Monday, March 7, 2011
Transfer Pricing impact of business restructuring-Analysis of recent ruling of Bangalore Tribunal
In this highly competitive world, Multinational Enterprises (MNE’s) regularly restructure their business to improve efficiency and profitability. Such restructuring within MNE group results in number of tax and transfer pricing issues. Indian Transfer Pricing Regulation in its present form does not contain any specific provision dealing with transfer pricing impact of business restructuring. The resent ruling of Bangalore Tribunal in the case of Intel Asia Electronics Inc. v. Asstt. DIT[2011]9 taxmann.com 197, has provided some significant and positive guidance on transfer pricing issue arising from business restructuring.
Tuesday, March 1, 2011
POA theory is less than circumstantial-Hersh W. Chadha Case
In the recent case of Hersh W. Chadha v. Dy. DIT [2011] 43 SOT 544, the Delhi Tribunal has held that where it is hard to unearth direct evidence or demonstrative proof, circumstantial evidence and its appreciation thereof would acquire importance. The Tribunal adopted this method of circumstantial evidence in order to curb out the tax dogging and making tax dodgers answerable and accountable. The same decision has been taken up for discussion here.
Monday, February 28, 2011
Indian Government's Stand on Black Money
The Finance Minister, Mr. Pranab Mukherjee said that the Central Government has nothing to hide on black money issue and the Primie Minister has asked him to share the information with public. But he claimed that so far the Government has no reliable estimate of black money, which could be between USD 500 billion to USD 1400 billion. "No country is going to share information unless there is a legal framework," said Mukherjee. Emphasizing that there is no reliable estimates of black money generated by Indians within and outside the country, The Finance Minister said, "It's necessary to find out sources of black money so that its generation can be prevented. Swiss Bank has been persistently refusing to divulge information on black money," he said. "I have signed an agreement with Swiss authorities, we will be able to get information from Swiss Banks by amending the double taxation norms," he added. India has amended DTAA with 23 countries which will enable us to seek banking information, informed Mukherjee. "India is updating laws on transfer pricing mechanism to bring it at par with international standards as part of attempts to bring back the black money stashed abroad," said Mukherjee. India has started receiving information of Indians, who have generated income outside the country under double taxation avoidance agreements, he informed. He also informed that the Government has constituted a multi discriplinary committee to get studies conducted, to estimate the quantum of illicit funds generated by Indian citizens. The Government has formulated a five pronged strategy which consists of joining the global crusade against black money, creating an appropriate legislative framework, setting up institution for dealing with illict funds and developing systems for implementation. But he said that there is a way to get information when Income Tax authorities decide to prosecute offenders. "Eight more Income tax international overview units to be setup.. right now there are two units," he said.
Wednesday, January 19, 2011
International Taxation
- Day to day reporting of Indian and foreign case laws & statutes on International Taxation
- An almost complete Tax Treaty Network with Case Laws
- Complete Database of Indian Case Laws & Statues Since 1886
- OECD/UN/US Model Tax Treaties
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
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.
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
(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.
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.
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