Friday, July 23, 2010

RBI

RBI may need to get more aggressive



Inflation in India has spread beyond food and fuel prices and is becoming entrenched, meaning the Reserve Bank of India (RBI) may have little choice but to tighten policy more aggressively than now expected. A majority of economists polled by Reuters this week expect the RBI to raise interest rates by 25 basis points for a fourth time since March in its quarterly review on July 27. Most also expect the central bank to notch up rates by just another quarter point before the end of the year, given a tightening of market liquidity in recent weeks and uncertainty about the strength of global recovery. However, trends in broad money growth, the credit-deposit ratio and rising imports suggest inflationary pressures are likely to remain and may pose a bigger challenge later on, calling for a more aggressive action.



Pace of import growth may widen trade gap further

With India expected to grow more than 8 percent this year and next, imports are expected to pick up. Since export growth is weak, rising imports threaten to push up the trade deficit up substantially, in turn widening the current account deficit, which reached $13 billion in the January-March quarter, its biggest since 1981. A more decisive monetary tightening to curb domestic demand would help keep India's external imbalances in check.



Reserve money growth threatens to push inflation higher

Reserve money has been rising rapidly in recent months. Before the financial crisis, reserve money consistently led broad money growth, the central bank's key monetary gauge. Between 2000-2007 the annual change in reserve money had a 0.6 correlation with the year-on-year change in M3. That dropped to 0.4 for the 2000-2010 period because of massive liquidity injections during the financial crisis. However, with a rise in economic activity the correlation is likely to get tighter. A pickup in money supply growth, will serve as another important signal of inflationary pressures ahead.



Rising gap in credit-deposit growth to add to price pressures

Bank credit is growing at an annual pace of around 22 percent while deposits grow at a 15 percent clip. So the credit-deposit ratio has widened to 73.44 percent in July from around 70 percent at the start of this year, climbing above the monthly average of the past five years of 69 percent. The Reserve Bank of India will need to raise policy rates to push more money back into deposits and slow credit growth, reducing the disparity between the two. – www.economictimes.indiatimes.com

Tuesday, May 25, 2010

E-filing of I-T returns restored: FinMin

The Finance Ministry today said the facility of online filing of Income Tax (I-T) returns has been restored after procuring security certification for the Income Tax Department's website.

"The security certification of the Income Tax department’s Internet portal, which had lapsed on 8th May 2010, has been renewed. The e-filing facility for AY 2010-11 has now been restored," an official release said.

It further said that taxpayers can now e-file I-T returns for AY 2010-11 without any difficulty.

Yesterday, the Finance Ministry said it had temporarily suspended the facility for e-filing of income tax returns, as it could not procure a security certification for the I-T Department's website in time.

The security certification, which is provided by specialised agencies, indicates that adequate safeguards have been taken to protect data from unauthorized access.

The government had introduced the system for mandatory filing of I-T returns by corporates in electronic format from assessment year 2006-07.

Thursday, May 13, 2010

Two more process centres coming to improve taxpayer services

The Central Board of Direct Taxes plans to set up two more central processing centres (CPC) — one each in Ahmedabad and Faridabad (National Capital Region) — to improve taxpayer service, the CBDT Chairman, Mr S. S. N. Moorthy, said here today.

The Income-Tax Department has already set up a CPC in Bangalore. This CPC is being used to process all electronic returns filed from across the country and all those paper returns filed throughout Karnataka. It is also processing TDS returns besides other returns of income.

Instances of delay in refunds would be reduced once the Bangalore CPC becomes fully functional, Mr Moorthy told media persons on the sidelines of an Assocham seminar on tax deduction at source (TDS) here on Wednesday.

Last year, there had been mismatches of TDS credits, which have now been taken care of, according to Mr Moorthy. “We have given instructions for rectifications of these cases and also speedy processing of returns,” he said.

TDS tutorial

The Income-Tax Department hopes to become much more efficient this year to meet the service expectations of the taxpayers and citizens, Mr Durgesh Shankar, CBDT Member (Revenue), said.

As part of taxpayer education on the TDS provisions, the Finance Minister, Mr Pranab Mukherjee, had on May 8 uploaded a TDS tutorial on to the Web site of the Income-Tax Department. “I am not saying it is absolutely exhaustive, but the dos and don'ts, what is the law, how do you apply for TAN …We hope that this will be made good use of,” Mr Shankar said.

Meanwhile, the CBDT Chairman made it clear that there was “no legal lacuna” in stipulating a higher TDS rate of 20 per cent on payments made to non-residents who do not have or furnish PAN numbers to the deductor.

With most tax treaties providing for withholding at 5 per cent or ten per cent, there were doubts on whether the new requirement of TDS at 20 per cent are tantamount to overriding of Treaty provisions. “I don't see any legal lacuna in this,” Mr Moorthy told Business Line.

TDS 40 pc of total direct tax proceeds

TDS has become an important component of the Centre's revenue mop-up efforts. In 2009-10, the total TDS collections stood at Rs 1.53 lakh crore, accounting for close to 40 per cent of the total direct tax collections of Rs 3.78 lakh crore (provisional) for that year. In 2004-05, the TDS component was 33 per cent of the total direct tax collections.

Mr Moorthy said the Income-Tax Department was yet to arrive at final figure of direct tax collections for 2009-10. “The final figures will be available in mid-May when all the transactions are compiled. As on date, we are somewhere around Rs 3.78 lakh crore,” he said.

Monday, May 10, 2010

Saral version II is simpler

T. N. Pandey
(The author is a former chairman of CBDT.)

While presenting the Budget for 2010-11, the Finance Minister (vide para 122 of the Budget speech) made the following announcement concerning simplification of return forms: “I mentioned last year that the income-tax return forms should be simple and user-friendly. The Income-Tax Department is now ready to notify SARAL-II form for individual salaried taxpayers for the coming assessment year. This form will enable individuals to enter relevant details in a simple format in only two pages.”


The form — Saral-II (ITR-1) — has since been notified.

Salient aspects
Applicability: This form can be used for the assessment year 2010-11. It can be filed by individuals having income from salary or pension; income from one house property (excluding loss brought forward from previous year); and income from other sources (excluding winning from lottery and income from race).
Contents: As in the cases of other returns, the particulars concerning the assessee have to be furnished under the headsname; PAN; address (including e-mail address); designation of the assessing officer; whether the return is original return or a revised one; andresidential status.
Details of income chargeable under the heads:
(i) salaries and pension,
(ii) income from house property,
(iii) income from other sources (minus sign is to be shown if the result under (ii) and (iii) above is loss).
Also included are details of: deductions claimed under Sections 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80G, 80GG, 80GGA, 80GGC and 80U; and total income. Total income is to be computed after making the deductions. On the taxable income, tax is to be calculated, which shall be inclusive of secondary and higher education cess.

From the tax so calculated, amount of reliefs admissible under Sections 89 and 90/91 are to be deducted and interest payable under Sections 234A, 234B and 234C is to be added to arrive at the figure of tax payable or tax refundable.

Further details

Bank account number with MICR Code and nature of account. And details of tax deducted at source under the following heads:

In the cases of salaries/pension: Tax Deduction Account (TAN) of the employer; name and address of the employer; income chargeable under the head salaries and pension; deductions under Chapter-VI-A; tax payable, including education cess; total tax deducted at source; amount of tax payable or refundable.

Details of tax deducted at source from incomes, other than salary and pension: TAN; amount paid or credited; date of payment/credit; total tax credited; and amount of tax, out of that, deducted for which credit is being claimed in the assessment year.

Details of advance tax paid under the following heads for each instalment: Name of bank and branch, where payment is made; BSR Code of the bank; date of deposit; serial numbers of challan; and amounts paid.

Details of other information: Under this head, details about transactions, for which information is available to the I-T Department, through the Annual Information Returns, required to be filed under Section 285BA of the I-T Act, 1961, is to be given under the Code numbers 001 to 008.

In the last part of the return, details of incomes claimed to be exempt from dividends, capital gains, and others are to be mentioned.

Verification: The last portion in the return relates to verification that the contents of the return are truly stated in accordance with the provisions of the I-T Act, 1961.

The Finance Minister needs to be complimented for simplifying Saral. This will held increase voluntary compliance and improve the image of the I-T Department among taxpayers.

Source: The Hindu Businessline, 10th May 2010, Delhi edition

Central Excise - e-payments and e-filing will increase from new Financial Year

Central Excise - e-payments and e-filing will increase from new Financial Year
Uma Kothari, CA

The Central Government has issued notification to increase ambit and scope of mandatory e-payment and e-filing of returns in relation to Central Excise duty w.e.f. 01.04.2010. The scope is restricted to Central Excise and apparently does not cover Service Tax. At present limit for compulsory e-payment is Rs.50 lakh of net payment (excluding CENVAT) in preceding year. From 01.04.2010 the limit will be Rs.10 lakh (including payment by way of CENVAT credit) in any preceding year to impose obligation to make e-payment as well as to file e-returns. It is suggested that combined amount of Central Excise and Service tax may be considered and uniform Rules may be made for both in a combined manner.



New Notification:

The Central Government has vide recent notification No. 04/2010-Central Excise (N.T.) issued from its Head Quarters at New Delhi, on 19th February, 2010 a notification to increased the ambit of electronic payment and e-filing of returns of Central Excise amending the Rule no. 8 and 12 of the Central Excise Rules, 2002 w.e.f.01.04.2010. This is by exercising the powers conferred by section 37 of the Central Excise Act, 1944. Being related to a Central Legislation the notification will be applicable on all India basis.

Thursday, April 8, 2010

Reduction in timelines between issue closure and listing - Press Release No. 88/2010, dated 6-4-2010. source: www.taxmann.com
Convergence of Indian Accounting Standards with International Financial Reporting Standards (IFRS). source: www.taxmann.com
Once an issue was considered and decided by CIT (Appeals), remedy of Revenue cannot lie in invocation of jurisdiction u/s 263

Wednesday, April 7, 2010

It is open to an assessee to exhaust remedies as provided for u/s 144C against transfer pricing order passed u/s 92CA(3). www.taxmann.com
it would not become a colourable devise and consequently earn any disqualification. http://ping.fm/NhTl7
Once transaction is held to be genuine merely because it has been entered into with a motive to avoid tax, contd.
Reduction in timelines between issue closure and listing - Press Release No. 88/2010, dated 6-4-2010. Source www.taxmann.com

Tuesday, April 6, 2010

Overseas Investments - Liberalisation - A.P. (DIR Series) Circular No.45, dated 1-4-2010
Income tax authorities for purposes of Dispute Resolution Panel Notified. http://ping.fm/357Vq
It is open to an assessee to exhaust remedies as provided for u/s 144C against transfer pricing order passed u/s 92CA(3)
Consolidated FDI Policy (Effective from 1-4-2010) - Circular No. 1 of 2010, dated 31-3-2010

Monday, April 5, 2010

Collection of sales tax as a part of dealers’ price is nothing but a trading receipt
Charges towards reimbursement of expenses cannot be included in income.
Bar as provided in section 80-IA(3) is to be considered only for first year of claim of deduction u/s 80-IA
Overseas Investments - Liberalisation - A.P. (DIR Series) Circular No.45, dated 1-4-2010
Income tax authorities for purposes of Dispute Resolution Panel Notified. http://ping.fm/YXA1N

Thursday, April 1, 2010

Service Tax on Rail freight deferred - Notification Nos. 20, 21 & 22/2010-Service Tax, dated 30-3-2010
Section 244A read with Explanation thereto does not exclude payment of interest on refund of self assessment tax
Collection of sales tax as a part of dealers’ price is nothing but a trading receipt. http://ping.fm/GQU3R

Wednesday, March 31, 2010

Process of drawing of wire from wire rods amounts to manufacture of thing or article within meaning of section 80-IC
On non-compliance with statutory condition precedent, reopening of an assessment cannot be sustained. www.taxmann.com/BreakingNews.aspx
All payments by way of dividend have to be taxed in the hands of the recipient of the dividend namely the shareholder.
contd. carries on its own scope of work independently does not reasonably lead to the conclusion that an AOP has been formed
Merely coming together and acting in cooperation with each other for the purpose of executing the work while each member

Tuesday, March 30, 2010

Penalty cannot be levied u/s 271D for receiving cash from borrower by a lender in violation of section 269SS
There is no direct decision in favour of the Revenue for levy of service tax on the service component of a works contract prior to 1-6-2007
A statement taken under section 133A during survey cannot have same value as evidence recorded during search u/s 132(4)
Obligation to deduct tax at source u/s 195 arises only when payment is chargeable under provisions of Act (Dissented from Samsung’s case)
Guidelines for review of cases which require prior approval of the GOI for making foreign investment - Press Note No. 1 (2010 Series)
Simply because there is perpetual succession in appointment of trustee, can't disentitle an assessee-inst.from getting registration u/s 12AA
A warehouse is an asset subject to tax under section 2(ea)(i) of Wealth-tax Act. http://ping.fm/onUI8
Public Provident Fund Scheme, 1968:(2) Reiteration of instructions on opening of an account for a minor
Public Provident Fund Scheme, 1968 : (1) Clarification regarding reckoning of the date of deposit

Monday, March 29, 2010

SEBI (Credit Rating Agencies) (Amendment) Regulations, 2010 - Amendment in regulation 2 & 9
Obligation to deduct tax at source u/s 195 arises only when payment is chargeable under provisions of Act (Dissented from Samsung’s case)
A statement taken under section 133A during survey cannot have same value as evidence recorded during search u/s 132(4)
There is no direct decision in favour of the Revenue for levy of service tax on the service component of a works contract prior to 1-6-2007
Penalty cannot be levied u/s 271D for receiving cash from borrower by a lender in violation of section 269SS
in respect to seller only and not for purchaser. http://ping.fm/UKV6E
Provisions of sec. 50C are applicable only for computation of capital gains in real estate transaction contd.
Guidelines for review of cases which require prior approval of the GOI for making foreign investment - Press Note No. 1 (2010 Series).

Friday, March 26, 2010

Guidelines for Accounting of Repo/Reverse Repo Transactions.
Clarification regarding allowing losses on account of forex derivatives - Instruction No. 03/2010, dated 23-3-2010. source www.taxmann.com
DTC not to override tax treaties
SEBI (Credit Rating Agencies) (Amendment) Regulations, 2010 - Amendment in regulation 2 & 9. http://ping.fm/GgpFs
Obligation to deduct tax at source u/s 195 arises only when payment is chargeable under provisions of Act (Dissented from Samsung’s case).

Thursday, March 25, 2010

CBDT’s clarification on allowing losses on account of Forex derivatives [Source : www.taxmann.com]
Banking : Guidelines for Accounting of Repo/Reverse Repo Transactions [Source : www.taxmann.com]
IT –Once source is proved, it is not possible to treat deposits collected from public under Companies Act as unexplained credit [ITAT-Coch.]
IT – Indo-US Treaty : Persons deputed by an American co. to an Indian co. cannot be considered as its PE in India when services….[ITAT-Mum.]
IT –Indo-German Treaty : Payment made for purchase of software cannot be treated either as interest or royalty or even as technical services
A mere making of claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding income of the assessee
Reopening of an assessment on mere change of opinion without any tangible material is unsustainable
Assets of a company in liquidation cannot be disposed of at the mere pleasure of the company
By virtue of Article 13.4 of India–Mauritius DTAA, capital gain tax is not liable to be charged in India in respect of transfer of shares by a Mauritian company held in an Indian company to another Mauritian company
Indo-Canada Treaty: A special provision in the Income-tax Act cannot be pressed into service to deny the benefit which is otherwise due to FII under the tax treaty provisions notwithstanding their conflict with the domestic law of income tax

Tuesday, March 23, 2010

Income earned by a co-operative society from interest on FDRs / Saving balances with commercial banks qualifies for exemption u/s 80P(2)(a)(i)
Section 143(2)(ii) clearly stipulates service of notice and not issuance of notice. For details view www.taxmann.com
Provisions of section 56(2)(v) applied only to gift on or after 1-9-2004. Source: www.taxmann.com

Friday, March 19, 2010

Income tax

IT - Loss claimed by assessee on a/c of fluctuation in foreign exchange rate as on balance sheet date is allowable as expenditure u/s 37(1) [SC] : Taxmann.com

Wealth tax

WT - When urban land is utilized for construction of a building with prescribed authority’s approval then that land ceases to be urban land [Ker.]source: www.taxmann.com

Wednesday, March 17, 2010

Foreign Direct Investment

FDI – Clarification regarding revision of conversion price of FCCBs [Source : www.taxmann.com]

Income Tax

IT - Sale of a depreciable asset in r/o which depreciation was allowed to assessee should always be treated as short term capital gains [Ker.] : Taxmann.com

Monday, March 15, 2010

Income tax

IT- Any person who in someway or other facilitates purchases by a non-resident for export can’t be brought within cl.(b) of Explanation 1 to sec. 9(1)(i) [AAR]


IT - Shares allotted to partners of an extinct firm consequential to regn. of that firm as a co. would not give rise to any profit or gain [AAR] : Taxmann.com

Friday, March 12, 2010

Income Tax

IT-Payment towards VSAT/Transaction charges made by a Stock Broker to Stock Exchange is not fee for technical services u/s 194J
[ITAT-Mum.] Source : taxmann.com

RTI

RTI Act cannot be applied to claim exemption from disclosure of information, provided by an assessee to IT Dept. for asst. purposes, to 3rd party [CIC]. source www.taxmann.com

Wednesday, February 24, 2010

Service Tax

E-payment of Service Tax & E-filing of ST Return made mandatory in case of payment of Service Tax above Rs. 10 lakhs [Source : www.taxmann.com]

Income tax

IT - Commission paid for sale of SIM card, pre-paid or post-paid, is commission as envisaged under section 194H [Del.] : Source : www.taxmann.com

Royalty

Reference in Art. 13(3)(c) of Indo-Canada DTAA is to “any copyright” and not to “any right” for purpose of terming a payment as ‘royalty’ [Del.] : Taxmann.com

Monday, February 22, 2010

TDS Rules

New TDS Rules Notified [Source : www.taxmann.com ]

Income tax

IT - Word ‘capital asset’ in section 2(14) does not necessarily mean that property, which assessee holds, must be his own [ITAT-Mum.] : Taxmann.com


IT - Provisions of section 194C(1) is applicable to job work assigned by an event manager to others [ITAT-Mum.] : Source : www.taxmann.com

Friday, February 19, 2010

CL - For a person to be vicariously liable for an offence committed by a company under SEBI Act, he need not necessarily be a Director of that company [Delhi]


IT - Any expenditure incurred for construction of a hospital building for general public is expenditure incurred for charitable purposes [Allah.] : Taxmann.com



IT - Income earned by an NRI from his employment in USA can not be taxed under Income-tax Act [AAR] : Source : taxmann.com

Wednesday, February 17, 2010

FDI – New pricing norms for revision of conversion price of FCCBs extended [Source : www.taxmann.com]



IT - Deferred revenue expenditure is essentially revenue in nature [ITAT-Ahd.] : Source : www.taxmann.com



IT – Sec. 80-IA(2) does not provide that first year of 10 consecutive AYs should be always first year when assessee starts service [ITAT-Ahd.] : Taxmann.com

Saturday, February 13, 2010

NBFCs – Classification of NBFCs stands modified to include Infrastructure Finance Companies [Source : www.taxmann.com]


IT – Payment made by an ad. agency to an accredited ad. agency for release of its ads. in print media does not fall within ambit of sec. 194C(1) [ITAT-Bang.]



IT – Interest could be levied u/s 234B(3) for the first time in reassessment completed under section 147 [Kerala] : Source : www.taxmann.com


IT - No further adjustments in ALP are required when difference between ALP determined by assessee and by AO varies not more than 5% [ITAT-Del.] www.taxmann.com



IT - Sale of stock exchange membership card of a defaulting member by Stock Exchange amounts to “transfer” [Kerala] : Source : www.taxmann.com



IT - Amount paid for compounding an offence can never be an amount in nature of expenditure which can qualify for deduction u/s 37(1) [Kar.] : taxmann.com

Thursday, February 11, 2010

Service Tax

Service tax is not leviable on 'sale' portion of photography service [P&H} : Source : www.taxmann.com

Income Tax

IT - Bad debts written off cannot be factor to determine ALP of any international transaction [ITAT-Mum.] : Source : www.taxmann.com



IT-BBC worldwide has no PE in India, its Indian agent is remunerated on an arm’s length basis which extinguishes any further tax liability on it [ITAT-Del.]


IT - Interest earned by a co-op. credit society on surplus funds cannot fall within "profits and gains of business" mentioned in section 80P(2) [SC] : taxmann.com



IT - Commission payment to whole time directors of a company is an allowable expenditure [ITAT-Del.} : Source : www.taxmann.com

Thursday, February 4, 2010

Income Tax

No assessment under Chapter XIV-B can be made without issuing notice u/s 143(2) [SC] : Source : www.taxmann.com


Interest earned by an industrial undertaking on late payment received from customers is eligible for deduction u/s 80-IA [Del.] : Source : www.taxmann.com


An applicant cannot seek adjudication on merits at any time he wants after having allowed previous application to go by default [AAR] : taxmann.com

Wednesday, February 3, 2010

Service Tax

Propriety of revenue’s instruction to its officers demanding service tax on renting of immovable property against High Court’s ruling [Del.] source: www.Taxmann.com
IT: Payment received by applicant from third party re-sellers on a/c of software products supplies to end-customers does not result in royalty income [AAR]

Income Tax

Taxability in one of Contracting States is not a sine qua non to avail Indo-UAE Tax treaty benefits in other Contracting State [ITAT-Mum.] source:www.taxmann.com

Saturday, January 30, 2010

CBDT

CBDT allows adjustment of Advance Tax in respect of Fringe Benefits of Accounting Year 2010-11 against Advance tax [Circular No. 2/2010]
source: www.taxamnn.com

Service Tax

Sec35A (3) of CE Act cannot be interpreted to infer that Commissioner (A) while hearing service tax appeals has no power to remand a matter [CESTAT-Del]

Friday, January 29, 2010

ST - Credit of input service must be allowed on any expenditure incurred by assessee which forms a part of assessable value of final product [CESTAT-Mum.]


IT - 2 kms. distance from municipal limits of Khanna city for purpose of section 2(14)(iii) has to be taken in terms of approach by road [P&H] : Taxmann.com

Thursday, January 28, 2010

Service Tax -

Execution of a lump sum work would not fall under category of providing of service of supply of manpower [CESTAT-Bang.] : Source : www.taxmann.com

Income Tax

Interest earned by an industrial undertaking on late payment received from customers against supply of goods is eligible for deduction u/s 80-IA [Delhi]

Filing of Income Tax Returns

Date for filing ITR-V Form extended [CBDT] : Source : www.taxmann.com

Wednesday, January 27, 2010

27th January 2010

IT - Expenditure towards consultation charges for restructuring of company is an allowable deduction u/s 37(1) [P&H] : Source : www.taxmann.com


IT-Where co. constructs structure on land out of its own funds, rent has to be assessed in co’s hands and not shareholders even if they owned that land [Kar]

Monday, January 25, 2010

A Co-operative Bank is entitled to deduction u/s 80P(2)(a)(i) on amount of interest received u/s 244A on refund of tax [ITAT-SB-Mum.]

Source : www.taxmann.com


Sec. 44AB does not provide that where assessee is carrying on many bzneses, then to calculate turnover (TO) limit TO of all bzneses has to be clubbed [Kar.]

Source : www.taxmann.com




Texturising and Twisting of partially oriented yarn (POY) by thermo mechanical process constitutes ‘manufacture’ in terms of section 80-IA [SC]

Source : www.taxmann.com





GST : Comments of Revenue Department on First Discussion Paper released [FINMIN}

Source : www.taxmann.com

Friday, January 22, 2010

Service tax demand on value of materials supplied in course of rendering taxable service is not sustainable where service provider has paid State VAT on same.
Section 4 of Securities Contracts (Regulation)Act, 1956 does not require publication of pre-recognition Rules and Bye-laws of a Stock Exchange [SC]
No addition can be made or sustained simply on basis of statement recorded at time of survey/search [ITAT-Mum.]

Source : www.taxmann.com

Wednesday, January 20, 2010

CBEC’s clarification on problem faced by exporters in availing refund of excess credit.
Source : www.taxmann.com
After 1-4-1989, AO has power to re-open, provided there is tangible material to come to conclusion that there is escapement of income from assessment [SC]

Transfer pricing

Transfer pricing - A business organization with negative net worth cannot be treated at par with a normal business entity for computation of ALP

20th Jan Update

A company can file compliant under rule 13 of the Redressal of Public Grievances Rules, 1998 before Insurance Ombudsman [MP]
Source : www.taxmann.com