demo: August 2013

Saturday, 31 August 2013

Entities Where Non-Resident Indians (NRIs) Can Invest In India

Entities Where Non-Resident Indians (NRIs) Can Invest In India
---------------------------------------------------------------------------

(MAIN EMPHASIS ON: HOW AND WHERE TO INVEST, FROM A COMMON MAN POINT OF VIEW)

In India, a no. of families have their relatives living abroad who have gone either for earning livelihood or otherwise, always have intension to send/ remit the money in India for starting any business or to put their money in some projects. But many laws and regulations of Indian Government and restrictions imposed by RBI restrict the NRIs, Foreign Nationals to invest the money. So For a Common Man/ Lay Man, there is always a question in mind whether NRIs can invest in India through FDI or not and if yes, then what are the entities where NRIs can invest through FDI as in India, or what are the ways/ sources/ areas where they can invest. Hence, in this Article, I have tried to elaborate in simple language that what are the entities where NRIs can invest in India as FDI.

Master Circular is being circulated by Department every year on July 1, 2013 carrying and describing the various guidelines/ instructions/ routs/ areas/ ways/ sources through which NRIs and Foreign Nationals can invest in India. This year the consolidated FDI Policy was issued which had been effective from April 5, 2013.

Hence, as per FDI Policy, 2013 a non-resident entity (Entity here means NRIs, POIs, OCBs, SEBI registered FVCI, FIIs etc.) can invest in India, subject to the FDI Policy except in those sectors/ activities which are prohibited. But again such investments are to be made in some entities like Trusts, Companies, Firms etc. Following entities where the NRIs can invest through FDI:

1. NRIs can invest in India in form of FDI in Indian Companies i.e. private Limited/ Limited Companies. The Indian Companies can issue capital against FDI. The FDI is allowed in the various sectors through automatic route or through approval route. In case of automatic route, only the intimation to RBI is sufficient when the money is being invested in Indian Companies or the money is re-patriated outside the country. And in case of approval route, first the approval is required from the Government i.e. FIPB Approval (Foreign Investment Promotion Board) for investment in Indian Company and only after the approval from FIPB, The investment can be made in such Indian Companies.

2. NRIs can also invest in Limited Liability Partnerships (LLPs) through automatic route where the FDI is allowed 100% and in other cases with the Government Approval Route. Moreover, LLPs with FDI will not be allowed to operate in agricultural/plantation activity, print media or real estate business.

3. NRIs or PIOs (Person of Indian Origin resident outside India) can also invest in capital of the Firms whether Partnership Firms/ Sole Proprietorship Concerns but the biggest advantage is that they cannot re-patriate the money back to abroad i.e. they can invest on non-repatriation basis and that even subject to some conditions like

(i) the investments must have not been done in agricultural/plantation or real estate business or print media sector.

(ii) Amount is invested by inward remittance or out of NRE/FCNR (B)/NRO account maintained with Authorized Dealers / Authorized banks.

(iii) Amount invested shall not be eligible for repatriation outside India.

The NRIs/ PIOs can re-patriate such Investments back to abroad from such Sole Prop./ Partnership Firms subject to the prior permission of Reserve Bank for investment in sole proprietorship concerns/partnership firms with repatriation option. The application will be decided in consultation with the Government of India.

4. Investment is allowed in Indian Venture Capital Undertakings (IVCUs) /Venture Capital Funds (VCFs) etc. through automatic route or approval route depending upon the company set up i.e. whether VCF has been incorporated as a Trust or as Company under Companies Act, 1956 and subject to the pricing guidelines, reporting requirements, mode of payment, minimum capitalization norms, etc.

NOTE: No investment can be made in any entities other than the above mentioned as per Consolidated FDI Policy, 2013.

There is a condition for investment in Prop./ Partnership Firms that Amount must be invested by inward remittance or out of NRE/FCNR (B)/NRO account maintained with Authorized Dealers / Authorized banks. NRE/ NRO Accounts have been described as follows:

NRE/ NRO Accounts: If a person is a Non Resident Indian (NRI), he can open two kinds of account in India – a non-resident rupee accounts (NRE), and non resident ordinary rupee accounts (NRO). Here’s the difference between the two.

NRE: A Non-Resident External (NRE) account is a bank account that’s opened by depositing foreign currency at the time of opening a bank account. This currency can be tendered in the form of traveler’s checks or notes. The account can opened in the names of two or more non-resident individuals provided all the account holders are persons of Indian nationality or origin. Amount held in the NRE account are freely repatriable.

NRO:A Non-Resident Ordinary (NRO) account is the normal bank account opened by an Indian going abroad with the intention of becoming an NRI. An NRI can also open this account by sending remittances from his home country or by transferring funds from his other NRO account. The account can be held jointly by residents. It’s easy to transfer funds from an NRE to an NRO account. But it’s not possible to transfer funds from an NRO account to an NRE account. Once you transfer funds from an NRE to an NRO account, the amount is non-repatriable. Consequently, you cannot transfer it back.

---------------------------------------------------------------------------------------------------

Subscribe and Be Updated Yourself
♥ Pulla Harsha Vardhan ♥
© pullaharshavardhan.blogspot.in ©

---------------------------------------------------------------------------------------------------

Restrictions on gold in long term would encourage smuggling

Restrictions on gold in long term would encourage smuggling
-------------------------------------------------------------------------

India Inc today said hiking duty on gold would curb demand in short run but it would encourage smuggling of the precious metal in the long term.

"No doubt, a hike in duty in gold imports would curb demand for gold in the short run. But from a long term perspective it is counterproductive as it would encourage smuggling of the precious metal," CII Director General Chandrajit Banerjee said in a statement.

The government today hiked customs duty on gold, silver and platinum to 10 per cent in the third revision this year in a bid to curb the surging imports and burgeoning CAD.

While the duty on gold and platinum was raised from 8 per cent to 10 per cent, the levy on silver was hiked by 4 per cent.

Banerjee said people should be discouraged from investing in gold and the government should encourage financial savings by households.

"A better option to discourage the diversion of financial resources into unproductive assets like gold, in near to medium term would be to encourage financial savings by households," he added.

He said that it would be appropriate to launch attractive, innovative and reliable inflation adjusted instruments which would yield 1.5-2 per cent higher returns than long term average inflation.

"Besides, an action plan for dematerialization of gold is desirable to reduce its physical imports. Thirdly, government should take steps to keep inflation rate as low as possible as gold is seen as a hedge against inflation," he added.

Measures to boost special economic zones coming today

Measures to boost special economic zones coming today
------------------------------------------------------------------

The government is set to notify on Monday measures aimed at giving a fresh impetus to investments in special economic zones (SEZs) and boosting exports, including a cut in the minimum area required for such zones and a new dedicated scheme for electronic hardware and food processing.

"The idea is to give incentives to push SEZs out of the big cities and explore the less dense cities," said a commerce department official, who did not wish to be named Agro-based food processing special economic zones are being introduced following demands by the agrarian states such as Punjab and Haryana, where land is very expensive, and the Northeast region, where land is very scarce.

As per new norms, the minimum area required for electronic hardware and agro-based food processing special economic zones has been fixed at 10 hectare due to the limited availability of land in a few states. Besides, electronic hardware, special economic zones will be eligible for additional benefits, including a 20% capital subsidy.

"SEZs can serve as an enclave to attract foreign capital into the country and also give a leg-up to manufacturing," the official said, adding that these zones would eventually help cut down imports.

The government is looking to attract long-term foreign capital into the country and has liberalised its foreign direct investment for the purpose.

The manufacturing sector recorded a growth of just 1% in 2012-13, adding to the worries of policymakers.

As per the new norms, the investors will be able to set up both software and hardware facilities on the same premises. "The thrust has been to allow better utilisation of available land," the official said, adding that the objective was to make these distinct from the single-product SEZs, where the mandatory minimum land area is being halved to 50 hectare.

In a significant dilution of norms, the government will allow developers to use land with some prior minor construction as a vacant land for SEZ. However, benefits such as duty-free imports and 100% income tax exemption for the first five years, will only apply to the land where construction takes place after it gets notified as an SEZ.

"People sit on a lot of land, with a small construction at the corner of it, rendering the entire land ineligible for an SEZ. These changes will address this concern," the official said.

Multi-services special economic zones will be treated on a par with single-product SEZs, with the minimum area being slashed to half from 100 hectare. This will allow multi-product SEZ developers with a minimum land requirement of 500 hectare to set up multi-services SEZ on an additional 50 hectare of land.

Developers will be allowed to add another product on a contiguous 50 hectare in case of multi-product special economic zones.

Commerce and industry minister Anand Sharma had in April announced the reduction in minimum land for multi-product SEZs to 500 hectare from 1,000 hectare and scrapped the minimum requirement altogether for IT SEZs.

The amendments will also allow an easier exit for developers, allowing them to transfer or sell ownership of SEZ units. SEZs allow duty-free imports or domestic procurement of goods and also provide 100% income tax exemption on export income for SEZ units for the first five years.

TDS on Immovable Property (Other than agriculture land) From A.Y. 2014-15 U/s 194IA

TDS on Immovable Property (Other than agriculture land) From A.Y. 2014-15 U/s 194IA:

Introduction:-This is a new tax, applicable from 1st June, 2013, deducted at source on the sale of any immovable property (other than agriculture land).

However this section applicable only when sale consideration of the immovable property more than 50 Lacs.

This provision introduced by The Finance Mini5ster to improve the reporting of such transactions and prevents the circulation of black money in Real Estate Market.

Rate of TDS: – TDS on transactions of immovable property is to be deducted at 1%. If the seller has not disclosed his PAN No. , then the rate of TDS would be 20%.

Who will liable to deduct & pay tax :- TDS is required to deduct by the purchaser at the time of payment. Such TDS would be deducted from the consideration being paid to seller and have to be paid separately to the Govt. by the purchaser.

TDS deducted by the buyer at the time of making the payment to the seller has to be deposited with in a period of 7 days from the end of the month in which deduction has been made. Form 26QB has been prescribed for making such payment.

TAN No. is not mandatory :- According the provision of Section- 203A , any person deducting TDS shall also apply for a TAN No. U/s 203A. This TAN No. is mandatory required to be quoted at the time of deducting any TDS, at the time of filling return and at the time deposit of TDS with the Govt. Without holding TAN No. any person not able to deducts TDS.

However Section 194IA (3) remove such hardship. Which state that a person deducting TDS on property is not mandatory required to quote TAN No.

TDS on amount paid in Installment:- According to Sec-194IA TDS is to be deducted at the time of payment. The date of transfer is not relevant. It is not required to be deducted at the time of transfer but is required to be deducted at the time of payment.

So even if advance payment is being made TDS would be required to be deducted. In case the payment is being made in installments to the seller, then TDS would be deducted at the time of paying each installment.

More than one Buyer or Seller :- In case where more than one buyer or seller and individual purchase price of each buyer is less than 50 lacs, but the aggregate value of transaction exceed Rs 50 Lacs, then Sec-194 IA would be applicable and TDS on such property required to be deducted and deposit with the Govt. before Due date.

TDS in case when property is Finance through Bank :- Provision will also apply even when property is financed through a bank loan. Buyer will have to ensure that he himself or bank deducts tax before disbursing the loan to the seller.

Key Notes :-

1) TDS may be required to be deducted even in the case where the capital gains exempt U/s 54.

2) In this provision, provision of Sec-203A will not apply.

3) TDS on Immovable property deducted only if transaction over 50 Lacs.

4) TDS on Agriculture land is exempt. Which is define Us- 2(14) (iii)

5) The TDS Certificate shall be issued in Form 16B within 15 days from the due date of deposit.

6) Provision will also apply in case when part of the total payment made before 1st June, 2013.

7) If any advance payment made to the seller, in this case also TDS will deduct whole amount.

The provision will also apply even in case where buyer bought an Under Construction Property prior to the provision coming into effect but he has to make the balance payment after 1st June, 2013.

Income Tax Department has begun enquiry into firms running from tax heavens

Income Tax Department has begun enquiry into firms running from tax heavens
-----------------------------------------------------------------------------------------

The Income Tax Department has initiated enquiries on the issue of Indian entities operating from tax havens as stated by International Consortium of Investigative Journalists (ICIJ), Parliament was informed today.

"Income Tax authorities have started enquiries into the matter," Minister of State for Finance Jesudasu Seelam said in a written reply to Rajya Sabha.

Such enquiries include taking up the matter with competent foreign authorities to obtain information relevant for the investigation, he said, adding, further action under direct taxes would follow on completion of such enquiries.

ICIJ had recently uploaded information on its website icij.org, inter alia, containing particulars of certain entities including trusts, fund companies created in offshore locations such as British Virgin Islands, Cayman Islands etc, the Minister said.

Such information contains particulars of 498 Indian addresses with names etc, who prima facie appear to be connected with some of the offshore entities, he added.

The information available on the website of ICIJ does not reveal particulars of financial transactions of the offshore entities or Indian persons, the Minister said.

Seelam also said the list contains two names which are also the names of two Members of Parliament.

During the enquiries, he said, one of the MPs has denied having any relationship with the entity named against his name on the website of ICIJ.

The other MP stated that without prejudice to his being a 'Non-Resident' from Assessment Year 2005-06 onwards, he is not required or obliged to furnish details relating to his overseas business interest and bank accounts, he said.

The company mentioned against his name on the website of ICIJ was struck off from the register of the Registry in the year 2010, the Minister said.

In reply to a separate question, Seelam said no real estate company has been found guilty of money laundering or contravention of FEMA during the last 3 years.

"A show cause notice for the contravention of relevant provisions of FEMA 1999, has been issued to Emaar MGF Land Ltd on June 6, 2013, " he said.

The amount involved in the alleged contravention is Rs 8,600.80 crore, he said.

No more duty-free TVs from abroad

No more duty-free TVs from abroad:

India will ban the duty-free import of flat-screen televisions from August 26, adding to a package of measures designed to prop up the rupee by stemming the flow of foreign currency out of the country.

Government officials estimated that more than 1 million television sets were brought into the country last year many from Dubai, Thailand and Singapore under a scheme that allowed airline passengers to bring in screens worth up to Rs. 35,000 as part of their baggage allowance.

Under the new rules, passengers will have to pay a 35 per cent duty and other charges, the officials said.

All about Comptroller and Auditor General of India (CAG)

All about Comptroller and Auditor General of India (CAG)
---------------------------------------------------------------------

>Authority, established by the Constitution of India

>Audit of government accounts (including the accounts of the state governments) in India is entrusted to the CAG of India who is empowered to audit all expenditure from the revenues of the union or state governments, whether incurred within India or outside.

>The CAG is also the external auditor of government-owned companies

>Former CAG, Vinod Rai has been appointed as external auditor of three major UN organisations, the Vienna-based International Atomic Energy Agency (IAEA), the Geneva-based World Intellectual Property Organisation (WIPO) and World Food Organisation(WFO).

>Former CAG, Vinod Rai has been elected the Chairman of the United Nations' panel of external auditors.

>Rebecca Mathai, is an Indian who is presently the External Auditor of UN organisation World Food Programme(WFP) Headquartered at Rome, Italy

>Reports of the CAG are taken into consideration by the Public Accounts Committees

>Also the head of the Indian Audit and Accounts Service

>The CAG is ranked 9th and enjoys the same status as a judge of Supreme Court of India in Indian order of precedence

>Current CAG of India is shashi Kant Sharma, who was appointed on 23 May 2013. He is the 12th CAG of India.

>Comptroller and Auditor-General of India is appointed by the President of India following a recommendation by the Prime Minister.

>His salary is the same as salary of a Judge of Supreme Court of India. Neither his salary nor rights in respect of leave of absence, pension or age of retirement can be varied to his disadvantage after his appointment.

Relevant date to determine applicable service tax rate

Relevant date to determine applicable service tax rate
---------------------------------------------------------------

What is the relevant date for determining the rate of service tax applicable?

We are sharing with you an important judgement of the Hon’ble CESTAT, Ahmedabad in the case of Commissioner of Central Excise & Service Tax, Rajkot Versus M/s Kandla Port Trust [2013 (7) TMI 859 – CESTAT AHMEDABAD] on following issue:

Issue:
What will be the relevant date for determining the rate of Service Tax applicable – whether the date of providing service or the date of issue of invoice or date of making payment?

Facts & Background:
M/s Kandla Port Trust (“the Respondent”) is engaged in providing services of Port Service. During the course of audit, it was observed by the Department that the Respondent had paid service tax at the rate prevailing on the date of providing service instead of the rate prevailing at the time of raising invoices.

Service tax had been paid at the rate of 5% instead of 8% for the invoices raised on or after 14.05.2003 and at the rate of 8% instead of 10% for the invoices raised on or after 10.9.2004. Further, Education Cess at the rate of 2% of the service tax amount for the invoices raised after 10.9.2004 was not paid.

Hence, show cause notice was issued to the Respondent on 07.4.2006, which was adjudicated by the Joint Commissioner, Rajkot who confirmed the demand of service tax of Rs. 6,02,353/- and also imposed equal amount of penalty under Section 76 read with Section 78 of the Finance Act, 1994.

Thereafter the Respondent filed an appeal before the Commissioner of Central Excise (Appeals) Rajkot, who has allowed their appeal. However, the Revenue has challenged the order passed by the Commissioner of Central Excise (Appeals).
Held:

It was held by the Hon’ble CESTAT that the relevant date for determining the rate of service tax applicable is the date of providing service and not the date of raising invoice or making payment. The Hon’ble Ahmedabad Tribunal rejected the appeal filed by the Revenue and decided the case in favour of the Respondent.

The Hon’ble Ahmedabad Tribunal relied on the following judgements to decide the case in favour of the Respondent:
1. Commissioner of Central Excise & Customs, Vadodara vs. Schott Glass India Pvt. Limited [2009 (14) STR 146 (Guj.)]
2. Commissioner of Central Excise & Cus. vs. Reliance Industries Limited [2010 (19) STR 807 (Guj,)]
3. Commissioner of Service Tax vs. Consulting Engineering Services (I) Pvt. Limited.

Points to note:
It is worthwhile to note that only rendering of service triggers the incidence of service tax and hence, it is treated as the taxable event. The Hon’ble Supreme Court in the case of Association of Leasing & Financial Service Companies [2010-TIOL-87-SC-ST-LB] has held that for levy of service tax, the taxable event is rendition of services.
In the instant case, the Hon’ble Ahmedabad Tribunal has passed its judgment on similar premise that taxable event in relation to service tax is rendering of service and not raising of invoices or making of payment. Hence, additional liability cannot be fastened on the assessee merely because the invoices were raised or payments were made subsequent to the increase in rate of service tax.

Further, the above judgment has been passed for a period prior to the Point of Taxation Rules, 2011 (“the POT Rules”). Hence, the readers are advised to consider the POT Rules for final conclusion but moot question is still valid whether the rules can override the chargeability, which results in taxable event for the chargeability of Service tax.

Date of determination of rate of tax, value of taxable service and rate of exchange:
W.e.f 28th May, 2012, Section 67A of the Finance Act, 1994 was inserted vide Finance Act, 2012 to provide certainty on the rate of service tax, value of a taxable service and rate of exchange, if any, which shall be the rate of service tax or value of a taxable service or rate of exchange, as the case may be, in force or as applicable at the time when the taxable service has been provided or agreed to be provided.
Explanation.— For the purposes of this section, “rate of exchange” means the rate of exchange referred to in the Explanation to section 14 of the Customs Act, 1962.’; (52 of 1962.)

Provident Fund Schemes: EPF Vs PPF

Provident Fund Schemes: EPF Vs PPF
--------------------------------------------

Difference between Employees Provident Fund (EPF) and Public Provident Fund (PPF)

Government with a view to secure post retirement life of employees formed an organization named Employees Provident Fund Organization (EPFO). This organization is responsible to manage Provident fund which aims to secure future with stable returns after retirement or certain age.

But EPFO is only for salaried individuals, for other professionals there is a scheme called Public Provident Fund (PPF) which is maintained by Post Office or few specified banks.

In India there are three types of provident fund

-Employee Provident Fund (EPF)
-Public Provident Fund (PPF)
-General Provident Fund (VPF)

Each type of fund has different features but with same motto of providing retirement benefits to the contributor.

Let’s see the each scheme individually:

What is Employee Provident Fund (EPF)?
------------------------------------------------
The Employee Provident Fund, or provident fund as it is normally referred to, is a retirement benefit scheme that is for organized and unorganized sector (Private Sector) employees.

In case employee wishes to contribute more than the mandatory amount, he can do so by opting for Voluntary Provident Fund (VPF). This is beyond employee EPF contribution of 12%. Also Employee contribution towards VPF does not bound employer to contribute to this VPF. Maximum contribution into VPF can be upto 100% of Basic Salary including Dearness Allowances. This would carry same rate of interest of EPF. The amount would be credited to EPF account and there is no separate account for VPF.

What is Public Provident Fund (PPF)?
--------------------------------------------
PPF is established by central government to secure future of non-salaried employees, such as consultant, freelancer, contractor etc, even an unemployed person can open PPF account with a nominal amount of Rs.100.

What is General Provident Fund (GPF)?
----------------------------------------------
General Provident Fund is only for Government Employees. Under this scheme government employees contribute a specific amount which is decided by the Government but there is no contribution from Government side.

Unique aspect of PPF
--------------------------
The other unique feature is that in case of insolvency, the PPF account cannot be used to pay off debts in settlement process. However the PPF account cannot be utilized in case of Income Tax evasion.

Save tax by Paying Rent to your Parents

Save tax by Paying Rent to your Parents
-----------------------------------------------

Claim income tax deduction for rent paid to your parents

This is possible only if the property is registered in the name of your parent. The owner will be taxed for the rental income after a 30% deduction. So, if you pay your father a rent of Rs 3,00,000 a year (Rs 25,000 a month), he will be taxed for only Rs 2,10,000 lakh. If your parents are retired and do not derive any significant taxable income, the amount of rent would be tax free in their hands. It is advisable that you enter into an agreement with them and actually make the payment every month, preferably by cheque.

It gets better if the property is jointly owned by both parents. Then you can divide the rent two-ways so that the tax liability gets split between the two parents. If their income exceeds the basic exemption limit, you can help them save tax by investing in their name under Section 80C options such as the Senior Citizens’ Saving Scheme, five-year bank fixed deposits or tax-saving equity mutual funds.

However, this tax-free window will become smaller next year after the proposed Direct Taxes Code (DTC) comes into effect. The DTC has proposed to bring down the 30% standard deduction on rental income to 20%. This would push up the tax liability of the senior citizens who receive rent from property. Also, many of the existing tax saving options will no longer be available under the DTC regime.

Take a look at the example to see the tax implications. Let us assume your monthly basic salary is Rs 40,000 and HRA is Rs 16,000. Your monthly rent is also Rs 16,000. In this case, of the total monthly HRA, Rs 12,000 will be tax exempt. Assuming you are in the 20% tax bracket, your annual tax saving would be Rs 29,664.

Please note that you will have to submit copies of rent receipts or rent agreement, depending on what your organisation stipulates.

Remember, the same is not possible if you are paying rent to your spouse even if your spouse is issuing rent receipts. The reason behind this rule is that there cannot be a commercial relationship between spouses as they are believed to be staying together.

Banks avoid Rs 30,000 crore MTM loss on RBI action:

Banks avoid Rs 30,000 crore MTM loss on RBI action:
---------------------------------------------------------------

Ratings agency Icra today said the country's banks were staring at a loss of up to Rs 30,000 crore on mark to market losses if not for the Reserve Bank's relaxations yesterday.

The losses will now get reduced to Rs 3,000-5,500 crore, it said in a statement released a day after the Reserve Bank got in the set of relaxations.

Indian banks were staring at a Rs 25,000-30,000 crore Mark-to-Market (MTM) losses on their fixed income investment portfolio in Q2, FY14 as 10-year G-sec yields hardened from 7.45 per cent as on June 30, 2013, to 9.2 per cent by August 19," it said.

The losses for entire year on account of MTM have been estimated by Icra at Rs 9,000-17,000 crore for the system.

The measures introduced yesterday include the choice to maintain hold to maturity category bonds at 24.5 per cent as against the earlier decision to bring it down to 23 per cent, transfer securities qualifying for statutory liquidity ratio holding to the HTM category from available for sale category and an one time option to valuing those according to the yield on July 15.

RBI also allowed banks to amortise the MTM losses spread equally over the next three quarters.

It can be noted that yesterday's moves were necessitated due to the hardening of yields, following RBI's liquidity measures starting July 15 and the consequential fears of booking huge MTM losses by the banks.

Icra said as a consequence of the measures yesterday, there will be a "significant reduction" in the provisioning by banks' for the MTM losses.

The rating agency said as the bank have been given an option to convert, the AFS or HFT book will reduce to 5-6 per cent on the portfolio as a result of the shift in investments to MTM.

They will also choose to move the longer duration securities to the MTM as the yields on those were higher only by 0.15 per cent as on July 15 as against June 30, it said.

After the heavy fall in banking stocks yesterday, the BSE's sectoral Bankex gained 0.49 per cent to close at 10,562 points.

------------------------------------------------------------------------------------------

Subscribe And Be Updated Yourself

♥ Pulla Harsha Vardhan ♥

© pullaharshavardhan.blogspot.in ©

------------------------------------------------------------------------------------------

I-T dept goes for tech upgrade to tighten tax net

I-T dept goes for tech upgrade to tighten tax net

To tighten the noose around tax evaders and expand the tax net, the finance ministry is rolling out seven-eight big-ticket technology projects that would significantly bolster its capabilities. The projects, at various stages of implementation, would enable the income tax department to carry out a complete profiling of taxpayers.

The new capabilities would ensure seamless movement of information within the department. And, the business intelligence and trend analysis tools used to mine the data will make the department more “proactive than reactive” in nabbing tax dodgers. The department is also considering collecting transaction data from external sources such as the internet.

“The country’s tax base is not going up. If you look at our tax-to-gross domestic product (GDP) ratio, it is the lowest in the world,” said a senior official with a technology firm working with the government on some of the projects. “We, as a country, specialise in how to evade taxes. That’s the reason why the government is looking at using technology tools to check tax evasion in the country.” (SHARPER TECH EYES)

There are about 35 million taxpayers in the country. In 2012-13, the Centre’s tax to-GDP ratio stood at 7.8 per cent.

The Rs 200-crore income tax business applications project aims at refreshing and significantly upgrading the department’s entire existing technology. The department is also implementing a network project that would provide better connectivity across income tax offices, with higher speed bandwidth.

-----------------------------------------------------------------------------------------

Subscribe and Be Updated yourself

♥ Pulla Harsha Vardhan ♥

© pullaharshavardhan.blogspot.in ©

-----------------------------------------------------------------------------------------

We have enough reserves to deal with currency woes:

We have enough reserves to deal with currency woes:
---------------------------------------------------------------

The Reserve Bank today said it has adequate foreign exchange reserves to deal with the declining value of rupee and the widening current account deficit (CAD).

"I believe our forex reserves are adequate to manage current situation," RBI Governor D Subbarao said in a response to whether RBI has enough firepower to defend the rupee, which plunged to an all-time low of 65.56 today.

The country's foreign exchange reserves were up at USD 278.602 billion as of August 9 compared with USD 277.17 billion a week earlier.

After breaching the 65 mark, the rupee made some recovery to settle at a fresh closing level of 64.55, still down by 44 paise today against the US currency on persistent dollar demand from banks and importers and sustained capital outflows.

Subbarao also said the recent measures taken to curb volatility of rupee would continue till stability is restored.

"We have taken those measures again in order to curb volatility, in order to curb certain outflows, and we will revisit them as stability returns," he said, clarifying that "RBI does not take any position on the exchange rate, we are not targetting a level of exchange rate."

RBI took steps on July 15 and 23 to tighten liquidity. These measures were taken to "raise cost of rupee resources at the short end which is in the arsenal of instruments available to central bank to defend against volatility in rupee," he said.

----------------------------------------------------------------------------------------

Subscribe and Be Updated yourself

♥ Pulla Harsha Vardhan ♥

© pullaharshavardhan.blogspot.in ©

-----------------------------------------------------------------------------------------

Service tax on restaurants and hotel accommodations is unconstitutional; HC sets aside levy of ST

Service tax on restaurants and hotel accommodations is unconstitutional; HC sets aside levy of ST

Levy of service tax on service forming part of supply of goods in a restaurant, as well as short-term accommodation services in hotels, inns, etc. is unconstitutional

In the instant case the assessee challenged the levy of service tax on AC restaurants licensed to serve alcoholic beverages and short-term accommodation provided by hotel, inn, guest house, club or camp-site under sections 65(105)(zzzzv) and 65(105)(zzzzw)] as unconstitutional.

The High Court held the impugned levy as unconstitutional with the following observations:

1) Article 366(29A)(f) empowers State Governments to impose tax on supply, whether it is by way of or as a part of any service of goods either being food or any other article for human consumption or any drink, intoxicating or not. Incidence of sales-tax is on supply of any goods by way of or as part of any service;

2) When food is supplied or alcoholic beverages are supplied as part of any service, such transfer is deemed to be a sale and there cannot be a different component of service which could be charged to service tax by Central Government;

3) In view of judgment in K. Damodarasamy Naidu & Bros. v. State of Tamil Nadu (2000) 1 SCC 521, it held that service formed part of sale of goods and State Government alone had legislative competence to enact law imposing a tax on service element forming part of sale of goods as well;

4) In view of judgment in Godfrey Philips India Ltd. v. State of U.P (2005) 2 SCC 215, it held that luxuries were activities of enjoyment or indulgences which were costly or generally recognised as being beyond necessary requirements of an average member of society;

5) Service tax imposed on services provided in a hotel and other similar establishments, which fall within extended meaning of word "luxuries", trenches upon legislative function of State under Entry 62 of List II;

6) Hence , sub-clauses (zzzzv) and (zzzzw) to clause 105 of section 65 of the Finance Act, 1994 as amended by the Finance Act, 2011 were beyond the legislative competence of the Parliament as the sub-clauses were covered by Entry 54 and Entry 62 of List II of the Seventh Schedule - KERALA CLASSIFIED HOTELS & RESORTS ASSOCIATION V. UNION OF INDIA (2013) (Kerala)

Source: 35 taxmann.com 568

----------------------------------------------------------------------------------------

Subscribe And Be Updated yourself

♥ Pulla Harsha Vardhan ♥

© pullaharshavardhan.blogspot.in ©

----------------------------------------------------------------------------------------