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

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

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The Modi government has constituted a six-member task force to review the Income Tax Act, 1961, and draft a new Direct Tax Law in consonance with economic needs of the country. The Terms of Reference of the task force is to draft an appropriate Direct Tax Legislation keeping in view (i) the direct tax system prevalent in various countries, (ii) international best practices, (iii) economic needs of the country, and (iv) any other matter connected thereto. The task force will set its own procedures for regulating its work and is required to submit its report to the government within six months.
It may be recalled that during the Rajaswa Gyan Sangam held on 1st and 2nd September, 2017, Prime Minister Narendra Modi had said that the Income Tax Act, 1961 was drafted more than 50 years ago and needs to be re-drafted.
Commenting on the government move to draft a new direct tax legislation, Vikas Vasal, Partner & Tax Leader, Grant Thornton India LLP, says that it’s a move in the right direction, and in line with government’s stated intent to boost investor and business confidence in the country.
“It’s a long journey, and constitution of the task force is the first step. A simple, easier-to-interpret direct tax code with minimal conflicts will go a long way in providing certainty and clarity to the tax payers. Unnecessary litigation on otherwise settled issues only results in waste of productive time and effort. Hopefully, the new code will address these issues, incorporating the learnings from the current tax law, as well as the decade-long discussions on the earlier Direct Tax Code that was shelved some time back,” he says.
Here’s how the new Direct Tax Law is expected to simplify tax-related issues and boost investor and business confidence:
1. Simplify Law and Declutter Redundant Provisions: The current Income Tax Act is more than 5 decades old and has suffered thousands of amendments over these years. Formation of a committee for drafting a new Direct Tax Code is a progressive step to do away with the past baggage and make the law relevant to the current business environment. A new code would simplify the law and declutter redundant provisions.
2. Pro-Business Development: This is a pro-business development as concerns of the industry can be addressed in the new law. “The government has in recent past taken several initiatives such as the issuance of clarification on debated issues, issuing detailed guidelines on new regulations, acceptance of judicial decisions etc. for the benefit of the taxpayers. One would expect that several of such measures would find a place in the new law,” says Vasal.
3. Reduce Litigation: The provisions of the Income Tax Act have been a subject matter of extensive litigation, which has led to complexity in the interpretation. A new law, without a baggage of past jurisprudence, would be simpler to interpret and is expected to reduce litigation.
4. Plug Loopholes in a Single Shot: The Direct Tax Code would provide an opportunity to the authorities to plug the loopholes in a single shot rather than making it an annual exercise. It is an excellent opportunity to make the law simpler, taxpayer-friendly, less prone to litigation and free from interpretational loopholes.
There is a word of caution though. “We need to learn from our past experience of the previous version of the direct tax code and make sure that a new law is developed on the threshold of simplicity rather than rehashing of the existing Income Tax Act in a new format,” says Vasal.

Post GST, you will see prices falling: Piyush Goyal : 17-07-2017

Stressed power assets can be a source of low-cost electricity, replacing costly supplies, says power, coal, renewable energy and mines minister Piyush Goyal. In an interview with ET , he also said the goods and services tax (GST) had rolled out smoothly and that it will end corruption and create jobs. Excerpts:

What is the outlook for stressed assets and the ultra mega power projects?
In both, I have no role to play on the face of it. There’s no licensing, no power ministry approvals. At the same time, as an Indian, I do recognise these are assets where banks have lent money, investments have been made. They will ultimately generate power the country certainly needs. In many cases, I also recognise that some of them could be (stressed) for factors beyond their control.

Like the Indonesian coal issue?
True. One can argue that they should have foreseen that there may be a change, but there is no limit to how much one can imagine about change. I’m not directly a party. I do believe these are national assets, Indian money has been invested in them and an early resolution will be in India’s interest, more so because the more power we can generate, the more the competition and efficiency in the sector. I’ve met with the bankers. They have a  viewpoint that I’ve taken very seriously and I’m trying to play the role of a facilitator to see how we can help banks find a resolution. Wherever required, we’re also willing to help with management, technology, or interface with various departments to make processes smoother, approvals smoother.

On the coal side, my biggest stress is that I don’t have enough outlets to sell the large amounts India produces. I’ll be delighted if more plants come up. It will lead to more demand for low cost power and more consumption of coal. This is now a national issue. All of us have to work together to find a solution.

What is the way forward?
SBI Capital Markets is engaged with various stakeholders and trying to see the best way forward for consumers. The objective is for the consumer to get 24×7 affordable and quality power. Keeping that in mind, whatever needs to be done in national interest, should be done. This is certainly very attractively priced power but if companies keep making losses and banks stop funding them, or if they shut down totally, we’ll have to assess what is the is the impact on transmission of power in that region; on availability of power and the transmission infrastructure to move power. It’s a large quantity of power centred in one area, supplying to five or six states. We’ll have to see if alternative power is available at those prices, or will it make it more expensive.

Can states take over stressed assets?
That’s between bankers and states. If at all, the decision of what has to be done with it will rest with bankers and promoters, but states also will probably have an interest because if the large volume of low-cost power is removed from the system, (it may lead to) power shutdowns or inadequate availability. It could also be more expensive. In some states, it may be a zero-sum game, they may be able to live without it.

How optimistic are you on resolving issues?
Within the framework of law and keeping in mind that the consumer should not suffer, the larger perspective is that consumers should not have to pay for the problem. I think a solution can always be found.

What about the other stressed assets?
We’ll have to see what’s the cost to complete them and what will be cost of power. Some are very strategically located at pitheads. Those may be much easier to resolve and provide low-cost power. We’ve launched an app, Merit. In Merit, we’re transparently putting in public domain at what cost each discom is buying power from each supplier. Fixed cost, one can say, they have to pay. In variable costs we found some fantastic stuff. Some states have the ability to buy low-cost power but are still sourcing from a plant that is more expensive. Any such case they’ll have to justify (the reason) — technical or coal was not enough, or breakdown.

So, the system ensures corruption-free purchase of power. Earlier, this was very opaque, it was in the files of the government. We’ve demystified power purchase. Wherever states are buying expensive power, these stressed assets can go to serve and replace the expensive power.

Can the government take over these assets?
That’s for banks to do. I’m not in the picture at all.

In Gujarat, companies have offered to sell equity to the state for Re 1…
Gujaratis are smart people. That’s all I can say. The Gujarat government knows what’s in the interest of consumers. When they plan, they ensure they can save every single rupee, or earn every single rupee for the state government and bring power at lowest cost to the consumer. They are tightfisted in their approach. So, they must have looked at the entire scenario, what benefits they can get, what  alternatives are available. They might be approaching the issue clinically. So far, they’ve not intimated anything, but banks are still studying the whole scenario.

CIL has concerns about coal’s long-term outlook. Neyveli Lignite has bagged big solar projects. Is coal’s outlook uncertain?
Not at all. I can’t inject renewables into a grid that doesn’t have base load. Coal will be the mainstay of our energy needs. Coal has a very bright future. There are two causes of diversification: A) it’s a big business opportunity; B) I’ve been pushing them on renewables. While I genuinely believe they have to burn coal, they also have to be  responsible citizens. They have money and ability. My approach is that if NTPC has to go from 50,000-1,00,000 MW, that journey will have a lot of renewables.

You have set a target of 1 lakh MW for NTPC?
Our government believes in scale.

Will a government company like NTPC take over stressed assets?
Not taking over, but they will certainly support any such effort. There’s no proposal to take them over. We’ll let banks find ways. SBI Cap is working on this. Bankers have a very positive attitude… As we speak, power at Rs 2.23 is available; 5,322 MW surplus power is available at the exchange. If they all start buying this, there’s another 10,000 MW waiting to come. In a year or two, as these all get consumed these stressed assets will start feeding the power.

What is the assessment of GST rollout so far?
Frankly, the smooth way in which it’s been rolled out is very redeeming, very satisfying. The technology and systems they’ve created are outstanding. The business community, traders, industry have all adapted and adopted it in a very supportive fashion. They are willing to appreciate any such transformational change of this dimension never before embarked anywhere in the world is bound to have some transitional issues.  All these issues will be placed before the GST Council. Every party has supported it. Parties not in government have also supported it. This is the biggest example of cooperative and collaborative federalism that India has ever seen. It’s a shared legacy of the entire country. It belongs to every political party, to every citizen. You will see prices falling of everything. Almost universally, costs are coming down. Average household budgets will be lower.

Will the government’s revenue rise?
Direct and indirect revenue will rise. Jobs will go up. If a truck does 14 trips instead of 10 trips in a month, many more jobs will be created. Logistics is one of the biggest gainers. Corruption and leakages will certainly come down. For example, if excise (department) caught somebody, VAT and income tax would never come to know. Here, sales are being reported honestly, and the system is so beautifully designed that if you don’t report. your sales honestly, you’ll be caught somewhere in the chain. Gradually, we’ll move towards an honest society where people will not compete on the ability to evade taxes but on ability to compete on quality of goods, quality of service. That will be the determining factor.

Certainly, I’m quite confident that as revenue goes up, as more compliance is there, funds will be available to serve the poor, farmers, women and youth in a far more efficient way. At some stage, we can start looking at revising some rates to make them more market friendly. Gradually, it will lead to more investment. A lot of foreign investment didn’t come before 2014 because of uncertainty. To my mind, it’s a great move.

Source : Economic Times