the proposed merger with their parent bank.

The employees of all the associate banks of SBI are protesting under the banner of All India Bank Employees Association.

“We are protesting against the plan of SBI management to merge 5 large associate banks into it,” a statement issued by the union said.

The employees will also  stage a demonstration against the proposal at Azad Maidan here today.

SBI has five associate banks — State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank Of Travancore.

Notably, the Board of Directors of SBI had on Tuesday discussed the possibility of acquiring its associate banks, including assets and liabilities.

“This discussion is purely exploratory at this stage and not certain.  A proposal seeking an in-principle approval to start negotiations with associate banks will be submitted to the central government,” SBI had said after the board meeting.

Besides, the SBI management also proposed to merge the first women-oriented ‘Bharatiya Mahila Bank’ with it. SBI has sought government approval for the proposed plan.

Yesterday, another union, All India Bank Officers’ Association, had requested the government not to give consent to the SBI’s plan of merger.

Ssource : The Hindu

Corrupt cannot use black money window: CBDT : 21-05-2016


Corrupt individuals will not be eligible to declare their black money under compliance window that kicks off from June 1, said the Central Board of Direct Taxes (CBDT) on Friday.

“As per section 196(b) of the Finance Act, 2016, the Income Disclosure Scheme shall not apply in relation to prosecution of any offence punishable under the Prevention of Corruption Act, 1988,” it said, adding that said such declarations will not be acceptable.

The Income Disclosure Scheme will begin from June 1, 2016 for a period of four months and will allow persons with undisclosed income in the country to come clean by paying tax, penalty and surcharge of 45 per cent of fair market value.

The CBDT has issued a set of Frequently Asked Questions to explain how and where the provisions of this new scheme can be applied.

The declaration will, however, be held void if the declarant fails to pay the entire amount of tax, surcharge and penalty within the four month window or suppresses any facts.

It has further explained that the scheme will also not apply to persons to whom the Income Tax Department has sent a notice or initiated a search or survey operation or cases that are pending before an appellate authority. However, persons who have declared only a part of their undisclosed income can also use the window to declare the rest of the undisclosed income.

Capital gains tax

The CBDT has also said a declarant will be liable to pay capital gains tax on the sale of any asset declared under the compliance scheme.

“Since the asset will be taxed at its fair market value, the cost of acquisition for the purpose of capital gains shall be the fair market value as on June 1, 2016, when the period of holding shall start,” it said.

Effect of valid declaration

Promising to keep details of the declaration confidential, the CBDT in a separate circular also said the disclosed income will not be used as evidence for penalty or prosecution under the Income Tax Act and Wealth Tax Act. Further, the income will have immunity from the Benami Transactions (Prohibition) Act, 1988 and will not be chargeable to any further wealth tax or income tax.

“Declaration of undisclosed income will not affect the finality of completed assessments,” it further said.

Source : The Hindu

NSE asks investors not to indulge in self-transactions in SLB segment : 21-05-2016


The National Stock Exchange has asked market participants to ensure that they do not indulge in self-transactions in the Securities Lending and Borrowing (SLB) segment.

The directives are in line with the exchange’s implementation of prevention of self-trades in capital market, futures and options as well as currency derivative segment.

“Participants are notified to ensure non-execution of self-transactions in the Securities Lending & Borrowing Scheme of National Securities Clearing Corporation Ltd,” the National Stock Exchange (NSE) had said in a circular dated May 19.

Self-transactions refer to trading activity resulting from matching between a buy and a sell order entered in the same order book by a participant for the same client code originating from same or different trading terminals of the participants.

These transactions include proprietary and client transactions.

The stock exchange had introduced a new facility to check self-trades in the equity, currency derivatives and futures and options segments, last year.

The SLB mechanism allows short sellers to borrow securities for making delivery.

Short selling means selling of a stock that the seller does not own at the time of trade.

Source : Economic Times

Notification No. 368/2016-RB 20-5-2016


RESERVE BANK OF INDIA
(FOREIGN EXCHANGE DEPARTMENT)
(CENTRAL OFFICE)

FEMA NOTIFICATION

368/2016-RB, Dated: May 20, 2016

Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Seventh Amendment) Regulations, 2016

G.S.R. 537(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 and Commencement

(i) These Regulations may be called the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Seventh Amendment) Regulations, 2016.

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

2. New Regulation

In the Principal Regulations, after Regulation 10, the following shall be inserted, namely:-

“10A. In case of transfer of shares between a resident buyer and a non-resident seller or vice-versa, not more than twenty five per cent of the total consideration can be paid by the buyer on a deferred basis within a period not exceeding eighteen months from the date of the transfer agreement. For this purpose, if so agreed between the buyer and the seller, an escrow arrangement may be made between the buyer and the seller for an amount not more than twenty five per cent of the total consideration for a period not exceeding eighteen months from the date of the transfer agreement or if the total consideration is paid by the buyer to the seller, the seller may furnish an indemnity for an amount not more than twenty five per cent of the total consideration for a period not exceeding eighteen months from the date of the payment of the full consideration:

Provided the total consideration finally paid for the shares must be compliant with the applicable pricing guidelines.”

[F. No. 1/7/2016-EM]

(Shekhar Bhatnagar)
Chief General Manager-in-Charge

Foot Note: The Principal Regulations were published in the Official Gazette vide G.S.R. No. 406(E) dated May 8, 2000 in Part II, Section 3, sub-Section (i) and subsequently amended as under:-

G.S.R.No. 158(E) dated 02.03.2001
G.S.R.No. 175(E) dated 13.03.2001
G.S.R.No. 182(E) dated 14.03.2001
G.S.R.No. 4(E) dated 02.01.2002
G.S.R.No. 574(E) dated 19.08.2002
G.S.R.No. 223(E) dated 18.03.2003
G.S.R.No. 225(E) dated 18.03.2003
G.S.R.No. 558(E) dated 22.07.2003
G.S.R.No. 835(E) dated 23.10.2003
G.S.R.No. 899(E) dated 22.11.2003
G.S.R.No. 12(E) dated 07.01.2004
G.S.R.No. 278(E) dated 23.04.2004
G.S.R.No. 454(E) dated 16.07.2004
G.S.R.No. 625(E) dated 21.09.2004
G.S.R.No. 799(E) dated 08.12.2004
G.S.R.No. 201(E) dated 01.04.2005
G.S.R.No. 202(E) dated 01.04.2005
G.S.R.No. 504(E) dated 25.07.2005
G.S.R.No. 505(E) dated 25.07.2005
G.S.R.No. 513(E) dated 29.07.2005
G.S.R.No. 738(E) dated 22.12.2005
G.S.R.No. 29(E) dated 19.01.2006
G.S.R.No. 413(E) dated 11.07.2006
G.S.R.No. 712(E) dated 14.11.2007
G.S.R.No. 713(E) dated 14.11.2007
G.S.R.No. 737(E) dated 29.11.2007
G.S.R.No. 575(E) dated 05.08.2008
G.S.R.No. 896(E) dated 30.12.2008
G.S.R.No. 851(E) dated 01.12.2009
G.S.R.No. 341 (E) dated 21.04.2010
G.S.R.No. 821 (E) dated 10.11.2012
G.S.R.No. 606(E) dated 03.08.2012
G.S.R.No. 795(E) dated 30.10.2012
G.S.R.No. 796(E) dated 30.10.2012
G.S.R. No. 797(E) dated 30.10.2012
G.S.R.No. 945 (E) dated 31.12.2012
G.S.R. No.946(E) dated 31.12.2012
G.S.R. No.38(E) dated 22.01.2013
G.S.R.No.515(E) dated 30.07.2013
G.S.R.No.532(E) dated 05.08.2013
G.S.R. No.341(E) dated 28.05.2013
G.S.R.No.344(E) dated 29.05.2013
G.S.R. No.195(E) dated 01.04.2013
G.S.R.No.393(E) dated 21.06.2013
G.S.R.No.591(E) dated 04.09.2013
G.S.R.No.596(E) dated 06.09.2013
G.S.R.No.597(E) dated 06.09.2013
G.S.R.No.681(E) dated 11.10.2013
G.S.R.No.682(E) dated 11.10.2013
G.S.R. No.818(E) dated 31.12.2013
G.S.R. No.805(E) dated 30.12.2013
G.S.R.No.683(E) dated 11.10.2013
G.S.R.No.189(E) dated 19.03.2014
G.S.R.No. 190(E) dated 19.03.2014
G.S.R.No. 270(E) dated 07.04.2014
G.S.R.No. 361 (E) dated 27.05.2014
G.S.R.No. 370(E) dated 30.05.2014
G.S.R.No. 371(E) dated 30.05.2014
G.S.R.No. 435(E) dated 08.07.2014
G.S.R.No. 400(E) dated 12.06.2014
G.S.R.No. 436(E) dated 08.07.2014
G.S.R.No. 487(E) dated 11.07.2014
G.S.R.No. 632(E) dated 02.09.2014
G.S.R.No. 798(E) dated 13.11.2014
G.S.R.No. 799(E) dated 13.11.2014
G.S.R.No. 800(E) dated 13.11.2014
G.S.R.No. 829(E) dated 21.11.2014
G.S.R.No. 906(E) dated 22.12.2014
G.S.R.No. 914(E) dated 24.12.2014
G.S.R.No. 30(E) dated14.01.2015
G.S.R.No. 183(E) dated 12.03.2015
G.S.R.No. 284(E) dated 13.04.2015
G.S.R.No. 484(E) dated 11.06.2015
G.S.R.No. 745(E) dated 30.09.2015
G.S.R.No. 759(E) dated 06.10.2015
G.S.R.No. 823(E) dated 30.10.2015
G.S.R.No. 858(E) dated 16.11.2015
G.S.R.No. 165(E) dated 15.02.2016
G.S.R.No. 166(E) dated 15.02.2016
G.S.R.No. 369(E) dated 30.03.2016

No. 17/2016 Dated: 20-5-2016


Clarifications on the Income Declaration Scheme, 2016 – Circular – Dated 20-5-2016 – Income Tax

Circular No.17 of 2016

F.No.142/8/2016-TPL

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

(TPL Division)

Dated 20th of May, 2016

Clarifications on the Income Declaration Scheme, 2016

The Income Declaration Scheme, 2016 (hereinafter referred to as ‘the Scheme’) incorporated as Chapter IX of theFinance Act, 2016 provides an opportunity to persons who have not paid full taxes in the past to come forward and declare the undisclosed income and pay tax, surcharge and penalty totaling in all the 45% of such undisclosed income declared. The Income Declaration Scheme Rules, 2016 (hereinafter referred to as ‘the Rules’) have been notified. In regard to the scheme queries have been received from the public about the scope of the scheme and the procedure to be followed. The Board has considered the same and decided to clarify the points raised by issue of a circular in the form of questions and answers as follows.-

Question No.1: Where an undisclosed income in the form of investment in asset is declared under the Scheme and tax, surcharge and penalty is paid on the fair market value of the asset as on 01.06.2016, then will the declarant be liable for capital gains on sale of such asset in the future? If yes, then how will the capital gains in such case be computed?

Answer: Yes, the declarant will be liable for capital gains under the Income-tax Act on sale of such asset in future. As per the current provisions of the Income-tax Act, the capital gains is computed by deducting cost of acquisition from the sale price. However, since the asset will be taxed at its fair market value the cost of acquisition for the purpose of Capital Gains shall be the fair market value as on 01.06.2016 and the period of holding shall start from the said date (i.e. the date of determination of fair market value for the purposes of the Scheme).

Question No.2: Where a notice under section 142(1)/ 143(2)/ 148/ 153A/ 153C of the Income-tax Act has been issued to a person for an assessment year will he be ineligible from making a declaration under the Scheme?

Answer: The person will only be ineligible from declaration for those assessment years for which a notice under section 142(1)/143(2)/148/153A/153C is issued and the proceeding is pending before the Assessing Officer. He is free to declare undisclosed income for other years for which no notice under above referred sections has been issued.

Question No.3: As per the Scheme, declaration cannot be made where an undisclosed asset has been acquired during any previous year relevant to an assessment year for which a notice under section 142,143(2), 148, 153A or 153C of the Income-tax Act has been issued. If the notice has been issued but not served on the declarant then how will he come to know whether the notice has been issued?

Answer: The declarant will not be eligible for declaration under the Scheme where the undisclosed income relates to the assessment year where a notice under section 142, 143(2), 148, 153A or 153C of the Income-tax Act has been issued and served on the declarant on or before 31st day of May, 2016. The declarant is required to file a declaration regarding receipt of any such notice in Form-1.

Question No.4: In a case where the undisclosed income is represented in the form of investment in asset and such asset is partly from income that has been assessed to tax earlier, then what shall be the method of computation of undisclosed income represented by such undisclosed asset for the purposes of the Scheme?

Answer: As per sub-rule (2) of rule 3 of the Income Declaration Scheme Rules, 2016, where investment in any asset is partly from an income which has been assessed to tax, the undisclosed income represented in form of such asset will be the fair market value of the asset determined in accordance with sub-rule (1) of rule 3 as reduced by an amount which bears to the value of the asset as on the 1.6.2016, the same proportion as the assessed income bears to the total cost of the asset. This is illustrated by an example as under:

Investment in acquisition of asset in previous year 2013-14 is of ₹ 500 out of which ₹ 200 relates to income assessed to tax in A.Y. 2012-13 and ₹ 300 is from undisclosed income pertaining to previous year 2013-14. The fair market value of the asset as on 01.06.2016 is ₹ 1500.

The undisclosed income represented by this asset under the scheme shall be:

1500 minus (1500 X 200 /500) = ₹ 900

Question No.5: Can a declaration be made of undisclosed income which has been assessed to tax and the case is pending before an Appellate Authority?

Answer: As per section 189 of the Finance Act, 2016, the declarant is not entitled to re-open any assessment or reassessment made under the Income-tax Act. Therefore, he is not entitled to avail the tax compliance in respect of such income. However, he can declare other undisclosed income for the said assessment year which has not been assessed under the Income-tax Act.

Question No.6: Can a person against whom a search/survey operation has been initiated file declaration under the Scheme?

Answer: (a) The person is not eligible to make a declaration under the Scheme if a search has been initiated and the time for issuance of notice under section 153A has not expired, even if such notice for the relevant assessment year has not been issued. In this case, however, the person is eligible to file a declaration in respect of an undisclosed income in relation to an assessment year which is prior to assessment years relevant for the purpose of notice under section 153A.

(b) In case of survey operation the person is barred from making a declaration under the Scheme in respect of an undisclosed income in which the survey was conducted. The person is, however, eligible to make a declaration in respect of an undisclosed income of any other previous year.

Question No. 7: Where a search/survey operation was conducted and the assessment has been completed but certain income was neither disclosed nor assessed, then whether such unassessed income can be declared under the Scheme?

Answer: Yes, such undisclosed income can be declared under the Scheme.

Question No.8: What are the consequences if no declaration under the Scheme is made in respect of undisclosed income prior to the commencement of the Scheme?

Answer: As per section 197(c) of the Finance Act, 2016, where any income has accrued or arisen or received or any asset has been acquired out of such income prior to the commencement of the Scheme and no declaration is made under the Scheme, then such income shall be deemed to have been accrued, arisen or received or the value of the asset acquired out of such income shall be deemed to have been acquired in the year in which a notice under section 142/143(2)/148/153A/153C is issued by the Assessing Officer and the provisions of the Income-tax Act shall apply accordingly.

Question No.9: If a declaration of undisclosed income is made under the Scheme and the same was found ineligible due to the reasons listed in section 196 of the Finance Act, 2016, then will the person be liable for consequences under section 197(c) of the Finance Act, 2016?

Answer: In respect of such undisclosed income which has been duly declared in good faith but not found eligible, then such income shall not be hit by section 197(c) of the Finance Act, 2016. However, such undisclosed income may be assessed under the normal provisions of the Income-tax Act, 1961.

Question No.10: If a person declares only a part of his undisclosed income under the Scheme, then will he get immunity under the Scheme in respect of the part income declared?

Answer: It is expected that one should declare all his undisclosed income. However, in such a case the person will get immunity as per the provisions of the Scheme in respect of the undisclosed income declared under the Scheme and no immunity will be available in respect of the undisclosed income which is not declared.

Question No.11: Can a person declare under the Scheme his undisclosed income which has been acquired from money earned through corruption?

Answer: No. As per section 196(b) of the Finance Act, 2016, the Scheme shall not apply, inter-alia, in relation to prosecution of any offence punishable under the Prevention of Corruption Act, 1988. Therefore, declaration of such undisclosed income cannot be made under the Scheme. However, if such a declaration is made and in an event it is found that the income represented money earned through corruption it would amount to misrepresentation of facts and the declaration shall be void under section 193 of the Finance Act, 2016. If a declaration is held as void, the provisions of the Income-tax Act shall apply in respect of such income as they apply in relation to any other undisclosed income.

Question No.12: Whether at the time of declaration under the Scheme, will the Principal Commissioner/Commissioner do any enquiry in respect of the declaration made?

Answer: After the declaration is made the Principal Commissioner/ Commissioner will enquire whether any proceeding under section 142(1)/143(2)/148/153A/153C is pending for the assessment year for which declaration has been made. Apart from this no other enquiry will be conducted by him at the time of declaration.

Question No.13: Will the declarations made under the Scheme be kept confidential?

Answer: The Scheme incorporates the provisions of section 138 of the Income-tax Act relating to disclosure of information in respect of assessees. Therefore, the information in respect of declaration made is confidential as in the case of return of income filed by assessees.

Question No.14: Is it necessary to file a valuation report of an undisclosed income represented in the form of investment in asset along with the declaration under the Scheme?

Answer: It is not mandatory to file the valuation report of the undisclosed income represented in the form of investment in asset along with the declaration. However, the declarant should have the valuation report. While e-filing the declaration on the departmental website a facility for uploading the documents will be available.

(Ekta Jain)

Deputy Secretary to the Govt. of India

Didi’s help may drive GST Bill past Rajya Sabha : 20-05-2016


While BJP is expected to improve its numbers only marginally in Rajya Sabha after the biennial election on June 11, prospects for passage of the GST Bill looks up as Trinamool Congress has announced its support for the key legislation.

Soon after her win, West Bengal chief minister Mamata Banerjee declared TMC’s support to the stalled Goods and Services Tax Bill in Rajya Sabha. The poll setback to Congress and Left, the main opponents to the bill, will mean that their tally will not increase. On the other hand, support of TMC and other regional parties could increase the pressure on Congress to reach an accomodation on the tax measure.

With NDA due to improve its tally in RS , TMC’s support will add 12 crucial votes if the GST Bill comes up for division. Moreover, for the first time, NDA will overtake UPA’s tally in RS with BJP and its ally TDP possibly getting seven additional seats.

Though just TMC’s support won’t allow the government to cross the Rajya Sabha hurdle, NDA may hope to garner support of other “non-NDA and non-UPA” parties like Samajwadi Party, BJD and the BSP. These parties may together tilt the balance in favour of NDA either by voting with it or just by abstaining to bring down the half-way mark.

While AIADMK had earlier opposed the GST Bill, keeping in mind the state’s manufacturing base that would be affected by such a law, the party may be open to striking a deal as its opposition is not ideological or obstructionist. The party, with its impressive show in Tamil Nadu, will gain one additional seat in RS after its biennial election next month.

The BJP’s big win in Assam will, however, not immediately help the party increase its tally in RS as there will not be any vacancy in the Upper House from the state until June, 2019. Victorious parties in West Bengal, Kerala and Puducherry will also have to wait before their numbers can get a boost.

Elections to 57 RS seats from different states, including Tamil Nadu, Maharashtra, Haryana, Madhya Pradesh, Chhattisgarh, Bihar, Andhra Pradesh, Telangana and UP, will be held next month. Most of these seats in the Upper House will be vacant during June-August.
It is expected that the BJP will win four additional Rajya Sabha seats while the TDP may win three others in the biennial election. As against its 14 retiring members from different states, the BJP may get 18 seats – a net gain of four seats in the biennial election.
Six of these 57 seats will be vacant from Tamil Nadu due to retirement of members after the completion of their six-year term. Three of them are from the AIADMK, two from the DMK and one from the Congress. It is expected that the ruling AIADMK will win four seats – gain of an additional one seat – backed by its strength in the state assembly and the DMK would be able to retain the remaining two.

The NDA will have an advantage of nominated members as well. The President, on recommendation of the government, had nominated six members last month while one seat still remains vacant. If the government takes a call on the vacant seat, it will have an advantage of total seven votes. Two of the six nominated members have already decided to accept the whip of the ruling BJP.
Source : Th e Hindu

FM Jaitley pitches for expanding capital base for World Bank : 20-05-2016


Finance Minister Arun Jaitley today pitched for expanding capital base of the World Bank so that the mutilateral funding institution can better cater to the development needs of emerging countries like India.

“FM (Arun Jaitley) stressed on the need for the World Bank to have a larger capital base, more activity and more projects,” the Finance Ministry said in a late evening tweet.

Jaitley held a meeting with the Executive Directors of the World Bank here today.

During the meeting he suggested that the role of the World Bank Group could be expanded in areas like social sector- education, health, agriculture, development, small-scale industry etc.

India has been underlining the need for reforms in the World Bank with a view to according greater say to emerging economies in the activities of the multilateral lending agency.

Source : Economic Times

Govt’s fiscal deficit target may change to a ‘range’: Nomura Group : 20-05-2016


Government’s fiscal deficit target of 3 per cent by next financial year could be changed to a “range” post a committee’s recommendations on the country’s fiscal roadmap, says a Nomura report.

According to the Japanese financial services major, the recommendations by a five-member panel could be implemented in the next budget.

“Currently, the government has a fiscal deficit target at 3 per cent of GDP in 2017-18, but this could be changed to a ‘range’ post the committee’s recommendations, in our view,” Nomura said in a research note.

The committee will submit its report to the government by October this year which implies that its recommendations could be implemented in the next budget.

The government on May 17 formed a five-member committee under former revenue secretary N K Singh to review the working of the 12-year old FRBM Act and examine the feasibility of a fiscal deficit range instead of a fixed target.

The committee will review the working of the Fiscal Responsibility and Budget Management (FRBM) Act over the last 12 years and suggest the way forward “keeping in view the broad objective of fiscal consolidation and prudence and the changes required in the context of the uncertainty and volatility in the global economy”.

The FRBM review committee will seek to settle the debate whether government can opt for higher fiscal deficit to boost economic growth.

In the 2016-17 budget, the government announced it was setting up a panel to change the medium-term fiscal deficit target from the current absolute number to a range, to “give necessary policy space to the government to deal with dynamic situations.”

Source : PTI

F.No. 278A/54/2015-Legal – 19-05-2016


F.No. 278A/54/2015-Legal
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF EXCISE & CUSTOMS
(LEGAL CELL)
NEW DELHI

Dated: May 19, 2016

Sub:- Need for timely forwarding proposal for fresh appointment/extension of tenure of SPPs handling CBEC cases before the Subordinate Courts/Courts of Session and High Court – reg

The Board vide Instruction dated 29.2.2016 (copy available on CBEC Website) has prescribed the procedure for selection of Special Public Prosecutors (SPPs) for handling CBEC cases before the Subordinate Courts/Courts of Session and High Court. Para ’2′ of the said Instruction dated 29.02.2016, inter alia, provides times lines for processing and forwarding the proposal to Board.

2. It has, however, been observed that most of the Chief Commissioner’s send their proposal to the Board after the expiry of the tenure of the said SPPs. In such a situation, the questions are invariably asked about the reasons for such a delay. The M/o Law & Justice has also taken a serious view in some cases and has rejected the proposed extension on account of inordinate delay.

3. You are, therefore, requested to review of the situation regarding SPP’s in your Zone and send the proposal for fresh appointment/extension of tenure of SPPs whose tenure is expiring in accordance with the procedure laid down in the said Instruction to the Board at the earliest. It is again emphasised that all such proposals of extension of tenure of SPPs must be sent along all relevant documents to Board at least two months before the date of expiry of the term of SPP.

(Y S Karoo)
Under Secretary to the Govt. of India

No. PRESS RELEASE Dated: 19-5-2016


EXPLANATORY NOTES ON PROVISIONS OF THE INCOME DECLARATION SCHEME, 2016 AS PROVIDED IN CHAPTER IX OF THE FINANCE ACT, 2016 – Circular – Dated 20-5-2016 – Income Tax

Circular No. 16 of 2016

F.No.370142/8/2016-TPL

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

(TPL DIVISION)

 Dated: 20th May, 2016

EXPLANATORY NOTES ON PROVISIONS OF THE INCOME DECLARATION SCHEME, 2016 AS PROVIDED IN CHAPTER IX OF THE FINANCE ACT, 2016

Introduction

The Income Declaration Scheme, 2016 (referred to here as ‘the Scheme’) is contained in the Finance Act, 2016, which received the assent of the President on the 14th of May 2016.

2. The Scheme provides an opportunity to persons who have paid not full taxes in the past to come forward and declare the undisclosed income and pay tax, surcharge and penalty totalling in all to forty-five per cent of such undisclosed income declared.

Scope of the Scheme

3. A declaration under the aforesaid Scheme may be made in respect of any income or income in the form of investment in any asset located in India and acquired from income chargeable to tax under the Income-tax Act for any assessment year prior to the assessment year 2017-18 for which the declarant had, either failed to furnish a return under section 139 of the Income-tax Act, or failed to disclose such income in a return furnished before the date of commencement of the Scheme, or such income had escaped assessment by reason of the omission or failure on the part of such person to make a return under the Income-tax Act or to disclose fully and truly all material facts necessary for the assessment or otherwise. Where the income chargeable to tax is declared in the form of investment in any asset, the fair market value of such asset as on 1st June, 2016 computed in accordance with Rule 3 of the Income Declaration Scheme Rules, 2016 shall be deemed to be the undisclosed income.

Rate of tax, surcharge and penalty

4. The person making a declaration under the Scheme would be liable to pay tax at the rate of 30 percent of the value of such undisclosed income as increased by surcharge at the rate of 25 percent of such tax. In addition, he would also be liable to pay penalty at the rate of 25 percent of such tax. Therefore, the declarant would be liable to pay a total of 45 percent of the value of the undisclosed income declared by him. This special rate of tax, surcharge and penalty specified in the Scheme will override any rate or rates specified under the provisions of the Income-tax Act or the annual Finance Acts.

Time limits for declaration and making payment

5. A declaration under the Scheme can be made anytime on or after 1st June, 2016 but before a date to be notified by the Central Government. The Central Government has further notified 30th September, 2016 as the last date for making a declaration under the Scheme and 30th November, 2016 as the last date by which the tax, surcharge and penalty mentioned in para 4 above shall be paid. Accordingly, a declaration under the Scheme in Form 1 as prescribed in the Rules may be made at any time before 30.09.2016. After such declaration has been furnished, the jurisdictional Principal CIT/ CIT will issue an acknowledgment in Form-2 to the declarant within 15 days from the end of the month in which the declaration under Form-1 is made. The declarant shall not be liable for any adverse consequences under the Scheme in respect of, any income which has been duly declared but has been found ineligible for declaration. However, such information may be used under the provisions of the Income-tax Act. The declarant shall furnish proof of payment made in respect of tax, surcharge and penalty to the jurisdictional Principal CIT/CIT in Form-3 after which the said authority shall issue a certificate in Form-4 of the accepted declaration within 15 days of submission of proof of payment by the declarant.

Form for declaration

6. As per the Scheme, declaration is to be made in such form and shall be verified in such manner as may be prescribed. The form prescribed for this purpose is Form 1 which has been duly notified. The table below mentions the persons who are authorized to sign the said form:

Sl. Status of the declarant Declaration to be signed by
1. Individual Individual; where individual is absent from India, person authorized by him; where the individual is mentally   incapacitated,   his   guardian   or   other person competent to act on his behalf.
2. HUF Karta; where the karta is absent from India or is mentally   incapacitated   from   attending   to   his affairs, by any other adult member of the HUF
3. Company Managing  Director;  where  for  any  unavoidable reason the managing director is not able to sign or there is no managing director, by any director.
4. Firm Managing  partner;  where  for  any  unavoidable reason the managing partner is not able to sign the declaration,   or   where   there   is   no   managing partner, by any partner, not being a minor.
5. Any other association Any  member  of the association  or  the principal officer.
6. Any other person That person or by some other person competent to act on his behalf.

The declaration may be filed online on the e-filing website of the Income-tax Department using the digital signature of the declarant or through electronic verification code or in paper form before the jurisdictional Principal CIT/CIT.

Declaration not eligible in certain cases

7. As per the provisions of the Scheme, no declaration can be made in respect of any undisclosed income chargeable to tax under the Income-tax Act for assessment year 2016-17 or any earlier assessment year in the following cases-

(i) where a notice under section 142 or section 143(2) or section 148 or section 153A or section 153C of theIncome-tax Act has been issued in respect of such assessment year and the proceeding is pending before the Assessing Officer. For the purposes of declaration under the Scheme, it is clarified that the person will not be eligible under the Scheme if any notice referred above has been served upon the person on or before 31st May, 2016 i.e. before the date of commencement of this Scheme.

In the form of declaration (Form 1) the declarant will verify that no such notice has been received by him on or before 31st May, 2016.

(ii) where a search has been conducted under section 132 or requisition has been made under section 132A or a survey has been carried out under section 133A of the Income-tax Act in a previous year and the time for issuance of a notice under section 143 (2) or section 153A or section 153C for the relevant assessment year has not expired. In the form of declaration (Form 1) the declarant will also verify that these facts do not prevail in his case.

(iii) cases covered under the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015.

A person in respect of whom proceedings for prosecution of any offence punishable under Chapter IX (offences relating to public servants) or Chapter XVII (offences against property) of the Indian Penal Code or under the Unlawful Activities (Prevention) Act or the Narcotic Drugs and Psychotropic Substances Act or the Prevention of Corruption Act are pending shall not be eligible to make declaration under the Scheme.

A person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act or a person in respect of whom an order of detention has been made under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, subject to the conditions specified in the Scheme, shall also not be eligible for making a declaration under the Scheme.

Circumstances where declaration shall be invalid

8. In the following situations, a declaration shall be void and shall be deemed never to have been made:-

(a) If the declarant fails to pay the entire amount of tax, surcharge and penalty within the specified date, i.e., 30.11.2016;

(b) Where the declaration has been made by misrepresentation or suppression of facts or information.

Where the declaration is held to be void for any of the above reasons, it shall be deemed never to have been made and all the provisions of the Income-tax Act, including penalties and prosecutions, shall apply accordingly.

Any tax, surcharge or penalty paid in pursuance of the declaration shall, however, not be refundable under any circumstances.

Effect of valid declaration

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

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

(b) The contents of the declaration shall not be admissible in evidence against the declarant in any penalty or prosecution proceedings under the Income-tax Act and the Wealth Tax Act;

(c) Immunity from the Benami Transactions (Prohibition) Act, 1988 shall be available in respect of the assets disclosed in the declarations subject to the condition that the benamidar shall transfer to the declarant or his legal representative the asset in respect of which the declaration of undisclosed income is made on or before 30th September, 2017;

(d) The value of asset declared in the declaration shall not be chargeable to Wealth-tax for any assessment year or years.

(e) Declaration of undisclosed income will not affect the finality of completed assessments. The declarant will not be entitled to claim re-assessment of any earlier year or revision of any order or any benefit or set off or relief in any appeal or proceedings under the Income-tax Act in respect of declared undisclosed income or any tax, surcharge or penalty paid thereon.

(Ekta Jain)

Deputy Secretary to the Government of India

Notification No : 33/2016 Dated: 19-5-2016


Income Declaration Scheme Rules, 2016 – 33/2016 – Dated 19-5-2016 – Income Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION NO. 33/2016

New Delhi, the 19th May, 2016

S.O. 1831(E)- In exercise of the powers conferred by sub-section (1) and sub-section (2) of section 199 of the Finance Act, 2016 (28 of 2016), the Central Board of Direct Taxes, subject to the control of the Central Government hereby makes the following rules for carrying out the provisions of Chapter IX of the said Act relating to the Income Declaration Scheme, 2016 namely :-

1. Short title and commencement.

(1) These rules may be called the Income Declaration Scheme Rules, 2016.

(2) They shall come into force on the 1st day of June, 2016.

2. Definitions.

(1) In these rules, unless the context otherwise requires,-

(a) “Act” means the Finance Act, 2016 (28 of 2016);

(b) “Form” means a form appended to these rules;

(c) “recognised stock exchange” shall have the same meaning as assigned to it in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

(d) “registered valuer” means a person registered as a valuer under section 34AB of the Wealth-tax Act, 1957 (27 of 1957);

(e) “section” means a section of the Act.

(2) Words and expressions used and not defined in these rules but defined in the Act, or the Income-tax Act, 1961 (43 of 1961) or the rules made thereunder, shall have the meanings respectively assigned to them in those Acts and rules.

3. Determination of Fair market value

(1) The fair market value of the asset shall be determined in the following manner, namely:-

(a) the value of bullion, jewellery or precious stone shall be the higher of-

(I) its cost of acquisition; and

(II) the price such bullion, jewellery or precious stone shall ordinarily fetch if sold in the open market as on the 1st day of June, 2016, on the basis of the valuation report obtained by the declarant from a registered valuer;

(b) the valuation of archaeological collections, drawings, paintings, sculptures or any work of art (hereinafter referred to as artistic work) shall be the higher of-

(I) its cost of acquisition; and

(II) the price such artistic work shall ordinarily fetch if sold in the open market as on the 1st day of June, 2016 on the basis of the valuation report obtained by the declarant from a registered valuer;

(c) the value of shares and securities of-

(I) quoted share and securities shall be the higher of-

(i) its cost of acquisition; and

(ii) the price determined by taking-

(A) the average of the lowest and highest price of such shares and securities quoted on a recognised stock exchange as on the 1st day of June, 2016; or

(B) the average of the lowest and highest price of such shares and securities on a recognised stock exchange on a date immediately preceding the 1st day of June, 2016 when such shares and securities were traded on a recognised stock exchange, where on the 1st day of June, 2016 there is no trading in such shares and securities on a recognised stock exchange;

(II) unquoted equity shares shall be the higher of-

(i) its cost of acquisition; and

(ii) the value, on the 1st day of June, 2016, of such equity shares as determined in the following manner, namely:-

the fair market value of unquoted equity shares = (A+B – L) × (PV)/ (PE)

where,

A = book value of all the assets in the balance sheet (other than bullion, jewellery, precious stone, artistic work, shares, securities and immovable property) as reduced by,- (i) any amount of income-tax paid, if any, less the amount of income-tax refund claimed, if any, and (ii) any amount shown as asset including the unamortised amount of deferred expenditure which does not represent the value of any asset;

B= fair market value of bullion, jewellery, precious stone, artistic work, shares, securities and immovable property as determined in the manner provided in this rule;

L= book value of liabilities shown in the balance sheet, but not including the following amounts, namely:-

(i) the paid-up capital in respect of equity shares;

(ii) the amount set apart for payment of dividends on preference shares and equity shares;

(iii) reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation;

(iv) any amount representing provision for taxation, other than amount of income-tax paid, if any, less the amount of income-tax claimed as refund, if any, to the extent of the excess over the tax payable with reference to the book profits in accordance with the law applicable thereto;

(v) any amount representing provisions made for meeting liabilities, other than ascertained liabilities;

(vi) any amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares;

PE = total amount of paid up equity share capital as shown in the balance-sheet;

PV= the paid up value of such equity share;

(III) unquoted share and security other than equity share in a company shall be the higher of,-

(i) its cost of acquisition; and

(ii) the price that the share or security shall ordinarily fetch if sold in the open market on the 1st day of June, 2016, , on the basis of the valuation report obtained by the declarant from a registered valuer;

(d) the fair market value of an immovable property shall be higher of-

(I) its cost of acquisition; and

(II) the price that the property shall ordinarily fetch if sold in the open market on the 1st day of June, 2016 on the basis of the valuation report obtained by the declarant from a registered valuer;

(e) value of an interest of a person in a partnership firm or in an association of persons or a limited liability partnership of which he is a member shall be determined in the manner as specified in clause (f);

(f) The net asset of the firm, association of persons or limited liability partnership on the 1st day of June, 2016 shall first be determined and the portion of the net asset of the firm, association of persons or limited liability partnership as is equal to the amount of its capital shall be allocated among its partners or members in the proportion in which capital has been contributed by them and the residue of the net asset shall be allocated among the partners or members in accordance with the agreement of partnership or association or limited liability partnership for distribution of assets in the event of dissolution of the firm, association or limited liability partnership, or, in the absence of such agreement, in the proportion in which the partners or members are entitled to share profits and the sum total of the amount so allocated to a partner or member shall be treated as the value of the interest of that partner or member in the partnership or association.

Explanation.- For the purposes of this clause the net asset of the firm, association of persons or limited liability partnership shall be (A + B – L), which shall be determined in the manner provided in sub-clause (II) of clause (c);

(g) valuation of any other asset shall be higher of-

(I) its cost of acquisition or the amount invested; and

(II) the price that the asset would fetch if sold in the open market on the 1st day of June, 2016.

Explanation- For the purposes of this rule,-

(a) “quoted share or security” in relation to share or security means a share or security quoted on any recognized stock exchange with regularity from time to time, where the quotations of such shares or securities are based on current transaction made in the ordinary course of business;

(b) “unquoted share and security” in relation to share or security means share or security which is not a quoted share or security;

(c) “balance sheet” in relation to any company means the balance sheet of such company (including the notes annexed thereto and forming part of the accounts) as on 31st day of March, 2016, which has been audited by the auditor of the company appointed under the Companies Act, 2013 (18 of 2013) and where the balance sheet as on 31st day of March, 2016 is not audited, the balance sheet (including the notes annexed thereto and forming part of the accounts) which has been approved and adopted in the annual general meeting of the shareholders of the company.

(2) Where investment in any asset is partly from an income which has been assessed to tax prior to assessment year 2017-18, the fair market value of the asset determined in accordance with sub-rule (1) shall be reduced by an amount which bears to the value of the asset as on the 1st day of June, 2016, the same proportion as the assessed income bears to the total cost of the asset.

4. Declaration of income or income in the form of investment in any asset.

(1) A declaration of income or income in the form of investment in any asset under section 183 shall be made in Form-1.

(2) The declaration shall be furnished:-

(a) electronically under digital signature; or

(b) through transmission of data in the form electronically under electronic verification code; or

(c) in print form, to the concerned Principal Commissioner or the Commissioner who has the jurisdiction over the declarant.

(3) The Principal Commissioner or the Commissioner shall issue an acknowledgement in Form-2 to the declarant within fifteen days from the end of the month in which the declaration under section 183 has been furnished.

(4) The proof of payment of tax, surcharge and penalty made pursuant to the acknowledgement issued by the Principal Commissioner or the Commissioner shall be furnished by the declarant to the such Principal Commissioner or Commissioner in Form 3.

(5) The Principal Commissioner or the Commissioner shall grant a certificate in Form-4 to the declarant within fifteen days of the submission of proof of payment of tax, surcharge along with penalty by the declarant under section 187 of the Act in respect of the income so declared.

(6) The Principal Director-General of Income-tax (Systems) or Director-General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture and transmission of data and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to furnishing the form in the manner specified in sub-rule(2).

Explanation.-For the purposes of this rule “electronic verification code” means a code generated for the purpose of electronic verification of the person furnishing the return of income as per the data structure and standards specified by Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems).

71 – 19-5-2016


RUPEE DRAWING ARRANGEMENT – SUBMISSION OF STATEMENT/RETURNS UNDER XBRL

A.P. (DIR SERIES 2015-16) CIRCULAR NO.71DATED 19-5-2016

Attention of Authorised Dealer Category – I (AD Cat – I) banks is invited to the A.P. (DIR Series) Circular No. 28 [A. P. (FL/RL Series) Circular No. 02] dated February 6, 2008 and the A. P. (DIR Series) Circular No. 7 dated July 18, 2014 in terms of which AD Cat- I banks were required to submit statement E on total remittances received every quarter.

2. Authorised Dealer Category – I (AD Cat – I) banks are now advised to report the above mentioned statement in eXtensible Business Reporting Language (XBRL) system from the quarter ending June 2016.

3. The reporting platform may be accessed at https://secweb.rbi.org.in/orfsxbrl/. For User name and password, Authorised Dealer Category – I (AD Cat – I) banks are advised to submit the duly filled form (Annex I) through email on or before May 30, 2016.

4. FED Master Direction No. 18/2015-16 dated January 1, 2016 is being updated to reflect the changes.

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

Annex I

Contact Information Form* for creation of User id- RDA Statement

(Fill in Capital Letters)

A. Name of the Bank
B. Contact Information DO NOT WRITE HERE
B.1 Name
B.2 Designation
B.3 Address DO NOT WRITE HERE
B.3.1
B.3.2 City
B.3.3 State
B.3.3 Pin code
B.4 Phone No DO NOT WRITE HERE
C.4.1 STD Code
C.4.2 Number
B.5 Fax DO NOT WRITE HERE
B.4.1 STD Code
B.4.2 Number
B.6 Email-1
B.7 Email-2
* Don’t keep any column blank. In future, any change should be informed immediately to Email (fedaprd@rbi.org.in).

 

 

For RBI use only (Don’t write anything below this line)
 

USER ID :

PASSWORD:

 

 

Notification No : 32/2016 Dated: 19-5-2016


CG notified 30-09-2016, 30-11-2016 and 30-09-2017 as the dates for make a declaration in respect of as the date on or before which the benamidar shall transfer to the declarant, being the person who provides the consideration for such asset, or his legal representative – 32/2016 – Dated 19-5-2016 – Income Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION NO. 32/2016

New Delhi, the 19th May, 2016

S.O. 1830(E)- In exercise of the powers conferred by section 183, section 187 and section 190 of the Finance Act, 2016 (28 of 2016), the Central Government hereby appoints -

(i) the 30th day of September, 2016 as the date on or before which a person may make a declaration under sub-section (1) of section 183;

(ii) the 30th day of November, 2016 as the date on or before which the tax and surcharge is payable under section 184, and the penalty is payable under section 185 in respect of the undisclosed income;

(iii) the 30th day of September, 2017 as the date on or before which the benamidar shall transfer to the declarant, being the person who provides the consideration for such asset, or his legal representative.

F.No.142/8/2016-TPL

(Ekta Jain)

Deputy Secretary to the Government of India

70 – 19-5-2016


MONEY TRANSFER SERVICE SCHEME – SUBMISSION OF STATEMENT/RETURNS UNDER XBRL

A.P. (DIR SERIES 2015-16) CIRCULAR NO.70DATED 19-5-2016

Attention of Authorised Persons, who are Indian Agents under Money Transfer Service Scheme (MTSS) is invited to the A.P. (DIR Series) Circular No. 89 dated March 12, 2013 in terms of which all Authorised Persons, who are Indian Agents under Money Transfer Service Scheme were required to submit quarterly statement of the quantum of remittances received in the prescribed format.

2. All Authorised Persons, who are Indian Agents under Money Transfer Service Scheme (MTSS) are now advised to report the above mentioned statement in eXtensible Business Reporting Language (XBRL) system from the quarter ending June 2016.

3. The reporting platform may be accessed at https://secweb.rbi.org.in/orfsxbrl/. For User name and password, Authorised Persons, who are Indian Agents under Money Transfer Service Scheme (MTSS) are advised to submit the duly filled in form (Annex I) through email on or before May 30, 2016.

4. FED Master Direction No. 18/2015-16 dated January 1, 2016 is being updated to reflect the changes.

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

Annex I

Contact Information Form* for creation of User id- MTSS Statement

(Fill in Capital Letters)

A. Name of the Indian Agent
B. Contact Information DO NOT WRITE HERE
B.1 Name
B.2 Designation
B.3 Address DO NOT WRITE HERE
B.3.1
B.3.2 City
B.3.3 State
B.3.3 Pin code
B.4 Phone No DO NOT WRITE HERE
C.4.1 STD Code
C.4.2 Number
B.5 Fax DO NOT WRITE HERE
B.4.1 STD Code
B.4.2 Number
B.6 Email-1
B.7 Email-2
* Don’t keep any column blank. In future, any change should be informed immediately to Email (fedaprd@rbi.org.in).

 

 

For RBI use only (Don’t write anything below this line)
 

USER ID :
PASSWORD:

 

 

Insurance regulator brings out norms to strengthen insurers’ boards : 19-05-2016


The regulator said the boards would have to look at overall direction of the business of the insurance company, including policies, strategies and risk management across all the functions

The Insurance Regulatory and Development Authority of India (Irdai) has brought out the final norms on corporate governance for insurance that aims to strengthen the boards of insurance companies.

The regulator said the boards would have to look at overall direction of the business of the insurance company, including policies, strategies and risk management across all the functions.

It would also have to look at projections on the capital requirements, revenue streams, expenses and the profitability.

Irdai said while laying down the projections, the boards must address the expectations of the shareholders and the policyholders. Compliance to the Insurance Act would rest with the board.

The board is also required to set up committees such as audit committee, risk management committee, policyholder protection committee, investment committee, nomination and remuneration committee and corporate social responsibility committee.

In another guideline on appointment of insurance agents, Irdai asked insurers to maintain a list of blacklisted agents.

Agents will also be required to disclose to customers the companies that they work and if they are suspended from an insurance company, they have to wait five years before reapplying to become an agent.

Source : Business Standard

Central ministries differ on rules allowing FDI in retail food products : 19-05-2016


The government’s proposed move to allow foreigners to retail food products is caught in interministerial differences on whether conditions need to be imposed for such investments and market access.

Finance minister Arun Jaitley had in the budget for this fiscal announced that 100% foreign direct investment would be allowed through the approval route in marketing of food products produced and manufactured in India . The Department of Industrial Policy and Promotion ( DIPP ) and the finance ministry are not keen on sectoral conditions, which are difficult to monitor and often act as a deterrent.

However, the food ministry is keen on imposing conditions on the lines of those for multi-brand retail, an official privy to the deliberations said on condition of anonymity. Multi-brand retail faces numerous conditions including mandatory 30% sourcing from local micro, small and medium industries. A formal note has been moved by the DIPP that will be taken up  by the Cabinet once these differences are resolved. “It should be taken up soon,” another official said.

The government wants to open up retail of food products to provide a boost to farming and the rural economy . “Our FDI policy has to address the requirements of farmers and food processing industry,” Jaitley had said in his budget speech in February. “A lot of fruits and vegetables grown by our farmers either do not fetch the right prices or fail to reach the markets.  Food processing industry and trade should be more efficient. 100% FDI will be allowed through FIPB route in marketing of food products produced and manufactured in India,” he had said.

This will benefit farmers, give impetus to food processing industry and create vast employment opportunities, Jaitley had said. Policymakers have been gradually becoming wary of including sectoral conditions in the FDI policy that they say only burden it, favouring instead stringent regulation  by sector regulators or administrative departments. As part of the gradual opening up of the foreign investment policy in the country, sectoral conditions are being knocked off to make the policy less cumbersome.

Conditions in sectors being opened up are not finding many takers within the government. The multi-brand retail sector, which is open for up to 49% FDI, has conditions including opening up of retail outlets only in cities with a population of more than 10 lakh as per 2011 Census, 50% of total FDI be brought in the first tranche with a minimum capital of $100 million and mandatory sourcing.

The ruling BJP has strong opposition to FDI in multi-brand retail but food retail is seen as a game changer for country’s farmers since as much as 50% of vegetables produced go waste. Higher investment in food processing is seen as crucial to ensuring better incomes for farmers. The government has set itself a target of doubling farmers’ incomes in the next five years.

Source : Economic Times

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Switzerland plans ordinance for automatic tax info exchange : 19-05-2016


Having such an exchange mechanism with Switzerland would help India in its clampdown on illicit fund flows.

Switzerland today started the process for an ordinance to put in place a mechanism for automatic exchange of tax information with India and other countries.

As part of global efforts to curb flow of illegal funds in the financial system, Switzerland has agreed to be part of the automatic tax information exchange framework.

The Swiss Federal Council today initiated the consultation on the ordinance on the International Automatic Exchange of Information in Tax Matters (AEOI Act).

The consultation process would be on till September 9.

In a release, Swiss government said the ordinance contains the Federal Council’s implementing provisions for the Federal Act on the AEOI Act.

“The ordinance mentions in particular other non-reporting financial institutions and exempt accounts, and regulates details with regard to the reporting and due diligence requirements for reporting Swiss financial institutions,” it said.

Besides, the ordinance has provisions that are required to implement the automatic exchange of information, including implementing provisions on the tasks of the Federal Tax Administration (FTA).

Having an automatic tax information exchange mechanism with Switzerland would help India in its clampdown on illicit fund flows.

Both countries have stepped up their cooperation on tax matters related to black money allegedly stashed by Indians there.

Almost 100 countries and territories, including India, have declared their intention to the Global Forum on Transparency and Exchange of Information for Tax Purposes to implement the AEOI standard.

“The AEOI should be introduced in 2017 so that the first exchange of data with selected partner states can take place from 2018,” the release said.

With respect to introduction of AEOI standard, the Swiss Federal Assembly adopted two agreements in December last year. They were the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (administrative assistance convention) and the Multilateral Competent Authority Agreement (MCAA).

According to the release, AEOI system must be activated bilaterally so that it can be introduced with a partner state.

So far, Switzerland has signed an agreement on the introduction of the AEOI with the European Union, as well as joint declarations on the basis of the MCAA with a number of other countries and territories, it noted.

In July 2014, the Organisation for Economic Cooperation and Development (OECD) Council adopted the new global standard for the international AEOI in tax matters.

Under the standards, certain financial institutions, collective investment vehicles and insurance companies collect financial information on their clients, so long as they are resident abroad for tax purposes.

The information covers all types of investment income and account balances and the same is automatically transmitted once a year to the tax authority, which transmits the data for the client to the respective tax authority abroad.

Having in place such a system is expected to prevent flow of illegal funds in the system and help keep overseas tax authorities better informed.

Source : PTI

No.1030/2016-CX, Dated : 18-05-2016


GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF EXCISE AND CUSTOMS
NEW DELHI

CIRCULAR NO

1030/18/2016-CX, Dated: May 18, 2016

Subject: Imposition of Central Excise duty on jewellery – Constitution of sub-committee of the High Level Committee – regarding.

In continuation to the Circular No. 1025/13/2016-CX dated 22.04.2016 issued vide F.No. 354/25/2016-TRU, the following trade representatives are nominated as members of the aforesaid Sub-Committee:

i. Shri Konal Doshi, past Convenor, Jewellery panel, GJEPC [Mobile-9820124106; Mail- doshi.konal@gmail.com];

ii. Shri Ashok Minawala, past Chairman, AIGJF, [Mobile-9821020011; Mail-ashok.minawala@gmail.com]; and

iii. Shri Fatehchand Ranka, Chairman, All India Action Committee on Jewellery, AIACJ [Mobile-9823082661; Mail- fatehchand@rankajewellerspvtltd.com, fatehchand@gmail.com].

2. Wide publicity may be given to this circular.

Hindi version would follow.

F.No.354/25/2016-TRU

(Anurag Sehgal)
Under Secretary

No. 14/2016 Dated: 18-5-2016


Digital reporting of Form No.60 – Circular – Dated 18-5-2016 – Income Tax

Circular No. 14 /2016

F.No.370149/68/2016-TPL

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 18th May, 2016

Subject: Digital reporting of Form No.60-reg.

1. Vide Notification No.95, dated 30th December, 2015, rules 114B, 114C and 114D of the Income-tax Rules, 1962 ( the Rules) were amended and have come into force from the 1st day of January, 2016.

2. The amended rules inter-alia provide for furnishing of a statement in Form No. 61, containing particulars of declaration made in Form No.60, through online transmission of data electronically. The statement in Form No. 61is to be provided by every person referred to in clause (b) to (k) of sub-rule (1) of rule 114C and in sub- rule (2) of Rule 114C, and who is required to get his accounts audited under section 44AB of the Income-tax Act, 1961. Sub-rule (2) of rule 114D mandates that online statement in Form No. 61 should be furnished by:

a) 31st October of that year, where the declarations are received by the 30th September; and

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

3. It has been brought to the notice of the Central Board of Direct Taxes (the Board) by various stakeholders that hardship is being faced in complying with online submission of statement in Form No. 61, containing particulars of declaration made in Form No.60.

4. In view of the above, it is decided that filling of all the fields in Form No.60 shall be considered to be mandatory in respect of transactions entered on or after 1.04.2016. It is also decided that online reporting of declarations in Form No. 61 for  quarter ending March, 2016 may be done along with report for quarter ending September, 2016.

5. The above may be brought to the notice of all concerned.

(Dr. T. S. Mapwal)

DCIT, OSD (TPL-IV)

CBDT, New Delhi. 

No. 193/03/2016 Dated: 18-5-2016


Clarification regarding leviability of service tax in respect of services provided by arbitral tribunal and members of such tribunal – Dated 18-5-2016 – Service Tax

Circular No.193/03/2016-Service Tax

F. No. 356/1/2016-TRU

Government of India

Department of Revenue

Central Board of Excise & Customs

New Delhi, the 18th May, 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)

Madam/Sir,

Sub: Clarification regarding leviability of service tax in respect of services provided by arbitral tribunal and members of such tribunal -reg.

It has come to the notice of the Board that there is some confusion regarding the legal position with respect to continuance of reverse charge mechanism for services provided by arbitral tribunals and individual arbitrators on the arbitral tribunal, with effect from 1.4.2016.

2.1 Services provided by an arbitral tribunal to (i) any person other than a business entity; or (ii) a business entity with a turnover up to rupees ten lakh in the preceding financial year, are exempt from services tax [Entry 6(a) of Notification No. 25/2012 – ST refers]. “Arbitral tribunal” has been assigned the same meaning in the exemptionnotification No. 25/2012 – ST [paragraph 2(c)] as in clause (d) of Section 2 of the Arbitration and Conciliation Act 1996, which is as follows:-

“arbitral tribunal means a sole arbitrator or a panel of arbitrators”

2.2 In the Budget 2016-17, the entry at (c) of Sl. No. 6 of notification No.25/2012-ST, has been omitted with effect from 1.4.2016. It read as:

“Services provided by a person represented on an arbitral tribunal to an arbitral tribunal.”

3. The matter has been examined. It may be noted that the services provided or agreed to be provided by an arbitral tribunal to a business entity (turnover exceeding ₹ 10 lakh) located in the taxable territory, is taxable under reverse charge mechanism and recipient of service is liable to discharge service tax liability [Rule 2(d)(D)(I) ofService Tax Rules, 1994 and Notification No. 30/3012 – ST (Sl. No. 4) refer]. There is no change in the Budget 2016-17 with respect to the said provisions.

4. It could be argued that service provided by an arbitrator on the panel of arbitrators, to the arbitral tribunal is taxable under forward charge. However, this does not appear to be a correct interpretation of law. Any reference in Service Tax law to an “arbitral tribunal” necessarily includes the natural persons on the arbitral tribunal, by virtue of clause (d) of Section 2 of the Arbitration and Conciliation Act, 1996. Services are provided or agreed to be provided by the panel of arbitrators, as comprising the several natural persons on the said panel, to the business entity or to the arbitration institution approached by the business entity for purposes of arbitration. The liability to discharge service tax is on the service recipient, if it is a business entity located in the taxable territory with a turnover exceeding rupees ten lakh in the preceding financial year.

5. In view of the above, it is clarified that Service Tax liability for services provided by an arbitral tribunal (including the individual arbitrators of the tribunal) shall be on the service recipient if it is a business entity located in the taxable territory with a turnover exceeding rupees ten lakh in the preceding financial year.

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,

(Abhishek Verma)

Technical Officer (TRU)

Higher STT on sale of option contracts from June 1: NSE : 18-05-2016


Sale of option contracts will attract a higher rate of securities transaction tax ( STT ) from next month, leading bourse NSE has said.

STT is applicable on all sell transactions for both futures and option contracts in the derivative segment.

“We would like to inform that as per the Finance Act, 2016…which received the Presidential assent on May 14, 2016, rate of levy of Securities Transaction Tax (STT) on sale of option has been revised from current rate of 0.017 per cent to 0.05 per cent with effect from 1st day of June, 2016,” NSE said in recent circular.

Accordingly, a seller of the ‘options in securities’ would have to pay STT at the rate of 0.05 per cent.

As per securities regulations, options on securities has been defined as “option on securities has been defined as “option in securities” and refers to a contract for the purchase or sale of a right to buy or sell, or a right to buy and sell, securities in future.

The taxes on other securities transaction has remained unchanged.

STT is levied on sale of an option in securities, sale of an option in securities, where option is exercised and sale of a futures in securities.

Options contract is a type of derivative which gives its buyer the right (but not the obligation) to sell/buy the underlying asset at a predetermined price within or at end of a specified period.

The buyer of the option purchases the right from the seller for a consideration which is called the premium. The seller of an option is obligated to settle the option as per the terms of the contract when the buyer exercises his right.

The underlying asset could include securities, an index of prices of securities, among others.

Source : The Hindu

India gearing up to apply Mauritius tax treaty fix to double taxation avoidance accord with Cyprus : 18-05-2016


Now that loopholes in the tax treaty with Mauritius have been plugged, the Indian government is gearing up to apply the same fix to its accord with Cyprus.

Talks to amend the double taxation avoidance treaty are at an advanced stage and the two sides will soon exchange formal proposals, a government official said.

“Talks are on…With Mauritius tax treaty done, Cyprus talks would move swiftly now,” said the official, marking a deeper engagement on the issue after India took the harsh step of declaring the island state a non-cooperative jurisdiction in November 2013.

Cyprus ranks seventh in terms of foreign direct investment flows into India. The 20-year-old treaty offers benefits such as capital gains tax exemption and zero withholding tax on dividends to residents.

It also offers a lower tax rate of 10% on income from interest, royalties and fees for technical services. India has been trying to renegotiate the treaty with the European tax haven for many years as it has been with Mauritius.

Cyprus has been reluctant, citing capital gains tax exemption in the treaties that India has with Mauritius and Singapore. With the Mauritius treaty being tightened, India has been able to make a stronger case for renegotiations with Cyprus.

The template for the amendment is likely to be the same as that of the Mauritius treaty. Concerns about round-tripping of Indian funds and treaty shopping have fuelled India’s resolve to opt for corrective measures in its tax treaties.

India and Mauritius announced a protocol to amend their tax treaty on May 10, restoring India’s right to tax capital gains. The accord with Singapore will also be revamped as the capital gains tax benefit in that agreement is linked to provisions in India-Mauritius double taxation avoidance convention.

The naming of Cyprus as a noncooperative jurisdiction stemmed from a row over sharing information related to Indian account holders. The Mediterranean island was the first tax jurisdiction to be labelled thus by India, leading to a 30% withholding tax on all payments made to Cyprus and Indian entities receiving funds from there having to make additional disclosures, including the source of the money.

Indian entities with investments from Cyprus also have to forego deductions on account of expenditure and allowances.

The non-cooperation tag prompted Cyprus to relent on sharing of information but it had resisted amending the tax treaty because of other such accords, as mentioned above.

The Narendra Modi government resolved to put in place a stringent framework to deal with black money soon after taking over in May 2014, in line with election pledges.

It has since unveiled a series of measures including the setting up of a special investigation team on black money and a new law to deal with undisclosed overseas assets, besides reworking benami legislation.

Amending the bilateral tax treaties is seen as another step forward in that direction as it helps tackle opaque structures created to gain undue tax benefits.

Tax experts said the treaty should be amended to provide certainty to investors.

“While Cyprus-based funds continue to enjoy capital gains tax exemption in India, they would have to deal with the adverse perception around the blacklisting of Cyprus by India as well as the potential impact of GAAR (general anti-avoidance rules),” said Rajesh H Gandhi, partner, tax, Deloitte Haskins & Sells LLP.

“The government might therefore want to get its treaty with Cyprus amended so that there is more certainty for Cyprus funds and ensure that there is parity in tax  treatment with Mauritius and Singapore.”

Source : PTI

 

New review panel for FRBM law : 18-05-2016


A new committee, led by former Member of Parliament and revenue and expenditure secretary N K Singh, will now review the Fiscal Responsibility and Budget Management (FRBM) Act, and suggest a future road map.

The government announced the formation of the five-member panel on Tuesday.

The other members of the panel are Reserve Bank of India Deputy Governor Urjit Patel, Chief Economic Advisor Arvind Subramanian, former finance secretary Sumit Bose, and Rathin Roy, the director of National Institute of Public Finance and Policy and a Business Standard columnist.

The terms of reference of the committee, whose idea was first mooted by Finance Minister Arun Jaitley in his 2016-17 Union Budget speech, include examining the need and feasibility of having a “fiscal deficit range” as targets in place of existing fixed numbers as percentages of gross domestic product, said an official finance ministry statement.

The panel will review the working of the FRBM Act over the last 12 years and suggest the path forward, keeping in mind the broad objective of fiscal consolidation and the changes required in the backdrop of global volatility and uncertainty.

It will also take a re-look at various aspects, factors and considerations for determining FRBM targets and will examine the feasibility of aligning fiscal expansion or contraction with credit expansion and contraction.

“The committee will also examine and give recommendations on any other aspect considered relevant in relation to the determination and implementation of the FRBM roadmap. It may be entrusted with additional terms of reference, if considered necessary,” the statement said, adding the panel will submit its report to the government by the 31 October, 2016.

The panel can also consult other government departments and outside experts during the course of its work.

“While remaining committed to fiscal prudence and consolidation, a time has come to review the working of the FRBM Act, especially in the context of the uncertainty and volatility which have become the new norms of global economy. I, therefore, propose to constitute a committee to review the implementation of the FRBM Act and give its recommendations on the way forward,” Jaitley had said in his Budget speech on 29 February.

As reported by the Business Standard earlier, the panel may look at a number of indicators and trends during the course of its deliberations, including the global macroeconomic situation and global growth forecasts, the government’s debt situation, India’s debt market, household savings and consumption, lending activity of the banks, the Centre and states’ expected spending commitments and projections on India’s tax-GDP ratio over the next four-five years.

Source : Business Standard

Notification No. : 23/2016 Dated:17-05-2016


[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)
NEW DELHI

NOTIFICATION NO

23/2016-Central Excise, Dated: May 17, 2016

In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, 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,-

(i) in the opening paragraph after the second proviso the following provisos shall be inserted, namely:-

Provided also that nothing contained in this notification shall apply to the goods specified against serial number 113 of the said Table after the 31st day of March, 2017:

Provided also that nothing contained in this notification shall apply to the goods specified against serial number 113B of the said Table after the 31st day of March, 2017:

Provided also that this notification shall apply to the goods specified against serial number 113C of the said Table with effect from the 1st day of April, 2017:

Provided also that this notification shall apply to the goods specified against serial number 113D of the said Table with effect from the 1st day of April, 2017:

(ii) in the Table, after serial number 113A and the entries relating thereto, the following serial numbers and entries shall be inserted, namely:-

(1) (2) (3) (4) (5)
“113B 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
113C 29 or 38 Alkyl esters of long chain fatty acids obtained from vegetable oils, commonly known as bio-diesels. 6% -
113D 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

6% 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 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. 22/2016-Central Excise, dated the 5th May, 2016 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 490(E) dated the 5th May, 2016.

Notification No : 25/2016 Dated : 17-5-2016


Services provided by the specified organisations in respect of a religious pilgrimage facilitated by the Ministry of External Affairs of the Government of India, under bilateral arrangement – 25/2016 – Dated 17-5-2016 – Service Tax

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

Notification No. 25/2016-Service Tax

New Delhi, the  17th May, 2016

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 19th day of August, 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 the specified organisations as defined in clause (zfa) of paragraph 2 of the notification no. 25/2012-Service Tax dated 20th June, 2012, published in the Gazette of India, Extraordinary vide number G.S.R 467 (E), dated the 20th June, 2012, in respect of a religious pilgrimage facilitated by the Ministry of External Affairs of the Government of India, under bilateral arrangement and these services were 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),read with 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 services provided by the said specified organisations in respect of a religious pilgrimage facilitated by the Ministry of External Affairs of the Government of India, under bilateral arrangement, in the said period, but for the said practice, shall not be required to be paid.

[F.No.137/16/2015-Service Tax]

(Rajeev Yadav)

Director to the Government of India

World Bank okays $625-m aid for rooftop solar projects in India : 17-05-2016


The board of World Bank has approved a $625-million loan to support the Centre’s programme to generate electricity from rooftop solar power plants.

The Bank also approved a co-financing loan of $120 million on concessional terms and a $5-million grant from the Climate Investment Fund’s Clean Technology Fund, the global development bank said in a statement on Monday.

The statement added that the sanctions will help finance installation of at least 400 MW of grid connected rooftop solar photovoltaic projects across India. State Bank of India will on-lend funds to solar photovoltaic developers and end-users who wish to invest in mainly commercial and industrial rooftop solar power systems.

The financing will be provided to those with sound technical capacity, relevant experience and creditworthiness as per State Bank of India’s standards.

Source : The Hindu

RBI’s billing system boosts payments cos : 17-05-2016


Mumbai: In coming months, the ability to pay bills at one’s convenience will be available to most Indians irrespective of whether they are digitally connected or not. This has been made possible by the launch of the Bharat Bill Payment System (BBPS) – a billing platform conceived by the Reserve Bank of India (RBI).

Over the weekend, the RBI authorized the first round of 33 BBPS operating units, or BBPOUs. These include wallet companies like Oxigen and Paytm and aggregators like BillDesk and Techprocess, along with 26 banks such as the top lenders like SBI, ICICI, HDFC Bank, Axis Bank, Kotak and even smaller ones like Ratnakar Bank.

A P Hota, MD & CEO, National Payments Corporation of India (NPCI), said, “The payments system was already interoperable, the billing information system was not. Now with the BBPS, the billing information system gets interoperable. If any operators plug in a biller, all the operating units will be able to view and pay bills.” He added that there is an incentive for both the unit enrolling the biller and the unit providing bill payment facility.

Operators can provide bill payment facilities through any of the channels under them. For banks, this could be ATMs, branches, online or mobile apps. Non-banks will need to tie up with a bank for accounting purposes. They can also appoint agents with outlets. The outlet can be a kirana store which will display a BBPS logo. “The moment they put up a BBPS logo, they will have to accept any of the bills submitted which are a part of the BBPS system,” said Hota.

 According to Hota, while BBPS will start with recurring payments, the idea is to use the infrastructure for all service payments in the future, including examination fees, taxes and one-off payments.
Oxigen plans to open up its two lakh retail outlets – which are currently top-up points for customers – to bill payments as they have the basic requirement of a networked point-of-sale device. “We can provide both cash-based and wallet-based bill payment services,” said Pramod Saxena, founder and chairman, Oxigen Services India. He sees walk-in customers providing a big boost to Oxigen’s wallet business. “We will encourage customers to fund their wallets at the touch points and make payments through the wallets,” said Saxena. Unlike the past when bill collection was seen as a chore, the new players see this as an opportunity to get customers.

Vijay Shekhar Sharma, founder, Paytm, said, “For Paytm, this will be a key advantage in the market. Our large user base has lapped up our electricity bill payments service. In some electricity boards, we have more than 90% share of online payments. We will support the mission by removing any convenience fee charged by various platforms. We want to take the lion’s share of consumer’s monthly recurring spending by making it easy and not penalizing them to pay online.”

Source : PTI

 

Sebi streamlines settlement procedures : 17-05-2016


Entities under probe for ‘serious violations’ in capitalmarkets can seek settlement of the case only if they agree to make good the losses suffered by the investors to Securities and Exchange Board of India’s (Sebi’s) satisfaction, the regulator has opined.

Regulations provide for settlement of the cases where proceedings have been or are yet to be initiated, while the cases where prosecution has been initiated are compoundable by the concerned court.

The regulator has now issued a guidance note for greater clarity on the cases that can be settled, while changes have also been made for expediting the compoundable matters as suggested by the special Sebi court, a senior official said.

Several prosecution cases filed by Sebi are pending before the special court in Mumbai and many of the accused are ready to compound the cases. The court had asked Sebi to adopt an alternative mechanism for expeditious approval for compounding of cases and ensure faster recovery of penalties.

Accordingly, Sebi has modified an internal circular to allow applications relating to offence of non-payment of penalty to be processed by the Prosecution Division of Sebi’s Enforcement Department, if the accused agrees to pay penalty with 12% interest per annum and the legal charges.

All other cases would continue to go to the High Powered Advisory Committee and the Panel of Whole Time Members.

Sebi has also issued a guidance note in view of certain doubts raised on the interpretation of the provision relating to non-settlement of cases involving ‘fraudulent and unfair trade practices’ that the regulator considers to be serious in nature, having market-wide impact or having caused substantial losses to investors, especially small shareholders.

The move may reduce the administrative burden on Sebi and also pave the way for the settlement for some old cases.

According to the guidance note, the purpose of the norms “is not to prohibit the settlements in respect of all kinds of fraudulent and unfair trade practices (and) the general rule shall be settlement of such defaults with appropriate terms and rejection in exceptional cases”.

On “serious violation” and violations involving a market-wide impact or substantial losses to investors, Sebi has given detailed clarifications on how to deal such cases.

Sebi has further said that the seriousness of the default should be decided after taking into account “the weight and sufficiency of the evidence” as well, and not merely on the basis of the seriousness of the levelled charges.

The violation which would be considered to have “market-wide impact” would be those defaults that have a bearing on the securities markets as a whole and not just on securities of the concerned company and its investors.

Sebi would also examine the “qualitative and quantitative impact on rights of investors, including the number of complaints received, especially from retail investors and small shareholders”.

In cases where violation is found to be “serious” and also involves market-wide impact or substantial losses to investors, a settlement application can be considered only if the applicant “has made or intends to make good the losses due to the investors to the satisfaction of Sebi”.

The applicant would also have to furnish an undertaking that “for limited purpose of settling administrative and civil proceedings which the board alone is competent to initiate under the securities laws, and for no other purposes, be shall be deemed to have admitted his guilt”.

Sebi, however, clarified that the guidance note does not modify its power to reject an application or to consider an application under these regulations, nor does it give any applicant the right to seek settlement.

In the consent settlement process, the entity facing a probe by Sebi is subjected to certain fees and restrictions without admission or denial of alleged irregularities, and the regulator thereafter drops its charges and the investigations with a caveat that all disclosures made to it are correct. The case can still be re-opened if some new facts come up later.

Source : Business Standard

Easier tax regime? Disputes pile up, despite NDA government’s plans to cut them : 16-05-2016


Even as the NDA government has made ostensible efforts to make life easier for taxpayers — leaving only the retrospective tax issues largely unresolved — tax disputes may have only piled up, proof that old habits die hard with the revenue authorities. At the level of commissioners-appeal (CITs-A), the first recourse of the taxpayer in case of dispute, 2.8 lakh appeals involving a whopping Rs 5.67 lakh crore were pending till October last year, sharply up from the corresponding figures of 2.32 lakh and Rs 3.84 lakh crore at the end of the previous financial year.

In other words, in the seven months to October-end last year, unsettled disputes pending before these commissioners rose 21% and the amount locked up surged 48%. In the year to April-end, 2015, a period which too largely belonged to the NDA government, appeals pending before the CITs-A have only risen, though less steeply. And the CITs-A are only the first of the many layers of appeal where direct tax disputes are dealt with, with the income-tax appellate tribunal and the high courts being the higher fora and the Supreme Court, the final arbiter.

Though the finance ministry’s latest annual report only put out the data on the undecided appeals before CITs-A, other available data suggest that the situation is any better with the tribunal and the courts.

Data separately gathered by FE show that outstanding claims – which include disputed and undisputed ones in 3:2 ratio- by the I-T department rose from Rs 5.8 lakh crore to Rs 8.3 lakh crore during 2014-15.

The issue of unresolved tax disputes has larger dimensions. In the case of multinationals, aggressive transfer pricing (TP) adjustments demanded by the tax authorities have been a major source of worry in the last few years. Although the aggression has been toned down by the Modi government, the progress on the taxpayer-friendly mechanisms put in place like the advance pricing agreements (APAs) has been less than satisfactory. As regards APAs, which by definition would guide the I-T department’s pricing of non-resident firms’ transactions with their India-resident associates and enable them to get TP audit waiver, of the 590 applications filed between FY13 and December 2015, only 32 became final agreements. Even among this small number of final agreements, which signal resolution of the dispute, only 2 were bilateral ones involving the revenue department of the MNCs’ home countries.

Of late, however, there has been some headway in settling disputes involving US-based tech biggies like Microsoft, IBM, Google, Cisco, Honeywell, AT&T, Dell, Intel and Alcatel thanks to the invocation of the mutual agreement procedure (MAP) in the India-US Double Taxation Avoidance Convention. The current MAP agreement between the US and India targets to settle a total 200 cases — all relating to the disputes over the values ascribed by the Indian tax department to the past cross-border transactions of US-based MNCs’ associates in India.

The big gap between the Modi government’s targets and achievements in reducing the backlog of tax disputes is partly attributable to the rise in the number of new cases. Many analysts feel the government’s efforts would yield more concrete results in the coming months. “The government issuing clarifications on substantive law in a rational manner would help bring down litigation. This would bring clarity on interpretation of the law for both tax payers and the income tax department. However, polices that say that a tax payer could pay certain percentage of tax and penalty and would be relieved of the tax demand, would not help much. There have been praiseworthy efforts from the government in the recent past to bring in clarity on various issues such as MAT on FIIs, characterisation of income from sale of shares etc. These kind of steps are helpful in the longer term,” said Rahul K Mitra, partner and national head (BEPS & tax dispute resolution) KPMG India.

Efforts are being made to reduce indirect tax disputes as well. The threshold limit below which appeals are not to be filed by revenue department in Customs, Excise and Service Tax Appellate Tribunal (CESTAT) and High Courts have lately been raised to Rs 10 lakh and Rs 15 lakh, respectively. “Withdrawal of all cases in High Courts and CESTAT where there is a precedent Supreme Court decision and against which no review is contemplated. The Chief and Principal Commissioners directed to identify the cases fit for withdrawal among the cases pending in appeal before CESTAT and High Courts,” the finance ministry had said. Following this withdrawal applications in 980 cases in High Courts and 2, 174 cases in CESTAT have been filed. Out of this, High Courts allow withdrawal in 250 cases and CESTAT in 202 cases.

“There have been efforts to reduce litigation by increasing threshold limits for “tax effect” for filing of appeals, resulting in withdrawal of appeals by revenue at different forums,” said Sandeep Chaufla, Partner at PwC. In addition, the government has been issuing circulars clarifying the clauses that takes away the ambiguity between a tax payer and the assesse officer. There has been circulars clarifying treatment of profit of shares, taking tax holiday benefits, among others.

In April, in a significant reform that would cut the audit delays concerning indirect taxes, give relief to taxpayers and reduce litigation, the Central Board of Excise and Customs (CBEC) has eased and expedited the procedure of dealing with audit objections raised by the Comptroller and Auditor General. According to a CBEC circular issued to its field formations, the practice of issuing protective show-cause notices (SCNs) to assessees in cases where the audit objections are not accepted by the CBEC has been done away with. If the CBEC accedes to the objections, the SCNs would henceforth be issued forthwith and adjudicated expeditiously. No SCNs will be transferred to the call book, where they used to get piled up.

Source : Financial Express

BRICS may set up ratings agency for emerging markets in October meet : 16-05-2016


After the BRICS Bank, the five-member bloc of emerging nations is considering setting up a credit ratings firm in its efforts to challenge western hegemony in the world of finance. The credit rating agency for emerging markets, as it is tentatively called, is likely to take shape at the BRICS Summit to be hosted by India in October. The idea of a non-western ratings firm for the emerging markets has been in discussion among the leaders of the BRICS nations — Brazil, Russia, India, China and South Africa — for the past few years, said officials with knowledge of the plan.

Another proposal to be taken up during India’s presidency at the BRICS is setting up of the NDB Institute in India to research on and identify projects for utilising the $100 billion that the New Development Bank (NDB) formed by the BRICS nations has in its disposal. The big three — Moody’s, Fitch and Standard & Poor’s — together account for 90% of the global ratings market. The criteria used by them for rating emerging economies has often come under critical evaluation, these officials said.

Emerging economies claim that western ratings firms are biased, optimistic on developed nations and pessimistic on the developing ones. Russia in particular and China have been perturbed by the western ratings firms. Russia alleges that the western firms had deliberately lowered Moscow’s rating after the Ukraine crisis.

Sources here said a BRICS ratings firm could also assist other emerging New Delhi: After the BRICS Bank, the five-member bloc of emerging nations is considering setting up a credit ratings firm in its efforts to challenge western hegemony in the world of finance. The credit rating agency for emerging markets, as it is tentatively called, is likely to take shape at the BRICS Summit to be hosted by India in October. The idea of a non-western ratings firm for the emerging markets has been in discussion among the leaders of the BRICS nations — Brazil, Russia, India, China and South Africa — for the past few years, said officials with knowledge of the plan.

Another proposal to be taken up during India’s presidency at the BRICS is setting up of the NDB Institute in India to research on and identify projects for utilising the $100 billion that the New Development Bank (NDB) formed by the BRICS nations has in its disposal. The big three — Moody’s, Fitch and Standard & Poor’s — together account for 90% of the global ratings market. The criteria used by them for rating emerging economies has often come under critical evaluation, these officials said. Emerging economies claim that western ratings firms are biased, optimistic on developed nations and pessimistic on the developing ones. Russia in particular and China have been perturbed by the western ratings firms. Russia alleges that the western firms had deliberately lowered Moscow’s rating after the Ukraine crisis.

Sources here said a BRICS ratings firm could also assist other emerging will be able to rate infrastructure and sustainable projects in the emerging economies. The Asian Development Bank estimates that in the next decade, Asian countries will need $8 trillion in infrastructure investments to maintain current economic growth rates. India’s Narendra Modi government is desperate to boost the country’s infrastructure and has createdNational Infrastructure Investment Fund (NIIF) where fund rich UAE is putting funds. And the Prime Minister’s trip to Qatar early June en route to the US might see Doha also putting in some investments in NIIF. Creation of NDB, the BRICS Bank, was India’s brainchild.

Source : PTI

Finance Ministry to soon set up panel on bad loans : 16-05-2016


In pursuance to the directions of the Supreme Court, the Finance Ministrywill soon set up a panel to look into the issue of mounting bad loans and come out with the steps to deal with the problem.

“The committee to look into non-performing assets (NPAs) issue will be announced soon in accordance with the suggestions of the Honourable Supreme Court,” a senior Finance Ministry official said.

It will look into various issues related to NPAs and ways to rein it, the official added.

Besides, it will also point out if loan approval process and system is suffering from any gaps or lacuna.

Some names have been considered for the panel including Union Bank of IndiaBSE -6.08 % Chairman and Managing Director Arun Tiwari, Indian Bank MD M K Jain and legal expert M R Umarji, the official said, adding it could be headed by senior official of the Finance Ministry.

Last month, the bench headed by Supreme Court Chief Justice T S Thakur suggested the Centre to consider setting up a committee of experts which would go into the entire gamut of issues related to NPA.

“You propose a committee to look into it. We will accept the proposal,” a bench comprising Chief Justice and Justices R Banimathi and U U Lalit had said.

“Tell us about mechanism for recovering the dues. There may be some mechanism to deal with it. There is also a need of amendments. Suggest the ways and means by which these things can be prevented,” it had observed.

“We are trying to highlight the issues as there is something not working. If your system would have been perfect then things would not have happened,” it had said while hearing PIL filed by senior advocate Prashant Bhushan.

The gross NPAs of public sector banks (PSBs) increased from 5.43 per cent as on March 2015 to 7.30 per cent as on December 2015. Gross NPAs of PSBs increased from Rs 2,67,065 lakh crore in March to Rs 3,61,731 lakh crore in December.

At the end of December, as many as 701 accounts with bad loans exceeding Rs 100 crore owed public sector banks (PSBs) Rs 1.63 lakh crore, while SBI accounted for the biggest chunk.

Playing down the NPA issue, RBI Governor Raghuram Rajan yesterday had said India’s banking sector is facing problems but there is no chance the country facing a “Lehman moment”.

Lehman moment refers to the collapse of the leading US investment banker Lehman Brothers in 2008 which triggered the global economic crisis.

Source : The Economic Times

Sebi to tighten KYC, transfer norms for P-Notes : 14-05-2016


Acting upon recommendations of the Special Investigation Team (SIT) on black money, market watchdog Sebi plans to tighten due diligence requirements for issuance and transfer of controversy-ridden P-Notes and put the onus on investors to ensure compliance with anti-money laundering law.

While Sebi (Securities and Exchange Board of India) has been of the view that the regulations have already been strengthened to check any misuse of this route for money laundering like activities, it has decided to put in place additional safeguards as suggested by the SIT.

The regulator plans to put in place six specific changes to the KYC (Know Your Client) norms and transferability of Offshore Derivative Instruments (ODIs) – commonly known as Participatory Notes or P-Notes – in this regard.

The proposed changes have been finalised after discussing with concerned stakeholders including some major issuers of P-Notes and they have broadly agreed to the suggested measures in the interest of the markets, a senior official said.

These include mandating the issuers of P-Notes to file Suspicious Transaction Reports (STRs), if any, with the Indian Financial Intelligence Unit (FIU) in relation to the ODIs issued by them.

On the KYC norms, while current regulations also mandate that ODIs can be issued only after compliance to the KYC requirements, the issuer entities have been adopting either the Indian AML (anti-money laundering) norms, norms in the jurisdiction of the issuer or the norms in the jurisdiction of the end beneficial owner or the ODI subscriber.

According to the proposal, Indian AML norms would need to be followed by issuer entities for carrying out customer due diligence of the ODI subscribers.

Officials said the regulations have been very robust to check any misuse of P-Notes and the proposed changes might not affect the flow of funds in a big way as they are mostly procedural in nature and do not drastically change the regulatory framework.

P-Notes are typically instruments issued by registered foreign institutional investors to overseas investors, who wish to invest in the domestic stock markets without registering themselves directly in India, but still need to go through a proper due diligence process.

P-Notes make up for about 10-12% of the total FII inflows, as against over 50% at the peak of stock market bull run in 2007. Rules have been tightened several times in recent years to check any misuse of this route, but P-Notes have still continued to court controversies.

The Supreme Court appointed SIT on black money last year had suggested that Sebi should further strengthen its norms to keep a tab on beneficial ownership of P-Notes as they were widely used by foreign investors and could be prone to misuse.

The slew of measures that have now been proposed by Sebi in this regard would require the ODI issuers to identify and verify the persons with exposure in excess of a pre-defined threshold in the subscriber entities — which could be 25% in case of a company and 15% in case of partnership firms, trusts or unincorporated bodies.

The KYC review would need to be carried out as per the risk profile of the subscribers.

The issuer would also need to do reconfirmation of the ODI positions on a semi-annual basis, while such reconfirmation reports, along with any breaches and the remedial actions, would need to be reported to Sebi.

In current norms, there is also a lack of uniformity amongst the issuer entities when it comes to identifying the persons controlling the operations of the subscriber entities. This gap would be taken care of through periodic reporting to Sebi, as per the risk classification of the subscriber.

On transfer of ODIs, the current regulations state that any further issue of transfer of any ODI is made only to persons regulated by an appropriate regulatory authority.

It has been proposed now the issuer entities would ensure that the transfer of OFIs is done to only such entities that are eligible to invest in ODIs and have been pre-approved by the issuer entities.

However, the transfers are as such very rare as such and are mostly related to the rebalancing of portfolios.

Recently, Sebi Chairman U K Sinha had said strong measures have been put in place to check any misdemeanours including misuse of P-Notes, as he sought to put to rest concerns that these instruments were misused to bring back black money into the country.

He had said sufficient safeguards have been put in place to check any possible gaps and Sebi is now in a position to identify and check details of beneficiary owners of such funds to the second, third and even fourth levels.

In case of any irregularities, Sebi can take penal action and also share the details with the tax department and other authorities for further action on their part.

Earlier it was difficult to identify the end-users of such instruments, but since 2014 Sebi has limited the rights for who can subscribe to these instruments to only two of the three classes of Foreign Portfolio Investors. These are sovereign funds and regulated entities, while others are already debarred others from using P-Notes.

“It has been said that PNs are a big source for bringing black money into the country. Prior to 2011, we did not know who were subscribers of P-Notes and who were the subsequent beneficiary owners. Now, by regulations, every month Sebi is getting the information who are the latest beneficiary owners of the P-Notes,” Sinha had said in an interaction.

Source : Business Standard

China signs pact aimed at fighting multinational tax avoidance : 14-05-2016


China said it has signed a multilateral agreement to share tax information on multinational companies, paving the way for it to join the fight on global tax avoidance.

China said it has signed a multilateral agreement to share tax information on multinational companies, paving the way for it to join the fight on global tax avoidance.

China signed the country-by-country tax reporting agreement, along with Canada, India, Iceland, Israel and New Zealand, during a meeting of the OECD Forum on Tax Administration (FTA) in Beijing this week, bringing the number of countries that have signed the pact to 39.

Tax authorities will “obtain a more complete understanding of the way multinational enterprises structure their operations, while also ensuring that the confidentiality and the appropriate use of such information is safeguarded”, according to a statement issued on Friday, after the meeting.

The pact was in line with the commitment made by G20 leaders on Base Erosion and Profit Shifting, a programme to fight global tax avoidance.

Developed nations are trying to crack down on tax loopholes that allow multinational companies to shift profits from high tax countries to more relaxed jurisdictions.

Source : PTI

Let’s not hand over taxation power to courts: What FM Arun Jaitley said in RS on May 11 : 14-05-2016


The following are excerpts of Finance Minister Arun Jaitley’s reply to the debate on the budget in the Rajya Sabha that was made on May 11.

The world, today, uniformly acknowledges that India is a fast growing economy… The point is with regard to our ability to continue with the reform process. The whole world is really looking at us. Are we able to continue with some of the reform measures, particularly bring the Goods and Services Tax?

Now it is said that it had been obstructed by the NDA, now it is being obstructed by somebody else. Well, let me honestly confess that there was no consensus at that time between the states. I concede it was the UPA idea in the first instance, and one of the first things that we did was to bring about a 100% consensus between states.

Let me come to the three points of objection which you (Congress) have raised:

The manufacturing states had a reservation during the UPA regime. And mind you, this was not a BJP, Congress, UPA, NDA issue; it was manufacturing states which had a particular concern.

So, a consensus was arrived at, that for a two year-period, 1% additional tax on inter-state movement of goods and services will take place. I am willing to go back to the states and persuade them to drop this idea. So, it is not really a contentious issue. The second issue that you (Congress) mentioned is, let us have a dispute settlement process. The dispute settlement process that you are suggesting is, if states can’t decide in the GST council, a body headed by the Supreme Court Judge must then decide. For heaven’s sake, I beseech you, in the interest of Indian democracy, not to go on this misadventure.

The manner in which encroachment of legislative and executive authority by India’s judiciary is taking place, probably, financial power and budget-making is the last of the only powers that you have left. Taxation is the only power which states have. It would be wholly misconceived for any party to say, let us hand over the taxation power also to the judiciary. I noticed that when I said ‘don’t hand over the taxation power to the court’, each one of your members was thumping the desk. It (taxation under GST) is a political issue and it has to be sorted out politically. You can’t hand over this power to judiciary.

I have not read the judgment, but today I have seen on television that we have the NDRF and the SDRF, the State Disaster Relief Fund and the Central Relief Fund, the Supreme Court has directed us to create a new fund. Now, we have already passed the Appropriation Bill. From where do I get this extra money outside the Appropriation Bill to comply with this direction of the Supreme Court? Can’t you see? Step by step, brick by brick, the edifice of India’s Legislature is being destroyed.

If there is a taxation dispute between the Centre and the state and a major party says, ‘let a judge now resolve it’, the taxation power is also lost. So, to have a GST council of states and Centre, where states will have two-thirds vote and the Centre will have one-third vote, was a suggestion which was accepted by Mr Chidambaram.

You (Congress) now turn back and say, “no”; our insistence is create a dispute redress mechanism and appoint a judge to resolve taxation dispute between the Centre and states.

That (GST) council will decide and every decision will be by a three-fourths majority. So, both the Centre and the states have to work together. And the bill further says that in case there is a problem, the GST council itself will decide a mechanism for its resolution. They can have a political mechanism to resolve it. After all, these are political problems which have to be resolved politically. These are not judicially determinable matters, how much share will West Bengal get and how much share will we get. Now, let me come to your third objection, and your third objection has a very chequered history. When Mr Pranab Mukherjee, the honourable President today, introduced the GST, there was no cap. When Mr Chidambaram referred it to the standing committee, there was no cap. When the standing committee’s recommendations came, there was no cap. When you finalised those recommendations and went out of the government, there was no cap. So, throughout the UPA, there was no cap as far as the GST was concerned. So, the cap never existed.

Now, suddenly, you say that there must be 18% cap provided in the Constitution itself. I have no difficulty with the figure of 18%. Taxes must be reasonable. Now, there is a fallacy to have a uniform cap.

Situation one – there is a drought in the country, and five states say that they are suffering from drought and they need more money and more taxes. So, for one year, they want to charge 20%. Are we then going to first amend the Constitution? The second fallacy of 18% is that there cannot a uniform tax for all the commodities. You will have commodities which the aam admi uses. Then, you may have luxury products. A luxury product will have to be taxed at a much higher rate. Why do you want a cap in the Constitution?

My submission to you is that if India needs to grow, we have to look at our capacity at reforming ourselves, bringing major tax reforms and every state has agreed. Therefore, please reconsider your position. I have no difficulty with the 18%, but by putting an 18% cap in the Constitution itself and surrendering parliamentary and state legislatures’ jurisdiction on taxation to a judge to decide, I think, the last of the powers left with the legislatures itself would also be surrendered. And, therefore, when we meet again in the monsoon session, I think, it will be an appropriate time for us to take a view and the government’s position is very clear.

Every state has to implement the GST. So, we want all parties to be on board, all state governments to be on board. Therefore, I will request your party to reconsider its position, and, if you don’t reconsider this position, then, please allow the parliamentary process of decision by voting to take place because, ultimately, then, we are questioning India’s ability to implement a reform.

I will certainly be discussing once again with you (Congress) and your colleagues but, I think, it is a subject on which you should take a considered view and not deviate from the proposals which two of your eminent finance ministers themselves had accepted.

Source : The Economic Times

Dividend disclosure policy may be made mandatory : 13-05-2016


Upping the corporate governance ante, capital market regulator Securities and Exchange Board of India (Sebi) plans to make dividend disclosure policy compulsory for listed companies. The move is aimed at helping ordinary shareholders understand how much dividend they can expect from a company.

At present, it is not mandatory under any regulations for companies to declare dividends or to even have a policy, although a handful of companies have voluntary formulated such a policy.

Sebi has no plans to force any company to pay dividends, but would set broad policy terms for companies, said sources. The regulator wants companies to disclose circumstances and financial parameters under which they can or cannot pay dividends. Also, Sebi would ask companies to state what they intend to do with their retained earnings if they don’t wish to pay dividends, people with knowledge of the development said. (WHAT INDIA INC PAYS)

Domestic companies have ad-hoc rules regarding dividends. For instance, in 2014-15, Tata Motors, Reliance Power and Glenmark didn’t pay any dividends to shareholders, despite making decent profits. On the other hand, Vedanta, Tata Steel and state-owned MMTC paid dividends even as they made losses.

“Declaration of dividend is the prerogative and business decision of the management. Such decision is typically dependent on a number of contingent factors. The management may have justifiable reasons for holding cash or deferring distribution,” said Akila Agrawal, partner, Shardul Amarchand Mangaldas.

Although expecting a dividend is within the rights of minority shareholders, it is also justified for a company to retain cash by not paying dividend in order to re-plough it into the business or create a war chest for potential acquisitions.

Sebi, at present, mandates companies to disclose a dividend policy at the time of an initial public offering . The regulator wants such a policy to be part of companies’ annual report.

Besides, companies will also have to disclose it on their websites. Initially, Sebi might restrict the rule to the top 500 companies in terms of market value.

Experts said such a policy may not meet its objective if companies make vague disclosures.

“Asking companies to have a dividend policy is a good idea, but it remains to be seen how effective it would be. A lot of companies might make generic disclosures, which may not have much significance,” said Shriram Subramanian, founder and managing director, InGovern Research Services, a corporate governance and proxy advisory firm.

“Sebi requiring listed companies to mandatorily institute a dividend distribution policy will not necessarily result in enhanced investor protection. In all probability, it will just result in adoption of broadly drafted policies, wherein the management will ultimately retain its discretion to declare dividends depending on business exigencies,” added Agrawal.

Source : The Economic Times

Bankruptcy Code to give fillip to ease of doing biz: FinMin : 13-05-2016


Describing the Bankruptcy Code as comprehensive and systemic reform, the Finance Ministry today said the new law will give a big boost to ease of doing business in the country by ensuring a quantum leap for the functioning of the credit market.

The Insolvency and Bankruptcy Code, 2016, which was approved by Parliament yesterday, “would take India from among relatively weak insolvency regimes to becoming one of the world’s best insolvency regimes”, it said in a release.

“History was created on May 11, 2016 when the Rajya Sabha passed the Code. With the passing of this Bill, India has crossed an important milestone in becoming a world-class economy. The Lok Sabha had already passed the Bill on May 5, 2016,” it said.

Hitherto, India was lacking the legal and institutional machinery for dealing with debt defaults as per global standards.

Recovery proceedings by creditors either through the Contract Act or special laws such as the Recovery of Debts .. defaults as per global standards.

Recovery proceedings by creditors either through the Contract Act or special laws such as the Recovery of Debts due to Banks and Financial Institutions Act and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act have not had “desired outcomes”.

Economic Affairs Secretary Shaktikanta Das maintained that the government’s effort will be to create all structures regarding Bankruptcy Code as “early as  possible”.

“We are working on framing the rules and regulations and drawing guidelines (regarding bankruptcy code). We are also looking at administrative issues relating to the Bankruptcy Code,” he said.

Commenting on the Code, Misha, Partner, Shardul Amarchand Mangaldas & Co said the new law has various positive features, including the fact that it consolidates bankruptcy and insolvency laws for both corporate and individuals within an effective framework for timely resolution.

“However, a major concern in the Code is the provision of handing over of entire management and affairs of the corporate to insolvency professionals during the corporate insolvency process… This would  dis-incentivise corporate debtors to voluntarily invoke the insolvency process under the Code,” she said.

The vision of the new law, according to the ministry’s statement, is to encourage entrepreneurship and innovation.

“It is true that some business ventures will always fail, but such failures will be handled rapidly and swiftly. Entrepreneurs and lenders will be able to move on instead of being bogged down with decisions taken in the past,” it said.

Source : PTI

Now, services to attract 10 per cent tax under revised DTAA : 13-05-2016


The amended India-Mauritius tax treaty has inserted a new clause allowing source-based taxation at 10 per cent on fees paid for technical and consultancy services.

Besides, services-based permanent establishment has been introduced under which the business income of an employee of a foreign company in India will be taxable if he or she spends 90 days in India in the past 12 months.

The revision provides for 10 per cent tax on gross basis for fees for technical services ( FTS) in the source state, according to the text of the treaty amendment signed on Tuesday.

So far, a company or entity was deemed to have a permanent establishment (PE) in India if it had a place of business or site or office building or factory workshop.

Tax experts said that now if a company’s employees spend 90 man days in India, then the companies’ business income in India will be taxable at 40 per cent.

“Through the inclusion of the services PE clause, the tax net has been widened,” an expert said, adding that tax credit can be obtained.

The tax will be at the highest applicable rate between the two countries.

As per the protocol, the definition of PE has been enlarged to include “furnishing of services, including  consultancy services, by an enterprise through employees or other personnel” for more than 90 days within any 12 months.

The amendment to the more than three-decade old treaty that aims to plug a loophole which allowed investors to use the Mauritius route to evade taxes on capital gains in India also gives right to the source country to levy 7.5 per cent tax on interest earned.

The original treaty of August 1983 provided exemption on interest received by banks in the source  country to levy 7.5 per cent tax on interest earned.

The original treaty of August 1983 provided exemption on interest received by banks in the source state when they are residents of the other country.

The amendment removes this exemption, as per the text of the revised protocol.

However, exemption would continue to be granted in the case of interest arising from debt claims existing on or before March 31, 2017 provided it is derived and beneficially owned by any bank resident of the other country carrying on bonafide banking business in the source state.

The amendment, which give India the right to tax short-term capital gains from April 1, 2017, also inserts a new article allows the two nations to lend assistance to each other in collection of taxes.

The protocol inserts new clause allowing source-based taxation of capital gains on alienation of shares. Companies routing funds into India through Mauritius from the next fiscal will have  to pay short-term capital gains tax at half the rate prevailing during a two-year transition period. The levy is currently at 15 per cent.

Source : The Hindu

68 [(1)/23(R) – 12-5-2016


CIRCULAR NO 68/2016, Dated: May 12, 2016

Foreign Exchange Management (Exports of Goods and Services) Regulations, 2015

Attention of Authorised Dealers (ADs) is invited to A.D.(M.A. Series) Circular No. 11 dated May 16, 2000 in terms of which ADs were advised of various Rules, Regulations, Notifications/ Directions issued under the Foreign Exchange Management Act, 1999 (hereinafter referred to as the Act). On a review it is felt necessary to revise the regulations issued under the Foreign Exchange Management (Exports of Goods and Services) Regulations, 2000 as amended from time to time. Accordingly, in consultation with the Government of India, the said regulations have been repealed and superseded by the Foreign Exchange Management (Exports of Goods and Services) Regulations, 2015.

2. The Annexure attached to this Circular contains detailed directions relating to dealings of ADs with their exporter clients.

3. The new regulations have been notified vide Notification No. FEMA. 23(R)/2015-RB dated January 12, 2016 c.f. G.S.R. No. 19 (E) dated January 12, 2016 and have come into force with effect from January 12, 2016. The Master Direction No. 16 of 2015-16(Export of Goods and Services) has been updated accordingly to incorporate the above changes.

4. ADs may bring the contents of the 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 Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/ approvals, if any, required under any other law.

RBI/2015-16/395

(Shekhar Bhatnagar)
Chief General Manager-in- charge

Insolvency and Bankruptcy Code to strengthen identification and resolution of insolvencies: Crisil


The Bill pertaining to the Insolvency and Bankruptcy Code, 2015, passed in the Lok Sabha last week and awaiting final approval from the Rajya Sabha, is a watershed reform that will structurally strengthen the identification and resolution of insolvencies in India, according to Crisil Ratings.

While lenders and asset reconstruction companies (ARCs) are the immediate beneficiaries, the code will also significantly improve India’s ‘ease of doing business’ ranking, the credit rating agency said and added that over the long term, it will enhance creditor rights, boost investor confidence and facilitate deepening of India’s corporate bond market.

The agency observed that the code enhances the right of a creditor to identify insolvency and initiate resolution proceedings through an ecosystem that will include a new regulator and information utilities. It attempts to simplify legal processes, preserve value for creditors and provide them with greater certainty of outcome.

Pawan Agrawal, Chief Analytical Officer, Crisil Ratings, in a statement, said: “We believe the code will instill far greater financial discipline among borrowers.

“It can also potentially kindle investor interest in lower-rated (below AA category) corporate bonds, which will help in deepening the market. But implementation of the code is critical and the build-out of the ecosystem will take time.”

The agency assessed that for ARCs, the new code, along with 100 per cent foreign direct investments announced in the Union Budget for the current fiscal, will boost capital flows and make them an increasingly important intermediary between lenders and borrowers.

Crisil’s analysis shows recoveries by ARCs have been low at about 36 per cent with the average resolution taking about five years. That’s in line with a World Bank study, which said it takes more than four years to wind up a sick company in India, or twice the time taken in China, with recovery at just at about 25 per cent, which is among the lowest in emerging economies. The new code prescribes a much faster timeline of 180 days for resolution.

Krishnan Sitaraman, Senior Director, Crisil Ratings, said: “Quicker resolution will allow ARCs to churn capital faster and enhance returns. It will also attract investments into the distressed assets space.”

Crisil’s analysis of recoveries indicate that smaller assets (debt up to Rs. 100 crore) have a shorter resolution timeframe and better recovery rate compared with the larger ones because of the greater bargaining power of banks.

It observed that the current asset quality challenges at banks stem from disproportionate exposure to large corporates, and these corporates could continue to take legal recourse to delay recovery proceedings, which would challenge effective resolution within the proposed timeline of 180 days. It would also mean that the code is unlikely to alleviate the current asset quality problems of banks anytime soon.

But in the long run, Crisil said the code will structurally hasten the resolution of weak assets (currently forecast at about Rs. 8 lakh crore by March 31, 2017) problems, thereby releasing precious capital for the banking system, which, in turn, will encourage credit expansion.

Source : The Economic Times

Government issues draft policy to make small buildings eco-compliant : 11-05-2016


With a majority of buildings coming up being small in size, the government has come out with a draft notification to make eco-compliance mandatory for such projects.

The smaller projects, with a built-up area of over 5,000 square metres to 20,000 square metres, will have to comply with environmental conditions like installation of natural drainage, water conservation, rainwater harvesting and solid waste management, among others, according to the draft issued by the Environment Ministry.

The environmental conditions will be integrated with the ‘building permission’ — except for hospitals — being granted by local authorities, it said.

The draft policy seeks to amend the Environment Impact Assessment notification, 2006. The ministry has sought public comments within 60 days.

“The current environmental regime covers buildings and constructions of only above 20,000 square metres of built-up area whereas a majority of the buildings being constructed are of smaller size and it is important to integrate environmental concerns, considerations and best practices into construction and operation of building and construction sector projects of smaller sizes as well,” the draft notification stated.

The Environment Ministry has proposed that local by-laws and the  revised National Building Code should incorporate these environment conditions so that even smaller-sized buildings are eco-compliant.

As per the proposed amendments, smaller projects will have to maintain proper natural drainage system with adequate size of channel for ensuring unrestricted flow of water.

The smaller buildings should have water conservation, rain water harvesting and groundwater recharge system. They should also have the unpaved area of more than or equal to 20 per cent of the recreational open spaces.

That apart, the ministry has specified the projects that need to follow a solid waste management under which buildings should have separate wet and dry bins at the ground level for facilitating segregation of waste.

In common area, lighting must be of LED or solar lights should be provided. There should also be dust, smoke and debris prevention measures such as screens and installation of barricades at the site during construction.

The smaller projects should have green cover. A minimum of one tree for every 80 square metres of land should be planted and maintained. The existing trees will be counted for this purpose. Preference should be given to planting native species, the notification added.

Source : PTI

Revised Mauritius tax pact may hit overseas fund flows : 11-05-2016


 India has wrested the power to tax capital gains on the sale of shares of domestic companies by entities based in Mauritius, a move that may have a “significant impact” on investments routed through the tax haven.

The two countries amended their 33-year-old tax treaty, bringing the curtains down on the Mauritius route, which government revenue officials and critics said had become synonymous with tax avoidance and abusive practices such as treaty shopping and round-tripping.

The new regime will apply on shares acquired on or after April 1, 2017, the finance ministry said in a statement. Investments made before that date will not be affected. There will be a transition period from April 1, 2017, to March 31, 2019, during which capital gains will be taxed at half the domestic rate.

The decision, partly driven by the urgency to increase tax revenue, may temporarily weaken rupee and make Dalal Street nervous. Foreign Portfolio Investors – the largest investor group – will now have to pay 15% tax on short-term capital gains on listed shares.

“This is a colossal tax development and will have a significant impact for numerous institutional funds, asset managers and private companies which have used the Mauritius route to invest into India,” Rajesh H Gandhi, a partner at Deloitte Haskins & Sells LLP, said on a day when lawyers and consultants were flooded with calls from London and Singapore.

Mauritius is the biggest source of foreign direct investment and portfolio investment into India because of the bilateral tax treaty that exempted such fund flows from capital gains tax. The island nation accounts for over 34% of FDI into India, while Singapore contributes 16%.

The amendment of the treaty also brings the regime in line with India’s plan to introduce general antiavoidance rules from 2017. The move changes the dynamics for private equity and foreign portfolio investors and asset managers not just from Mauritius but also from Singapore. India had linked the continuance of capital gains tax exemption in its treaty with Singapore to the agreement with Mauritius.

The protocol will tackle the longpending issues of treaty abuse and round-tripping of funds attributed to the India-Mauritius treaty, curb revenue loss and prevent double non-taxation, the finance ministry said in the statement.

“This amendment to the India-Mauritius tax treaty puts to rest and provides clarity and certainty to one of the longest-running tax controversies with regard to investments by Mauritius residents in Indian securities,” said Sudhir Kapadia of EY.

The new regime provides parity between foreign and domestic investors in respect of capital gains tax.

“This move may also encourage setting up of offshore fund management companies in India in view of the recent safe harbour rules wherein offshore funds’ gains from Indian securities will be taxed as capital gains rather than business income,” Kapadia said.

The revised protocol, which was signed in the Mauritius capital of Port Louis on Tuesday, provides for grandfathering to provide stability to investments made so far.

Investments made before April 1, 2017, will not be subject to capital gains tax in India. Further, a transition period has been provided for investors meeting certain conditions in the Limitation of Benefits clause.

In the transition phase, the tax rate will be limited to 50% of the domestic tax rate in India if it has a bona fide business. A resident would be deemed to be a shell or a conduit company if its total expenditure in Mauritius is less than Rs 2.7 million, or 1.5 million Mauritian rupees, in the preceding 12 months. “Welcome signing of amendments to India-Mauritius DTAC.

Investments prior to 1st April 2017 are grandfathered. Expect surge in investment flow,” Economic Affairs Secretary Shaktikanta Das tweeted.

Interest arising in India to Mauritius resident banks will be subject to withholding tax in India at 7.5% on debt claims or loans made after March 31, 2017. However, the interest income of Mauritius resident banks in respect of debt claims before March 31, 2017, will be exempt from tax in India.

“It’s good to note that grandfathering provisions have been proposed to protect the existing investments from Mauritius to India and that these changes will apply prospectively,” said Vikas Vasal, tax partner at KPMG.

The new protocol also provides for updating of the information exchange agreement in line with international standards.

The Mauritius route for investment has been under the spotlight for long and New Delhi’s attempts to amend the treaty for the past 10 years have not been very successful.
The change became possible under the global Base Erosion and Profit Sharing framework agreed by countries to contain abuse of tax treaties. Under those rules, India would have the power to unilaterally suspend treaty benefits if Mauritius did not agree to amend the tax accord.

Routing investments through other tax havens won’t be feasible anymore under the new global order. Daksha Baxi of Khaitan & Co said US investors will be less worried about capital gains if India succeeds in renegotiating the India-US treaty within this transition period.

“The real issue that India needs to now tackle is re-negotiating the India-US treaty to get ‘resourcing’ rule incorporated in that treaty – similar to what the US has with many other countries, including China. Currently, the source rules in the US prevent US residents from claiming credit for Indian capital gains taxes against the US capital gains tax liability,” Baxi said.

Source : Business Standard

No.1029/2016-CX, Dated : 10-05-2016


GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF EXCISE AND CUSTOMS
NEW DELHI

CIRCULAR NO

1029/17/2016-CX, Dated: May 10, 2016

Sub: Clarification on segregation of impurities viz. iron, steel, rubber, plastic, dust etc. from honey grade brass scrap – reg.

Representations have been received from the members of the trade involved in manufacture of brass products, regarding applicability of provisions relating to clearance of segregated foreign materials as “inputs as such” from imported honey grade brass scrap. The said imported scrap mainly contains brass metal but it also contains impurities like iron, steel, rubber, plastic, dust etc. which is integrally attached to the main material/ brass scrap. Before feeding resultant brass scrap in the furnace during the manufacturing process, the said foreign materials (impurities) attached to the honey grade brass scrap is segregated manually and then such sorted material is issued for further process like breaking, cutting etc. wherein big pieces of scrap are converted into small pieces so that the same can be fed into the furnace. Ultimately the brass scrap is fed into furnace where brass melts but materials like steel, iron etc. do not as they have higher melting point. Molten brass is poured for manufacturing whereas foundry waste of iron, steel, slag is cleared and sold separately. Such foundry waste is quite clearly process waste.

2. However, there is another category of waste viz. foreign materials segregated initially and not fed in furnace. The issue is when such segregated foreign material is cleared by the brass manufacturers, can it be treated as clearance of “inputs as such” and accordingly are the manufacturers required to pay an amount equal to the credit availed in respect of such inputs in terms of Rule 3(5) of CENVAT Credit Rules, 2004.

3. The issue has been examined. Segregation from honey grade brass scrap in order to weed out other foreign materials before the process of melting in the furnace is an essential process relating to manufacture of brass articles. The foreign materials, emerging during the process of segregation have to be treated as process waste and cannot be treated like removal of inputs as such. The segregated foreign material has an altogether different character and use vis-a-vis brass scrap. Value per unit and classification of the segregated foreign material is also different from that of imported brass scrap. Accordingly, clearance of foreign material such as iron, steel, rubber, plastic, dust etc. cannot be treated as clearance of inputs as such. It may be noted that circular no. 62/2001-Cus dated 12.11.2001 does not apply to the issue at hand as the facts at hand are different.

4. In view of above, it is clarified that the clearance of segregated foreign materials namely iron, steel, rubber, plastic, dust etc. from honey grade brass scrap before feeding in the furnace cannot be treated as removal of “inputs as such” as envisaged under Rule 3 (5) of CENVAT Credit Rules, 2004. The segregated foreign material in such situation, as has been explained above, shall be cleared on payment of Central Excise duty on transaction value as per its appropriate classification and rate of duty determined on merits.

5. Difficulty faced, if any, in implementing the circular should be brought to the notice of the Board. Hindi version will follow.

[F.No.267/33/2014-CX.8]

(Rohan)
Under Secretary to the Govt. of India

Govt plans to amend 145-year-old pension law : 10-05-2016


The Centre is considering to amend a 145-year-old law that provides security to the pensioners against attachment of pension.

There are about 58 lakh central government pensioners.

The matter to Pensions Act, 1871 has been under consideration for past some time past in accordance with the policy of the central government to repeal obsolete laws.

However, this Act had to be excluded from the list of the obsolete laws to be repealed as some of its provisions provide security to the pensioners against attachment of pension.

A meeting was recently called by Ministry of Personnel, Public Grievances and Pensions to elicit views of select ministries on the proposal to amend the rules regulating various types of pension administered by them to ensure continuance of shield as provided under the 1871 Act, according to minutes of the meeting.

The move to call the meeting was to facilitate repealing of the old Act, it said.

The representative from Department of Financial Services (DFS) suggested that instead of amending a large number of Acts and rules to secure those pensions against attachment, the existing Pensions Act, 1871 may be amended to repeal only those provisions in the Act which have since become irrelevant or redundant.

This proposal was supported by representatives of ministries of Home, Labour, Rural Development, Defence, Ministry of Railways and Department of Personnel and Training.

Under the old law, no pension granted or continued by government on political considerations, or on account of past services, present infirmities or as a compassionate allowance, and no money due on account of any such pension or allowance, shall be liable to seizure, attachment or sequestration by process of any court at the instance of a creditor,for any demand against the pensioner, or in satisfaction of a decree or order of any such court.

It was then decided that this suggestion will be placed before the competent authority for taking a decision in the matter, the minutes read.

During the meeting, the DFS officials mentioned that the existing Pensions Act is applicable to pensions admissible under a large number of rules and Acts of Parliament.

He said that the pensions of President, Vice President, Ministers and Member of Parliament etc. are regulated by the Acts of Parliament. Similarly, the pensions of Supreme Court, High Courts Judges, Central Vigilance Commissioners, Central Information Commissioners, Members of Union Public Service Commission, etc. are also granted pension under the Acts regulating their service conditions.

These Acts of Parliament also do not contain provisions securing the pension against attachment, assignment etc, it said.

Therefore, if the Pensions Act was to be repealed, then necessary amendments would need to be made in relevant laws of Parliament along with the other rules regulating various kinds of pension like Freedom Fighter Pension etc. being administered by concerned Ministries, the minutes of the meeting said.

Source : The HIndu

Banks still bet on brick and mortar branches to boost business : 10-05-2016


Despite sweeping technological advances in mobile and electronic banking, data suggest that the significance of the brick-and-mortar channel for Indian banks is far from diminishing. Over the last five years, banks have been setting up 5,000 to 11,000 branches a year, a compounded annual growth of 8 per cent between 2010-11 and 2014-15. From about 90,000 in 2010-11, the branch count has gone up to around 1,25,800 in 2014-15, according to RBI data.

This is in contrast with the trend seen in the US, where banks having large networks have been cutting back on their branches in the last couple of years. According to financial news, data and analysis provider SNL Financial, the US banking sector ended 2015 with 92,997 branches, 1,614 less than a year earlier, extending a branch reduction trend that started in 2009.

Tapping the rural market

Branch expansion in India has been led by private banks in the last five years. While PSU banks have increased their number of branches by 8-9 per cent annually, private banks have seen 13-14 per cent growth on a smaller base.

One reason for the higher rate of expansion in private banks can be that the larger PSU banks have already spread across the country, in both urban and rural areas. SBI, for instance, has four times the number of branches that HDFC Bank or ICICI Bank have. As the private banks catch up, they have to follow the mandated rules for branch expansion — one-fourth of new branches have to be in unbanked areas.

As the branch count increases, presence in rural and semi-urban areas is also moving up. HDFC Bank, for instance, has been setting up 400-500 branches every year in the last five years. Semi-urban and rural branches together constitute 55 per cent of HDFC Bank’s total branches, up from about 40 per cent in 2010-11.

“In line with HDFC Bank’s strategy of increasing its presence in the rural market — also referred to as ‘the Bharat’, we have been increasing our footprint in terms of branches in these markets,” says Ravi Narayanan, Country Head, Branch Banking & Retail Trade Fx, HDFC Bank.

Banks have also been able to manage costs better at rural branches to make them viable. “For instance, instead of employing 8-10 persons as in the case of urban branches, we have experimented with two-man and three-man branches in rural areas,” explains Ravi.

For Axis Bank, which has doubled its branch strength in the last five years, branches are largely split equally between metro, urban, semi-urban and rural areas, according to Rajiv Anand, Group Executive & Head Retail Banking, Axis Bank.

Face to face

Banks have also been ramping up branch presence to build a national presence and have a wider reach.

“Customers still walk into a branch irrespective of social strata, to have a face to face discussion as a matter of cultural comfort,” says Narayanan of HDFC Bank. He thinks that branches will slowly shift focus to financial awareness activities.

Axis Bank’s Rajiv Anand says, “While we are witnessing exponential growth in the adoption of self-serve digital channels, there is still a large chunk of the population that prefers the brick and mortar model. Also, digital channels typically cater to transactional activities while branches provide relationship-based activities that require proximity.”

Both private lenders believe that branches not only play a key role in acquiring new customers but also towards migrating customers to the digital channels.

Given the reduction in transactional banking activities at the branch level, branches in the medium term are likely to become more compact in size, leading to quicker break-even, adds Anand.

Surprisingly, SBI has been going slow on branch expansion. After adding 1,050-odd branches in 2013-14, India’s largest lender added just 464 branches in 2014-15, and 165 in the nine-months ended December 2015.

Source : PTI

Government notifies roll back of import duties on mobile components : 10-05-2016


The Central Board of Excise and Customs (CBEC) has issued notifications partly rolling back import duties of 29.441 per cent imposed on key mobile phone components such as chargers and batteries.

In the Budget for 2016-17, Finance Minister Arun Jaitley had proposed to levy a basic customs duty of 10 per cent on charger or adaptor, battery, wired headsets for use in manufacture of mobile handsets including cellular phones.

Another  12.5 per cent countervailing duty was proposed on the same and a 4 per cent Special Additional Duty, totalling the incidence of duties to 29.441 per cent.

Following representation from the industry, Jaitley in reply to the debate on Finance Bill last week announced partial roll back of these duties.

A CBEC notification said the basic customs duty and special additional duty has been reversed and importers of mobile handset components such as chargers, adaptors, batteries  and wired headsets now need to pay only the countervailing duty of 12.5 per cent.

This being subject to “the importer shall comply the procedure specified in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2016,” the notification said.

This rollback brings them at par with the duty of the full mobile phone package.

CBEC also said ‘preform of silica’ for use in the manufacture of telecommunication grade optical fibres or optical fibre cables would attract a basic customs duty of 5 per cent.

The import duty on preform of silica for use in the manufacture of telecommunication grade optical fibres or optical fibre cables has been halved to 5 per cent from 10 per cent proposed by Jaitley in Budget for 2016-17.

It also exempted components or parts, including engines of aircraft from  customs duty of 5 per cent.

The import duty on preform of silica for use in the manufacture of telecommunication grade optical fibres or optical fibre cables has been halved to 5 per cent from 10 per cent proposed by Jaitley in Budget for 2016-17.

It also exempted components or parts, including engines of aircraft from customs duty to boost Make-in-India. There was no import duty on these parts previously as well but the CBEC conditioned the exemption to the importer submitting  “documents duly certified by the Director General of Civil Aviation approved Quality Managers of aircraft maintenance organisations indicating such parts, testing equipment, tools and tool-kits.”

Also, the components or parts, including engines, of aircraft which is imported for maintenance, repair or overhauling by units approved by the Director General of Civil Aviation in the Ministry of Civil Aviation, have to be exported back after repairs.

Source : The Economic Times

Notification No. S.O. 1753(E) 09-05-2016


SECTION 4 OF THE SPECIAL ECONOMIC ZONES ACT, 2005 – LARSEN AND TOUBRO LTD

NOTIFICATION NO. SO 1753(E) [F.NO.F.1/183/2007-SEZ]DATED 9-5-2016

Whereas, M/s. Larsen and Toubro Limited, a private organization in the State of Gujarat, 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 at village Ankhol and Bapod, Taluka Vadodara, District Vadodara, in the State of Gujarat;

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 10.00 hectares at above Special Economic Zone vide Ministry of Commerce and Industry Notification Number S.O. 2686(E) dated 18th November, 2008;

And whereas, M/s. Larsen and Toubro Limited, has now proposed to include an area of 2.1974 hectares as a part of above Special Economic Zone and the Central Government has granted letter of approval for notification of above area on 25th April, 2014;

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 notifies an additional area of 2.1974 hectares, as a part of above Special Economic Zone, thereby making total area of the Special Economic Zone as 12.1974 hectares, comprising the survey numbers and the area given below in the table namely:—

TABLE

S. No. Village Survey No. Area in hectares
1. Ankhol 225 Part 1.1971
2. 223/A Part 0.2125
3. Bapod 380/B Part 0.7542
4. Hanumanpura 49/D Part-1 0.0336
Total 2.1974
Grant total area of SEZ after above addition 12.1974

Finance Ministry seeks access to big borrowers’ database, RBI denies permission : 09-05-2016


The government and the central bank are in another dispute — this time over access to a database of borrowers with loans exceeding Rs 5 crore. The finance ministry has asked the Reserve Bank of India to provide information on all such borrowers. The ministry says this is to monitor the process of sanctioning loans, among other reasons.

The information is contained in the Central Repository of Information on Large Credits, which was set up by RBI as one of the measures to prevent bor .. borrowers from gaming the system while seeking loans. Reserve Bank has not shared this information with the ministry. Senior officials familiar with this matter spoke to ET on the condition they not be identified. Emails sent to the spokespersons of the finance ministry and RBI did not receive any response.

If RBI agrees to the finance ministry’s request, the government will get details of all loans taken by large borrowers across banks as well as their credit rating and asset classification. Such access will help keep a check on loan sanction procedures and in taking up cases if there are any vigilance issues, said a government official familiar with the matter.

“It is a  pre-emptive action rather than looking into the details once the account has become a non-performing asset due to various reasons,” the official said, adding that in the case of some prominent wilful defaulters, banks were caught unawares or had taken few steps to secure collateral. “RBI is not too keen to share the information,” said the government official.

The ministry  justified the move to seek the data on the grounds that it will help the government address systemic sector-specific issues, an argument that officials said did not convince RBI. “Such information will help us take proactive steps if required in cases where government intervention is needed so that loan disbursement is not stuck because of policy issues,” said one of the officials, who did not wish to be identified.

“We keep getting requests from borrowers, where a loan has been sanctioned but disbursement is stuck because the project does not have environmental clearance or other related issues. If we are aware of the issues, we can fasttrack the process and hold inter-ministerial consultations to get those issues resolved,” the official said. On Saturday, RBI Governor Raghuram Rajan said the central bank is working on a new mechanism to make public the names of wilful defaulters, although he noted  that the regulator is in favour of protecting privacy in cases where there is no wrongdoing.

According to government data, the top 50 defaulters of public sector banks had borrowings in excess of Rs 1.21 lakh crore as of December 2015. Bankers, too, expressed concern over giving the government access to CRILC data. “As promoters they can ask for sector-specific information or if there is any vigilance issue, then even case-specific details, but access to all data is avoidable,”  said the managing director of a state-run lender.

Banks have to necessarily furnish credit information to CRILC on their borrowers with aggregate fund-based and non-fund based exposure of Rs 5 crore and above, failing which RBI can penalise them. State Bank of Travancore was fined Rs 1crore in January 2016.

Source : Economic Times

Raghuram Rajan coy about second term as RBI Governor : 09-05-2016


NOIDA: New Delhi has not yet asked Raghuram Rajan whether he would like to pad up for a second innings at the Reserve Bank of India after his term ends on September 4. In the past one month, there has been endless speculation about the equations between the government and the RBI governor — whether Rajan would be given a cold shoulder, or offered another term, or invited to play a different role.

“That question, I can’t answer. First I have to be asked, ‘Do you want to continue?’ Then I can answer,” said Rajan at the Shiv Nadar University on Saturday when ET asked him whether he would like a second term as the RBI boss. There is a widely shared perception in financial markets and banking circles that the Centre may find it difficult to refuse a second term to Rajan if he were keen on continuing. But as of now, the Chicago school economist — who in the past three years has positioned himself as an inflation warrior — is keeping options open.

“I love teaching. I will go back to academia once I am done with my work here,” Rajan said in a meeting with the Shiv Nadar University’s faculty. The governor was the chief guest at the second convocation of the university, which was founded in 2011. Even though corporate India and local markets have criticised Rajan’s policy to keep interest rates high and liquidity tight, foreign portfolio managers, who have gained from high rates and a stable rupee, have been vocal admirers of Rajan.

Last week, Christopher Wood, equity strategist at brokerage and investment group CLSA, said the biggest risk to the Indian bond and currency market will be if the RBI governor is not given a second term. “He (Prime Minister Narendra Modi) must recognise the constructive role played by RBI under Rajan in both imposing a tighter NPL (non-performing loan) system on banks, carrying out a stress test on banks and putting pressure on them to go after defaulting creditors,” Wood wrote in the widely ciwidely circulated CLSA newsletter.

Before taking over as the RBI governor in September 2013, Rajan was the chief economic adviser in the ministry of finance. Prior to that, he was a professor of finance at the University of Chicago Booth School of Business and chief economist at the International Monetary Fund. “I have no problems with India’s growth. It could be better. The best is yet to come,” said Rajan.

Rajan also stressed the need to have research-oriented universities. “As a country, as we grow in stature, we have to contribute ideas. We are always protesting — this doesn’t look good, that doesn’t look good. We are always underprepared and that’s why we shout.” Back in the ’50s, he pointed out, ideas and concepts such as Panchsheel emerged in India, but today “we are a shouting lot”.

“If we contribute ideas based on facts, based on research,  we could very quickly become leaders,” he said. Addressing students at the convocation, Rajan said, “India is changing, in many ways for the better. You will be able to help shape our country, the world, and your place in it. Play to your strengths.” Referring to the Shiv Nadar University, founded by billionaire tech czar Shiv Nadar, Rajan said, “I would like to see places like this flourish. Thoughtful philanthropy, as reflected in the founding of this school, can further help enhance  society’s acceptance of great wealth.”

However, adding a word of caution, the RBI governor said, “We should make sure that unscrupulous schools do not prey on uninformed students, leaving them with high debt and useless degrees.” Greater Noida, where Shiv Nadar University is located, is emerging as an educational hub with around 50 colleges attracting students from across the country.

Source : The Hindu

 

No. 13/2016 Dated: 9-5-2016


Verification of tax-returns for Assessment Years 2009-2010, 2010-2011, 2011-2012 2012-2013, 2013-2014 and 2014-2015 through EVC which are pending due to non-filing of ITR-V Form and processing of such returns – Circular – Dated 9-5-2016 – Income Tax

CIRCULAR NO 13/2016

F. No. 225/46/2016-ITA.II

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

New Delhi, 9th May, 2016

Subject:- Verification of tax-returns for Assessment Years 2009-2010, 2010-2011, 2011-2012 2012-2013, 2013-2014 and 2014-2015 through EVC which are pending due to non-filing of ITR-V Form and processing of such returns-regd.

Under the earlier system of e-filing, in tax-returns which were to be filed electronically without a digital signature, taxpayer had to take printout of ITR-V Form and send it to Centralised Processing Centre (‘CPC’), Bengaluru within 120 days of transmitting the data electronically. In view of difficulties being faced by the taxpayers in the process, from time to time, relaxation for filing the ITR-V for various Assessment Years was granted so that process of filing the return could be completed. In law, consequences of non fifing the ITR-V within the time allowed is significant as such a return is/can be declared Non-est in law and thereafter, all the consequences for Non-Filing a tax return, as specified in the Act follow.

2. However, inspite of granting relaxation of time for submitting ITR-V Form on various occasions, as mentioned in para above, it has been noticed that a large number of such electronically filed returns still remain pending with the income-tax Department for want of receipt of a valid ITR-V Form at CPC, Bengaluru from the taxpayers concerned.

3. The matter has been examined. With introduction of Electronic Verification Code as one of the possible mode for filing the tax return from the last financial-year, the verification of tax return, especially in those cases where the taxpayer earlier had to compulsorily verify the return through submission of ITR-V , has become much more convenient. Therefore, in order to regularize the aforesaid returns which have either become Non-est or have remained pending due to non-filing/non-receipt of respective ITR-V Form, the Central Board of Direct Taxes (‘CBDT’), in exercise of powers under section 119(2)(a) of the Act, in case of returns for Assessment Years 2009-10, 2010-11, 2011-12, 2012-2013, 2013-2014 and 2014-2015 which were uploaded electronically by the taxpayer within the time allowed under section 139 of the Act and which have remained incomplete due to non-submission of ITR-V Form for verification, hereby permits verification of such returns also through EVC. Such verification process must be completed by 31.08.2016. As an alternative to EVC, the taxpayer is allowed to send a duly signed copy of ITR-V to the CPC, Bengaluru by this date by speed post. In such cases, CBDT also relaxes the time-frame for issuing the intimation as provided in second proviso to sub section (1) of Section 143 of the Act and directs that such returns shall be processed by 30.11.2016 and intimation of processing of such returns shall be sent to the taxpayer concerned as per the laid down procedure. In refund cases, while determining the interest, provision of section 244A(2) of the Act would apply.

4. In situations where the taxpayer concerned had submitted the ITR-V Form after the permitted time which was earlier being treated as Non-est/declared Non-est and evidence of same is available with the Department, the same shall be treated as valid compliance of this order and dealt with accordingly. However, this relaxation shall not apply in those cases, where during the intervening period; Department has already taken recourse to any other measure as specified in the Act for ensuring filing of tax return by the taxpayer concerned after declaring the return as Non-est.

5. It is also clarified that this is the final opportunity being provided to the taxpayers to regularize their pending income-tax returns pertaining to the Assessment Year’s 2009-2010 till 2014-2015 which were filed as per provisions of section 139 of the Act but were declared Non-est/have remained pending for verification just for want of receipt of a valid ITR-V Form at CPC, Bengaluru. In case the taxpayer concerned does not get his return regularized by furnishing a valid verification (either EVC or ITR-V) till 31.08.2016, necessary consequences as provided in law for non-filing the return may follow. In this regard, Principal DGIT(Systems) shall take all necessary measures to duly inform the taxpayers which are proposed to be covered vide this order to complete the verification process within the time being allowed. The taxpayer concerned may also ascertain whether ITR-V has been received in the CPC, Bengaluru or not by logging on the website of income-tax Department-http:/incometaxefiling.gov.in/e-Filing/Services/ITR-V Receipt Status.html by entering PAN No. and Assessment Year or e-Filing Acknowledgement Number. Alternatively, status of ITR-V could also be ascertained at the above Website under ‘Click to view Returns/Forms’ after logging in with registered e-Filing account. In case ITR-V has not been received within the prescribed time, status will not be displayed and further steps would be required to be taken as mentioned above.

6. Hindi version to follow.

 (Rohit Garg)

Deputy Secretary to the Government of India

RSS affiliate to oppose FDI in e-commerce : 09-05-2016


A Rashtriya Swayamsevak Sangh (RSS)-affiliate has decided to oppose foreign direct investment (FDI) in e-commerce, food processing and marketing sectors.

The Swadeshi Jagran Manch (SJM), a key affiliate of the RSS, would pass a resolution against the economic reforms of the BJP-led government at its national council meeting slated later this month. “We will urge the government to take back its decision. FDI in these sectors would go against the interests of small shopkeepers,” SJM’s national co-convener Ashwani Mahajan told PTI. The Manch will meet in Bhopal for its annual National Council meeting on May21 and 22.

The Manch believes that FDI in e-commerce was coming in an “illegal” way earlier and allowing it now amounts to rewarding those who had been flouting the rules and circumventing the law.

Mahajan said e-Commerce companies have been adopting “predatory pricing” by allowing heavy discounting on products which are adversely affecting the small Indian shopkeepers.

“These companies are incurring huge losses by adopting predatory pricing of products and their sole purpose in doing so is to capture the huge Indian consumer market, that will render the traditional shopkeepers jobless,” he said.

It is a reality that such transactions have made life easy and products come cheap, he said.

He said though e-Commerce is not so prevalent in purchase of products of daily use, online buying is on the rise.

The SJM leader said there are nearly 2,000 small and big portals involved in e-commerce, though most most transactions are limited to a few big ones.

Mahajan apprehended if e-commerce continues to grow at the present pace, it may reach 4 per cent of GDP by the year 2020.

In 2009, total retail business of e-commerce companies was hardly Rs 6,000 crore, which shot up to Rs 78,000 crore in 2013.

The SJM leader said even chemists have been effected by it as some portals are also offering discounts on medicines in the Indian market.

The SJM has been frequently opposing government’s decisions. It had earlier protested against field trial of genetically modified (GM) Mustard crop and the policy on Intellectual Property Rights, among other issues.

Source : The Hindu

Government drops cap gains tax on startup shares held for 2 years : 06-05-2016


NEW DELHI: In a fresh boost to startups, the government on Thursday inserted an amendment to the Finance Bill to provide for capital gains tax exemption if shares of an unlisted company were held for more than two years.

Currently, there is no capital gains tax on share transactions in listed companies if those stocks are held for 12 months. But shares of unlisted entities face capital gains tax of 20% even after three years. The tax treatment has been a major area of concern for  international investors, several of whom are pumping billions into Indian companies. And, the move is expected to spur M&As.

The amendment was introduced as finance minister Arun Jaitley introduced other ones to the Bill, which was later cleared by the Lok Sabha. Most of the other amendments were in the nature of clarifications. For instance, buyers will have to pay 1% tax on cars which cost over Rs 10 lakh, which will be collected by the seller. This, officials said, was  a clarification, although the move is meant to keep a check on the flow of black money in the economy. A similar provision of tax deducted at source had been prescribed for property of over Rs 50 lakh.

Similarly, the government has said that new companies which opt for a lower tax rate of 25% but opt to forego all exemptions cannot go back to a regime with exemptions. Further, limited liability partnership (LLP) firms have also been included in the list of entities eligible for benefits .. available to startups, including a tax holiday. The government had earlier proposed to provide a tax holiday for three years to the startups, meeting the specified criterion.

The government has also issued several other clarifications including on the taxation of trusts that convert into companies, with those with agricultural income expected to pay tax only once income starts accruing post-conversion. The finance ministry is expected to issue detailed guidelines shortly. The government  also clarified that the tax on dividend receipts of over Rs 10 lakh will be paid on receipts from all companies.

Jaitley, however, resisted pressure from the powerful jeweller lobby which had been seeking a rollback of the 1% excise duty, while promising tough actions against black money. The FM said the government will act tough against those found to be holding illegal offshore accounts as revealed in the PanamaBSE -2.71 % Papers leak under the recently passed stringent black money . The FM said the government will act tough against those found to be holding illegal offshore accounts as revealed in the PanamaBSE -2.71 % Papers leak under the recently passed stringent black money law. In his hour-long reply, he dwelt at length on the challenges facing the Indian economy and said the government will work to resolve the NPA problem of banks. While he promised action against those passing off income from other sources as farm income, he ruled out taxing agricultural earnings.  “There are two categories. One is honest agricultural income. You may have a large income which is a separate case. That is a rare case. But there are some cases where people are passing off income from other sources as agriculture income. That is a case of evasion. That will be dealt with under the law. That the assessing officer can deal with,” he said.

Source : The Economic Times

LS passes Budget : 06-05-2016


The Lok Sabha on Thursday passed the Union Budget for 2016-17, incorporating official amendments to the Finance Bill.It now goes to the Rajya Sabha for debate but that House has no power to reject it.

One such is reducing the period of holding of shares of unlisted companies from the current 36 months to 24 months to qualify for long-term capital gains tax. The provision was absent despite Finance Minister Arun Jaitley announcing it in his Budget speech.

Other amendments included extending the tax benefits for start-ups to limited liability partnerships, dropping a proposal to tax employer contributions to recognised provident funds in excess of Rs 1.5 lakh a year and clearing an ambiguity on additional dividend tax.  Penalty for concealing income has been changed from the existing 0-300 per cent to 50-200 per cent.

Opposition parties raised the issue of not bringing non-taxation measures such as setting up of a  monetary policy committee to fix the policy rate and amendments in the Foreign Contribution Regulation Act. Speaker Sumitra Mahajan gave the ruling that there were precedents of non-taxation proposals being included in the Finance Bill but the established practice was to keep such proposals out.

With this, the way has been paved to set up a panel to fix the policy rate, against the current practice of the Reserve Bank governor doing so. However, the latter will have a casting vote.

Experts believe the proposal to reduce the period of listing of shares for unlisted companies from three to two years to come under long-term capital gains (LTCG) will reduce the tax burden for shareholders in such companies. “This will encourage M&A (mergers & acquisition) activity,” said Sunil Shah, partner, Deloitte Haskins & Sells. LTCG attracts 20 per cent tax in unlisted companies; the short-term tax is 30 per cent.

The Bill had proposed additional dividend tax at 10 per cent over the dividend distribution tax (DDT). It was not clear whether this applied on the total received by a taxpayer or to dividends received from each company. The amendment has clarified that such tax will be levied if the aggregate amount of dividends received by a tax payer from a domestic company or companies, exceeds Rs 10 lakh in a year.

The Bill had proposed various tax sops to start-ups, including exemption for three years. The amendments extend these to limited liability partnerships (LLPs). “Start-ups need not incorporate as a company and formation as an LLP will help in minimising administrative costs,” Shah said. An LLP is a partnership in which partners have limited liabilities. It therefore exhibits elements of partnerships and corporations. In an LLP, one partner is not responsible or liable for another partner’s misconduct or negligence.

The Bill has reduced the upper limit of penalty for concealment of income to 50-200 per cent   from the current 0-300 per cent.

However, experts warn that the amendment widens the ambit of concealment. If a person or a company does not file a return, it may be considered concealment, said Neeru Ahuja, partner with Deloitte LLP.


WHAT JAITLEY SAID

  • Rules out withdrawing one per cent excise duty on gold jewellery
  • Dares Congress to withdraw 5 % VAT on gold jewellery in Kerala
  • Duty is precursor to GST
  • Bank NPAs are an issue of concern. Weakened business cycle due to global economy impacted bank balance sheets
  • Agriculture income tax is outside the scope of Centre’s power
  • May advise states not to do so as farm sector is stressed
  • Will act tough against those found to be holding illegal offshore accounts as revealed in the Panama Papers leak
  • Rs 6,500 crore unearthed in the HSBC list, Rs 4,000-4,250 cr under the foreign black money law and Rs 71,000 cr through assessments
  • The Finance Bill  amendments put into effect the withdrawal of controversial provident fund related budget announcements.
  • FM says notices have gone to all those whose names figured in Panama list

67/2015-16 [(1)/5(R)] – 5-5-2016


CIRCULAR NO 67/RBI., Dated: May 5, 2016

Foreign Exchange Management (Deposit) Regulations, 2016

Attention of Authorised Dealers (ADs) is invited to (a) A.D. (M.A. Series) Circular No. 11 dated May 16, 2000 in terms of which ADs were advised of various Rules, Regulations, Notifications/ Directions issued under the Foreign Exchange Management Act, 1999 (hereinafter referred to as the Act) and (b) para 3.2 of Part I and paras 1.1, 2.4, 2.5, 2.7, 2.8, 4, 4.8, 6.6, 6.7, 6.8, 7, 8.1, 9, 10, 12 and the Appendix of Part II of Master Direction No. 14 on Deposits and Accounts. On a review it is felt necessary to revise the regulations issued under the Foreign Exchange Management (Deposit) Regulations, 2000, as amended from time to time. Accordingly, in consultation with the Government of India, the said regulations have been repealed and superseded by the Foreign Exchange Management (Deposit) Regulations, 2016 (Notification No. FEMA 5(R)/2016-RB dated April 1, 2016), hereinafter referred to as Deposit Regulations.

2. These regulations seek to regulate deposits between a person resident in India and a person resident outside India:

3. Some of the key definitions under the regulations are given below:

(i) ‘Deposit’ includes deposit of money with a bank, company, proprietary concern, partnership firm, corporate body, trust or any other person.

(ii) A ‘Non-resident Indian (NRI)’ is a person resident outside India who is a citizen of India.

(iii) A ‘Person of Indian Origin (PIO)’ is a person resident outside India who is a citizen of any country other than Bangladesh or Pakistan or such other country as may be specified by the Central Government, satisfying the following conditions:

a) Who was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or

b) Who belonged to a territory that became part of India after the 15th day of August, 1947; or

c) Who is a child or a grandchild or a great grandchild of a citizen of India or of a person referred to in clause (a) or (b); or

d) Who is a spouse of foreign origin of a citizen of India or spouse of foreign origin of a person referred to in clause (a) or (b) or (c)

Explanation: PIO will include an ‘Overseas Citizen of India’ cardholder within the meaning of Section 7(A) of the Citizenship Act, 1955.

(iv) Permissible currency means a foreign currency which is freely convertible.

4. In terms of Regulation 4 of the Deposit Regulations, no restriction under these regulations shall be applicable for opening of rupee/ foreign currency deposit accounts by certain persons, viz.

(i) Rupee/ foreign currency accounts by foreign diplomatic missions and diplomatic personnel or their family members in India with an Authorised Dealer in India subject to conditions mentioned therein.

(ii) Deposits in rupees maintained by persons resident in Nepal and Bhutan with Authorised Dealer in India.

(iii)Deposits with Authorised Dealer in India maintained by any multilateral organization, of which India is a member nation, and the subsidiary/ affiliate bodies and officials of such organizations in India.

5. In terms of Regulations 5 and 6 of the Deposit Regulations, a person resident outside India may open deposit accounts with Authorized Dealer/ authorized bank/Indian company under various schemes. Details of the schemes have been specified in the respective schedules. The major features are highlighted below:

A) Non-Resident (External) Account (NRE) Scheme

i) NRIs and PIOs are permitted to open these accounts in Indian Rupee with Authorized Dealers and authorized banks in any form e.g saving, current, recurring or fixed deposit subject to the conditions specified in Schedule 1 of the Deposit Regulations.

ii) Inward remittances from outside India to the NRE account and remittances outside India from the NRE account are permitted.

iii) Authorised Dealers/ banks in India may grant loans against the security of the funds held in NRE accounts to the account holder/ third party in India, without any limits, subject to the usual margin requirements. The loan sanctioned to the account holder can be repaid either by adjusting the deposits or through inward remittances from outside India through banking channels or out of balances held in the NRO account of the account holder. The loan shall be used for the purpose laid down in the regulations and cannot be repatriated outside India.

iv) Authorised Dealers may allow their branches/ correspondents outside India to grant loans outside India to the non-resident depositor or to a third party against the security of deposits, subject to the conditions laid down in the regulations.

v) The facility for premature withdrawal of the deposits shall not be available where loans against such deposits are availed of.

vi) The term “loan” shall include all types of fund based/ non-fund based facilities.

vii) Income from interest on the balances in the account is exempt from income tax and balances are exempt from wealth tax.

viii) Current income like rent, dividend, pension, interest, etc. of NRIs and PIOs will be construed as a permissible credit to their NRE account provided the Authorised Dealer is satisfied that the credit represents current income of the NRI/ PIO account holder and income tax thereon has been deducted/ paid/ provided for, as the case may be.

ix) AD Category – I banks and authorized banks may credit proceeds of demand drafts / bankers’ cheques/ account payee cheques issued against encashment of foreign currency to the NRE account where the instruments issued to the NRE account holder are supported by encashment certificate issued by an AD Category I/ Category – II.

x) An NRE account can be opened jointly:

(a) in the names of two or more eligible NRIs and/or PIOs;

(b) with resident relative(s) on “former or survivor” basis.

B) Foreign Currency (Non-Resident) Account (Banks) (FCNR(B)) Scheme

i) NRIs and PIOs are permitted to open these accounts in any permissible foreign currency with Authorized Dealers subject to the conditions specified in Schedule 2 of the Deposit Regulations.

ii) These accounts can only be maintained in the form of term deposit.

iii) Other terms and conditions applicable to NRE accounts (cf. Schedule 1 of the Deposit Regulations) in respect of joint accounts, repatriation of funds, loans/ overdrafts applies mutatis mutandis to FCNR(B) accounts.

iv) Form A2 is not required to be filled while remitting funds at the time of closure of FCNR (B) accounts.

C) Non-Resident (Ordinary) Rupee (NRO) Account

i) Any person resident outside India may open NRO account in Indian Rupee with Authorized Dealers and authorized banks for the purpose of putting through bona fide transactions in rupees subject to the conditions specified in Schedule 3 to the Deposit Regulations.

ii) The account can be maintained in any form e.g savings, current, recurring or fixed deposit.

iii) Balances in the NRO account cannot be repatriated abroad except for current income of the account holder and up to USD 1 million per financial year by NRIs and PIOs, subject to conditions specified in Foreign Exchange Management (Remittance of Assets) Regulations, 2016. Funds can be transferred to the NRE account within the USD 1 million facility.

iv) Loans may be granted in India to the account holder or third party subject to usual norms and margin requirement.

v) Transfers from other NRO accounts is a permissible credit for the account. Similarly, transfers to other NRO accounts is a permissible debit.

vi) An NRO account can be opened jointly with residents on ‘former or survivor’ basis. NRIs and/or PIOs may hold NRO accounts jointly with other NRIs and/or PIOs.

vii) Rupee gift/ loan made by a resident to a NRI/ PIO relative within the limits prescribed under the Liberalized Remittance Scheme may be credited to the latter’s NRO account.

viii) NRO accounts may be designated as resident accounts on the return of the account holder to India for any purpose indicating his intention to stay in India for an uncertain period.

ix) Authorized Dealer Banks may furnish on a monthly basis, a statement on the number of applicants and total amount remitted, as per proforma at annex.

x) Opening of accounts by individuals of Pakistan nationality and entities of Pakistan/ Bangladesh nationality/ ownership will require prior approval of the Reserve Bank of India.

xi) Individuals of Bangladesh nationality can open an NRO account provided they hold a valid visa and valid residential permit issued by Foreigner Registration Office (FRO)/ Foreigner Regional Registration Office (FRRO) concerned.

D) Special Non-Resident Rupee (SNRR) Account

i) Any person resident outside India, having a business interest in India, may open an SNRR account in Indian Rupee with Authorized Dealers for the purpose of putting through bona fide transactions in rupees, subject to the conditions specified in Schedule 4 of the Deposit Regulations.

ii) The SNRR account shall carry the nomenclature of the specific business for which it is opened and shall not earn any interest.

iii) The debits/ credits and the balances in the account shall be incidental and commensurate with the business operations of the account holder.

iv) The tenure of the account should be concurrent to the tenure of the contract/ period of operation/ the business of the account holder and shall in no case exceed seven years.

v) The balances in the SNRR account shall be eligible for repatriation.

vi) Opening of account by individual/ entities of Pakistan/ Bangladesh nationality/ ownership will require prior approval of the Reserve Bank of India.

E) Escrow Account

i) Resident/ non-resident acquirers and non-resident corporates may open Escrow account in INR with an Authorized Dealer in India as an escrow agent subject to the terms and conditions specified in Schedule 5 of the Deposit Regulations.

ii) Transactions shall be in accordance with the Foreign Exchange Management (Transfer or Issue of Security by a person resident Outside India) Regulations, 2000 and regulations of the Securities and Exchange Board of India (SEBI), as applicable.

iii) The accounts shall be non-interest bearing.

iv) No fund/ non-fund based facility would be permitted against the balances in the account.

F) Acceptance of deposit by a company in India from NRIs and PIOs on repatriation basis

A company incorporated in India including a Non-Banking Financial Company (NBFC) registered with the Reserve Bank shall not accept deposits from NRIs/PIOs on repatriation basis. It may, however, renew the deposits it had accepted in accordance with Schedule 6 of the Deposit Regulations.

G) Acceptance of deposits by Indian proprietorship concern/ firm or a company from NRIs and PIOs on non-repatriation basis

General permission has been granted to Indian proprietorship concern/firm or a company (including Non-Banking Finance Company registered with Reserve Bank) to accept deposits from NRIs and PIOs on non-repatriation basis subject to the terms and conditions specified in Schedule 7 of these Regulations.

6. Other deposits (subject to Regulations 6 and 7 of the Deposit Regulations)

i) General permission has been granted to Indian companies to accept deposits from NRIs and PIOs by issue of Commercial Papers subject to conditions.

ii) A deposit made by an Authorised Dealer with its branch, head office or correspondent outside India, and a deposit made by a branch or correspondent outside India of an Authorised Dealer, and held in its books in India, will be governed by the directions issued by the Reserve Bank in this regard.

iii) A shipping or airline company incorporated outside India, can open, hold and maintain a foreign currency account with an Authorized Dealer for meeting the local expenses in India of such airline or shipping company, provided the credits to such accounts are only by way of freight or passage fare collections in India or by inward remittances through banking channels from its office outside India.

iv) An Authorised Dealer may allow unincorporated joint ventures (UJV) of foreign companies/ entities, with Indian entities, executing a contract in India, to open and maintain non-interest bearing foreign currency account and an SNRR account as specified in Schedule 4 of the Deposit Regulations for the purpose of undertaking transactions in the ordinary course of its business. The debits and credits in these accounts should be incidental to the business requirement of the UJV. The tenure of the account should be concurrent to the tenure of the contract/ period of operation of the UJV and all operations in the account shall be in accordance with the provisions of the Act or the rules or regulations made or the directions issued thereunder. Opening of such accounts by companies/ entities of Pakistan/ Bangladesh ownership/ nationality would require the prior approval of the Reserve Bank.

v) Opening of a foreign currency Escrow account with an Authorised Dealer in India for the purpose of routing counter-trade transactions would require approval of Reserve Bank.

7. To facilitate the foreign nationals to collect their pending dues in India, ADs may permit such foreign nationals to re-designate their resident account maintained in India as NRO account on leaving the country after their employment to enable them to receive their pending bonafide dues, subject to the bank satisfying itself that the credit of amounts are bonafide dues of the account holder when she/ he was a resident in India. The funds credited to the NRO account should be repatriated abroad immediately, subject to payment of the applicable Income tax and other taxes in India. The amount repatriated abroad should not exceed USD one million per financial year. The debit to the account should be only for the purpose of repatriation to the account holder’s account maintained abroad. The account should be closed immediately after all the dues have been received and repatriated as per the declaration made by the account holder when the account was designated as an NRO account.

8. Maturity proceeds of term deposits, if any, under the erstwhile Non-Resident (Special) rupee Account Scheme (NRSR Account) which was discontinued with effect from April 1, 2002, may be credited to the NRO account of the account holder.

9. Balances in the Exchange Earner’s Foreign Currency (EEFC) Account and Resident Foreign Currency (Domestic) [RFC(D)] Account may be credited to NRE/ FCNR(B) Accounts, at the option/ request of the account holders, consequent upon change of their residential status from resident to non-resident.

10. Authorised Dealers may issue International Credit Cards (ICCs) to NRIs and PIOs, the debits of which are subject to the conditions for use of the ICCs by residents. Charges on the use of ICCs should be settled by the NRI/PIO out of inward remittances or balances held in NRE/ FCNR(B)/ NRO accounts. Settlement of charges out of balances held in NRO accounts are subject to the limits for repatriation of balances held in NRO accounts specified in regulation 4(2) of Foreign Exchange Management (Remittance of Assets) Regulations, 2016.

11. Authorised Dealers can allow the following operations on non-resident accounts in terms of Power of Attorney granted in favour of a resident by the non-resident account holder:

(a) The operations in NRE/ FCNR(B) Accounts are restricted to:

(i) Withdrawal for local payments; and

(ii) Remittance of funds through banking channels to the non-resident account holder.

(b) The operations in NRO Accounts are restricted to:

(i) All local payments in rupees including payments for eligible investments subject to compliance with relevant regulations made by the Reserve Bank; and

(ii) Remittance outside India of current income in India of the non-resident individual account holder, net of applicable taxes.

The resident Power of Attorney holder is not permitted to repatriate outside India funds held in the account other than to the non-resident individual account holder nor making payment by way of gift to a resident on behalf of the non-resident account holder or transfer funds from the account to another NRO account.

12. Regional Rural Banks (RRBs) are permitted to open and maintain NRO/ NRE accounts in Rupees and accept FCNR(B) deposits as per the eligibility criteria prescribed by the Reserve Bank vide Circular No. RPCD.CO.RRB.No.BC.106 /03.05.33(C)/2006-07 dated June 28, 2007. RRBs may approach the respective Regional Office of the Foreign Exchange Department, for authorization for opening of accounts/ acceptance of deposits.

13. Any deposit between a person resident in India and a person resident outside India which is not covered by the provisions of the Act or these Regulations would require approval of Reserve Bank.

14. The new regulations have been notified vide Notification No. FEMA. 5(R)/2016-RB dated April 1, 2016 c.f. G.S.R. No. 389 (E) dated April 1, 2016 and have come into force with effect from April 1, 2016 except the provisions of Regulation 7(2) (Para 6 (iii) above), which have come into effect from January 21, 2016. The Master Direction No. 14 of 2015-16 (Deposits and Accounts) has been updated accordingly to incorporate the above changes.

15. AD Category- I banks may bring the contents of the circular to the notice of their constituents concerned.

16. 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.

RBI/2015-16/390

(Shekhar Bhatnagar)
Chief General Manager-in- charge

Notification No : 31/2016 Dated: 5-5-2016


Income-tax (12th Amendment) Rules, 2016 – Amends Rule 29B – Relaxation from one of the conditions – Application for certificate authorising receipt of interest and other sums without deduction of tax – 31/2016 – Dated 5-5-2016 – Income Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(Department of Revenue)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 31/2016

New Delhi, the 5th May, 2016

INCOME-TAX

S.O. 1655 (E).‐ In exercise of the powers conferred by section 295 read with section 195 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 (12th Amendment) Rules, 2016.

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

2. In the Income-tax Rules, 1962, in rule 29B, in sub-rule (2), the clause (iii) shall be omitted.

[F. No.370142/3/2016-TPL]

(PITAMBAR DAS)

DIRECTOR (TAX POLICY AND LEGISLATION)

Note: The principal rules were published in the Gazette of India vide notification number S.O.969(E), dated the 26th March, 1962 and last amended vide notification number S.O.1587 (E), dated the 29th April, 2016.

Notification No : 7/2016 Dated: 4-5-2016


Procedure for online submission of declaration by person claiming receipt of certain incomes without deduction of tax in Form 15G/15H under sub-section (1) or under sub-section (1A) of section 197A of the Income-tax Act, 1961 read with Rule 29C of Income-tax Rules, 1962 – 7/2016 – Dated 4-5-2016 – Income Tax

Government of India

Ministry of Finance

Central Board of Direct Taxes

Directorate of Income Tax (Systems)

Notification No. 7/2016

New Delhi, 4th May 2016

Procedure for online submission of declaration by person claiming receipt of certain incomes without deduction of tax in Form 15G/15H under sub-section (1) or under sub-section (1A) of section 197A of the Income-tax Act, 1961 read with Rule 29C of Income-tax Rules, 1962

As per sub-rule (1) of rule 29C (Declaration by person claiming receipt of certain incomes without deduction of tax) of the Income-tax Rules, 1962 (hereunder referred as the Rules) a declaration under sub-section (1) or under sub-section (1A) of section 197A shall be in Form No. 15G and declaration under sub-section (1C) of section 197A shall be in Form No. 15H.

2. As per sub-rule (3) of rule 29C, the person responsible for paying any income of the nature referred to in sub-section (1) or sub-section (1A) or sub-section (1C) of section 197A, shall allot a unique identification number to each declaration received by him in Form No.15G and Form No.15H respectively during every quarter of the financial year in accordance with the procedures, formats and standards specified by the Principal Director General of Income-tax (Systems) under sub-rule (7) of rule 29C.

3. As per sub-rule (4) of rule 29C, the person referred to in sub-rule (3) herein shall furnish the particulars of declaration received by him during any quarter of the financial year along with the unique identification number allotted by him under sub-rule (3) in the statement of deduction of tax of the said quarter in accordance with the provisions of clause (vii) of sub-rule (4) of rule 31A. As per sub-rule (7) of rule 29C, the Principal Director General of Income-tax (Systems) shall specify the procedures, formats and standards for the purposes of furnishing and verification of the declaration, allotment of unique identification number and furnishing or making available the declaration to the income tax authority and shall be responsible for the day-to-day administration in relation to the furnishing of the particulars of declaration in accordance with the provisions of sub-rule (4) of rule 29C.

4. In exercise of the powers delegated by Central Board of Direct Taxes (‘Board’) under sub-rule (7) of rule 29C of the Income-tax Rules, 1962, the Principal Director General of Income-tax (Systems) hereby lays down the following procedures:

a.  Registration: The deductor/collector is required to register by logging in to the e-filing website (https://incometaxindiaefiling.gov.in/) of the Income Tax Department. To file the “Statement of Form 15G/15H”, deductor should hold a valid TAN. Following path is to be used for the registration process:

Register yourself → Tax Deductor & Collector

b.  Preparation: The prescribed schema for Form 15G/15H and utility to prepare XML file can be downloaded from the e-filing website home page under forms (other than ITR) tab. The Form 15G/15H utility can be used to prepare the xml zip file. The declaration is required to be submitted using a Digital Signature Certificate. The signature file for the zipped file can be generated using the DSC Management Utility (available under Downloads in the e-Filing website https://incometaxindiaefiling.gov.in/)

c.   Submission: The designated person is required to login to the e-filing website using TAN and go to e-File → Upload Form 15G/15H. The designated person is required to upload the “Zip” file along with the signature file (generated as explained in para (b) above). Once uploaded, the status of the statement shall be shown as “Uploaded”. The uploaded file shall be processed and validated at the e-filing portal (list of validations are given in the user manual). Upon validation, the status shall be either “Accepted” or “Rejected which will reflect within 24 hours from the time of upload. The status of uploaded file will be visible at My account → View Form 15G/15H. In case the submitted file is “Rejected”, the reason for rejection shall be displayed and the corrected statement can be uploaded again.

(Gopal Mukherjee)

Pr. DGIT (Systems), CBDT

MCLR being used by banks to woo corporates : 05-05-2016


Marginal Cost of Funds based Lending Rate (MCLR ) – the new benchmark to which the pricing of the loans are linked – are now being used by lenders to attract the higher rated corporate clients by offering differential pricing.

Bankers explain that unlike a base rate where they had to lend at a fixed rate, in MCLR they are able to play on the risk premium and offer differential pricing to customers, especially in the corporate end.

“When we were in the base rate regime then we had to offer everyone almost the same rate with very little play but in MCLR I can work on the spread and offer lower rates to less risky customers. This is because there are different buckets and I can place the risk as per that. And it can be a big help in growing the corporate segment where all the banks are essentially chasing the top rated corporates for growth,” said a private sector banker.

Head of corporate banking with SBI’s associate banking unit, said band of MCLR rates has given flexibility to offer best of rate for short term requirements for new corporate customer.

“The borrower may need money for one year. But, instead giving loan for one year which has higher MCLR, bank gives MCLR for three month loan which is 10-15 basis points cheaper. This loan could be rolled over for four quarters. This is being done within RBI norms and meeting credit quality norms,” he added.

The MCLR rates had been introduced by the Reserve Bank of India last year and came into effect from 1st April. The central bank has directed banks to move to this system for pricing loans to ensure faster monetary transmission. This is because even when RBI had reduced the benchmark rate by 25 basis points, banks had only reduced their base rate by 60-70 basis points.

Apart from this, it is also expected to improve bank credit n the system also by channelising the recent surge of volumes in the CP market towards bank credit. CP dues as a percentage of short-term bank credit went up to 14 per cent in FY16 (from 11 per cent last year) and three to five per cent of this, which is Rs 74,500 crore to Rs1,20,000 crore, is likely to flow back into the banking system as rates get competitive.

Banks are expected to review their MCLR rates every month as per the central bank’s guidelines. However, there are also some concerns that the tenor premium that is added in calculating MCLR is being taken into account twice as it is already there in the dated security that is also considered while calculating it.

Source : The Hindu

 

I-T department’s new LTA, HRA reporting form may detect fake claims : 05-05-2016


You may no longer be able to provide fake bills to claim income tax deductions for leave travel allowance (LTA) and house rent allowance (HRA). Changes announced on Tuesday in reporting format for individuals claiming tax deduction on leave travel allowance (LTA), leave travel concessions (LTC), house rent allowance and interest paid on home loans is aimed at plugging leakages on account of fake bills, experts say.

“The tax authorities are making efforts to plug leakages under tax provisions by tightening the procedure to claim tax exemptions.They are making it difficult to back claims with fake rent receipts and leave travel expenses. Initially one had to purely mention the sum claimed under exempt allowances. Now additional details have been asked for to curb the practices of claiming of fake receipts,” says Manish Shah, CEO and Co-founder, BigDecisions.com, a financial services advisory platform.

The I-T department’s has announced a new standard Form 12BB for salaried taxpayers to claim tax deduction on LTA, LTC, HRA and interest paid on home loans. With this, traxpayers will have to furnish to their employers proof of travel for claiming LTA and LTC benefits. In case of HRA, the Central Board of Direct Taxes has asked employees to furnish details including name, address and PAN number of the landlord if the aggregate rent paid exceeds Rs 1 lakh a year.

For claiming deduction of interest on home loan, the name, address and PAN of the lender will have to be furnished. Evidence of investment or expenditure will have to be provided for claiming tax deduction under Chapter VI-A which relates to allowable deductions under various sections including Section 80C, Section 80CCC and Section 80CCD. Section 80C allows deductions upto Rs 1.5 lakhs on specified investments.

The rules will be applicable from June 1, 2016.

Shah said since the new forms would make it easier for both taxpayer and employer. “Since it is a standard form it will help employees and employers as well. It will have all the details pertaining to the relevant tax deductions made by an employee,” he said.

He pointed out that earlier, Form 16 contained the HRA exemption as claimed by the employee. HRA exemption would be calculated by the employer and shown in Form 16 provided rent receipt were submitted on time. For claiming tax exemptions for LTA, one must preserve the documentary proofs (journey tickets) required to make a claim for LTA. The employer has the right to demand such proofs from the employee. Deductions for interest paid on home loan was claimed under section 24(b).

Source : The Financial Express

Financial inequality highest in India, China: International Monetary Fund : 05-05-2016


Financial inequality is highest in India and China among Asia Pacific countries despite the two being among the fastest growing economies, IMF has said.

According to the International Monetary Fund, China and India have grown rapidly and reduced poverty sharply, however, this impressive economic performance has been accompanied by increasing levels of inequality.

“In the past, rapid growth in Asia came with equitable distribution of the gains. But more recently, while the fast-growing Asian economies have lifted millions out of poverty they have been unable to replicate the ‘growth with equity’ miracle,” the Fund said.

As per the report, China managed to increase middle class in urban areas, as did Thailand, while India and Indonesia struggled to lift sizeable portions of their populations toward higher income levels.

“In India, differences between rural and urban areas have increased, and have been accompanied by rising intra-urban inequality,” it said.

Many factors have been identified as key drivers of the inequality between rural and urban areas in China and India.

In China, rapid industrialisation in particular regions and the concentration of foreign direct investment in coastal areas have led to substantial inequalities between coastal and interior regions. Other factors also include low educational attainment and low returns to education in rural areas.

On India, the report said inter provincial inequality is lower in India than in China, and rising inequality in India has been found to be primarily an urban phenomenon.

Moreover, the rural-urban income gap has increased, and higher rural inflation has been found to be a key driver of this. Educational attainment has also been identified as an important factor explaining rising inequality in India over the past two decades, the Fund said.

The two countries have introduced a number of policies to tackle the rising inequality.

China introduced the Minimum Livelihood Guarantee Scheme (Dibao) for social protection in the 1990s. Moreover, various social programs are aiming to expand social safety nets and provide support for the development of rural areas and western regions.

In India, the government introduced the Mahatma Gandhi National Rural Employment Guarantee Act to support rural livelihoods by providing at least 100 days of employment. Programs to improve education include the National Education Scheme and Midday Meal Scheme.

The Fund lauded the JAM (Jan Dhan-Aadhaar-Mobile) initiative and said that “the JAM trinity initiative helped India in making substantial advances in financial inclusion. More recently, programs aiming for universal bank account coverage were launched”.

Source : PTI

 

Notification No : 8/2016 Dated: 4-5-2016


Procedure for submission of Form 15CC by an authorised dealer in respect of remittances under sub-section (6) of section 195 of the Income-tax Act, 1961 read with rule 37BB of the Income-tax Rules, 1962 – 8/2016 – Dated 4-5-2016 – Income Tax

Government of India

Ministry of Finance

Central Board of Direct Taxes

Directorate of Income Tax (Systems)

Notification No 8/2016

New Delhi, 4th May, 2016

Procedure for submission of Form  15CC by an authorised dealer in respect of  remittances under sub-section (6) of section 195 of the Income-tax Act, 1961 read with rule 37BB of the Income-tax Rules, 1962

Under sub-section (6) of section 195 of the Income-tax Act, person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum, whether or not chargeable under the provisions of this Act, is required to furnish the information relating to payment of such sum, in such form and manner, as may be prescribed.

2. As per sub-rule (7) of rule 37BB of the Income-tax Rules, 1962, the authorised dealers are required to 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).

3.  In exercise of the powers delegated by Central Board of Direct Taxes (‘Board’) under sub-rule (8) of Rule 37BB of the Income-tax Rules 1962, the Principal Director General of Income-tax (Systems) hereby lays down the procedure for submission of Form  15CC as follows:

a)  Generation of ITDREIN: The reporting entity is required to get registered with the  Income Tax Department by logging in to the e-filing website with the login ID used for the purpose of filing the Income-tax Return of the reporting entity. In case if the reporting entity is not registered for filing Income-tax Return, it may get ITDREIN by logging in with its TAN. A link to register reporting entity has been provided under “My Account>Manage ITDREIN”. The reporting entity is required to apply for different ITDREIN for different reporting entity categories. Once ITDREIN is generated, the reporting entity will receive a confirmation e-mail on the registered e-mail ID and SMS at registered mobile number. There will be no option to deactivate ITDREIN, once ITDREIN is created.

b)  Submission of details of authorised person: The reporting financial institution will then be required to submit the details of authorised person (who will file Form 15CC). Once the details of authorized person are entered by the reporting entity, the authorized person will need to confirm through activation link on e-mail by entering the OTP sent on the mobile of the authorized person and generate the password.

c)  Submission of Form 15CC: Once the authorised person of the reporting entity gets registered successfully, it is required to submit  Form  15CC. The authorised person is then required to login to the e-filing website with the ITDREIN, PAN and password. The prescribed schema for the report under Form 15CC and a utility to prepare XML file can be downloaded from the e-filing website home page under forms (other than ITR) tab. The authorised person will be required to submit the PAN of the reporting entity, period for which report is to be submitted and the reporting entity category for which the report is to be submitted. The authorised person will then be provided the option to upload the Form 15CC. The form is required to be submitted using a Digital Signature Certificate of the authorised person.

(Gopal Mukherjee)

Pr. DGIT (System), CBDT

Notification No : 6/2016 Dated: 4-5-2016


Procedure for online submission of statement of deduction of tax under sub-section (3) of section 200 and statement of collection of tax under proviso to sub-section (3) of section 206C of the Income-tax Act, 1961 read with rule 31A(5) and rule 31AA(5) of the Income-tax Rules, 1962 respectively – 6/2016 – Dated 4-5-2016 – Income Tax

Government of India

Ministry of Finance

Central Board of Direct Taxes

Directorate of Income Tax (Systems)

Notification No. 6/2016

New Delhi, 4th May 2016

Procedure for online submission of statement of deduction of tax under sub-section (3) of section 200 and statement of collection of tax under proviso to sub-section (3) of section 206C of the Income-tax Act, 1961 read with rule 31A(5) and rule 31AA(5) of the Income-tax Rules, 1962 respectively

The provisions relating to the statement of deduction of tax under sub-section (3) of section 200 and the statement of collection of tax under proviso to sub-section (3) of section 206C of the Income-tax Act, 1961 (the Act) are prescribed under Rule 31A and Rule 31AA of the Income-tax Rules, 1962 (the Rules) respectively. As per sub-rule (5) of rule 31A and sub-rule (5) of rule 31AA of the Rules, the Director General of Income-tax (Systems) shall specify the procedures, formats and standards for the purposes of furnishing and verification of the statements and shall be responsible for the day to day administration in relation to furnishing and verification of the statements in the manner so specified.

2. In exercise of power conferred by sub-rule (5) of rule 31A and sub-rule (5) of rule 31AA of the Rules, the Principal Director General of Income-tax (Systems) hereby lays down the following procedures of registration in the e-filing portal, the manner of the preparation of the statements and submission of the statements as follows:

3. The deductors/collectors will have the option of online filing of e-TDS/TCS returns through e-filing portal or submission at TIN Facilitation Centres. Procedure for filing e-TDS/TCS statement online through e-filing portal is as under:

a Registration: The deductor /collector should hold valid TAN and is required to be registered in the e-filing website (https://incometaxindiaefiling.gov.in/) as “Tax Deductor & Collector” to file the “e-TDS/e-TCS Return”.

b Preparation: The Return Preparation Utility (RPU) to prepare the TDS/TCS Statement and File Validation Utility (FVU) to validate the Statements can be downloaded from the tin-nsdl website (https://www.tin-nsdl.com/). The statement is required to be uploaded as a zip file and submitted using a Digital Signature Certificate. The signature file for the zipped file will be generated using the DSC Management Utility (available under ‘Downloads’ in the e-Filing website https://incometaxindiaefilinR.Rov.in/).

c  Submission: The deductor/collector is required to login to the e-filing website using TAN and go to TDS → Upload TDS. The deductor/collector is required to upload the “Zip” file along with the signature file (generated as explained in para (b) above). Once uploaded, the status of the statement shall be shown as “Uploaded”. The uploaded file shall be processed and validated at the e-filing portal. Upon validation the status shall be either “Accepted” or “Rejected which will reflect within 24 hours from the time of upload. The status of uploaded file will be visible at TDS → View Filed TDS. In case the submitted file is “Rejected”, the reason for rejection shall be displayed.

(Gopal Mukherjee)

Pr. DGIT (Systems), CBDT

Panel slams govt for slashing funds for crucial projects to fund ‘Make in India’ scheme : 04-05-2016


A Parliamentary panel has pulled up the government for curtailing the expenses for crucial projects while funding initiatives like ‘Make in India’.

“The committee is constrained to observe that allocations to many crucial projects were slashed in the year 2015-16 in view of funding ambitious projects like Make in India initiative,” Parliamentary Standing Committee on Commerce said in its report.

However, the Department of Industrial Policy and Promotion (DIPP) could only utilise 40 per cent of the budget estimate for the initiative till December 2015.

The committee “strongly feels that the department should have been pro-active over timely utilisation of the funds available in the most effective manner”, it said.

It also said that an expenditure to the tune of 40 per cent under the scheme for investment promotion for Make in India till December 2015 reflects lack of imagination and preparation of blueprint to promote India as an investment destination.

Further, the report said that Make in India campaign has devoted Rs 284 crore for expenditure under the minor head advertisement and publicity.

However, the work being done under this allocation is primarily business promotion through investor outreach programmes, it said.

The committee, it said, is of the view that these investor outreach programmes being conducted with the help of Indian Embassies/Missions or with the help of the professional agencies to target investor is separate from advertising and publicity.

“The committee feels that an allocation of Rs 200 crore and more under the head ‘Business Promotion/Investor Outreach Programme’ makes more sense than maintaining it under the head ‘Advertisement and Publicity’,” it added.

On ease of doing business, the report said against a target to integrate 6 central government services, only 3 new central government services could be integrated in 2015-16.

Similarly, against a target to roll-out state government services in the remaining pilot states of Delhi, Haryana, Maharashtra, Tamil Nadu, Odisha, Punjab, Rajasthan, Uttar Pradesh and West Bengal some headway could be made only in state services of Andhra Pradesh (14 services), Delhi (2 services) and Odisha (14 services).

It expressed concern over the slow progress in pilot project level where 50 services have been targeted for implementation.

“With this pace of implementation, the committee wonders about the time that may go in making the project fully functional with integration of more than 200 services on the e-Biz portal,” it added.

The committee strongly recommends that the pace of the project should be quickened to improve the business and regulatory environment of the country.

On intellectual property rights, the committee notes that though nearly a year has passed since the IPR think tank submitted its final report on the draft National IPR Policy, the department is still non-committal about the timeline for its notification.

“With the government is emphasising on innovation and start-ups, the committee strongly feels the policy should not hang fire,” it said.

An early notification of a national IPR Policy would send right signal to the investors at large about the existence of a stable IPR regime and thus encourage investments within the country as well as from abroad, it added.

It also expressed deep concerns over the huge pendency of patent and trademark registration applications.

As on March 9, as many as 2,37,029 number of patent and 5,44,171 trademark registration applications are pending with the government.

It recommended the department that intensive training and sensitisation programme may be firmed up to improve the quality of examination of applications.

“The unclogging of the pendency and quality examination will add to the robustness of our IPR system,” it added.

Further, the committee expressed disappointment over the pace of implementation of the national manufacturing policy (NMP).

“Proposals for eight of the NIMZs notified have not been sent by the state governments…However, half the decade has passed by and the deliverables under the Policy seem nowhere in sight,” it said.

The committee feels the execution of the scheme at “snail’s pace” for implementing of NMP reflects “serious lack of effort” on the part of the department towards operationalisation of the policy.

The committee further feels that “much is still to be done” to effectively realise the measures like Make in India and Start Up India on ground.

“The committee strongly feels the department should speed up the necessary reforms to bring in improvement in the business environment of the country,” it added.

Source : The Hindu

India’s private sector activity growth slows in April : 04-05-2016


Private sector activity in the country eased in April amid slower expansion in new business inflows in services sector while order books at manufacturers also broadly stagnated, adding to the clamour for further interest rate cuts by Reserve Bank.

The Nikkei India Composite PMI Output Index, which maps both manufacturing and services sectors, dropped from 54.3 in March (37-month high) to 52.8 in April, pointing to a softer expansion in private sector activity across the country.

“Having accelerated to the fastest in over three years during March, activity growth across India’s private sector took a step back in April,” said Pollyanna De Lima, economist at Markit, which compiles the survey.

Lima added that manufacturers appear to be still struggling to generate strong upward momentum in a subdued demand environment while solid increase in activity and new work were sustained among service providers.

Meanwhile, the Nikkei Services Business Activity index was down from 54.3 in March to 53.7 in April.

The survey noted that April data highlighted a general lack of pressure on the capacity of Indian service providers as unfinished business declined.

On the employment front, services employment was unchanged in April. Broadly stagnant employment trends have now been registered through the past nine months. Meanwhile, manufacturing payroll numbers were also unchanged.

The higher prices paid for fuel, average input costs faced by Indian services companies increased in April and the rate of cost inflation reached a 13-month high.

Part of additional cost burdens was passed on to clients, as both manufacturers and service providers raised their selling prices again in April, Nikkei said.

Meanwhile, services firms’ sentiment weakened slightly in April, with the degree of optimism being modest by historical standards.

“Nevertheless, a softer expansion in activity, combined with unchanged employment and a dip in business expectations among the latter suggest that companies are not fully convinced about the recovery and that March’s stronger numbers might have been a one-off,” Lima added.

In the first bi-monthly monetary policy review for 2016-17 announced on April 5,RBI governor Raghuram Rajan reduced the key interest rate by 0.25 per cent and introduced a host of measures to smoothen liquidity supply.

While this was the first rate cut after a gap of six months, RBI has lowered its rate by 1.5 per cent cumulatively since January last year. However, the industry still wants further rate cuts from the central bank.

Source : The Financial Express

Submit proof of travel for claiming tax deduction on LTA: CBDT : 04-05-2016


The Income Tax Department has brought out a new form making it mandatory for salaried taxpayers to furnish proof of travel for claiming tax deduction on LTA or LTC.

The Central Board of Direct Taxes (CBDT) has brought in a Form 12BB form requiring employees to furnish to their employers with evidence in relation to house rent allowance (HRA) if it exceeds Rs 1 lakh in an assessment year.

The details to be furnished include name, address and PAN of landlord where the aggregate rent paid exceeds Rs 1 lakh, according to a CBDT order.

For claiming deduction of interest on home loan, the name, address and PAN of lender will have to be furnished.

Similarly, for claiming tax deduction on leave travel allowance/concession (LTA/LTC), the new rule makes it mandatory for employee to furnish to his employer evidence for travel expenditure.

Also evidence of investment or expenditure will have to be provided for claiming tax deduction under Chapter VI-A.

Chapter VI-A pertains to allowable deductions under Section 80C, Section 80CCC, Section 80CCD as well as other sections like 80E, 80G and 80TTA.

These are part of new Rule 26C and Form 12BB that require employees to furnish to the employer, evidence/particulars in relation to house rent allowance (HRA), leave travel concession (LTA), deduction of interest under the head ‘income from house property’ and deduction under Chapter VI-A.

CBDT, in the same order, also extended the time limit for depositing tax deducted at source (TDS) on transfer of immovable property from 7 days to 30 days.

Also, the due date for filing quarterly TDS returns in Form 24Q, 26Q and 27Q was extended by 15 days.

The amended rules will be applicable from June 1, 2016, CBDT said.

Under section 80C, a deduction of Rs 1.5 lakh can be claimed from total taxable income if invested/spent in PPF, employee’s share of PF contribution, life insurance premium payment, children’s tuition fee, principal repayment of home loan, Sukanya Samridhi Account among others.

Section 80CC provides for deduction on amount deposited in annuity plan of LIC or any other insurer for pension while Section 80CCD is for the same purpose on contribution to Pension (Section 80CCD).

Deduction under Section 80GG is available on House Rent paid where HRA is not received and the taxpayer or his spouse or minor child does not own residential accommodation at the place of employment.

Deduction available on the count is the minimum of rent paid minus 10 per cent of total income or Rs 5000 per month or 25 per cent of total income.

Section 80E provides for deduction of interest on loan taken for pursuing higher education.

An additional deductions on home loan interest of Rs 50,000, over and above Rs 2 lakh allowed under Section 24, is allowed for first time home owners under Section 80EE is available if the value of the property purchased is less than Rs 50 lakhs and home loan is less than Rs 35 lakhs.

Section 80D provides for deduction for premium paid of up to Rs 25,000 for medical insurance.

Source : PTI

Government mulls allowing sick, loss-making PSUs run PF trusts : 03-05-2016


The government is considering a proposal to relax the Employees’ Provident Fund Scheme to enable loss-making and sick PSUs to continue with their own PF Trusts, Parliament was informed today.

“Yes… The proposal is being examined in consultation with the Central Board of Trustees, Employees’ Provident Fund,” Labour Minister Bandaru Dattatreya replied to a question in Parliament on whether the government is looking to relax/amend the Employees’ Provident Fund Scheme to enable loss-making and sick PSUs to continue to run own PF Trusts.

The minister, however, said the government has not identified any such sick or loss-making PSUs.

On any similar relaxation for private firms, he said, “No… Provident Fund Trusts of exempted establishments are custodian of the hard-earned money of the workers which needs to be protected.”

Dattatreya further said, “Private companies do not have the sovereign guarantee behind them as enjoyed by the public sector undertakings of both the central government and the state governments. Therefore, the proposed amendment is not intended to extend this advantage to private companies, so as to protect the interest of the workers.”

Source : The Financial Express

NSE to conduct mock trading session on May 7 : 03-05-2016


Leading bourse the National Stock Exchange (NSE) will conduct a mock trading session on May 7, ahead of coming out with new versions of software for live trading.

The move is a part of the exchange’s efforts to provide the members with a robust and efficient system for trading.

The exchange would be conducting a mock-trading session to test the system performance in the capital market, currency derivatives and Futures & Options (F&O) segments on May 7, 2016, NSE said  n separate circulars.

Besides, mock trading session will also be conducted in the SLBM and debt segment on the same day.

In currency derivatives segment, the mock trading would be between 1000 hrs and 1530 hrs.

In the case of capital market and futures and options segment, mock trading would start at 1015 hrs and would continue till 1530 hrs.

The exchange will also be releasing a new versions of its software through which members can login to live trading system from May 9 onwards.

Source : PTI

Salary disclosure requirement non-negotiable – Sebi to MFs : 03-05-2016


Refusing to budge on its directive for mandatory disclosure of top-management salary by mutual funds, Sebi today told them it is a ‘non-negotiable’ requirement and investors must be provided date without any ‘extra filters’.

Some fund houses, including HDFC, Reliance and ICICI Prudential Mutual Funds, today began publishing the salary details for unit holders on their respective websites as per the directive, but many others did not do so and wanted the regulator to relax the rules or at least extend the deadline.

They made a representation through industry body AMFI (Association of Mutual Funds in India) this evening before the Securities and Exchange Board of India (Sebi) Chairman U K Sinha, but were told in clear terms that “the requirement is non-negotiable” and must be complied with immediate effect.

Regulatory sources said, Sebi is of the view that fund houses good profitability records have been forthcoming with the disclosure requirements, but others have been resisting the move.

Sebi had earlier this year asked fund houses to disclose salary details within one month of a financial year, starting with 2015-16. Accordingly, all fund houses needed to publish the details by today, after taking into account the weekend holidays for the last two days.

Sources said the  fund houses have also been told to disclose the salary details without any ‘extra filters’.

While all fund houses ask for investor details like folio number and registered mobile number and email IDs for giving access to these details, a few of them have put in additional requirements such as name of the executive whose salary the investor wants to know.

In case of DSP Blackrock MF, the investors were being told that the details would be shared a few days after receipt  of the request.

“Your request for information has been registered our Human Resource team will reply to you shortly,” as per DSP Blackrock MF website.

In today’s meeting, Sebi told the fund houses that investors in any scheme are entitled for the information and “unhelpful and unnecessary filters in providing the information should not be applied”.

Asking AMFI to ensure uniform compliance by all fund houses, Sebi has told them that ESOPs or incentives pertaining

to other years may be indicated separately as an explanation.

After the meeting with Sebi Chairman, AMFI also told all its members that the fund houses that no “impediments” should be created in providing the information and the remuneration for the purpose of disclosure would include all forms of income as defined under the IT Act.

It asked all fund houses to take suitable action for disclosure by tonight itself.

As per the disclosure, top fund house HDFC MF’s chief Milind Barve got a total annual remuneration of Rs 26.21 crore for the latest fiscal 2015-16. This included previously granted ESOPs that were exercised during the last fiscal.

HDFC MF said that remuneration include “exceptional amounts computed on exercise of options granted under ESOP plans over the period 2008-2013″.

The other executives of HDFC MF took home salaries ranging from Rs 13 crore to Rs 1 crore. As many as 38  persons received remuneration in excess of Rs 1 crore.

Sundeep Sikka, the top honcho of Reliance MF, received a pay package of Rs 13.74 crore — which included Rs 3.5 crore as salary and over Rs 10 crore as a one-time payout.

ICICI MF paid Rs 5.4 crore to its Managing Director Nimesh Shah. A total of 15 executives received remuneration of more than Rs 1 crore.

Source : The Economic Times

Notification No. 14 (R)/2016-RB 2-5-2016


RESERVE BANK OF INDIA
FOREIGN EXCHANGE DEPARTMENT
CENTRAL OFFICE
MUMBAI

FEMA NOTIFICATION NO

14(R)/2016-RB, Dated: May 2, 2016

Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016

G.S.R.No.480(E): In exercise of the powers conferred by Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), and in supersession of Notification No.FEMA.14/ 2000-RB dated May 3, 2000, as amended from time to time, dealing with Manner of Receipt and Payment, Notification No. FEMA.16/2000-RB dated May 3, 2000, as amended from time to time, dealing with Receipt from and Payment to a person Resident outside India and Notification No. FEMA.17/2000-RB dated May 3, 2000, as amended from time to time, dealing with Transactions in Indian Rupees with Residents of Nepal and Bhutan, the Reserve Bank of India makes the following Regulations in respect of Manner of Receipt and Payment, namely

1. Short title and commencement:

(i) These Regulations may be called the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016.

(ii) They shall come into effect 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) ‘Authorised Dealer’ means a person authorized as an authorized dealer under subsection (1) of Section 10 of the Act

(iii) ‘Authorised Bank’ means a bank, other than an authorized dealer, authorized by the Reserve Bank to accept deposits from persons resident outside India;

(iv) ‘FCNR/NRE account’ means an FCNR or NRE account opened and maintained in accordance with the Foreign Exchange Management (Deposits) Regulations, 2016;

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

3. Manner of Receipt in Foreign Exchange : -

(1) Every receipt in foreign exchange by an authorized dealer, whether by way of remittance from a foreign country or by way of reimbursement from his branch or correspondent outside India against payment for export from India, or against any other payment, shall be as mentioned below:

(A) Members of the Asian Clearing Union

(i) Bangladesh, Myanmar, Pakistan, Sri Lanka & Republic of Maldives -

a) Receipt for export of eligible goods and services by debit to the Asian Clearing Union Dollar account and/or Asian Clearing Union Euro account in India of a bank of the member country in which the other party to the transaction is resident or by credit to the Asian Clearing Union Dollar account and/or Asian Clearing Union Euro Account of the authorized dealer maintained with the correspondent bank in that member country;

b) Receipt may also be made in any freely convertible currency in all other cases.

c) In respect of exports from India to Myanmar, payment may be received in any freely convertible currency or through ACU mechanism from Myanmar.

(ii) Nepal and Bhutan -

(a) Receipt may be in Rupees

(b) Receipts for export of goods to Nepal may be made in free foreign exchange, provided the importer resident in Nepal has been permitted by the Nepal Rashtra Bank to make payment in free foreign exchange. However such receipts shall not be routed through the ACU mechanism.

(iii) Islamic Republic of Iran

(a) Receipt for export of eligible goods and services, in any freely convertible currency and/or in accordance with the directions issued by the Reserve Bank to the authorized dealers from time to time.

(b) Receipt in any freely convertible currency and/or in accordance with the directions issued by the Reserve Bank to the authorized dealers from time to time in all other cases.

(B) All countries other than those mentioned in A above

(i) Receipt in rupees from the account of a bank situated in any country other than a member country of the Asian Clearing Union.

(ii) Receipt in any freely convertible currency.

(2) (a) In respect of an export from India, receipt shall be made in a currency appropriate to the place of final destination as mentioned in the declaration form irrespective of the country of residence of the buyer.

(b) Any other mode of receipt of export proceeds for an export from India in accordance with the directions issued by the Reserve Bank of India to authorized dealers from time to time.

(3) Authorised dealers have been permitted to allow receipts for export of goods/ software to be received from a Third party (a party other than the buyer) as per the guidelines issued by the Reserve Bank.

4. Manner of Receipts in certain cases : -

(1) Notwithstanding anything contained in Regulation 3, receipt for export may also be made by the exporter as under, namely:

(i) in the form of a bank draft, cheque, pay order, foreign currency notes/travelers cheque from a buyer during his visit to India, provided the foreign currency so received is surrendered within the specified period to the authorized dealer of which the exporter is a customer ;

(ii) by debit to FCNR/NRE account maintained by the buyer with an Authorised Dealer or an Authorised Bank in India;

(iii) in rupees from the credit card servicing bank in India against the charge slip signed by the buyer where such payment is made by the buyer through a credit card;

(iv) from a rupee account held in the name of an Exchange House with an authorized dealer if the amount does not exceed fifteen lakh rupees per export transaction or an amount prescribed by RBI, in consultation with Government of India in this regard;

(v) In accordance with the directions issued by the Reserve Bank to Authorised Dealers, where the export is covered by the arrangement between the Central Government and the Government of a foreign country or by the credit arrangement entered into by the Exim Bank with a financial institution in a foreign state;

(vi) in the form of precious metals i.e. gold/silver/platinum equivalent to value of jewellery exported by Gem & Jewellery units in Special Economic Zones and Export Oriented Units on the condition that the sale contract provides for the same and the value is declared in the relevant EDF.

(2) In addition to 4 (1) (i) & (iii) above, any person resident in India may also receive any payment for other than exports by means of postal order issued by a post office outside India or by a postal money order issued by such post office.

5. Manner of payment in foreign exchange : -

(1) A payment in foreign exchange by an Authorised Dealer, whether by way of remittance from India or by way of reimbursement to his branch or correspondent outside India against payment for import into India, or against any other payment, shall be as mentioned below :

(A) Members of the Asian Clearing Union

(i) Bangladesh, Myanmar, Pakistan, Sri Lanka & Republic of Maldives -

(a) Payment for import of eligible goods and services by credit to Asian Clearing Dollar account and/or Asian Clearing Union Euro account in India of a bank of the member country in which the other party to the transaction is resident or by debit to the Asian Clearing Union Dollar account and/or Asian Clearing Union Euro account of the authorized dealer maintained with the correspondent bank in that member country;

(b) Payment may also be made in any freely convertible currency in all other cases.

(c) In respect of imports to India from Myanmar, payment may be made in any freely convertible currency or through ACU mechanism from Myanmar.

(ii) Nepal and Bhutan -

Payment may be in Rupees

(iii) Islamic Republic of Iran

(a) Payment for import of eligible goods and services, in any freely convertible currency and/or in accordance with the directions issued by the Reserve Bank to the authorized dealers from time to time.

(b) Payment in any freely convertible currency and/or in accordance with the directions issued by the Reserve Bank to the authorized dealers from time to time in all other cases.

(B) All countries other than those mentioned in A above.

(i) Payment in rupees from the account of a bank situated in any country other than a member country of the Asian Clearing Union

(ii) Payment in any freely convertible currency.

(2) In respect of import into India -

(a) Where the goods are shipped from a member country of the Asian Clearing Union (other than Nepal and Bhutan) but the supplier is resident of a country other than a member country of the Asian Clearing Union, payment may be made in a manner specified for countries in Group B of Regulation 5;

(b) In all other cases, payment shall be made in a currency appropriate to the country of shipment of goods;

(c) Any other mode of payment in accordance with the directions issued by the Reserve Bank of India to authorized dealers from time to time.

(3) Authorised Dealers have been permitted to allow payments for import of goods/software to be made to a Third Party (a party other than the supplier) as per the guidelines issued by the Reserve Bank.

6. Manner of Payment in certain cases :-

(1) Notwithstanding anything contained in Regulation 5, a person resident in India may make payment for import of goods.

In foreign exchange through an international card held by him/in rupees from international credit card/debit card through the credit/debit card servicing bank in India against the charge slip signed by the importer/as prescribed by Reserve Bank from time to time.

Provided that -

(a) the transaction for which the payment is so made is in conformity with the provisions of the Act, rules and regulations made thereunder; and

(b) the import is also in conformity with the provision of the Foreign Trade Policy in force.

(2) Any person resident in India may also make payment as under :

(i) in rupees towards meeting expenses on account of boarding, lodging and services related thereto or travel to and from and within India of a person resident outside India who is on a visit to India;

(ii) by means of a crossed cheque or a draft as consideration for purchase of gold or silver in any form imported by such person in accordance with the terms and conditions imposed under any order issued by the Central Government under the Foreign Trade (Development and Regulations) Act, 1992 or under any other law, rules or regulations for the time being in force;

(iii) a company or resident in India may make payment in rupees to its non whole time director who is resident outside India and is on a visit to India for the company’s work and is entitled to payment of sitting fees or commission or remuneration, and travel expenses to and from and within India, in accordance with the provisions contained in the company’s Memorandum of Association or Articles of Association or in any agreement entered into by it or in any resolution passed by the company in general meeting or by its Board of Directors, provided the requirement of any law, rules, regulations, directions applicable for making such payments are duly complied with.

(A K Pandey)
Chief General Manager

50 – 11-2-2016


Compilation of R-Returns: Reporting under FETERS – Circular – Dated 11-2-2016 – FEMA

RBI/2015-16/317
A.P. (DIR Series) Circular No. 50

February 11, 2016

To,

All Authorised Dealers in Foreign Exchange

Madam / Sir,

Compilation of R-Returns: Reporting under FETERS

Attention of Authorised Dealer (Category I) banks is invited to A.P.(DIR Series) Circular No.84 dated February 29, 2012 giving guidelines for compilation of R-Returns for reporting under the Foreign Exchange Transactions Electronic Reporting System (FETERS), A.P.(DIR Series) Circular No.101 dated February 4, 2014 on Export of Goods and Services: Export Data Processing and Monitoring System (EDPMS) for facilitating banks to submit export-related information through EDPMS platform and A.P.(DIR Series) Circular No.15 dated July 28, 2014 which discontinued separate reporting of information in ENC (Export Bills Negotiated / sent for collection) for acknowledgement of receipt of export documents and Sch.3 to 6 (realization of export proceeds) under FETERS.

Web based data submission by AD banks

2. In order to enhance the security-level in data submission and further improve data quality, the following modifications shall be effected in the guidelines for submission of data under the FETERS from 1st fortnight of April 2016 (i.e., reporting of those transactions which take place from April 1, 2016):

  1. The present email-based submission will be replaced by web-portal based data submission. However, there are no changes in periodicity, file-layout, delimiter, consistency checks, and inter-relationship among BOP6.TXT and QE.TXT files as well as their naming convention.
  2. Nodal offices of banks have to access the web-portal https://bop.rbi.org.in with the RBI-provided login-name and password, to submit data (Contact and other details are given in the above-mentioned Circular dated February 29, 2012).
  3. Banks may download RBI-provided validator template from this portal on their computer and perform off-line check of their FETERS data-file for error, if any, before its submission on the portal. Both Java-based and Excel-based validators are provided: Use of Java-based validator is advised for larger files. This portal also gives relevant master files (e.g., country, currency, AD code, purpose code masters).
  4. On uploading validated files, banks will get acknowledgment. They can view the data-files submitted by them during the previous two fortnights, with download facility. They can also revise the purpose codes for transaction submitted earlier, if required, which will be authenticated by RBI in the system.
  5. Banks may report (a) addition of AD code for their bank and (b) update AD category, which will be incorporated in the AD-master database by RBI after due authentication.
  6. With the discontinuation of ENC.TXT and SCH 3 to 6.TXT files in FETERS, the purpose codes P0105 [Export bills (in respect of goods) sent on collection – other than Nepal and Bhutan] and P0107 [Realisation of NPD export bills (full value of bill to be reported) – other than Nepal and Bhutan] have become defunct and are, therefore, discontinued.

Revision in Form A2

3. Further, in-order to streamline the reporting of the transactions relating to the Liberalised Remittance Scheme (LRS) in FETERS and On-line Return Filing System (ORFS), it has been decided that transactions relating to LRS may be reported under respective FETERS purpose codes (e.g. travel, medical treatment, purchase of immovable property, studies abroad, maintenance of close relatives; etc.) instead of reporting collectively under the purpose code S0023. This would help AD banks in classification of transactions for similar activity under single purpose code. Therefore, the purpose code S0023 would be revised as follows to enable reporting of ‘Opening of foreign currency account abroad with a bank’:

Purpose Code

Description as per the A.P.(DIR Series) Circular No.84 dated February 29, 2012and in Form A2

Revised Description

S0023 Remittances made under Liberalised Remittance Scheme (LRS) for Individuals Opening of foreign currency account abroad with a bank

i. For facilitating the existing monthly reporting of LRS transactions under ORFS, AD banks may use the following purpose codes only:

Sr. No.

Items under LRS

Corresponding FETERS purpose codes, if transaction is identified under LRS

1

Opening of foreign currency account abroad with a bank under LRS S0023

2

Purchase of immovable property S0005

3

Investment in equity, debt, JV, WoS, ESOPs, IDRs S0001, S0002, S0003, S0004, S0021, S0022

4

Gift S1302

5

Donations S1303

6

Travel (business, pilgrimage, medical treatment, education, employment, personal) S0301, S0303, S0304, S0305 & S0306

7

Maintenance of close relatives S1301

8

Medical Treatment S1108

9

Studies abroad S1107

10

Emigration S1307

11

‘Others’ such as loan to NRI close relatives and health insurance S0011, S0603

ii. AD banks should also ensure that the data pertaining to LRS transactions reported by them in FETERS tallies with that reported by them in ORFS.

iii. The Form A2 is also being revised (as per Annex) by introducing a check-box for LRS transactions in the relevant block as follows:

Sr. No.

Whether under LRS (Yes/No)

Purpose Code

Description

       
   

As per the Annex

iv. Further, the ‘Application cum Declaration for purchase of foreign exchange under the Liberalised Remittance Scheme of USD 250,000’ has been clubbed with Form A2 in order to reduce multiplicity of forms to be filled in by the customers.

Online submission of Form A2 by the remitter

4. With a view to facilitating miscellaneous remittances and reducing paperwork associated with payment transactions, it has been decided that Authorised Dealer banks, offering internet banking facilities to their customers may allow online submission of Form A2. Besides, they may also enable uploading/submission of documents, if and as may be necessary, to establish the permissibility of the remittances under the extant rules or regulations framed under the Foreign Exchange Management Act, 1999 (FEMA). Remittances that do not require any documentation (e.g. certain transactions under the LRS) may be put through on the basis of the Form A2 alone. To start with, remittances on the basis of online submission alone will be available for transactions with an upper limit of USD 25,000 (or its equivalent) for individuals and USD 100,000 (or its equivalent) for corporates. It may be noted that the remittance will be subject to satisfaction of the Authorised Dealer banks as laid down in Section 10 (5) of FEMA. Accordingly, Authorised Dealer banks are advised to frame appropriate guidelines for customer interface personnel to ensure ease of transactions for the customers within the ambit of the statutory/regulatory provisions. It may be further noted that reporting of transactions in FETERS shall continue, as hitherto, by the Authorised Dealer banks.

5. Appropriate changes in technology and/or operating procedure may be carried out by Authorised dealer banks immediately and compliance in this regard furnished to RBI.

6. The changes introduced through this circular may be implemented with immediate effect and in any case not later than April 1, 2016.

7. Authorised Dealer banks may bring the contents of this circular to the notice of their constituents.

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

Yours faithfully,

(B.P.Kanungo)
Principal Chief General Manager

49 – 4-2-2016


Post Office (Postal Orders/Money Orders), 2015 – Circular – Dated 4-2-2016 – FEMA

RBI/2015-16/314
A.P. (DIR Series) Circular No.49/2015-16 [(1)/18(R)]

February 04, 2016

To

All Category – I Authorised Dealers and Authorised Banks

Madam/ Sir

Post Office (Postal Orders/Money Orders), 2015

Attention of Authorised Dealers (ADs) is invited to Notification No. FEMA. 18(R)/2015-RB dated December 29, 2015 notified vide G.S.R. No.1009 (E) dated December 29, 2015, which supersedes the Notification No. FEMA.18/2000-RB.

2. Synopsis of the new regulations is given as under:

General permission has been given to any person to buy foreign exchange from any post office in India in the form of postal order or money order.

3. The new regulations have been notified vide Notification No. FEMA. 18(R)/2015-RB dated December 29, 2015, c.f. G.S.R. No.1009 (E) dated December 29, 2015 and shall come into force with effect from December 29, 2015.

4. AD Category- I banks may bring the contents of the circular to the notice of their constituents concerned.

5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 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. LETTER F.NO.225/12/2016/ITA.II Dated: 2-5-2016


Reduce litigation and maintain consistency assessments of income arising from transfer of unlisted shares no formal market exists for trading. – Circular – Dated 2-5-2016 – Income Tax

LETTER F.NO.225/12/2016/ITA.II

DATED 2-5-2016

Regarding characterisation of income from transactions in listed shares and securities, Central Board of Direct Taxes (‘CBDT’) had issued a clarificatory Circular no. 6/2016 dated 29th February, 2016, wherein with a view to reduce litigation and maintain consistency in approach in assessments, it was instructed that income arising from transfer of listed shares and securities, which are held for more than twelve months would be taxed under the head ‘Capital Gain’ unless the taxpayer itself treats these as its stock- in-trade and transfer thereof as its business income. It was further stated that in other situations, the issue was to be decided on the basis of existing Circulars issued by the CBDT on this subject.

2. Similarly, for determining the tax-treatment of income arising from transfer of unlisted shares for which no formal market exists for trading, a need has been felt to have a consistent view in assessments pertaining to such income. It has, accordingly, been decided that the income arising from transfer of unlisted shares would be considered under the head ‘Capital Gain’, irrespective of period of holding, with a view to avoid disputes/litigation and to maintain uniform approach.

3. It is, however, clarified that the above would not be necessarily applied in the situations where:

i.    the genuineness of transactions in unlisted shares itself is questionable; or

ii.   the transfer of unlisted shares is related to an issue pertaining to lifting of corporate veil; or

iii.  the transfer of unlisted shares is made along with the control and management of underlying business and the Assessing Officer would take appropriate view in such situations.

4. The above may be brought to the notice of all for necessary compliance.

Notification No. : S.O. 1647(E) Dated: 2-5-2016


SECTION 125 OF THE COMPANIES ACT, 2013 – CERTAIN CHARGES TO BE VOID AGAINST LIQUIDATOR OR CREDITORS UNLESS REGISTERED – CONSTITUTION OF INVESTOR EDUCATION AND PROTECTION FUND

NOTIFICATION NO. SO 1647(E) [F.NO.5/27/2013-IEPF (PART-1)]DATED 2-5-2016

In exercise of the powers conferred by sub-sections (5) and (6) of section 125 of the Companies Act, 2013 read with rules 5 and 7 of the Investor Education and Protection Fund Authority (Appointment of Chairperson and Members, holding meetings and provision for offices and officers) Rules, 2016 (herein after referred to as the said rules), the Central Government hereby constitutes the Investor Education and Protection Fund Authority consisting of following persons, namely:—

Sl. No. Particulars Designation
1. Sh. Tapan Ray,

Secretary,

Ministry of Corporate Affairs,

Shastri Bhawan,

New Delhi-110001.

Chairperson- ex-officio

(Till he continues the post of Secretary in Ministry of Corporate Affairs)

2. Sh. Gyan Bhushan,

Executive Director,

Securities and Exchange Board of India,

SEBI Bhavan, Plot No. C4-A, “G” Block,

Bandra Kurla Complex, Bandra (E),

Mumbai-400051.

Member- ex-officio

(Till he continues the post of Executive Director in the Securities and Exchange Board of India)

3. Sh. U. S. Paliwal,

Executive Director,

Reserve Bank of India,

17th Floor, Central Office Building,

Shahid Bhagat Singh Marg, Fort,

Mumbai-400001.

Member- ex-officio

(Till he continues the post of Executive Director in Reserve Bank of India)

4. Sh. Amarjit Chopra,

11, Empire Estate, Sultanpur,

Mehrauli-Gurgaon Road,

New Delhi-110030.

Member
5. Sh. N. L. Meena,

Flat No. 109, Tower-2,

Ganga Block, Sector D-6,

Vasant Kunj,

New Delhi-110070

Member
6. Smt. Anita Kapur,

B-9/12, Ground Floor,

Vasant Vihar,

New Delhi-110057.

Member

2. The term of office of members at serial no. 4 to 6 shall be governed by rule 8 of the said rules. Non-official members of the Authority shall be entitled for reimbursement of actual expenditure incurred for attending the meetings as per the provisions of sub-rule (10) of rule 11 of said rules.

Just 1% of population pay taxes, reveals government data : 02-05-2016


Taxpayers account for just about one per cent of India’s population, but tax outgo was over Rs 1 crore for as many as 5,430 individuals, as per the latest data disclosed by the government for assessment year 2012-13.

As part of a transparency drive, the government has made public direct tax data for last 15 years. Data for individuals has been published only for 2012-13 assessment year, which shows taxes for income in financial year ended March 31, 2012.

A total of 2.87 crore individuals filed income tax returns for that year, but 1.62 crore of them did not pay any tax — leaving the number of taxpayers at just about 1.25 crore which was close to one per cent of the country’s total population of about 123 crore at that time.

The tax outgo was less than Rs 1.5 lakh for a vast majority of nearly 89 per cent taxpayers (over 1.11 crore). Their average tax payable was just about Rs 21,000, while the collective amount stood at over Rs 23,000 crore.

The three individuals in the top-bracket of Rs 100-500 crore paid a total tax of Rs 437 crore — resulting in an average tax outgo of Rs 145.80 crore.

As many as 5,430 individuals paid income tax of over Rs 1 crore. Out of this, the tax range was Rs 1-5 crore for more than 5,000 individuals, resulting in a total outgo of Rs 8,907 crore.

As per the overall data, total income tax collections rose nine-fold to Rs 2.86 lakh crore in 2015-16, from Rs 31,764 crore in 2000-01.

The data further said that the bulk of individuals who filed returns for the assessment year 2012-13 earned an annual salary between Rs 5.5 lakh and Rs 9.5 lakh.

Over 20.23 lakh taxpayers earned Rs 5.5-9.5 lakh, while their cumulative salary earnings stood at Rs 1.40 lakh crore in the financial year 2011-12.

Further 19.18 lakh individuals earned salary of Rs 2.5-3.5 lakh that year.

 Source : The Hindu

 

I-T exemptions for private varsities : 02-05-2016


Private universities can claim income-tax exemption only on two conditions: Firstly, an educational institution or a university must be solely for the purpose of education and without any profit motive. Secondly, it must be wholly or substantially financed by the government. Both conditions must be satisfied under Section 10(23C) (iiiab) of theIncome Tax Act before exemption can be granted, the Supreme Court ruled in the case, Visvesvaraya Technological University vs CIT. The university’s claim under this provision was rejected by the revenue authorities, leading to the appeal. The court noted that during a short period of a decade (1999-2010) the university had generated a huge surplus of about Rs 500 crore collecting fees under different heads. “The expenditure incurred represented only a minuscule part of the fees collected,” the judgment observed. None of the benefits granted to the university has gone to the students. It expanded from 64 engineering colleges to 194. The government grants were meagre (about one per cent), the Supreme Court said, concluding that “the university is neither directly nor even substantially financed by the government so as to be entitled to exemption from payment of income tax.”

Time limit in cheque bounce cases

If a complaint of cheque bounce is filed after the period of limitation, the magistrate must give reasons for condoning the delay; he cannot order prosecution as a matter of course, the Supreme Court stated while quashing the judgment of the Kerala High Court in the case, K S Joseph vs Philips Carbon Black Ltd. The company filed criminal cases under the Negotiable Instruments Actagainst the drawer of the cheques, which were not paid on his order to stop payment. The company issued notice on February 3 and the complaint was filed on May 24, after 62 days’ delay. However, the magistrate issued summons to the drawer in a “short and summary” order. The high court dismissed his appeal. But on his second appeal, the Supreme Court directed the magistrate to pass a reasoned order for condoning delay after hearing the accused person.

Corruption law covers co-op managers

The Supreme Court has ruled that a manager in a multi-state cooperative society is a ‘public servant’ and could be tried for offences under the Prevention of Corruption Act. The trial court and the Madhya Pradesh court had held that the National Cooperative Consumers Federation of India Ltd, Jabalpur, was not a state entity and, therefore, its assistant manager was not a ‘public servant’ coming within the scope of the anti-corruption law. Therefore, the CBI appealed to the Supreme Court. Setting aside the high court ruling in the case, CBI vs PG Jain, the Supreme Court noted that under the Multi-State Cooperative Societies Act, the Jabalpur society and the likes are listed in the schedule to the Act as “national cooperative society” by Parliament. Moreover, the Centre owned 85 per cent of the shares in the society and, therefore, aided and controlled by it. The Supreme Court allowed the CBI to prosecute the manager.

Probe into HPCL allotment of LPG

Hindustan Petroleum Corporation Ltd (HPCL) has come in for severe criticism from the Supreme Court in the allotment of LPG distributorship for Hajipur in Bihar. In this case, Abhishek Kumar was the first in the merit list of candidates. But the company officers visited him and, thereafter, his allotment was cancelled without giving any reason; it was given to another person. Kumar moved the Patna High Court. The single-judge bench found the turnaround of HPCL strange and observed that it was “large-hearted” in some cases and “blind” in others. It was “either under pressure or obligation to accommodate another candidate”. The high court ordered investigation by the vigilance department into such aspects. The division bench, however, upheld the HPCL decision. On appeal, the Supreme Court restored the order of the single judge. It indicted the public sector undertaking for “inventing new grounds for justifying the cancellation of the candidature of Abhishek from the merit list, which is totally impermissible in law.”

Test to levy excise on packing material

Excise on packing materials like gunny bags, crates and cartons is a contentious issue arising in the tribunals. The test is in the terms of the agreement between the manufacturer, who send the goods, and the buyer. The Supreme Court dismissed the appeal of Tata Chemicals in a case in which the company claimed that there was an arrangement between it and the buyers of soda ash produced by it to the effect that sales made in gunny bags supplied by it could be returned and upon such return the value of the bags would be returned to the buyers. The judgment said that the law is that “if an arrangement exists between the seller and the buyer of excisable goods for return of the packing materials by the buyer to the seller, carrying an obligation on the seller to return the value of the packing materials to the buyer on such return, such value is not liable to be included in the assessable value of the finished product. Furthermore, if such an arrangement exists, the question of actual return is not relevant.” Such an arrangement could not be proved here.

I-T notices to Alcatel group quashed

The Delhi HC has quashed notices issued by the income tax (I-T) authorities to Alcatel-Lucent group companies seeking to reopen assessments for periods from 2004 to 2009. Alcatel, a French company, supplies telecom equipment to Indian firms. It said that it has no permanent establishment here as the sales and payments were made outside India and no income arose that was taxable in this country. The HC, while allowing 16 writ petitions, stated that the taxmen “merely repeated the words of the Income Tax Act that there has been a failure to disclose material particulars. This is certainly not sufficient as far as the legal requirement is concerned.”

Jewellers’ association wins import case

The Delhi High Court has quashed a circular issued by the Central Board of Excise and Customs in October 2015 on a petition by the Bullion and Jewellers Association. The association argued that the gold jewellery imported by its members from Indonesia was denied the benefit of preferential custom duty. The circular also directed custom officers to disregard certificates issued by the Indonesian authorities and the confirmation given by the government-owned companies in Indonesia. The court asked the authorities to release the imported gold according to law, ignoring the circular.

Source : PTI

Real Estate Bill is an act now, may protect home buyers : 02-05-2016


The Real Estate (Regulation and Development) Bill, 2016, became an act on May 1, kick-starting the process of making rules as well as putting in place institutional infrastructure to protect the interests of home buyers in India.

While acknowledging that the act is a positive development, property experts said the new rules should address problems faced by builders in getting sanctions and approvals in a timely manner. “Government authorities should also be made accountable for  timebound approvals through the rules that will be made,” said Anshuman Magazine, managing director of property advisory firm CBRE South Asia.

He said that if this happens, it will be one of the major steps towards the recovery of the Indian real estate market and will improve the confidence of both consumers and institutional investors – domestic or foreign. “Of course, it should not become another hurdle for development, which will then raise property prices in the long term,” said  Magazine.

he Ministry of Housing & Urban Poverty Alleviation notified 69 of the act’s 92 sections that come into force from May 1. Rules for implementing the provisions of the act have to be formulated by the central and state governments within six months – by October 31 – the maximum period stipulated in Section 84 of the act.

The housing ministry will make the rules for Union Territories while the Ministry of Urban Development will do so for Delhi.

The key to providing succour  to home buyers will be the setting up of Real Estate Regulatory Authorities, which will require all projects to be registered, and the formation of Appellate Tribunals to adjudicate disputes.

According to Section 20 of the act, state governments have to establish the regulatory authorities within one year of the law coming into force. These authorities will decide on the complaints of buyers and developers in 60 days.

The act seeks to protect the rights of home buyers, mandates registration of projects, including those that have not got completion or occupancy certificates.

Registration will require builders to set aside 70% of the funds collected from buyers and pay interest in case of delays. Any officer, preferably the secretary of the department dealing with housing, can be appointed as the interim regulatory authority.

Once the regulators are set up, they will get three months to formulate regulations concerning their functioning. Real Estate Appellate Tribunals need to be formed within a year – by April 30, 2017. These fast-track tribunals will decide on disputes over orders of the regulators within 60 days.

A committee chaired by the secretary of the housing ministry has started work on formulation of model rules so that states and UTs can frame their rules quickly, besides ensuring uniformity across the country. The ministry will also will come out with model regulations for the regulatory authorities.

The remaining sections of the act that have to be notified relate to aspects such as the functions and duties of promoters, rights and duties of allottees, prior registration of real estate projects with the regulatory authorities, recovery of interest on penalties, enforcement  of orders, offences, penalties and adjudication.

Considering that there 12 months left for the regulatory authorities to be set up by the states, builders are expected to speed up work to avoid the stringent provisions of the new real estate regulatory act.

Source : The Economic Times

Govt rolls back decision on EPF rate, fixes it at 8.8% : 30-04-2016


The finance ministry has yielded to the pressure from trade unions by agreeing to notify soon 8.8% rate of interest on the employees’ provident fund (EPF) deposits for 2015-16.

The move would bring cheers to EPF Organisation’s  around 5 lakh active subscribers and central trade unions who had denounced the finance ministry’s decision to ratify the rate at 8.7%, despite  the Central Board of Trustee’s (CBT) recommending 8.8%.

A seemingly elated labour and employment minister Bandaru Dattatreya said, “I am happy that the finance ministry has agreed to 8.8% rate of interest for 2015-16. The rates will be notified soon.”

This would be third roll-back by the finance ministry in matters related to EPFO in two months under the protest of the trade unions. Recently, it had withdrawn a proposal to tax on EPF and another on barring withdrawal of employers’ contribution to the EPF.

At 8.8%, the returns would be the highest in three years. In the previous two fiscals, EPFO had doled out 8.75% rate of interest to its subscribers. Rates were, however, lower at 8.5% in 2012-13 and 8.25% in 2011-12. Generally, CBT recommends the rate of interest to be accrued to EPF subscribers and the finance ministry ratifies the rate for a particular year.

Justifying the 8.7% rate of interest, the finance ministry had earlier said that the retirement fund body would leave with a surplus of around Rs 1,000 crore for the year 2015-16, lower than Rs 1,604 crore surplus it had in 2014-15, had it doles out 8.7% rate of interest. If offered 8.8% returns, the surplus would get further squeezed to just Rs 674 crore.

The labour ministry, on the other hand, were under tremendous pressure to stick to the CBT-recommended 8.8% rate from the trade unions including the RSS-affiliated Bharatiya Mazdoor Sangh (BMS). The labour minister is also the chairman of the CBT. Trade unions on Friday went on a nation-wide protest against the finance ministry’s decision.

BMS’ general secretary Virjesh Upadhyay thanked prime minister, finance minister and labour minister for “upholding the CBT decision on EPF interest rate.”

Source : PTI

FinMin blinks on PF decision : 30-04-2016


In a third flip-flop, the government has decided to reverse its earlier decision of reducing the interest rate on Employees’ Provident Fund deposits for 2015-16 and instead keep it at 8.8 per cent, in line with the stand of the Central Board of Trustees (CBT) of the EPF Organisation (EPFO).

The labour ministry had tried to persuade its finance counterpart to give in and the consultations worked, said labour minister Bandaru Dattatreya. The CBT had recommended 8.8 per cent in February; on Monday, the minister had informed the Lok Sabha that the finance ministry was approving only 8.7 per cent — a CBT decision has to be ratified  by the latter on this issue. It was probably the first such occasion when the finance ministry had so disagreed.

There have been other retreats in recent days on EPF decisions. Such as on the earlier decision to tax 60 per cent of PF money on withdrawal and also on the stringent conditions decided for premature withdrawal.

In its reasoning on the interest rate, the finance ministry said EPFO’s earnings for 2015-16 were not enough to pay 8.8 per cent. Till now, it noted, the interest income earned on 90 million inoperative accounts, a total principal amount of Rs 35,500 crore, was being distributed among existing account holders but this would no longer be possible, owing to a recent CBT decision. The labour ministry gave an explanation for why this wasn’t quite so.

Also, said finance ministry sources, the labour ministry had clarified that the earnings in 2014-15 turned out to be more than the estimates, and were used to recommend 8.8 per cent.

Sources also said finance had advised labour to create a reserve fund for the future, to help protect workers from interest rate shocks in a regime of falling rates.

As of end-March 2015, the EPFO had earned interest of Rs 2,800 crore on inoperative accounts, on which it had stopped paying interest since 2011.According to an official panel, EPFO would earn Rs 34,844 crore in 2015-16, sufficient to offer an interest rate of 8.95 per cent to the retirement fund body’s 50 million subscribers.

“We were able to explain to the ministry that we never touch that amount and, hence, have a cushion,” explained labour secretary Shankar Agarwal.

Trade unions had protested at the finance ministry’s stand; they marked Friday’s announcement as a victory.

Source : The  Economic Times

No. PRESS RELEASE Dated: 29-4-2016


Release of Data by Income Tax Department – Circular – Dated 29-4-2016 – Income Tax

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

PRESS RELEASE

New Delhi, 29th April, 2016

Subject: Release of Data by Income Tax Department – reg.

Income Tax Department has released Time Series Data for Financial Year 2000-01 to 2014-15 based on internal reporting/ MIS of the Income Tax Department or figures reported by Controller General of Accounts or data published by other Government agencies along with PAN Allotment Statistics pertaining to Financial Year 2013-14 and Income Tax Return Statistics for Assessment Year 2012-13 (FY 2011-12). The same is available on the official website of the Income Tax Department www.incometaxindia.gov.in for viewing. The data will be periodically updated to make it as current as possible. The objective of publishing this statistics is to encourage wider use and analysis of Income tax data by Departmental personnel as well as various stakeholders including economists, scholars, students, researchers and academicians for purposes of tax policy formulation and revenue forecasting.

(Meenakshi J Goswami)

Commissioner of Income Tax

(Media and Technical Policy)

Official Spokesperson, CBDT.

Notification No : 30/2016 Dated: 29-4-2016


Income-tax (11th Amendment) Rules, 2016 – 30/2016 – Dated 29-4-2016 – Income Tax

 

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 30/2016

New Delhi, the 29th April, 2016

INCOME-TAX

S.O. ___(E).- In exercise of the powers conferred by sections 192, 200 and 206C, read with section 295 of theIncome-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 (11th Amendment) Rules, 2016.

(2) They shall come into force from the 1st day of June, 2016.

2. In the Income-tax Rules, 1962 (hereafter referred to as the said rules), after rule 26B, the following rule shall be inserted, namely:-

“26C. Furnishing of evidence of claims by employee for deduction of tax under section 192.- (1) The assessee shall furnish to the person responsible for making payment under sub-section (1) of section 192, the evidence or the particulars of the claims referred to in sub-rule (2), in Form No.12BB for the purpose of estimating his income or computing the tax deduction at source.

(2) The assessee shall furnish the evidence or the particulars specified in column (3), of the Table below, of the claim specified in the corresponding entry in column(2) of the said Table:-

Table

Sl. No

Nature of claims

Evidence or particulars

(1)

(2)

(3)

1.

House Rent Allowance. Name, address and permanent account number of the landlord/landlords where the aggregate rent paid during the previous year exceeds rupees one lakh.

2.

Leave travel concession or assistance. Evidence of expenditure.

3.

Deduction of interest under the head “Income from house property”. Name, address and permanent account number of the lender.

4.

Deduction under Chapter VI-A. Evidence of investment or expenditure.”.

3. In the said rules, in rule 30,-

(a) in sub-rule (2A), for the words “seven days”, the words “thirty days” shall be substituted;

(b) in sub-rule (4), for the portion beginning with the word “shall” and ending with the words “ has been credited”, the following words, figures, letter and brackets shall be substituted, namely:-

“shall submit a statement in Form No. 24G to the agency authorised by the Principal Director of Income-tax (Systems) in respect of tax deducted by the deductors and reported to him.”;

(c) after the sub-rule (4), the following sub-rules shall be inserted, namely:-

“(4A) Statement referred to in sub-rule (4) shall be furnished-

(a) on or before the 30th day of April where the statement relates to the month of March; and

(b) in any other case, on or before 15 days from the end of relevant month.

(4B) Statement referred to in sub-rule (4) shall be furnished in the following manner, namely:-

(a) electronically under digital signature in accordance with the procedures, formats and standards specified under sub-rule (5); or

(b) electronically alongwith the verification of the statement in Form 27A or verified through an electronic process in accordance with the procedures, formats and standards specified under sub-rule (5).

(4C) The persons referred to in sub-rule (4) shall intimate the number (hereinafter referred to as the Book Identification Number) generated by the agency to each of the deductors in respect of whom the sum deducted has been credited.”;

(d) for sub-rule(5) , the following rules shall be substituted, namely:-

“(5) The Principal Director General of Income-tax (Systems) shall specify the procedures, formats and standards for the purposes of furnishing and verification of the statements and shall be responsible for the day-to-day administration in relation to furnishing of the information and verification of the statements.”.

4. In the said rules, in rule 31A, for sub-rule (2), the following sub-rule shall be substituted, namely:-

“(2) Statements referred to in sub-rule (1) for the quarter of the financial year ending with the date specified in column (2) of the Table below shall be furnished by the due date specified in the corresponding entry in column (3) of the said Table:

Table

Sl. No.

Date of ending of quarter of financial year

Due date

(1)

(2)

(3)

1.

30th June 31st July of the financial year

2.

30th September 31st October of the financial year

3.

31st December 31st January of the financial year

4.

31st March 31st May of the financial year immediately following the financial year in which the deduction is made”.

5. In the said rules, in rule 37CA,-

(a) in sub-rule (3), for the portion beginning with the word “shall” and ending with the words “ has been credited”, the following words, figures, letter and brackets shall be substituted, namely:-

“shall submit a statement in Form No. 24G to the agency authorised by the Principal Director of Income-tax (Systems) in respect of tax collected by the collectors and reported to him.”;

(b) after sub-rule (3),the following sub-rules shall be inserted, namely:-

“(3A) Statement referred to in sub-rule (3) shall be furnished-

(a) on or before the 30th day of April where the statement relates to the month of March; and

(b) in any other case, on or before 15 days from the end of relevant month.

(3B) Statement referred to in sub-rule (3) shall be furnished in the following manner, namely:-

(a) electronically under digital signature in accordance with the procedures, formats and standards specified under sub-rule (4); or

(b) electronically along with the verification of the statement in Form 27A or verified through an electronic process in accordance with the procedures, formats and standards specified under sub-rule (4).”;

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

“(4) The Principal Director General of Income-tax (Systems) shall specify the procedures, formats and standards for the purposes of furnishing and verification of the statements and shall be responsible for the day-to-day administration in relation to furnishing of the information and verification of the statements.”.

Notification No. : F. No. 3/516/2015-CL.II Dated: 29-4-2016


Central Government satisfied the delegates powers to appoint Inspectors for inspection of books and papers of a company

Notification [F.No. 3/516/2015-CL.II] dt. 29-4-2016

S.O. – In exercise of the powers conferred by sub-section (1) of section 458 of the Companies Act (18 of 2013), the Central Government being satisfied that circumstances warrant, hereby delegates the powers to appoint Inspectors for inspection of books and papers of a company under sub-section (5) of section 206, as ordered by Central Government, to the Regional Directors.

Here’s why Modi govt has cut LPG subsidy funds by 17% : 29-04-2016


Thanks to the fall in global oil prices, the Narendra Modi government has reduced the provision for subsidising domestic cooking gas by 17%.

“The government had decided to provide a fixed subsidy of Rs 18 per kg under direct benefit transfer for domestic LPG during April-October, which has been revised to Rs 15 per kg November 2015 onwards,” a senior petroleum ministry official told FE.

The budgetary support for PDS kerosene, however, remains at Rs 12/litre.

In order to offer clarity on subsidy sharing mechanism to both upstream (ONGC, Oil India and GAIL) and oil marketing companies (IOC, BPCL and HPCL), the government has put in place a fixed budgetary provisioning model for domestic LPG and kerosene. However, the actual subsidy turned out to be lower than the budgeted provision, letting the government create a pool account to keep the additional funds.

The average subsidy on domestic LPG got reduced by about 63% to Rs 11.08/kg in FY16 against Rs 29.63/kg in FY15. This made the government revise the provision for LPG subsidy downwards by Rs 3/kg. The benchmark Brent crude oil price fell nearly 44% to an average of $48.73/barrel in FY16 against $86.6/barrel in FY15.

“The pool account had savings of around Rs 8,000-9,000 crore by October-November 2015, which was utilised to clear the advances to OMCs. Now, the balance in pool account is about Rs 800-900 crore,” another government official said.

Not just the fall in global commodity prices, but the Modi government has successfully brought down the subsidy on domestic cooking gas by also relaunching UPA’s flagship programme of direct bank transfer of subsidy which was discontinued by the previous government. At the same time, more than one crore consumers have voluntarily given up their cooking gas subsidy.

The direct benefit transfer on LPG, which has been recognised by the Guinness Book of World Records as the largest cash transfer programme in the world, has helped to save about Rs 15,000 crore by stopping black marketing and diversions, Prime Minister Narendra Modi had said in his address from the ramparts of the Red Fort on August 15, 2015.

On April 25 this year, petroleum minister Dharmendra Pradhan informed the Lok Sabha that the government has decided to rationalise the subsidy outgo by excluding such LPG consumers from the purview of subsidy whose or whose spouse have taxable income of Rs 10 lakh and above during the previous financial year computed as per the Income Tax Act, 1961, with effect from January 1.

Source : The Hindu

Luxury item like gold jewellery can’t stay out of tax net: Arun Jaitley : 29-04-2016


The government has ruled out rollback of 1% excise duty on gold jewellery levied in the budget, calling it a tax on a luxury item. Finance minister Arun Jaitley said gold cannot remain out of the tax net when goods used by common people were being taxed.

Jaitley referred to items like soap, toothpaste, razor, pencil, ink, fruit juices and baby food attracting excise duty. “Why should the luxury items be exempted from tax,” he said, responding to a calling attention motion in Rajya Sabha. He added that even imitation jewellery attracted 6% excise duty.

Rubbishing Congress leader Raj Babbar’s charge that government was killing the trade and hurting local artisans, the finance minister reasoned that trade had not developed to the extent that annual turnovers of small jewellers had crossed Rs 6 crore. “This is implemented on big chains,” he said, adding it was a step towards implementation of the goods and services tax (GST).

Maintaining that a 18% GST  rate cannot be reached if luxury items were not taxed, he said the levy will be imposed only on corporate jewellers having a turover of up to Rs12 crore last year.

“Small jewellers and artisans are not covered within the ambit of this levy,” FM said While referring to states levying value added tax (VAT) on jewellery, Jaitley said if states felt the levy was not in order they should first remove VAT.

“Each state imposes VAT on gold and in  Kerala it is as high as 5%. If you (opposition) are so much concerned then get it removed from Kerala,” he said. Jaitley recalled that the UPA regime had imposed taxes on jewellery in 2005 and withdrawn it in 2009 in face of stiff opposition. It again imposed it in 2012 but the decision was rolled back again. Miffed Congress and Samajwadi Party staged a walkout from the House.

Sticking to his decision, the minister added, “We have to decide on which items we will impose excise duty and if there is any structured trade, they do not get the right to resort to agitation against tax.”

Jewellers have been on strike since the budget protesting against the levy on the grounds that it will lead to harassment. He allayed jewellers’ fears citing there will be no physical verification and tax can be paid on self-certification based on VAT returns.

“If any excise official or khakidressed man harrasses, jeweller just needs to click a snap on their mobile and send it to me,” finance minister said. The government has also formed a committee under former Chief Economic Advisor Ashok Lahiri that would also include three representatives of jewellers to address their concerns. So far, 206 jewellers have registered and the deadline for it has been extended till June 30 from March 31.

Source : PTI

Companies need not make adjustments in net profit for MAT under IndAS : 29-04-2016


Giving some clarity to companies switching to the new accounting standards, an expert Committee of Finance Ministry has said that there may not be any rise in tax burden for them. The committee, led by retired Indian Revenue Service Officer MP Lohia, has concluded that corporates will not have to make any adjustments to net profits while computing book profits to pay minimum alternate tax (MAT).

“Considering the implicit relation between distributable profits which is available for payment of dividend distribution tax, no further adjustments are required to be made to the net profits (Excluding net other comprehensive income) of India AS compliant companies, other than those already specified,” the Committee report said. The government had set up the expert panel in June last year to resolve the differences arising in the computation of MAT when companies with a turnover of over Rs. 500 crore adopt the Indian Accounting Standards (IndAS) from 2016-17. A number of firms had expressed concerns over their tax liabilities rising significantly due to the new system of accounting.

The Finance Ministry has now sought public comments on the report by May 10, before it finalises the guidelines. “The Committee submitted its report on 18 March, 2016 after having consultation with the Ministry of Corporate Affairs (MCA),” it said in a statement. “The net profits under Ind AS may include a sizeable amount of notional or unrealised gains or losses. If the MCA prescribes any further adjustments to the current year profits for computation of distributable profits, the requirement for any additional adjustments to the book profit under section 115JB may be examined,” said the Committee in its report. It also recommended that items that are a part of the net other comprehensive income should be included in book profits for MAT purposes at an appropriate point of time.

These include changes in revaluation surplus, re-measurements of defined benefit plans, gains and losses from investments in equity instruments designated at fair value. It further said those adjustments recorded in reserves and which would subsequently be reclassified to the profit and loss account, should be included in book profits in the year in which these are classified to the profit and loss account.

Experts welcomed the report and said it is in harmony with the current structure. “Industry can now start preparing themselves for the accounting standards. It has indicated that the same treatment would be carried forward,” said Vikas Gupta, Partner, Nangia & Co. Sunil Shah, Partner, Deloitte, concurred, saying: “The usual adjustments will continue to be made. But, there could be an impact in cases where unrealised gains and losses on fair value accounting are recorded in the profit and loss account, which is permissible under IndAS.

Source : The Hindu

66 – 28-4-2016


CIRCULAR NO 66/RBI., Dated: April 28, 2016

Opening and Maintenance of Rupee / Foreign Currency Vostro Accounts of Non-Resident Exchange Houses: Rupee Drawing Arrangement

Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to paragraph (C) 3 vii of the A. P. (DIR Series) Circular No. 28 [A. P. (FL/RL Series) Circular No. 02] dated February 06, 2008 and paragraph No. 3(h) and 5C of Master Direction No.2 dated January 1, 2016 on Opening and Maintenance of Rupee / Foreign Currency Vostro Accounts of Non-Resident Exchange Houses: Rupee Drawing Arrangement regarding collateral cover under Speed Remittance Procedure which inter-alia stipulated that the Exchange Houses shall keep with the AD Category – I bank a cash deposit in any convertible foreign currency equivalent to three days’ estimated drawings on which market related interest rate may be paid. The Exchange House can also keep the said collateral in the form of guarantees from a bank of international repute. The adequacy of collateral should be reviewed by the AD Category – I bank at regular intervals. These requirements were relaxed vide A. P. (DIR Series) Circular No. 16 [A. P. (FL/RL Series) Circular No. 3] dated November 27, 2009 and the collateral requirement was brought down to one day’s estimated drawings.

2. To further streamline the remittance arrangement under the Speed Remittance Procedure and make remittances cost-effective, it has now been decided to do away with the mandated requirement of maintenance of collateral or cash deposits by the Exchange Houses with whom the banks have entered into the Rupee Drawing Arrangement. The AD banks are free to determine the collateral requirement, if any, based on factors, such as, whether the remittances are pre-funded, the track record of the Exchange House, whether the remittances are effected on gross (real-time) or net (file transfer) basis, etc., and may frame their own policy in this regard.

3. Master Direction No.2 dated January 1, 2016 is being updated, to reflect the changes. The other instructions issued vide the above mentioned circulars shall remain unchanged.

4. AD Category-I banks may bring the contents of this circular to the notice of their constituents concerned.

5. The directions contained in this Circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999), as amended from time to time and are without prejudice to permission /approvals, if any, required under any other law.

RBI/2015-16/386

(Shekhar Bhatnagar)
Chief General Manager-in-Charge

65 – 28-4-2016


A P (DIR Series)

CIRCULAR NO

65/RBI., Dated: April 28, 2016

Import of Goods: Import Data Processing and Monitoring System (IDPMS)

Attention of Authorised Dealers is invited to Section 5 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Government of India Notification No. G.S.R. 381(E) dated May 3, 2000 viz. Foreign Exchange Management (Current Account Transaction) Rules, 2000 on import of goods read with A.P. (DIR Series) Circular No. 9 dated August 24, 2000 which provides the procedure, mode/manner of payment for imports and submission of related returns.

2. Reserve Bank of India had constituted a Working Group (Chairman: Shri A. K. Pandey, CGM, FED) comprising of representatives from Customs, Directorate General of Foreign Trade (DGFT), Special Economic Zone (SEZ), Foreign Exchange Dealers Association of India (FEDAI) and select Authorised Dealer banks (AD banks), to suggest putting in place a comprehensive IT- based system to facilitate efficient processing of all import transactions and effective monitoring thereof. The Working Group had recommended development of a robust and effective IT- based system “Import Data Processing and Monitoring System “(IDPMS) on the lines of “Export Data Processing and Monitoring System” (EDPMS) in consultation with the Customs authorities and other stakeholders.

3. To track the import transactions through banking system, Customs will modify the Bill of Entry format to display the AD Code of bank concerned, as reported by the importers. Primary data on import transactions from Customs and SEZ will first flow to the RBI secured server and thereupon depending on the AD code shall be shared with the respective banks for taking the transactions forward. The AD bank shall enter every subsequent activity, viz. document submission, outward remittance data, etc. in IDPMS so as to update the RBI database on real time basis. It is therefore, necessary that AD banks upload and download data on daily basis.

4. For non EDI (manual) Customs ports, till they are upgraded to EDI (computerised) ports, nodal branch of AD Category – I banks will upload Bills of Entry (BoE) data based on original BoE with stamp/signature of the Customs as submitted by importer. Under no circumstances, AD category – I banks will process the transactions till the concerned BoE is reflected in the IDPMS. Customs will share a copy of manual BoE with respective Regional Office of RBI for information as they presently do for shipping bills in the case of exports.

5. The date of operationalization of IDPMS will be notified shortly. All import remittances outstanding as on the notified date shall have to be uploaded in IDPMS. Further, to facilitate smooth processing of import transactions and closure of BoE and advance remittances in IDPMS, the following guidelines will be followed by the AD category – I banks:

6. Write off of import bills

i) AD Category I banks can consider closure of bills in IDPMS that involve write off to the extent of 5% of invoice value in cases where the amount declared in BoE varies from the actual remittance marginally due to discounts, fluctuation in exchange rates, change in the amount of freight, insurance, etc. Cases, where write off is on account of quality issues; short shipment or destruction of goods by the port / Customs / health authorities, may be closed with remarks subject to submission of satisfactory documentation for the same, irrespective of the amount involved.

ii) While allowing write off, AD Category – I banks must ensure that:

a) The case is not the subject matter of any pending civil or criminal suit;

b) The importer has not come to the adverse notice of the Enforcement Directorate or the Central Bureau of Investigation or any such other law enforcement agency; and

c) There is a system in place under which internal inspectors or auditors of the AD category – I banks (including external auditors appointed by authorised dealers) should carry out random sample check / percentage check of write-off of import bills; and

iii) Cases not covered by the above instructions / beyond the above limits, may be referred to the concerned Regional Office of Reserve Bank of India.

iv) The above guidelines are only meant to facilitate closure of bills in IDPMS and do not in any way absolve the importer from remitting / receiving the amount in case circumstances change.

7. Extension of Time

i) AD Category – I banks can consider granting extension of time for settlement of import dues up to a period of six months at a time (maximum up to the period of three years) irrespective of the invoice value for delays on account of disputes about quantity or quality or non-fulfilment of terms of contract; financial difficulties and cases where importer has filed suit against the seller. In cases where sector specific guidelines have been issued by Reserve Bank of India for extension of time (i.e. rough, cut and polished diamonds), the same will be applicable.

ii) While granting extension of time, AD Category -I banks must ensure that:

a) The import transactions covered by the invoices are not under investigation by Directorate of Enforcement / Central Bureau of Investigation or other investigating agencies;

b) While considering extension beyond one year from the date of remittance, the total outstanding of the importer does not exceed USD one million or 10 per cent of the average import remittances during the preceding two financial years, whichever is lower; and

c) Where extension of time has been granted by the AD Category – I banks, the date up to which extension has been granted may be indicated in the ‘Remarks’ column.

iii) Cases not covered by the above instructions / beyond the above limits, may be referred to the concerned Regional Office of Reserve Bank of India.

8. Follow-up for Evidence of Import

i) As per extant guidelines, AD Category – I banks have to submit a statement on half-yearly basis as at the end of June & December of every year, in form BEF furnishing details of import transactions, exceeding USD 100,000 in respect of which importers have defaulted in submission of appropriate document evidencing import within six months from the date of remittance using the online eXtensible Business Reporting Language (XBRL) system on bank-wide basis to the respective Regional Offices of the RBI.

ii) On operationalization of IDPMS, all outstanding import remittances, irrespective of the amount involved, will be uploaded into the system and submission of a separate BEF statement would be discontinued from a date to be notified separately.

iii) AD Category – I banks are required to follow up submission of evidence of import and remittance within stipulated time irrespective of the amount involved.

9. AD Category – I banks shall put in place a system to ensure that all import transactions and related remittances are processed only through IDPMS from the date to be notified shortly. The AD category – I banks should, therefore be in readiness mode for switching to the proposed IT based system. The requisite message formats and technical specifications have been shared with AD category -I banks via e-mail. These have also been placed on website (https://edpms.rbi.org.in).

10. Authorised Dealers may bring the contents of this circular to the notice of their constituents and customers concerned.

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

RBI/2015-16/385

(A K Pandey)
Chief General Manager

64/2015-16 [(1)/13(R)] – 28-4-2016


A P (DIR Series)

CIRCULAR NO

64/RBI., Dated: April 28, 2016

Foreign Exchange Management (Remittance of Assets) Regulations, 2016

Attention of Authorised Dealers (ADs) is invited to (a) A.D. (M.A. Series) Circular No. 11 dated May 16, 2000 in terms of which ADs were advised of various Rules, Regulations, Notifications/ Directions issued under the Foreign Exchange Management Act, 1999 (hereinafter referred to as the Act) and (b) Para 2.3 and 3.2 of Master Direction No. 13 on Remittance of Assets. On a review it is felt necessary to revise the regulations issued under the Foreign Exchange Management (Remittance of Assets) Regulations, 2000, as amended from time to time. Accordingly, in consultation with the Government of India, the said regulations have been repealed and superseded by the Foreign Exchange Management (Remittance of Assets) Regulations, 2016 (Notification No. FEMA 13(R)/2016-RB dated April 1, 2016, hereinafter referred to as Remittance of Assets Regulations).

2. Some key definitions in the regulations are:

a) A ‘Non-resident Indian (NRI)’ is a person resident outside India who is a citizen of India

b) A ‘Person of Indian Origin (PIO)’ is a person resident outside India who is a citizen of any country other than Bangladesh or Pakistan or such other country as may be specified by the Central Government, satisfying the following conditions:

(i) Who was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or

(ii) Who belonged to a territory that became part of India after the 15th day of August, 1947; or

(iii) Who is a child or a grandchild or a great grandchild of a citizen of India or of a person referred to in clause (a) or (b); or

(iv) Who is a spouse of foreign origin of a citizen of India or spouse of foreign origin of a person referred to in clause (a) or (b) or (c)

Explanation: PIO will include an ‘Overseas Citizen of India’ cardholder within the meaning of Section 7(A) of the Citizenship Act, 1955.

c) ‘Remittance of asset’ means remittance outside India of funds in a deposit with a bank/ firm/ company, provident fund balance or superannuation benefits, amount of claim or maturity proceeds of Insurance policy, sale proceeds of shares, securities, immovable property or any other asset held in India in accordance with the provisions of the Act or rules/ regulations made under the Act;

d) ‘Expatriate staff’ is a person whose provident/ superannuation/ pension fund is maintained outside India by his principal employer outside India;

e) ‘Not permanently resident’ is a person resident in India for employment of a specified duration or for a specific job/ assignment, the duration of which is not more than three years.

3. The salient features of the Remittance of Assets regulations are given as under:

a) Remittance of capital assets in India held by a person whether resident in or outside India would require the approval of the Reserve Bank except to the extent provided in the Act or Rules or Regulations made under the Act.

b) In terms of regulation 4(1) of the Remittance of Assets regulations, ADs may allow remittance of assets, up to USD one million per financial year, by a foreign national (not being a PIO or a citizen of Nepal or Bhutan), on submission of documentary evidence, in case:

(i) the person has retired from employment in India;

(ii) the person has inherited the assets from a person referred to in section 6(5) of the Act;

(iii) the person is a non-resident widow/ widower and has inherited assets from the person’s deceased spouse who was an Indian citizen resident in India.

In case the remittance is made in more than one instalment, the remittance of all instalments should be made through the same AD.

c) In terms of regulation 4(1), ibid, ADs may allow remittance of balance amount, held by a foreign student in a bank account in India, after completion of his/her studies/training in India.

d) In terms of regulation 4(2), ibid, ADs may allow NRIs and PIOs, on submission of documentary evidence, to remit up to USD one million, per financial year:

(i) out of balances held in their Non-Resident (Ordinary) Accounts (NRO accounts)/ sale proceeds of assets/ assets acquired in India by way of inheritance/ legacy;

(ii) out of assets acquired under a deed of settlement made by either of his parents or a relative as defined in Companies Act, 2013. The settlement should take effect on the death of the settler.

In case the remittance is made in more than one instalment, the remittance of all instalments should be made through the same AD. Further, where the remittance is to be made from the balances held in the NRO account, the Authorised Dealer should obtain an undertaking from the account holder stating that “the said remittance is sought to be made out of the remitter’s balances held in the account arising from his/ her legitimate receivables in India and not by borrowing from any other person or a transfer from any other NRO account and if such is found to be the case, the account holder will render himself/ herself liable for penal action under FEMA.”

e) In terms of regulation 4(3), ibid, ADs may allow remittances by Indian companies under liquidation on directions issued by a Court in India.

f) In terms of regulation 5, ibid, ADs may also allow Indian entities to remit their contribution towards the provident fund/ superannuation/ pension fund in respect of their expatriate staff resident in India but “not permanently resident” in India.

g) In terms of regulation 6, ibid, ADs may permit remittance of assets on closure or remittance of winding up proceeds of branch office/ liaison office (other than project office) as per Reserve Bank’s directions from time to time.

h) In terms of regulation 7, ibid, remittance of assets on hardship ground and remittances by NRIs and PIOs in excess of USD one million/financial year would require the prior approval of the Reserve Bank.

i) Any transaction involving remittance of assets under these regulations are subject to the applicable tax laws in India.

4. The new regulations have been notified vide Notification No. FEMA. 13(R)/2016-RB dated April 1, 2016 c.f. G.S.R. No.388 (E) dated April 1, 2016 and shall come into force with effect from April 1, 2016. The Master Direction No.13 has also been amended to incorporate the changes.

5. AD Category- I banks may bring the contents of the circular to the notice of their constituents concerned.

6. The directions contained in this circular have been issued under 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.

RBI/2015-16/ 384

(A K Pandey)
Chief General Manager

No. PRESS RELEASE Dated: 28-4-2016


Framework for computation of book profit for the purposes of levy of MAT under section 115JB of the Income-tax Act, 1961 for Indian Accounting Standards (Ind AS) compliant companies. – Circular – Dated 28-4-2016 – Income Tax

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 28th April, 2016

PRESS RELEASE

Subject: Framework for computation of book profit for the purposes of levy of MAT under section 115JB of the Income-tax Act, 1961 for Indian Accounting Standards (Ind AS) compliant companies.

On the basis of the recommendations of the Committee on MAT-Ind AS, the Central Government has notified 10 ICDS vide Notification No. S.O.892(E) dated 31st March, 2015. With the approval of the Finance Minister , the above said Committee was also requested to suggest the framework for computation of book profit for the purposes of levy of MAT under section 115JB of the Income-tax Act, 1961 for Indian Accounting Standards (Ind AS) compliant companies in the year of adoption and thereafter. The Committee submitted its report on 18th March, 2016 after having consultation with the Ministry of Corporate Affairs (MCA) which is now placed on www.incometaxindia.gov.in for inviting comments/suggestions from stakeholders.

The stake holders and general public are requested to bring out issues/points which in their opinion would require further clarification/guidance. These issues/points may be submitted by 10th May, 2016 at the email addresses (dirtpl3@nic.in) or by post at the following address with “Computation of book profit for Ind-AS compliant companies” written on the envelope:

Director (Tax Policy & Legislation)-III

Central Board of Direct Taxes,

Room No.147-G,

North Block,

New Delhi-110001

(Meenakshi J Goswami)

Commissioner of Income Tax

(Media and Technical Policy)

Official Spokesperson, CBDT.

Notification No: 29/2016 Dated: 28-4-2016


Income-tax (10th Amendment) Rules, 2016 – 29/2016 – Dated 28-4-2016 – Income Tax

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 29/2016

New Delhi, the 28th April, 2016

INCOME-TAX

S.O. ___(E).- In exercise of the powers conferred by section 35, 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 (10th Amendment) Rules, 2016.

(2) They shall come into force on the 1st day of July, 2016.

2. In the Income-tax Rules, 1962 (hereafter referred to as the said rules), in rule 6,-

(a) in sub-rule (7), for the words and brackets “Director General (Income-tax Exemptions)” wherever they occur, the words “Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Director General of Income-tax or Director General of Income-tax having jurisdiction over the sponsor” shall be substituted;

(b) in sub-rule (7A),-

(A) for clause (b), the following clauses shall be substituted, namely:-

“(b) The prescribed authority shall furnish electronically its report,-

(i) in relation to the approval of in-house research and development facility in Part A of Form No. 3CL;

(ii) quantifying the expenditure incurred on in-house research and development facility by the company during the previous year and eligible for weighted deduction under sub-section (2AB) of section 35 of the Act in Part B of Form No.3CL;

(ba) The report in Form No.3CL referred to in clause (b) shall be furnished electronically by the prescribed authority to the Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Director General of Income-tax or Director General of Income-tax having jurisdiction over such company within one hundred and twenty days,-

(i) of the grant of the approval, in a case referred to in sub-clause (i) of clause (b);

(ii) of the submission of the audit report, in a case referred to in sub-clause (ii) of clause (b);”;

(B) in clause (c), for the words, figures and letters “a copy thereof shall be furnished to the Secretary, Department of Scientific and Industrial Research by 31st day of October of each succeeding year”, the words, figures, letters and brackets “a report of audit in Form No.3CLA shall be furnished electronically to the Secretary, Department of Scientific and Industrial Research on or before the due date specified in Explanation 2 to sub-section (1) of section 139 of the Act for furnishing the return of income, for each succeeding year” shall be substituted;

(c) after sub-rule (7A), the following sub-rule shall be inserted, namely:-

“8. For the purposes of this rule, the Principle 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 the day-to-day administration in relation to furnishing the information in the manner so specified.”.

3. In the said rules, in Appendix II,-

(a) in Form No.3CK,-

(i) in Part A, for item 3, the following shall be substituted, namely:-

“3. Address, phone number of the Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Director General of Income-tax or Director General of Income-tax having jurisdiction over the company.

3A. Please specify the nature and business/activity of the company-

(a) business of bio-technology

(b) manufacture/production of article or things (Please specify the product).”;

(ii) in Part B,-

(A) for items (ii) and (iii), the following shall be substituted, namely:-

“(ii) the above Research and Development facility shall be exclusively used by the First Party to carry out scientific research relating to bio-technology or manufacture or production of any eligible article or thing under sub-section (2AB) of section 35 of the Act,

(iii) the First Party shall provide full co-operation to the Second Party in carrying out the Research and Development work relating to bio-technology or manufacture or production of eligible article or thing under sub-section (2AB) of section 35 of the Act,”;

(B) in item (v), for the words and brackets, “Director General of Income-tax (Exemptions) within a period of sixty days”, the words “Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Director General of Income-tax or Director General of Income-tax having jurisdiction over the First Party within a period of one hundred and twenty days” shall be substituted;

(iii) in Part C, for items (iii) and (iv), the following shall be substituted, namely:-

“(iii) render full co-operation in carrying out the Research and Development work relating to bio-technology or manufacture or production of any eligible article or thing under sub-section (2AB) of section 35 of the Act;

(iv) ensure that the company does not manufacture any product listed in the Eleventh Schedule of the Act;

(v) ensure that the company shall reflect the capital and revenue expenditure on in-house research and development facility in the schedules/notes to accounts in the audited financial statement of the company prepared for the purposes of its annual report and for the purposes of computation of income-tax;

(vi) submit the information as per Annexure-I and Annexure-II every year for the approved period on or before the due date specified in Explanation 2 to sub-section (1) of section 139 of the Act for furnishing the return of income;

(vii) ensure that the assets acquired by the approved facility will be utilised only for the approved purpose and shall not be disposed of without the approval of the Secretary, Department of Scientific and Industrial Research.”;

(iv) after Part C, the following shall be inserted, namely:-

“Annexure-I

(a) Information to be furnished separately in respect of each research and development facility approved by prescribed authority under section 35(2AB) of the Act.

1. Name and address of the registered office of the company

2. Permanent Account Number of the company

3. Previous year

4. Assessment year

5. A brief note on progress of each of the projects shown in the application to the prescribed authority at the time of approval. Any changes with regard to the scope of the projects as originally envisaged may be highlighted.

6. Details of any additional projects taken up during the previous year.

7. Details of changes, if any, in the research and development infrastructure during the previous year.

8. Details of research and development achievements and technologies commercialised during the previous year.

9. Details of patents obtained and/or filed during the previous year.

10. Details of any other changes in the approved research and development centre.

I certify that the above details are true and correct to the best of my knowledge and belief.

Signature of the Principal Officer of the company

(Name, designation and address)

Date:

Place:

Rate cut will ensure EPFO has surplus for provisioning: FinMin : 28-04-2016


With the government facing flak for its decision to cut the interest rate on the employees’ provident fund to 8.7 per cent for 2015-16, the Finance Ministry has said this was suggested to ensure sufficient provisioning for future liabilities.

“We have communicated that the Employees’ Provident Fund Organisation (EPFO) needs to have adequate surplus to meet any shortfalls in the coming year,” said a Finance Ministry official, while noting that the final decision has to be notified by the Labour Ministry.

“There has been a decision to credit interest in all inoperative accounts as well. So, there is nothing wrong with some surplus,” said another person familiar with the development.

Sources said the Labour Ministry, which is understood to be consulting the EPFO, is likely to discuss the interest rate proposal with the Finance Ministry again.

Open to discussions

“There can be further discussions if the Labour Ministry so wants. As of now, our suggestion on the interest rate is final,” said Finance Ministry officials.

Labour Minister Bandaru Dattatreya had on Monday informed the Lok Sabha that the Finance Ministry had ratified an interest rate of 8.7 per cent, against the recommendation of 8.8 per cent by the Central Board of Trustees of the EPFO.

In fact, after announcing the “interim rate”, the Labour Ministry was also planning to hike the rate further as it had a surplus of about ₹1,000 crore.

The Finance Ministry’s decision has been perceived as a move to keep the Provident Fund interest rate in sync with the rates for popular small savings schemes, such as the Public Provident Fund and Kisan Vikas Patra, which are now aligned to G-sec yields of the previous quarter.

Unions’ strike call

Central trade unions have opposed the “unilateral” rate cut by the government and have decided to hold demonstrations against it on April 29.

They said the Central Board of Trustees had recommended an 8.8 per cent rate as an interim measure as there was an indication that it could be increased further in view of availability of funds generated by the EPF.

Source : The Hindu

Long gap between GST panel meetings : 28-04-2016


With the Centre’s biggest proposed legislative reform, goods and services tax (GST), roll-out well past the deadline of April 2016, things might have slowed down at state level, too. The empowered committee of state finance ministers has not met to discuss the legislation for five months now.

West Bengal Finance Minister Amit Mitra was elected chairman of the empowered committee in February, after former chairman K M Mani stepped down as Kerala finance minister on graft charges. Mitra is yet to call a meeting.

This is significant, considering the Narendra Modi government is seen escalating efforts for the passage of the constitutional amendment Bill towards the unified indirect tax legislation.

The Union government is making all efforts to enable the GST roll-out, including pushing for passage of constitutional amendment Bill in the Rajya Sabha during the ongoing Budget session.

The Lok Sabha has already passed the Bill, stalled in the other House for want of majority support. After the passage, Bills of the GST itself would come before Parliament and state Assemblies. Rules will, then, be framed. The empowered committee needs to discuss key issues on the proposed rules. The empowered committee met in February to elect the chairman, but Mitra himself did not attend for health reasons.

In the earlier meeting in November 2015, 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 2015, but it 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. Congress has been demanding a cap of GST rate at 18 per cent in the Bill, but has met with stiff opposition from the ruling Bharatiya Janata Party as it will curb the flexibility of the proposed GST Council to change rates when needed.

Source : Business Standard

ST clarificatory Circular 192 falls short of expectations – 26-04-2016


Taxindiaonlinelogo-jpg

          By S Sivakumar, LL.B, FCA, FCS, ACSI, MBA, Advocate

THE TRU has come out with four notifications and a circular dated April 13, 2016, seeking to clarify the levy of service tax on services rendered by the Government.

These are –

Notification No. 22/2016-Service Tax, Dated: April 13, 2016

Notification No. 23/2016-Service Tax, Dated: April 13, 2016

Notification No. 24/2016-Service Tax, Dated: April 13, 2016

Notification No. 24/2016-Central Excise (NT), Dated: April 13, 2016

CBEC Circular No. 192/02/2016-Service Tax, Dated-April 13, 2016

While the intent behind these is laudable, it would seem that the Circular would create more confusion than clarify.

In Sl Nos 3 and 4, the circular clarifies that, there would be no service tax on taxes, cesses, duties, fines and penalties including fines and penalties payable to the Government for violation of a statute, bye-laws, rules or regulations, on the basis that, these are not consideration for any particular service as such and hence not leviable to service tax. Thanks to this clarification, any late fee or penalty payable for, let’s say, late or non-filing of the ST-3 return is also not subject to service tax levy. Also, in terms of Notification No. 22/2016-ST dated 13-4-2016, fines and liquidated damages payable to the Government for non-performance of contracts are not subject to service tax. There are also welcome clarifications in terms of services provided by one Government to another Government or local authority, in terms of Sl.No. 1 of the circular. There is also a welcome exemption in terms of services provided by way of grant of passport, visa, etc. to an individual who may be carrying out a profession or business, in terms of Notification No. 22/2016-ST dated 13-4-2016, as is the exemption provided in Notification No. 22/2016-ST dated 13-4-2016 where the gross amount charged does not exceed Rs 5,000/-. So far so good.

I have an arguable issue in the matter of clarification given at Sl.No. 5, wherein, it has been clarified as under :

“It is clarified that any activity undertaken by Government or a local authority against a consideration constitutes a service and the amount charged for performing such activities is liable to Service Tax. It is immaterial whether such activities are undertaken as a statutory or mandatory requirement under the law and irrespective of whether the amount charged for such service is laid down in a statute or not. As long as the payment is made (or fee charged) for getting a service in return (i.e., as a quid pro quo for the service received), it has to be regarded as a consideration for that service and taxable irrespective of by what name such payment is called. It is also clarified that Service Tax is leviable on any payment, in lieu of any permission or license granted by the Government or a local authority.”

The Government seems to believe there is always a quid pro quo in terms of a service rendered by the Government, whenever a ‘fee’ is paid (as contrasted to a case where a ‘tax’ is paid). It would then become necessary to understand and appreciate the difference between a ‘fee’ and a ‘tax’, as a ‘fee’ which is essentially in the nature of a ‘tax’ cannot be subjected to the levy of service tax.

In Sri Krishna Das v Town Area Committee, Chirgaon [(1990) 3 SCC 645], the Apex Court has succinctly discussed the difference between a ‘fee’ and a ‘tax’ by observing, as under:

Quote:

“22. A fee is paid for performing a function. A fee is not ordinarily considered to be a tax. If the fee is merely to compensate an authority for services performed or as compensation for the services rendered, it can hardly be called a tax. However, if the object of the fee is to provide general revenue of the authority rather than to compensate it, and the amount of the fee has no relation to the value of the services, the fee will amount to a tax. In the words of Cooley, “A charge fixed by statute for the service to be performed by an officer, where the charge has no relation to the value of the services performed and where the amount collected eventually finds its way into the treasury of the branch of the government whose officer or officers collect the charge is not a fee but a tax.”

23. Under the Indian Constitution the State Government’s power to levy a tax is not identical with that of its power to levy a fee. While the powers to levy taxes is conferred on the State legislatures by the various entries in List II, in it there is Entry 66 relating to fees, empowering the State Government to levy fees “in respect of any of the matters in this list, but not including fees taken in any court”. The result is that each State legislature has the power, to levy fees, which is co-extensive with its powers to legislate with respect to substantive matters and it may levy a fee with reference to the services that would be rendered by the State under such law. The State may also delegate such a power to a local   authority. When a levy or an imposition is questioned, the court has to inquire into its real nature inasmuch as though an imposition is labelled as a fee, in reality it may not be a fee but a tax, and vice versa. The question to be determined is whether the power to levy the tax or fee is conferred on that authority and if it falls beyond, to declare it ultra vires.

24. We have seen that a fee is a payment levied by an authority in respect of services performed by it for the benefit of the payer, while a tax is payable for the common benefits conferred by the authority on all tax payers. A fee is a payment made for some special benefit enjoyed by the payer and the payment is proportional to such benefit. Money raised by fee is appropriated for the performance of the service and does not merge in the general revenue. Where, however, the service is indistinguishable from the public services and forms part of the latter it is necessary to inquire what is the primary object of the levy and the essential purpose which it is intended to achieve. While there is no quid pro quo between a tax payer and the authority in case of a tax, there is a necessary co-relation between fee collected and the service intended to be rendered. Of course the quid pro quo need not be understood in mathematical equivalence but only in a fair correspondence between the two. A broad co- relationship is all that is necessary.”

Unquote

In another interesting decision, viz. Jindal Stainless Ltd. &   Anr. v. State of Haryana & Ors . [(2006) 7 SCC 241] = 2006-TIOL-34-SC-MISC-CB, a Constitution Bench of the Apex Court has stated as under:

Quote

“40. Tax is levied as a part of common burden. The basis of a tax is the ability or the capacity of the taxpayer to pay. The principle behind the levy   of a tax is the principle of ability or capacity. In the case of a tax, there is no identification of a specific benefit and even if such identification is there, it is not capable of direct measurement. In the case of a tax, a particular advantage, if it exists at all, is incidental to the State’s action. It is assessed on certain elements of business, such as, manufacture, purchase, sale, consumption, use, capital, etc. but its payment is not a condition precedent. It is not a term or condition of a licence. A fee is generally a term of a licence. A tax is a payment where the special benefit, if any, is converted into common burden.

41. On the other hand, a fee is based on the “principle of equivalence”. This principle is the converse of the “principle of ability” to pay. In the case of a fee or compensatory tax, the “principle of equivalence” applies. The basis of a fee or a compensatory tax is the same. The main basis of a fee or a compensatory tax is the quantifiable and measurable benefit. In the case of a tax, even if there is any benefit, the same is incidental to the government action and even if such benefit results from the government action, the same is not measurable. Under the principle of equivalence, as applicable to a fee or a compensatory tax, there is an indication of a quantifiable data, namely, a benefit which is measurable.”

Unquote

In another interesting decision, the Supreme Court in Calcutta Municipal Corporation and Others v M/s Shrey Mercantile Pvt Ltd &Others 2005 AIR SC 1879 held as under:

Quote

“According to “Words & Phrases”, Permanent Edition, Vol. 41 Page 230, a charge or fee, if levied for the purpose of raising revenue under the taxing power is a “tax”. Similarly, imposition of fees for the primary purpose of “regulation and control” may be classified as fees as it is in the exercise of “police power”, but if revenue is the primary purpose and regulation is merely incidental, then the imposition is a “tax”. A tax is an enforced contribution expected pursuant to a legislative authority for purpose of raising revenue to be used for public or governmental purposes and not as payment for a special privilege or service rendered by a public officer, in which case it is a “fee”. Generally speaking “taxes” are burdens of a pecuniary nature imposed for defraying the cost of governmental functions, whereas charges are “fees” where they are imposed upon a person to defray the cost of particular services rendered to his account.”

Unquote

Applying the law laid down by the Apex Court in these decisions, it would seem that in many instances, the so-called ‘fee’ is actually a ‘tax’ and consequently, service tax cannot be levied. An example that immediately comes to my mind are the fees that are charged by the Municipal Corporations on owners of flats, which are normally charged on a per square feet basis, which have to be treated as ‘taxes’. Similarly, fees collected by the State Government agencies towards providing various connections related to electricity, water, etc. might also be considered as ‘taxes’ and consequently, service tax may not be leviable.

Taking this discussion forward…in terms of the circular, even sovereign and statutory functions of the Government can be treated as ‘services’. In its circular No. 96/7/2007-ST dated August 23, 2007 , (serial no. 999.01) the Board had expressed the following view, viz.

“Many sovereign/public authorities (i.e. agencies constituted/ set up by Government) perform various functions and duties which are statutory in nature (e.g. Regional Transport Officer issuing fitness certificate, Factories inspector inspecting factories, Directorate of Boilers inspecting and certifying boilers etc.). These are mandatory and statutory functions. It cannot be said that these authorities are providing any service to any individual for consideration. Hence, these are not taxable services. However, if these authorities provide any non-statutory service, those will be liable to service tax, if the service falls within the definition of taxable service”.

One would wonder as to how this view could have undergone a change with the advent of the negative list based service tax regime. Can the Government, while performing a sovereign or statutory function be ever regarded as a service provider? There are several decisions that were rendered in the context of the positive list based service tax regime, wherein, it has been held that, service tax cannot be levied on statutory functions performed by Government Agencies.

In State of Madhya Pradesh v CCE, Gwalior 2006-TIOL-1227-CESTAT-DEL, the CESTAT took the view that, supervision charges collected as levy cannot be described as consideration for services provided for storage and warehousing. In M/s ELECTRICAL INSPECTORATE - 2007-TIOL-2175-CESTAT-BANGthe CESTAT took the view that, State Government Departments actions carried in furtherance of Sovereign functions and in terms of legislations cannot be a subject matter of Service Tax.

As we know…. consideration, which is a sine qua non for an activity to be considered as a service, is defined in Section 2(d) of the Indian Contract Act, as under:

“When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise”.

Unlike a commercial transaction, it cannot be said that, the Government, i.e. the promisee is undertaking an activity at the desire of the business entity, i.e. the promisor, especially in respect of sovereign and statutory functions, as the Government is in any case, required to perform these functions as part of its constitutional mandate. To bring these sovereign and statutory functions and activities under the service tax net is fraught with legal complications, for sure.

Before concluding…

In my view, fees paid under statutes such as the Companies Act, Factories Act, Shops and Establishments Act, etc. cannot be subjected to service tax.

Notwithstanding the fact that the Government’s move to collet service tax from the business entities on ‘services’ rendered by Government, etc. is likely to face legal challenges, business entities should expect a tough time from the overzealous Department, for whom, a Board Circular, however, illegal it might be, is more sacrosanct than a binding decision of the Apex Court.

It is not certain that the business entities that pay service tax under the reverse charge mechanism, in respect of services rendered by the Government, would be able to avail of CENVATcredit. The Department could always seek to deny credit on the basis that the fees that are paid to Government Departments have no ‘nexus’ with the output service.

 

No. 4/2016 Dated: 27-4-2016


Clarification with regard to Companies (Accounting Standards) Amendment. Rules 2016 – Dated 27-4-2016 – Companies Law

General Circular No. 04/2016

F. No.01/01/2009-CL-V

Government of India

Ministry of Corporate Affairs

5th Floor, A Wing, Shastri Bhavan,

Dr R.P. Road, New Delhi

Dated: 27th  April, 2016

To

All Regional Directors,

All Registrars of Companies,

All Stakeholders.

Subject : Clarification with regard to Companies (Accounting  Standards) Amendment. Rules 2016

Sir,

Stakeholders have sought clarifications with regard to the accounting period  for  which  the  accounts would  need  to be prepared  using the Accounting Standards, as amended through the Companies (Accounting  Standards) Amendment Rules, 2016. The matter has been examined in the Ministry and it is hereby clarified that the amended Accounting Standards should  be  used  for  preparation  of accounts  for  accounting   periods commencing on or after the date of notification.

This issues with the approval of the competent authority.

Yours faithfully

(Sudhir Kapoor)

Deputy Director

GST rollout, infrastructure funding an uphill climb for Indian government: Moody’s : 27-04-2016


Implementation of the Goods and Services Tax (GST) and bridging large infrastructure deficit are a difficult tasks before the Indian government, Moody’s Investors Service said on Wednesday.

In a report, Moody’s said a history of double-digit inflation, elevated government debt, weak infrastructure and a complex regulatory regime have constrained India’s credit profile.

“We also expect that some aspects of the government’s policy agenda — such as the implementation of GST and bridging India’s large infrastructure deficit will still face an uphill climb,” it said.

As a positive, Moody’s noted that easing of constraints on investment coupled with RBI’s inflation targeting and ongoing efforts to clean up bank balancesheets could propel growth.

Moody’s has a ‘positive’ outlook on its ‘Baa3’ rating on India, which is just a notch above the junk grade.

“Our positive outlook on India’s rating is based on our expectation of continued but gradual policy efforts to reduce the sovereign risks posed by high fiscal deficits, volatile inflation and weak bank balancesheets,” it said.

“The government has, in successive Budgets, stuck to its fiscal consolidation targets. Meanwhile, the central bank’s adoption of inflation targeting and ongoing efforts to clean up bank balancesheets will lower financial risks that would otherwise develop as growth accelerated.”

The government has eased constraints on private investment, both foreign and domestic, which should support growth and the balance of payments.

Indirect tax reform GST is currently stuck in the Rajya Sabha where the ruling NDA does not enjoy a majority. A single rate GST will replace central excise, state VAT, entertainment tax, octroi, entry tax, luxury tax and purchase tax on goods and services to ensure seamless transfer of goods and services.

Besides, the government is working on steps to modernise India’s infrastructure and is looking for avenues to fund development. It has set up a maiden sovereign wealth fund, NIIF, and is scouting for investors to buy 51 per cent stake in it. The government holds 49 per cent in NIIF.

In its report on Asia-Pacific sovereigns, Moody’s said high levels of public and private sector debt may weigh on sovereign credit quality as growth cools and financing conditions tighten.

“Each government’s policy effectiveness will determine how its credit profile navigates this climate of subdued demand and greater financial uncertainty,” it said.

According to Moody’s, policymakers across Asia face the challenge of reviving domestic growth in an environment of depressed global demand.

“Lower commodity prices and muted inflation offer monetary policy space to many central banks. However, most countries in the Asia-Pacific have less room for fiscal stimulus than they did prior to the global financial crisis,” the rating agency noted.

Source : The Economic Times

New rule applies on service tax : 27-04-2016


From the beginning of this month, services provided by a government or local authority to a business entity became liable to service tax, with some exemptions. Till enactment of the Finance Act, 2015, these services provided by a government or a local authority (with specific exclusion) were covered by a ‘negative list’. Service tax applied only on the ‘support service’ provided by the government or local authority to a business entity. In the 2015 Act, an enabling provision was made to exclude any services provided by a government or local authority to a business entity from the negative list. This amendment was given effect from April 1 this year, through a notification issued on March 1.

Clarifying the effect, the Central Board of Excise and Customs (CBEC) has said any activity undertaken by a government or local authority for any consideration (amount) constitutes a service. The amount charged for this is liable for service tax. It does not matter if such activities are a mandatory requirement under the law and whether the amount charged for such a service is laid down in a statute or not. As long as the payment is made (or fee charged) for getting a service, it has to be regarded as a consideration for that service and taxable, irrespective of the name for such a payment. It is also clarified that service tax is leviable on any payment in lieu of any permission or licence granted by a government or a local authority.

Fines, liquidated damages and taxes payable to a government or a local authority will not attract service tax, it adds.

Exporters and importers should note that services provided by a government by way of deputing officers after office hours or on holidays for inspection or container stuffing or such other duties in relation to import/export cargo on payment of merchant overtime charges are exempted. Services provided by a government or local authority by way of registration required under any law for the time being in force or for testing, calibration, safety check or certification relating to protection or safety of workers, consumers or the public at large, required under any law for the time being in force are also exempted. Also, any services where the gross amount charged for these does not exceed Rs 5,000.

Consequent to these recent changes, any fee in excess of Rs 5,000 for obtaining an import or export licence or authorisation will attract service tax. The composition fee for grant of extension of the export obligation period for advance authorisations and Export Promotion Capital Goods, settlement amounts paid by order of the Settlement Commission and fees for compounding of offences will also attract service tax. The Directorate General of Foreign Trade is yet to issue instructions in this regard.

Source : Business Standard

No.1028/2016-CX, Dated : 26-04-2016


GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
CENTRAL BOARD OF EXCISE AND CUSTOMS
NEW DELHI

CIRCULAR NO

1028/16/2016-CX , Dated: April 26, 2016

To

All Principal Chief Commissioner / Chief Commissioners of Customs, Central Excise & Service Tax;
All Director Generals of Customs, Central Excise & Service Tax;
All Principal Commissioners/ Commissioners of Customs, Central Excise & Service Tax;
Webmaster, CBEC

Subject:- Clarification with regard to disposal of Call Book cases which have been decided by Courts or Board has issued clarification-reg.

Attention is invited to Circular No. 162/73/95-CX, dated 14-12-1995, Circular No. 719/35/2003-CX, dated 28.05.2003 and Circular No. 992/16/2014-CX, dated 26.12.2014, where the Board had specified the following categories of cases which can be transferred to the Call Book, namely,

i. Cases in which the department has gone in appeal to the appropriate authority,

ii. Cases where injunction has been issued by Supreme Court/ High Court/ CEGAT, etc.

iii. Cases where audit objections are contested. (stands rescinded vide CircularNo. 1023/11/2016-CX, dated 8.4.2016)

iv. Cases where the board has specifically ordered the same to be kept pending and to be entered into the Call Book.

v. Cases referred to Settlement Commission.

2. References have been received from field formations requesting clarification on disposal of Call Book cases pertaining to (i), (ii) and (iv) above, when the same have been decided on merit by Hon’ble Supreme Court or High Courts and where such order of Hon’ble High Court has attained finality, or in cases where Board has, after the issue of instruction as in clause (iv) above, has issued a clarification on merit.

3. The matter has been examined. It is hereby clarified that such cases shall be taken out of Call Book and adjudicated where:-

(i) The issue involved has either been decided by Hon’ble Supreme Court or Hon’ble High Court and such order of the Hon’ble High Court has attained finality or,

(ii) Board has issued new instruction or circular clarifying the issue involved, subsequent to issue of the order to transfer the case to the Call Book.

4. A separate direction to take such cases out of the Call Book should not be awaited from the Board. This clarification applies to cases involving Central Excise duty, Customs duty and Service Tax.

5. Field formations may be informed accordingly. Difficulty experienced, if any, in implementing the circular should be brought to the notice of the Board. Hindi version would follow.

[F.No. 21/1/2016-CX.I]

(Santosh Kumar Mishra)
Under Secretary to the Government of India

Notification No. S.O. 1699(E) 26-4-2016


SECTION 4 OF THE SPECIAL ECONOMIC ZONES ACT, 2005 – MADHYA PRADESH AUDYOGIK KENDRA VIKAS (JABALPUR) LTD.

NOTIFICATION NO. SO 1699(E) [F.NO.F.1/14/2008-SEZ], DATED 27-4-2016

WHEREAS, M/s. Madhya Pradesh Audyogik Kendra Vikas (Jabalpur) 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 Mineral and Mineral based products sector at Village-Hargarh, Tehsil-Sihora, District-Jabalpur, in the State of Madhya Pradesh;

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 101.21 hectares at above Special Economic Zone vide Ministry of Commerce and Industry Notification Number S.O. 1841(E) dated 24th July, 2008;

And, whereas, M/s. Madhya Pradesh Audyogik Kendra Vikas (Jabalpur) Limited has now proposed for full de-notification of 101.21 hectares area at the above Special Economic Zone;

And, whereas, the State Government of Madhya Pradesh has given its “No Objection” to the proposal vide their letter No. 2271/596/295/2008/B-11, dated 15th September, 2015;

And, whereas, the Development Commissioner, Indore Special Economic Zone has recommended the proposal for full de-notification 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.

 

No. 11/2016 Dated: 26-4-2016


Payment of interest on refund under section 244A of excess TDS deposited under section 195 of the Income tax Act, 1961 – Circular – Dated 26-4-2016 – Income Tax

CIRCULAR NO 11/2016

F.No.279/Misc./M-140/2015-ITJ

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

New Delhi, 26th April, 2016

Subject:- Payment of interest on refund under section 244A of excess TDS deposited under section 195 of the Income tax Act, 1961-reg.

The procedure for refund of tax deducted at source under section 195 of the Income tax Act, 1961, to the person deducting the tax is delineated in CBDT Circular No. 7/2007 dated 23.10.2007. Circular No. 7/2007 states that no interest under section 244A of the Act, is admissible on refunds to be granted in accordance with the circular or on the refunds already granted in accordance with Circular No. 769 or Circular 790 dated 20.4.2000.

2. The issue of eligibility for interest on refund of excess TDS to a tax deductor has been a subject matter of controversy and litigation. The Hon’ble Supreme Court of India in the case of Tata Chemical Limited, Civil Appeal No. 6301 of 2011 vide order dated 26.02.2014, held that, “Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, there being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest.”

3. In view of the above judgment of the Apex Court it is settled that if a resident deductor is entitled for the refund of tax deposited under Section 195 of the Act, then it has to be refunded with interest under section 244A of the Act, from the date of payment of such tax.

4. Accordingly, it is advised that no appeals may henceforth be filed on this ground by the officers of the department and appeals already filed on this issue may not be pressed upon.

5. This may be brought to the notice of all concerned.

(Sadhana Panwar)

DCIT (OSD)(ITJ),

CBDT, New Delhi

No. 10/2016 Dated: 26-4-2016


Limitation for penalty proceedings under sections 271D and 271E of the Income tax Act, 1961 – Circular – Dated 26-4-2016 – Income Tax

CIRCULAR NO 10/2016

F.No.279/Misc./M-140/2015-ITJ

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

New Delhi, 26th April, 2016

Subject:- Limitation for penalty proceedings under sections 271D and 271E of the Income tax Act, 1961 – reg.

The issue whether the limitation for imposition of penalty under sections 271D and 271E of the Income tax Act, 1961, (hereinafter referred to as the Act) is determined under section 275(1)(a) or section 275(1)(c) of the Act, has given rise to considerable litigation.

2. The Hon’ble Delhi High Court in the case of Commissioner of Income Tax vs. Worldwide Township Projects Ltd, vide its order dated 21.5.14 in ITA No. 232/2014, considered the issue and observed that, “It is well settled that a penalty under this provision is independent of the assessment. The action inviting imposition of penalty is granting of loans above the prescribed limit otherwise than through banking channels and as such infringement of Section 269SS of the Act is not related to the income that may be assessed or finally adjudicated. In this view Section 275(1)(a) of the Act would not be applicable and the provisions of Section 275(1)(c) would be attracted. “The judgment has been accepted by the Central Board of Direct Taxes.

3. In view of the above, it is a settled position that the period of limitation of penalty proceedings under section 271D and 271E of the Act is governed by the provisions of section 275(1)(c) of the Act. Therefore, the limitation period for the imposition of penalty under these provisions would be the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. The limitation period is not dependent on the pendency of appeal against the assessment or other order referred to in section 275(1)(a) of the Act.

4. Accordingly, no appeals may henceforth be filed on this ground by the officers of the Department and appeals already filed, if any, on this issue before various Courts/Tribunals may not be pressed upon.

5. The above may be brought to the notice of all concerned.

 (Sadhana Panwar)

DCIT (OSD)(ITJ),

CBDT, New Delhi

No. 09/DV/2016 (Departmental View) Dated: 26-4-2016


Commencement of limitation for penalty proceedings under sections 271D and 271E of the Income tax Act, 1961 – Circular – Dated 26-4-2016 – Income Tax

CIRCULAR NO. 09/DV/2016

(Departmental View)

F.No.279/Misc./M-116/2012-ITJ

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF REVENUE

CENTRAL BOARD OF DIRECT TAXES

New Delhi, 26th April, 2016

Subject:- Commencement of limitation for penalty proceedings under sections 271D and 271E of the Income tax Act, 1961 – reg.

It has been brought to the notice of the Central Board of Direct Taxes (hereinafter referred to as the Board) that there are conflicting interpretations of various High Courts on the issue whether the limitation for imposition of penalty under sections 271D and 271E of the Income tax Act, 1961 (hereafter referred to as the Act) commences at the level of the Assessing Officer (below the rank of Joint Commissioner of Income Tax.) or at level of the Range authority i.e. the Joint Commissioner of Income Tax./Addl. Commissioner of Income Tax.

Some High Courts have held that the limitation commences at the level of the authority competent to impose the penalty i.e. Range Head while others have held that even though the Assessing Officer is not competent to impose the penalty, the limitation commences at the level of the Assessing Officer where the Assessing Officer has issued show cause notice or referred to the initiation of proceedings in assessment order.

2. On careful examination of the matter, the Board is of the view that for the sake of clarity and uniformity, the conflict needs to be resolved by way of a “Departmental View”.

3. The Hon’ble Kerala High Court in the case of Grihalaxmi Vision v. Addl. Commissioner of Income Tax, Range 1, Kozhikode ,vide its order dated 8.7.15 in ITA Nos. 83 & 86 of 2014, observed that, “Question to be considered is whether proceedings for levy of penalty, are initiated, with the passing of the order of assessment by the Assessing Officer or whether such proceedings have commenced with the issuance of the notice issued by the Joint Commissioner. From statutory provision, it is clear that the competent authority to levy penalty being the Joint Commissioner. Therefore, only the Joint Commissioner can initiate proceedings for levy of penalty. Such initiation of proceedings could not have been done by the Assessing Officer. The statement in the assessment order that the proceedings under Section 271D and E are initiated is inconsequential. On the other hand, if the assessment order is taken as the initiation of penalty proceedings, such initiation is by an authority who is incompetent and the proceedings thereafter would be proceedings without jurisdiction. If that be so, the initiation of the penalty proceedings is only with the issuance of the notice issued by the Joint Commissioner to the assessee to which he has filed his reply.”

4. The above judgment reflects the “Departmental View”. Accordingly, the Assessing Officers (below the rank of Joint Commissioner of Income Tax.) may be advised to make a reference to the Range Head, regarding any violation of the provisions of section 269SS and section 269T of the Act, as the case may be, in the course of the assessment proceedings (or any other proceedings under the Act). The Assessing Officer, (below the rank of Joint Commissioner of Income Tax) shall not issue the notice in this regard. The Range Head will issue the penalty notice and shall dispose/complete the proceedings within the limitation prescribed u/s 275(1)(c) of the Act.

5. Where any High Court decides this issue contrary to the “Departmental View”, the ”Departmental View” thereon shall not be operative in the area falling in the jurisdiction of the relevant High Court. However, the CCIT concerned should immediately bring the judgment to the notice of the Central Technical Committee. The CTC shall examine the said judgment on priority to decide as to whether filing of SLP to the Supreme Court will be adequate response for the time being or some legislative amendment is called for.

6. The above clarification may be brought to the notice of all officers.

(Sadhana Panwar)

DCIT(OSD)(ITJ),

CBDT, New Delhi

Notification No: G.S.R 832(E) Dated: 26-4-2016


Section 396 of CA 2013 – Jurisdiction of the state of Telangana – G.S.R 832(E) – Dated 26-4-2016 – Companies Law

Ministry of Corporate Affairs

Notification

New Delhi,

Dated: 26th April, 2015

S.O. - In exercise of the powers conferred by sub-section (1) of section 396 of the Companies Act, 2013 (18 of 2013) (herein after referred to as the said Act), the Central  Government notified  the jurisdictions of Regional  Directors  vide notification number G.S.R 832(E) dated 03.11.2015 to discharge the functions  under sub-section (1) of section 396 of the said Act.

2. In the said notification in serial number (7), in column (2), for the words “States of Karnataka and Andhra Pradesh” the words “States of Karnataka, Andhra Pradesh and Telangana” shall be substituted and shall be deemed to have been substituted with effect from 3rd November, 2015.

[F. No. 1/16/2013-CL-V]

Amardeep Singh Bhatia,

Joint Secretary to the Government of India