CA and CS HUB

No capital gains tax on share transfer via IPOs

By Deepshikha Sikarwar , ET Bureau
Experts say the clarification also does not address concerns of capital gains tax being levied on employee stock options or gifts in form of shares.

Genuine equity investments through initial public offers and bonus share issues won’t have to face long-term capital gains tax even if no securities transaction tax (STT) was paid on their transfers. The Central Board of Direct Taxes issued a draft notification to this effect on Monday, bringing relief to the investment community. 

It, however, failed to address a key concern related to off-market transactions in strategic purchases becoming taxable under the provision. Experts say the clarification also does not address concerns of capital gains tax being levied on employee stock options or gifts in the form of shares. The apex direct taxes body is seeking public comments on the notification clarifying the scope of a provision introduced in the budget this year to prevent tax abuse. 

The notification lists three types of transactions where the provision will apply, while sparing genuine ones. The first is investment in listed stocks that are not traded frequently and the acquisition of equity through preferential issues not falling under the Securities and Exchange Board of India (Sebi) issue of capital and disclosure norms. 

Second, those transactions where listed stock is not purchased over the exchange. Third, acquisition of shares in a company that's delisted and then listed again. 

Tax experts said the notification has addressed some concerns over the amendment related to section 10(38). But they pointed that the second clause poses risks to genuine investors. 

"This is an excellent notification by the government keeping in view the objective behind amendment to Section 10(38), which was to address cases of non-genuine, long-term capital gains being claimed as exempt from tax," said Sanjay Sanghvi, partner, Khaitan & Co. 

However, while the cases covered in the draft notification seek to address the issue of bogus and "non-genuine" cases, it should specifically exempt genuine instances such as private equity investments, employee stock options etc., Sanghvi said. 

In order to curb the practice of declaring unaccounted income as exempt from long-term capital gains by entering into sham transactions, the Finance Act, 2017 amended the provisions of Section 10 (38) of the Act. This meant exemptions under this section for income arising from the transfer of equity shares acquired on or after October 1, 2004, would only be available if the acquisition was chargeable to STT. 

However, to protect exemptions for genuine cases where STT could not have been paid, it was provided that the government would notify instances when the provision would not apply. These include share purchases inIPOs, bonus or rights issues by a listed company, stock purchases by non-resident Indians in accordance with the foreign direct investment (FDI) policy etc. 

But experts said that the second provision cited above may need another look. 

"This means that if an investor purchases shares of a listed company off market, he will not be able to claim capital gains tax exemption on sale of such shares even if the shares are sold on the stock market," said Rajesh Gandhi, partner, Deloitte Haskins & Sells LLP. 

He said this will have significant implications for all types of investors, specially private equity investors and strategic investors, which generally purchase a large quantity of listed company shares outside the stock exchange and could adversely impact the financial modeling and returns of such investors. 

"Allaying many concerns, as per the draft clarifications, most genuine transactions will continue to be exempt from tax, including mergers and demergers, gifts, etc.," said Abhishek Goenka, leader, direct taxes, PwC. "The category related to purchases off the stock exchange is too wide and could cover several genuine cases." 

However, a senior CBDT official told ET that genuine transactions won’t be taxed. "Genuine transactions like esops, bonus issues etc will not be touched," the official said.

Source: ET wealth

Paperwork required to handle TDS on sale of property

TDS deduction mandatory

1/7

It is mandatory for buyers of immovable property to deduct TDS from the amount to be paid to the seller. The buyer is required to deduct TDS @ 1% on the total consideration and deposit the same in the account of the income tax authorities in the prescribed format. Here's the low-down:

Form

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The buyer needs to fill out form 26QB either online or offline to deposit the TDS. One can click the following link to access the form online. https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp

Due date for filing

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Form 26QB is required to be filed within 7 days from the month in which the TDS was deducted by the buyer.

Details

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Information with respect to the buyer and seller (name, address, PAN, status), details of the property, consideration and TDS payable must be entered in the form.

Payment

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One can choose to pay either through Netbanking or at the branch of the bank. If the taxpayer chooses e-tax payment on subsequent date at the bank branch, an acknowledgement number is generated. This number must be retained by the taxpayer to be presented to the bank while making the payment.

Process

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After the form is filed and payment made to the income tax authorities, approved form 26QB or form 16B can be downloaded by logging into TRACES as a tax payer. Form 16B must be provided by the buyer to the seller as a proof of deposit of TDS.

Important points to note

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1. Dealings in agricultural land are excluded from the requirements of these provisions.

2. If the consideration is being paid in installments, TDS must also be deducted on each installment.

3. If PAN is not provided by the seller, TDS @ 20% is deductible.

Source : economicstimes.com

RBI clears proposal to introduce Rs200 notes

RBI is likely to start the process of printing the new Rs200 notes after June, only after the government officially approves this new denomination, says an official

Gopika Gopakumar

RBI has already introduced new Rs2,000 and Rs500 banknotes. Photo: AP

The board of the Reserve Bank of India (RBI) has cleared a proposal to introduce banknotes of Rs200 denomination, two people aware of the development said.

The decision was taken at the RBI board meeting in March, these people said. They didn’t want to be identified as they aren’t authorized to speak to the media.

The process of printing the new Rs200 notes is likely to begin after June, once the government officially approves this new denomination, said one of the two people cited earlier.

An RBI spokesperson declined to comment.

The move to introduce lower denomination notes comes against the backdrop of the government’s move to rework the currency mix.

On 8 November, it announced the withdrawal of Rs500 and Rs1,000 currency notes, amounting to around 86% of currency in circulation of Rs17.9 trillion.

Since then, RBI has replaced these with the new Rs2,000 and redesigned Rs500 bank notes. As on 24 March, currency in circulation was Rs13.12 trillion, still around 27% off pre-demonetization levels. The government is encouraging digital payments and may not increase currency in circulation to the pre-demonetization level.

On 13 March, RBI lifted all cash withdrawal caps. ATM operators, however, say that there is a paucity of lower denomination banknotes.

So far, the central bank has not revealed how many of the old currency notes it has got back from the public. The window for Indians who were out of the country between 8 November and 30 December ended on Friday.

The RBI board has 14 members. Apart from governor Urjit Patel and four deputy governors, the board also has economic affairs secretary Shaktikanta Das and financial services secretary Anjuly Chib Duggal.

Source livemint

CBDT proposes norms for tax benefits for genuine equity deals

In order to protect genuine transactions, the CBDT came out with a draft notification specifying certain eligible transactions for tax exemption on which STT was not paid

PTI

Equity deals that will be exempt from tax would include transaction through preferential issues for shares which are not frequently traded, share transactions which are not affected through recognised stock exchanges, and also in cases where the company has been delisted. Photo: iStock

New Delhi: To check tax evasion through “sham transactions” in stock market and protect genuine ones, the tax department on Monday proposed to exempt specified deals from long-term capital gains tax in cases where securities transaction tax (STT) was not paid.

As per the Finance Act, 2017, the income arising by way of a transfer of long-term capital asset, being equity share in a company, will be exempt from tax if such transfer is undertaken after 1 October 2004 and chargeable to STT.

However, in order to protect genuine transactions, the Central Board of Direct Taxes (CBDT) on Monday came out with a draft notification specifying certain eligible transactions for tax exemption on which STT was not paid.

These would include, transaction through preferential issues for shares which are not frequently traded, share transactions which are not affected through recognised stock exchanges, and also in cases where the company has been delisted.

The CBDT has invited comments from stakeholders on the draft notification by 11 April.

The proposed measure is to protect the exemption for genuine cases where the STT could not have been paid like acquisition of share in IPO, FPO, bonus or rights issue by a listed company acquisition by non-resident in accordance with FDI policy, CBDT said in a release.

Source livemint

Tax department proposes to ease anti-abuse clause in finance bill

Tax department clarified that a budget proposal to levy capital gains tax on all equity share sales where securities transaction tax has not been paid would apply in three cases

Gireesh Chandra PrasadRemya Nair

While tax experts welcomed the move in general, they fear that one of the three specified instances could hit M&As.

The tax department has proposed to soften an anti-abuse provision in Finance Bill 2017 meant to check money laundering by limiting its scope to only three specified instances of abuse.

A draft notification issued by the department on Monday clarified that a budget proposal to levy long-term capital gains tax (LTCG) on all equity share sales where securities transaction tax (STT) has not been paid would be applicable only in three cases.

These are: sale of listed equity shares in a company done outside a recognized stock exchange; acquisition of listed equities that are not very frequently traded on the stock exchanges through a preferential issue except in cases of court-approved mergers and cases of rehabilitation and debt restructuring; and the acquisition of equity shares in a company that is de-listed.

The proposal gives relief to investors acquiring shares in initial and follow-on public offers and non-residents participating in bonus or rights issues of a listed company, where securities transaction tax is not paid.

While tax experts welcomed the move in general, they fear that one of the three specified instances—sale of listed equity shares in a company done outside a recognized stock exchange—could hit mergers and acquisitions (M&As).

M&As are often done off-market to avoid influencing share prices and could attract capital gains tax as per the draft notification, according to Amit Maheshwari, partner, Ashok Maheshwary and Associates LLP.

The tax department will receive feedback on the draft till 11 April.

Ravi Mehta, partner, Grant Thornton India LLP, said, “On a literal reading, it could encompass both primary as well as secondary transactions, including genuine transactions such as purchase of shares under employee stock options, fresh fund-raising by listed companies from promoters or financial investors during down-turn and genuine off-market purchases such as share acquisition where price also includes control premium.”

In many cases, income tax would have been properly paid by sellers and, hence, there would be no effective revenue loss to the exchequer, added Mehta.

“This (provision) would dissuade acquirers to purchase shares of listed companies through a private transaction/off market. There have been several instances where some of the large acquisition transactions, including by private equity investors, have been undertaken off-market purely for commercial reasons,” said Anil Talreja, Partner, Deloitte Haskins and Sells LLP.

Still, the draft is conceptually appropriate and some of the issues with it should ideally be sorted out in the final notification, said Pranav Sayta, tax partner, EY India.

The anti-abuse provision was introduced in the budget this year after the Supreme Court-appointed special investigation team on black money highlighted the use of penny stocks in money laundering by inflating their price through market manipulation.

Source livemint

IT Dept gets 12 lakh responses on deposits during note ban

Income Tax department under its 'Operation Clean Money' project has received more than 12 lakh responses from 8.38 lakh distinct PANs/persons whose cash deposits were not in line with their tax profiles, Parliament was informed today.

Income Tax department under its 'Operation Clean Money' project has received more than 12 lakh responses from 8.38 lakh distinct PANs/persons whose cash deposits were not in line with their tax profiles, Parliament was informed today.

"To leverage technology and data analytics for e-verification of cash deposits made during the demonetisation period, I-T department has initiated 'Operation Clean Money project(OCM). Under OCM, about 18 lakh persons have been identified whose tax profile were prima facie not in line with the cash deposit made by them during the demonetisation period.

"...more than 12 lakh responses have been received from 8.38 lakh distinct PANs/persons," Minister of State for Finance Santosh Kumar Gangwar said in a written reply to the Lok Sabha.

Gangwar further said that in case explanation of sources of cash is found justified, the verification will close.

Noting that enforcement actions such as searches and surveys are also conducted on appropriate cases, including those who are non-compliant, the Minister said "action in such cases are part of continuous process under the Direct Taxes law."

Gangwar said investigations conducted by the I-T department post demonetisation have revealed various kind of malpractices and manipulations by certain persons/entities including owners of petrol pumps, CNG and gas agencies.

"Appropriate action against such persons is taken by the jurisdiction authorities of the ITD as per provisions of the Income-tax Act, 1961," he said.

Stating that while deposits and sales of all petrol pumps, CNG and gas agencies have not been scrutinised, Gangwar pointed out in certain cases of petrol pumps/LPG distributorship/CNG pumps, excess cash deposits over and above sales made in corresponding period have been found during the enforcement actions by the ITD.

"During the period from November 9, 2016 to January 10, 2017 more than 1,100 searches and surveys were conducted by the Income Tax department apart from issuing more than 5,100 verification notices," the minister said.

"These notices led to the seizure of valuable of more than Rs 610 crore which includes cash of Rs 513 crore. Seizure in cash of new currency notes was about Rs 110 crore," he added.

Further, the minister said undisclosed income detected in these new actions was more than Rs 5,400 crore.

Source : moneycontrol.com

Disclose deposits of Rs 2 lakh or more post note ban in new ITR forms

By ET Bureau 

NEW DELHI: Those who deposited cash of Rs 2 lakh and more in their accounts during the demonetisation drive will have to make a declaration in their income tax returns for the fiscal year that's just ended, as a follow up to the government's efforts to eliminate black money through the note-swap exercise. 

The tax return form notified by the income tax department -— now simplified to one page for most payers—includes a provision for such a declaration. 

In part E of the form that seeks other information from the assessee including bank details, another column has been added seeking details of cash deposited between November 9 and December 30 last year if the aggregate amount over this period was Rs 2 lakh or exceeded that. 

The last date for filing declarations under the Pradhan Mantri Garib Kalyan Yojana ended on March 31. 
The tax department said parts relating to tax computation and deductions have been rationalised and simplified for easy compliance. The one-page ITR Form-1(Sahaj) is for individuals with an income up to Rs 50 lakh, one residential property and other income such as interest. This will cover most taxpayers. 

"This will reduce the compliance burden to a significant extent on the individual taxpayer," the department said in a statement. "This initiative will benefit more than two crore taxpayers who will be eligible to file return of income in this simplified form." 

Number of tax forms have been reduced from nine to seven by unifying ITR-2, ITR-2A and ITR-3 into one ITR-2 form. ITR-4 and ITR-4S (Sugam) have been renumbered as ITR-3 and ITR-4 (Sugam), respectively, it said. 

All returns have to be filed electronically except for ITR-1 (Sahaj) or ITR-4 (Sugam) by those who are 80 years or more as well as individuals or Hindu Undivided Families (HUFs) with an income of up to `5 lakh and no refund claims. In such cases a paper form can be filed. 

PMGKY DEPOSITS 
Income tax offices were to have stayed open until midnight on Friday to accept last-minute deposits under PMGKY scheme. 

The scheme gave one last chance to those who deposited unaccounted cash after the demonetisation announcement on November 8 to come clean after paying 50% tax and penalty and putting another 25% of the amount declared in a non-interestbearing deposit for four years. 

The department had sent out messages to those who made large deposits to explain their source. Those making declarations under the scheme can file returns by April 10 if they have paid taxes and penalties till March 31.

Source : economicstimes.com

GST Bills–CGST, IGST, UTGST and Compensation to States, introduced in Lok Sabha on 27.03.2017 and passed by Lok Sabha on 29.03.2017. The following are the key features of the Bills :-

CGST provides for a maximum tax of 20 per centActual rates would however be a four-tier tax structure of 5, 12, 18 and 28 per cent as approved by the GST CouncilA Union Territory GST Bill will take care of taxation in UTs of Chandigarh, Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and DiuA Bill on Integrated-GST — to be levied and collected by the Centre on inter-state supply of goods and services, was also introduced in the Lok SabhaThe IGST law provides for a maximum tax of 40 per centJaitley also introduced a fourth legislation called GST (Compensation to States) Bill, 2017 that provides for mechanism for making good any loss of revenue of states from introduction of GST in first five years of rolloutAnother mirror legislation of CGST, called State-GST, will amalgamate all state taxes like VAT, will be levied by states and has to be approved by all state legislaturesTogether, CGST and SGST will enable the GST incidence of 40 per centGST will not apply to Jammu and KashmirThe CGST Bill also provides for e-commerce companies to collect tax at source at a rate not exceeding 1 per cent of net value of taxable supplies, out of payments to suppliers supplying goods or services through their portalsTo protect small businesses, the CGST provides for a tax of no more than 1 per cent of turnover for manufacturers with annual turnover of up to Rs 50 lakhA 2.5 per cent tax is prescribed for suppliersTo ensure that benefit of lower taxes is passed on to consumers, an anti-profiteering measure has been incorporated in the lawIt provides for constituting an Authority to examine whether input tax credits availed by any registered taxable person, or the reduction in the price on account of any reduction in the tax rate, have actually resulted in a commensurate reduction in the price of the said goods and/or services supplied by himThe law provides for arrest, ordered by no less than a Tax Commissioner, in case of suppression of any transaction or evading taxes. A person convicted is punishable by up to 5 years of imprisonment and/or fineThe Compensation Law provides for levy of cess on top of the peak rate of approved tax (28 per cent presently) on paan masala, tobacco, aerated waters, luxury cars and coal to create a non-lapsable fund for compensating statesCompensation will be paid bi-monthly and the amount due would be calculated after considering a 14 per cent growth rate in taxes over the base year of 2015-16Touted as the biggest taxation reform since independence, GST is expected to boost GDP growth by up to 2 per cent. The government proposes to roll out GST by July 1, 2017.

Source- ICSI

Revision in the Annual Membership fee, Entrance Fee and Certificate of Practice fee for Associate and Fellow Members w.e.f. 1^st April, 2017

The Council of the Institute has decided revision in Annual Membership fee, Entrance fee and Certificate of Practice fee for Associate and Fellow Members w.e.f. 1^st April, 2017, as under:

ParticularsAssociateFellowAnnual Membership feeRs. 2500Rs. 3000
Entrance feeRs. 2000Rs. 2000
Certificate of Practice feeRs. 2000Rs. 2000

The existing facility for payment of fee in advance/concessional fee shall remain in vogue for the revised fee structure.

CA Pratik Anand

In the final draft of the finance bill’2017, the government is proposing to ban all transactions in cash above Rs. 2 lacs from 01.04.2017.

If and when the proposed amendment to the finance bill’2017 is passed by the parliament then any person who enters into a transaction above Rs. 2 lacs in cash, will be liable to a penalty of an amount equivalent to the amount of transaction.

Proposed New Section 269ST reads as under:

No person shall receive an amount of two lakh rupees or more—

(a) in aggregate from a person in a day; or 

(b) in respect of a single transaction; or 

(c) in respect of transactions relating to one event or occasion from a person,

otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account: 

Provided that the provisions of this section shall not apply to—

(i) any receipt by—

(a) Government;

(b) any banking company, post office savings bank or co-operative bank;

(ii) transactions of the nature referred to in section 269SS;

(iii) such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify.

Therefore, in light of the above the government has proposed to ban all types of transactions in cash above Rs. 2 lacs.

The important points to note in respect of the above are as follows:

1) The restriction is on receipt of cash and not on payment of cash above Rs. 2 lacs:

Any person who receives above Rs. 2 lacs in cash will be liable to penalty equivalent to the amount received.

There is no restriction on payment of cash. However, it is to be noted that there is an existing provision for restricting cash payments above Rs. 20,000/- for business purposes. This provision has also been amended and now cash payments above Rs. 10,000/- shall not be allowed as expense in the income tax return.

2) Receiving cash above Rs. 2 lacs in a day from a person is not allowed:

Receipt of more than Rs. 2 lacs from a single person in a day is not allowed even though the amount has been paid in multiple transactions during the day which are below Rs. 2 lacs.

3) Receipt exceeding Rs. 2 lacs for a single transaction is not allowed:

For example, if a transaction is for Rs. 7 lacs, then a single payment for such transaction cannot exceed Rs. 2 lacs.

4) Receipt above Rs. 2 lacs in respect of a single event or an occasion from a person: 

The most common example of occasion is marriage, therefore a person cannot receive more than Rs. 2 lacs in cash for such occasion from a person.

Also important to note that this limit on an occasion is not limited to per day basis therefore receipts even on various days in respect of a single event or occasion aggregating above Rs. 2 lacs is prohibited.

If the receipts are from different persons, the same would not be covered by the third circumstance, even if the same relates to a single event or occasion.

5) What can be the case which is not covered under all the three circumstances?

Receipts from same person are permitted if the same is below the specified limit and on different days. If the same is not in relation to a single transaction and/or same event/occasion.

6) Nature of receipt does not matter

Another important point to be noted in respect of the proposed new section is that the nature of receipt does not matter.

Therefore, even if a person receives a sum which is not chargeable to tax still he would be hit by the provisions of this section and would be liable to penalty.

Receipts can be anything such as proceeds of sales of goods, income of whatsoever nature – taxable or not, gifts, capital receipts, loans, advances, government grants, subsidies, encashment of bonds/securities, encashment of instruments like National Savings Certificates, proceeds of Life Insurance Policies, scholarships, sale of shares, transactions between related parties and so on.

The nature of receipt is very wide and it would be interesting to see if the government exempts any circumstances in the future.

7) Who are the persons and what are the transactions exempted from section 269ST?

The proposed section 269ST would not be applicable in following cases:

“(i) any receipt by—

(a) Government;

(b) any banking company, post office savings bank or co-operative bank;

(ii) transactions of the nature referred to in section 269SS;

(iii) such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify”.

Therefore, if Govt. or a banking company receives any sum in contravention of this section, they would not be liable to any penalty.

Another interesting point to note is that receipt of money from a banking company is not exempted. Therefore even cash withdrawal in contravention of the above limits can be hit by the provisions of the proposed section 269ST.

8) What are the other points that should be kept in mind in respect of Section 269ST?

Some of the other relevant points to be considered are:

It is irrelevantthat the person receiving the cash has a PAN or not and whether such person is assessed to income tax or not. Source of income of the recipient is irrelevant and nature of receipt of such person is also irrelevant.This section would also apply to transactions between related persons.The provisions would also apply to transactions between persons who are otherwise exempt from tax.Restriction would apply on all persons/entities except those which are specifically exempted like banks etc. Therefore, section 269ST will be applicable on receipt of money by all persons such as individuals, HUFs, firms, companies, trusts, charitable Institutions, AOPs/ BOIs etc.

9) What are the modes of receipt which are not allowed?

Some of the modes of receipt which are not allowed are cash, bearer cheque, crossed cheque, self cheque, adjustment or transfer entry in the books of account.

However, going by the literal interpretation of the section any receipt of money other than by account payee cheque or account payee draft is not allowed. Whether this would cover transfers by e-payment wallets like Paytm etc which are very common these days will have to be clarified soon.

10. Section is applicable to receipts irrespective of the fact that they are with or without consideration.

Section 269ST is applicable to receipts irrespective of the fact that they are with or without consideration.

In case of receipts without consideration, there can be dual impact of penalty under this section and under section 56 of the Income Tax Act’ 1961 in some specific cases.

11) What is the penalty for violating section 269ST?

The Govt. proposes to introduce a new section prescribing penalty for violating the provisions of section 269ST. As per this section:

(1) If a person receives any sum in contravention of the provisions of section 269ST, he shall be liable to pay, by way of penalty, a sum equal to the amount of such receipt.

(2) The penalty will be not be levied if such person proves that there were good and sufficient reasons for the contravention.

What are good and sufficient reasons will be decided on a case to case basis by the joint commissioner as the joint commissioner has the power to levy such penalty.

(The author is a CA in practice at Delhi and can be contacted at: E-mail: contact@capratikanand.com, Mobile: +91-9953199493)

Central Board of Direct Taxes (CBDT’s) APA Program crosses the 150 Milestone

The Central Board of Direct Taxes (CBDT) has entered into 9 Advance Pricing Agreements (APAs) during the last two days of the current financial year. All the 9 Agreements entered into are Unilateral APAs. With this, the total number of APAs entered into by the CBDT has reached 152. This includes 11 Bilateral APAs and 141 Unilateral APAs. In Financial Year 2016-17, a total of 88 APAs (8 Bilateral APAs and 80 Unilateral APAs) were entered into. The APAs signed in financial year 2016-17 include Agreements with some technological behemoths having major operations in India in the IT sector.

The 9 APAs entered into during the last two days of the current Financial Year pertain to various sectors of the economy like Information Technology, Aviation, Oil & Gas, Automobiles, Electricals & Electronics, etc. The international transactions covered in these agreements include Receipt of Intra-Group Services, Provision of IT Enabled Services, Provision of Software Development Services, Provision of Engineering Design Services, Provision of Marketing Support Services, Import of Traded Goods, Payment of Interest on ECB, Receipt of Interest, Receipt of Guarantee Fee, Receipt of License Fee, Export of Goods, Receipt of Technical Support Services, Provision of Business Support Services, etc.

The APA Scheme was introduced in the Income-tax Act in 2012 and the “Rollback” provisions were introduced in 2014. The scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance. Since its inception, the APA scheme has been well-accepted by taxpayers and that has resulted in more than 800 applications (both Unilateral and Bilateral) being filed so far in five years.

       The signing of 88 APAs in a single year (F.Y 2016-17) is a significant achievement of the CBDT and its Officers. The progress of the APA Scheme strengthens the Government’s resolve of fostering a non-adversarial tax regime. The Indian APA programme has been appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner.

No. of Advance Pricing Agreements signed by CBDTS. NoFinancial YearUnilateral APAsBilateral APAsTotal12013-1450522014-1531432015-165325542016-1780888Total14111
152

The Union Government has announced revised rates of interest on Small Savings Schemes for the First Quarter of 2017-18 to bring them somewhat closer to market rates

Small Savings schemes will continue to be attractive as some of them enjoy income tax benefits and additional interest rate spreads

Revision of rates is a reflection of calibrated reform of the Union Government in the financial sector to ensure better interest rate transmission

The Union Government has announced revised rates of interest on various small savings schemes for the first quarter of the financial year 2017-18.  To bring such rates somewhat closer to market rates, the Government has decided to effect a reduction of 0.1 percentage points (10 basis points) in interest rates across the board in all the schemes except the Post Office Savings Account, which has been left untouched.

Government continues to accord highest priority to the interest of small savers, especially savings for the benefit of girl child, the senior citizens and the regular savers who form the backbone of our savings architecture. The current revision of rates is reflective of the Government’s commitment to calibrated reform in the financial sector to ensure better interest rate transmission.

Various small savings schemes will continue to be very attractive compared to bank deposits of similar maturities and tenor even after this marginal reduction in interest rates by 0.1 percentage points.  Apart from offering higher interest rates compared to bank deposits, some of the small savings schemes also enjoy income tax benefits.  Further, small savings schemes like Senior Citizens Savings Scheme (SCSS), Sukanya Samriddhi Account (SSA), PPF, 5 year National Savings Certificate (NSC), 5 year Monthly Income Scheme (MIS) and 5 year Time Deposits (TD) enjoy additional interest rate spreads.  This additional interest rate spread is 100 basis points in the case of Senior Citizen Savings Scheme, 75 basis points in Sukanya Samriddhi Account and 25 basis points spread in PPF, 5 year NSC, 5 year MIS and 5 year TD.

Source- Press Information Bureau, Government of India, Ministry of Finance, Dated: 31-March-2017

Extract of Clause 171 of Central Goods and Services Tax Bill, 2017

171.(1) Any reduction in rate of tax on any supply of goods or services or the benefit of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices.

(2) The Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by him.

(3) The Authority referred to in sub-section (2) shall exercise such powers and discharge such functions as may be prescribed.

Clause 171 of CGST Bill 2017 provides that it is mandatory to pass on the benefit due to reduction in rate of tax or from input tax credit to the consumer by way of commensurate reduction in prices.

While the objective may sound simple, implementing an anti-profiteering clause is fraught with grave risks.The Biggest Challenge will that government will have to ask for pre- and post-GST cost sheet of each product and calculate the pre-GST tax rate and post-GST tax rate for each and every item to understand the quantum of tax benefit that a supplier should get.

In My Personal View even if this might be just for transition (if it is like that assumingly) this defeats the complete mechanism of GST which is supposedly Destination based Consumption tax i.e. The Final Consumer is to bear the complete GST of the Value Chain. Inflation if rises was always expected and further the inflation aspect gets covered by multiple tax rate slabs wherein essential commodities will suffer less or no rate of GST.

About the Author: CA Ankit Gulgulia (Jain)

Author is Practicing Chartered Accountant in New Delhi/NCR and specialising in Indirect Taxes, Corporate Laws and Transfer Pricing. He can be reached at ankitgulgulia@gmail.com or at +91-9811653975

Source : taxguru.in

Directorate General of Human Resource Development
(Infrastructure & Welfare Wing)
Central Excise & Customs
C-4. Ground Floor. West Wing. IRCON Building
District Centre, Saket. New Delhi-110 017

F.No. 916/02/PMC/HRD-ID/2016 Date: 31st March, 2017

To,
All Principal Chief Commissioners/ Chief Commissioners, Central Excise & Service Tax
All Principal Directors General / Directors General under Central Board of Excise & Customs.

Sir/Madam,

Sub : Infrastructure proposals relating to formations in GST regime-reg

The re-organisation of field formations and Directorates of CBEC in the GST regime which is likely to be rolled out from 1st July, 2017. as approved by the Government, has since been communicated to you by the HRM Wing of the Directorate. The approved Re-organisation is also available on the CBEC website www.cbec.gov.in and DGHRD website www.dghrdcbec.gov.in

2. Consequent to the re-organisation of the field formations and certain Directorates, viz., DGCEI, NACEN, Systems and Tax Payer Services and creation of new Directorates. viz., Directorate General of Analytics & Risk Management and Directorate of International Customs; immediate action needs to be taken to set up new offices in your respective charges which should be functional by 15th June, 2017.

3 Accordingly, it is requested that immediate appropriate steps may be taken to identify requisite office accommodation which may be required and in cases where administrative approval and expenditure sanction is required from the Ministry, proposals, complete in all respects, as per the Infrastructure Manual, 2015 may be sent to ADG (I&W), DGHRD expeditiously to enable

this Directorate to process the same and get the requisite approvals from the competent authority well before 1st June, 2017,

4. Further, the requirement of additional funds, if any, for taking the office accommodation on hiring or purchase may also be projected by 30th April, 2017 so that the EMC Wing of DGHRD is able to project the same in the 1st Supplementary for 2017-18 (due in June, 2017) well in time. The requirement of funds for this purpose may also be separately communicated to the Additional Director (EMC), DGHRD.

5. It is requested that this matter may be accorded utmost priority having regard to the urgency in preparedness for the smooth roll out of GST.

Yours Faithfully,

(Sunil K. Sawhney)

Director General

The Institute of Chartered Accountants of India
[Set up by an Act of Parliament]
Post Box No.7112, ICAI BHAWAN, Indraprastha Marg
New Delhi – 110002

TO BE PUBLISHED IN PART III SECTION 4 OF THE GAZETTE OF INDIA

NOTIFICATION

15th March, 2017

No.13-CA(EXAM)/CPT/June/2017/II: In partial modification of the Institute’s Notification No.13- CA(EXAM)/CPT/June/2017 dated 27th January, 2017, it is notified for general information that Burhanpur, Chhindwara & Rewa (in the state of Madhya Pradesh) and Bhiwandi, Ichalkaranji (in the state of Maharashtra) are added to the list of cities where the Common Proficiency Test (CPT) is scheduled to be held on 18th June, 2017 (Sunday) in two sessions- Morning from 10.30 AM to 12.30 PM (IST) and afternoon from 2.00 PM to 4.00 PM (IST).

However, it is clarified that all other details notified vide Notification No.13-CA(EXAM)/CPT/ une/2017 dated 27th January, 2017 shall remain unchanged.

(V. SAGAR)

SECRETARY

Source- ICAI

Government of India
Ministry of Commerce & Industry
Department of Commerce
Directorate General of Foreign Trade
Udyog Bhawan

Notification No 43/2015-20 
New Delhi, Dated the 27^th March, 2017

Subject: Amendment in export policy of edible oils.

S.O.(E) In exercise of the powers conferred by Section 3 of the Foreign Trade (Development & Regulation) Act, 1992 (No.22 of 1992), as amended, read with Para 1.02 and 2.01 Df the Foreign Trade Policy (FTP), 2015-20, the Central Government hereby amends, with immediate effect, Notification No 22(RE-2013)/2009-14 dated 18.06.2013 read with Notification No 108(RE-2013)/2009-14 dated 06.02.2015 and Notification No. 17/2015-20 dated 06.08.2015 relating to 51. No. 92 of Schedule 2 of ITC(HS) Classification of Export & Import Items.

2. Export of edible oils was initially prohibited for a period of one year with effect from 17.03.2008 vide Notification No. 85 dated 17.03.2008 which was extended from time to time. Vide Notification 24(RE-2012)/2009-14 dated 19^thOctober 2012, prohibition on export of edible oil has been extended till further orders.

3. The following exemptions are permitted from the prohibition on export of ec ible oils:

(a) Castor oil

(b) Coconut oil from all EDI Ports and through all Land Custom Stations (I CS) on Indo-Nepal, Indo-Bangladesh, Indo-Bhutan and Indo-Pakistan borders.

(c) Deemed export of edible oils (as input raw material) from DTA to 100% EOUs for production of non-edible goods to be exported

(d) Edible oils from Domestic Tariff Area (DTA) to Special Economic Zones (SEZs) to be consumed by SEZ units for manufacture of processed food products, subject to applicable value addition norms

(e) Edible oils produced out of minor forest produce, ITC(HS) Code 1:;159010, 15159020, 15159030, 15159040, 15179010 and 15219020.

(f)  Organic edible oils subject to export contracts being registered and certi ied as ‘Organic’ by Agricultural & Processed Food Products Export Development Authority (APEI)A).

(g) Rice Bran oil in bulk, irrespective of any pack size

(h) Groundnut oil, Sesame oil, Soyabean oil and Maize (Corn) oil in bulk, irrespective of any pack

4. Export of edible oils in branded consumer packs of upto 5 Kgs is permitted with a Minimum Export Price (MEP) of USD 900 per MT.

5. Effect of this notification:

Export of Groundnut oil, Sesame oil, Soyabean oil and Maize (Corn) oil in bulk, irrespective of any pack size, has been exempted from the prohibition on export of edible oil;

(A. K. Bhalla)

Director General of Foreign Trade

E-mail: dgft@nic.in

[Issued from F.No.01/91/180/774/AM10/Export Cell(Pt.)]

CBI REGISTERS A CASE AGAINST TWO THEN AGMs & TWO THEN CHIEF MANAGERS OF SYNDICATE BANK AND OTHERS FOR CAUSING AN ALLEGED LOSS OF RS. 209 CRORE (APPROX) TO BANK

Press Release New Delhi, 25.03.2017

The Central Bureau of Investigation has registered a case u/s 120B r/w 420, 467, 468, 471 of IPC and 13(2) r/w 13(1)(d) of PC Act on a complaint from Syndicate Bank against two then AGMs & two then Chief Managers of Syndicate Bank and six private persons including CA, Builder etc. related to a fraud in its two branches at Jaipur and one at Udaipur (Rajasthan). An alleged loss of Rupees 209 Crore (approx) was caused to the bank.

It was alleged in the complaint that the said accused in criminal conspiracy with each other availed home loans/ credit facilities from Jaipur & Udaipur branches of Syndicate Bank on the basis of forged and fabricated documents. The funds so disbursed by Syndicate Bank were diverted and fraudulently siphoned off to the companies owned by accused persons, thereby causing an alleged loss to the bank.

Searches are being conducted today at 04 places including Jaipur, Ajmer at the residence/ official premises of accused persons. It is also informed that two accused are still in Judicial Custody and other one accused is on bail by Hon’ble Supreme Court of India on medical grounds in another case which was registered during March 2016 & chargesheeted by CBI.

Further investigation is continuing

Tax saving FD offers convenience, safety and a little liquidity too

By Preeti Motiani, ECONOMICTIMES.COM

Tax saving FD being a debt investment is safer than equity-based tax saving avenues such as ELSS schemes.

If you still haven't done any tax-saving investment and are looking for a safe and easy bet for saving tax then a tax-saving fixed deposit could be a solution. 

Tax-saving FD is one of the tax saving instruments where one can invest to save tax under section 80C of the Income Tax Act. One can invest in this FD easily by visiting a bank, filling the form and giving a cheque. In fact, if you place the FD in the same bank branch on which you are drawing the cheque then the transfer of funds can happen quickly and the investment can be done within a few hours. 

As the transfer of funds would be between accounts in the same bank branch, it can be done within say, 20 minutes (depending on bank staff efficiency) and you could walk out with your FD receipt within half an hour. Of course, this investment can be done online also provided you have access to net banking and are comfortable using it. 

Tax saving FD being a debt investment is safer than equity-based tax saving avenues such as ELSS schemes. Returns on a tax saving FD are also guaranteed contractually by the lender (the bank or post office) and fixed for the term of the FD. 

Among debt investments offering the section 80C tax benefit, this is one with the smallest lock in period of 5 years and offering a periodic interest pay out option. Five-year NSCs also offer Section 80C tax benefit but are cumulative instruments and do not offer periodic interest pay outs. Consequently, among debt investments tax saving FDs are a comparatively more liquid, safe and easy option. 

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Currently, banks are offering the interest rate for the general public ranging from 6.75% to 6.90%, whereas the Post office tax saving FD is currently offering an interest rate of 7.8%. 

Currently, all the post office savings schemes are offering higher interest rate than the bank FDs but they are due for review from 1.4.2017 by the government. 

Here are the few points to note while making the investment in Tax- Saving FD: 

1 . Only Individuals and HUFs can invest in tax saving fixed deposit(FD) scheme. 
2. The FD can be placed with a minimum amount which varies from bank to bank. The maximum amount is of course Rs 1.5 lakh in a financial year which is the ceiling for tax saving investment under section 80C of the Income Tax Act. 
3. These deposits have a lock-in period of 5 years. Premature withdrawals and loan against these FD's are not allowed. 
4. A person can invest in these FD's through any public or private sector bank except for co-operative and rural banks. 
5. Investment in Post Office Time Deposit of 5 years also qualifies for deduction under section 80 (C) of the Income Tax Act, 1961. 
6. Post Office Fixed deposit can be transferred from one Post office to another. 
7 . One can hold these FD's either in 'Single' or 'Joint' mode of holding. In the case the mode of holding is joint, the tax benefit is available only to the first holder. 
8. The interest earned is taxable as per the investor's tax bracket and therefore, TDS is applicable. The interest on deposits is payable on either monthly/quarterly basis or can be reinvested. 
9. Nomination facility is available for these FDs. 
10. Most banks offer slightly higher interest rates on FDs to senior citizens (as compared to the interest rate offered on the same FD to a non-senior citizen). This interest rate differential exists for tax saving FDs also. However, the post office does not offer higher interest rates to senior citizens

Source : Economicstimes.com

Commuting your pension money

The returns from your NPS or pension don’t have to go totally towards an annuity plan—which gives you a regular income after retirement. There are provisions for commuting it, to get lump sums. Here is how you do it

 
Deepti Bhaskaran

Pranab Jyoti Gogoi

When you invest for your retirement through products such as the National Pension System (NPS) or a pension plan offered by life insurance companies, the product construct is such that at the end of the investment period—on your retirement—you take the accumulated corpus to buy an annuity. An annuity is a pension product that pays you regular income for life.

But what if at the time of retirement you need a lump sum? The good news is that these products allow you to take a portion of the accumulated money as lump sum. In financial parlance, this is called commuting. It basically means an upfront payment of your pension money. 

Let’s understand the commuting provisions in the NPS and pension policies offered by life insurance companies. 

NPS 

NPS is a defined contribution retirement product that needs you to stay invested till 60 years of age. It’s a market-linked product that offers four investment options: scheme G invests in government securities, scheme C in fixed-income instruments other than government securities, scheme E in equities (limited to 50% or 75% through the lifecycle fund) and scheme A in alternate investment funds (limited to 5%). Early withdrawals are discouraged and you can keep only 20% of the money and have to buy an annuity with the remaining 80%. However, partial withdrawals are allowed for certain events. 

At 60 you can withdraw, or what is also called commute, up to 60% of the money (40% is tax free and 20% taxable). With the remaining 40% you need to buy an annuity. While you don’t pay any tax on the amount earmarked for buying an annuity, the annuity income (pension) that comes your way is taxable. 

Pension plans

Life insurance companies offer pension plans that can broadly be divided into two categories: traditional pension plans and unit-linked pension plans (ULPP). Traditional plans don’t disclose investment portfolios or costs. They either offer a minimum guaranteed return and peg additional returns to bonuses, or offer a guaranteed benefit at the very outset. ULPPs, on the other hand, are market-linked products in which you can see the costs as well as the fund performance.

ULPPs come with a lock-in of 5 years, whereas in the case of traditional plans there are heavy surrender penalties—meant to discourage premature withdrawal. As per rules, a pension plan by a life insurance company needs to offer a non-zero positive return of premiums to the policyholder on maturity.

On maturity you can commute one-third of the accumulated amount and annuitize the rest. The lump sum in your hands is tax-free. However the annuity income is taxable. The other option is to use the money and buy a single premium pension plan again, but on maturity you will still need to annuitize the minimum amount. 

Even as pension plans allow you to commute a part of your accumulated corpus to meet immediate requirements, financial planners don’t like the compulsory annuitization of pension money. This is so because, the minute you invest in these plans, you get committed to buying an annuity product several years down the line on retirement

Source livemint

4 things to calculate before counting your money

When you invest, several factors can diminish the magic of compounding, such as commissions and taxes. So, don’t jump at the first investment opportunity that offers great returns, look deeper

Are your financial goals on track? You may have a budget in place to generate the required savings and an investment plan to make the money work for you. But there are still situations that may be out of your hands to influence. However, what you can do is to make sure that you are not missing out on some of the obvious steps that can ring fence your financial plan as far as possible.

The success of your financial plan depends on how well you define your goals and how efficiently you select the investment vehicles to make your money work for you. Here are some of the factors and numbers relating to your investments, which you can ignore only at the risk of falling short of your financial goals.

Inflation

Don’t ignore the effect of inflation. It steadily eats into the value of your money and pushes up the amount of funds required to meet an expense in the future.

If inflation is assumed at 6%, then the cost of paying for your child’s education, which perhaps costs Rs4 lakh a year today, would be double that amount in 12 years.

While 6% may not seem like a large number at first, its effect compounds over the years—especially in case of long-term goals. Longer the period to the goal, greater will be its impact. If the effect of inflation is not considered while defining financial goals, then the value that is being targeted for them will be completely off the mark. The net result would be a corpus that is much lower than what you would actually need to meet the goals in the future.

Apart from looking at the general inflation rate, also consider the observed increase in cost of particular goals. For example, costs related to education and health, typically, increase at a much faster rate than those for general expenses.

Hidden costs and fees

Costs and fees eat into the returns from your investment. Don’t consider only the out-of pocket expenses that you have to pay—such as commissions and brokerages. Also consider the hidden costs that are ultimately charged to your investment.

These include expenses that are charged to the investment before its value is declared, such as fluctuating net asset values of mutual fund schemes and deductions from the gross amount invested to account for commissions.

When you evaluate investments, look beyond the return numbers. These costs can be found across products, so compare the products on these parameters too before deciding about them. If the costs are higher compared to other similar investments, then see if the higher costs are justified in any way. For example, actively managed equity funds charge a higher expense ration as compared to index funds. This is justified only if the actively managed fund consistently performs better than the index funds in rising and falling markets.

In the periods when returns are good, the higher expenses and deductions may not be seen as significant by the investor. But the same expenses levels will hurt when the returns fall or there are losses.

Consider all the costs involved in making and managing and investments, irrespective how they are charged or paid. All these affect the final corpus value that is available to you to meet the goals.

Taxes

The returns that you consider while evaluating investments are typically the pre-tax returns. A 10% return on a company fixed deposit may look good, but if you are in the 30% tax bracket, the effective return you earn would be only about 7%.

When you look at an investment through a post-tax lens, the suitability may be very different. Higher the tax bracket of the investor, greater will be the gap between the pre- and post-tax returns. From the point of view of an investor’s goals, the relevant number is the post-tax return.

It is important therefore to be aware of how the returns from various investments will be taxed. Look for ways in which you can maximize your post-tax returns.

For example, investing in debt securities through a debt mutual fund may be more tax-efficient than directly holding the bonds, where the interest income earned will be taxed according to the investor’s tax bracket.

Where the option is available, choose to draw returns as periodic dividend or interest income, or as capital gain, depending on which option gives your the best post-tax returns.

Performance

Don’t ignore the risks while evaluating an investment for its suitability for your goals. The investor must be willing to trade-off higher risk for higher returns. The impact of higher risk of volatility, default or illiquidity should be considered in light of the goal.

An investor may be willing to take on some volatility and illiquidity for a longer-term goal but not for a medium- or short-term goal.

Don’t ignore the performance of comparable investment options. Very often, the decision matrix considers the historic return performance of the investment under consideration, and maybe the risk factors. But it is important to consider how the benchmark and comparable investments performed, to determine the investment’s relative performance.

If you don’t do this, then you may be condemning your savings to working less efficiently for you. Compare apples to apples, to make sure that you have the right information. It is not enough if your investment is earning a level of return that you consider to be acceptable for your needs.

You need an investment that is consistently outperforming the benchmark and is a top-quartile performer in comparable investments, both in appreciating and declining markets.

The effects of compounding will be lower to the extent that the return numbers are lower as a result of performance, taxes and costs. Make sure you have considered all the relevant numbers to safeguard your savings and investments.

Source livemint

GST to apply on land lease, rent, EMIs for buying of houses under construction

Leasing of land, renting of buildings as well as EMIs for buying of under-construction houses will attract the Goods and Services Tax (GST)

GST, which the govt intends to roll out from 1 July 2017 will subsume central excise, service tax and state VAT among other indirect levies on manufactured goods and services.
 Come 1 July and leasing of land, renting of buildings as well as equated monthly Instalments (EMIs) paid for purchase of under-construction houses will start attracting the Goods and Services Tax (GST).

Sale of land and buildings will be however out of the purview of GST, the new indirect tax regime. Such transactions will continue to attract the stamp duty, according to the legislations finance minister Arun Jaitley introduced in the Lok Sabha on Monday for approval.

Electricity has also been kept out of the GST ambit.

GST, which the government intends to roll out from 1 July 2017, will subsume central excise, service tax and state VAT among other indirect levies on manufactured goods and services.

The Central GST (CGST) bill — one of the four legislations introduced, states that any lease, tenancy, easement, licence to occupy land will be considered as supply of service.

Also, any lease or letting out of the building, including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services as per the CGST bill.

The GST bills provide that sale of land and, sale of building except the sale of under construction building will nether be treated as a supply of goods not a supply of services. Thus GST can’t be levied in those supplies.

‘Goods’ in earlier drafts of the bills were defined as every kind of movable property other than money and securities but includes actionable claim.

‘Services’ were defined as anything other than goods. It was thought that GST may be levied on supply of immovable property such as Land or building apart from levy of stamp duty. But the bills presented in Parliament have now clarified this position.

Tax experts said that currently service tax is levied on rents paid for commercial and industrial units, although it is exempt for residential units.

Deloitte Haskins Sells LLP Senior Director M S Mani said: “While service tax is applicable at present on sale of under construction apartments, it is levied on a lower value as abatement allowed. The abatement is ostensibly to take care of the value of the land involved in the construction of apartments”.

He said the GST Rules, which will come up for discussion in the Council meeting on 31 March, would help ascertain whether a lower rate of GST is proposed for such transactions or whether a similar abatement procedure would be prescribed.

“This would also be dependent on the rate fixation committee which is expected to finalise its recommendations in April,” Mani said.

Experts said service tax is currently levied on payments made for under-construction residential houses after providing abatement, which brings down the effective rate from 18% to around 6%.

“The government is trying its best to make GST litigation free. The bills very clearly specify that GST would be charged on any lease of land or letting out of the building or construction of a complex, building, civil structure or a part thereof, where whole or any part of consideration has been received before issuance of completion certificate or its first occupation,” Nangia & Co Director Rajat Mohan said.

Experts said the GST subsumes central levies like excise and service tax and local levies like VAT, entertainment tax, luxury tax. However, it does not subsume Electricity Duty.

Since the GST Constitution Amendment Act does not provide for subsuming ‘electricity duty’ under GST, it will continue to be levied by the respective state governments.

Certain states like Delhi exempt residential properties from electricity duty but levy it on commercial and industrial units

Source livemint

Bitcoin use can attract anti-money laundering law: Govt

Use of virtual currencies, such as Bitcoin, is not authorized by RBI and could result in breach of anti-money laundering provisions,says MoS finance Arjun Ram Meghwal in Rajya Sabha

MoS finance Arun Ram Meghwal further said the creation of virtual currencies such as Bitcoin as a medium of payments is not authorized by any central bank or monetary authority. Photo: Bloomberg

 The use of virtual currencies, such as Bitcoin, is not authorized by the banking regulator Reserve Bank of India (RBI) and could result in breach of anti-money laundering provisions, the government said on Tuesday.

“The absence of counter parties in usage of virtual currencies, including Bitcoin, for illicit and illegal activities in anonymous/pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism laws,” Arjun Ram Meghwal, minister of state for finance in the National Democratic Alliance (NDA) government, said in a written reply to Rajya Sabha.

Meghwal further said the creation of virtual currencies such as Bitcoin as a medium of payments is not authorized by any central bank or monetary authority.

“No regulatory approval, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities,” Meghwal said.

RBI has already cautioned users, holders and traders of virtual currency, including Bitcoin, about the potential financial, legal and security risks arising from the usage.

Source livemint

Union Cabinet Approves 4 GST Bill

Esha Agrawal

The Union Cabinet has cleared four bills related to the Goods and Services Tax (GST), ahead of their introduction in Parliament, to enable roll out of the tax reform from July 1.

Approval of the bills by Parliament and a separate one by all state Assemblies will complete the legislative process for roll out of the GST, the one-nation-one-tax system that merges central taxes like excise duty and service tax and state levies like VAT.

What is GST bill?
Goods and Services Tax bill is India’s biggest reform in India’s indirect tax structure.
The purpose of the bill is to introduce one single tax on supply of goods and services, from the manufacturing stage until its delivery to the final consumer.
The final consumer of the goods and/or services will only have to bear the GST charged by the final dealer in the supply chain, and avail set-off benefits at all the previous stages.
This means interim tax stages such as excise duties and service tax and state levies like VAT will be absorbed under GST.
What were the four bills approved by the Cabinet ?
The Central Goods and Services Tax Bill 2017 (The CGST Bill),
The Integrated Goods and Services Tax Bill 2017 (The IGST Bill),
The Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill) and
The Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill)
GST Bill peak rate to be 40%, slabs intact for now
The GST levy may go up to 40 percent after the GST Council proposed raising the peak rate in the Bill to 20 percent, from the current 14 percent, to obviate the need for approaching Parliament for any change in rates in future.

The change in the peak rate will not alter the 4-slab rate structure of 5, 12, 18 and 28 percent agreed upon last year for the moment, In addition, a cess will be levied on demerit goods like luxury cars, aerated drinks and tobacco products.

The CGST Bill sets the tax regime for the levy of GST on intra-state supply of goods or services or both by the central government. IGST Bill deals levy of GST on inter-state supply of goods or services or both by the central government.

Similarly, the UTGST Bill provides for levy of GST on intra-UT supply of goods and services in the Union Territories without legislature. The Compensation Bill provides for compensation to the states for loss of revenue due to GST for a period of five years.

All state assemblies will have to separately approve the state GST legislation before this one-nation one-tax regime can be rolled out.

What are the benefits of GST?
The introduction of GST bill will help in simplifying administration as it removes multiple taxation systems at every stage of trade model and removes disturbances in production.
It also aims towards providing a uniform tax rate for all goods and services.
The manufacturers will be benefited by the tax regime as it will reduce the tax that levied on them.
A system of seamless tax-credits will lead to minimal cascading of taxes, thus reducing hidden costs during trade.
What are the Roadblocks for GST bill
The state GST bill has to be approved by every state government, before its introduction in Parliament for approval.
At the moment, the state GST bill has been sent to all the states by their respective state legislatures for the approval.
For any queries and comments please contact me on: eshaag6@gmail.com or 7388140275

KEEP ON SMILING!!!!!!!!

10 most important income-tax changes which will apply from April 1

By ECONOMICTIMES.COM 

With the passage of the Finance Bill on Wednesday, the Lok Sabha has completed the budgetary exercise for 2017-18. The tax proposals in the Budget 2017 have now become law. Below are 10 most important income-tax changes that will affect you next month: 

1. With a decrease in tax rate from 10 per cent to 5 per cent for total income between Rs 2.5 lakh and Rs 5 lakh, there is tax saving of up to Rs 12,500 per year and Rs 14,806 (including surcharge and cess) for those with income above Rs 1 crore. 

2. Tax rebate is reduced to Rs 2,500 from Rs 5,000 per year for taxpayers with income up to Rs 3.5 lakh (earlier Rs 5 lakh). Due to the combined effect of change in tax rate and rebate, an individual with taxable income of Rs 3.5 lakh will now pay tax of 2,575 instead of 5,150 earlier. 

3. Surcharge at 10 per cent of tax levied on rich taxpayers, with income between Rs 50 lakh and Rs 1 crore. The rate of surcharge for the super rich, with income above Rs 1 crore, will remain 15 per cent. 

4. Holding period for immovable property to be considered "long term" reduced to 2 years from 3. This will ensure immovable property held beyond 2 years is taxed at reduced rate of 20 per cent and eligible for various exemptions on reinvestment. 

5. Long term capital gains tax will result in a lower payout owing to beneficial amendments. The base year for indexation of cost (adjustment of inflation) has been shifted to April 1, 2001 from April 1, 1981. This means lower profits on sale. 

6. Further, tax exemption will be available on reinvestment of capital gains in notified redeemable bonds (in addition to investment in NHAI and REC bonds). 

7. A simple one-page tax return form is to be introduced for individuals with taxable income up to Rs 5 lakh (excluding business income). Those filing returns for the first time in this category will generally not be subject to scrutiny. 

8. Delay in filing tax return for 2017-18 will attract penalty of Rs 5,000 if filed by Dec 31, 2018 and Rs 10,000 if filed later. Such fee will be restricted to Rs 1,000 for small taxpayers with income up to Rs 5 lakh. 

9. Deduction for first-time investors in listed equity shares or listed units of equity oriented fund under the Rajiv Gandhi Equity Savings Scheme is withdrawn from 2017-18. If an individual has already claimed deduction under this scheme before April 1, 2017, he/she shall be allowed to avail a deduction for the next two years. 

10. Time period for revision of tax return cut to one year (from 2 years) from the end of the relevant FY or before completion of assessment, whichever is earlier

Source : economicstimes.com

Looking for last-minute tax planning with Section 80C investments? Here's help

By Sunil Dhawan, ECONOMICTIMES.COM 

Section 80C allows deduction from gross total income of up to Rs 1.5 lakh per annum on one or more eligible investments and specified expenses.

With less than ten days left for the financial year 2016-17 to end, the rush to save tax is nearing its natural epitome. Not so much for salaried individuals as they are expected to have done their bit by now (thanks to the regular reminders by account office), it's the non-salaried individuals who could still be scurrying around to find the right tax saver. 

For anyone looking for a tax-saver at this fag end of the tax saving season, the probability of committing errors are more. The chances of locking funds in an unsuitable tax saving investment are quite high. Tax-saving investment should never be made on an ad-hoc basis or for an ill-conceived goal. 

Still, if you are one of those waiting for the last-minute tax planning, here are few important things to look at. 

While choosing the right tax-saver, base your decision on these five important things, among others: 
* Total amount of deductions - See how much maximum you can avail 
* Existing commitments - See if any fresh investment is required or not 

* Types of tax-saving instrument - See what suits you 
* Tenure of the investment - See if the tax saver can help you meet your goal 
* Taxability of income from the investment - See the post-tax return based on your income slab 

Once you have got a fix on these, equally important is to choose a tax-saving instrument which can be linked to a specific goal. 

Total amount of deductions 
Section 80C allows deduction from gross total income (before arriving at taxable income) of up to Rs 1.5 lakh per annum on one or more eligible investments and specified expenses. The eligible investments include life insurance, Equity Linked Savings Schemes (ELSS) mutual funds, Public Provident Fund (PPF), National Savings Certificate (NSC), etc., while expenses and outflows can include tuition fees, principal repayment of home loan, among others. 

If you have exhausted your annual limit Sec 80C limit of Rs 1.5 lakh, you can also look at National Pension System (NPS) to save towards retirement and, in the process, save additional tax. 

From 2015-16 onwards, an additional (additional to Section 80C) deduction of up to Rs 50,000 under Section 80CCD (1b) for investment in NPS is also possible. For someone in the highest 30 per cent income tax bracket, it's an additional annual saving of about Rs 15,000. 

Further, the premium paid towards a health insurance plan for self and family members qualifies for tax benefit under Section 80D for Rs 25,000 and Rs 30,000 for those above 60. If one has a home loan, interest payments made towards its repayment can also be claimed under Section 24 of the Income Tax Act. The other deductions include donations under Section 80G, interest payments under Section 80E for education loan, etc. 

Existing commitments 
Before you start looking for the right tax saver, run this simple exercise to evaluate whether you actually need to make any fresh investments for this financial year (2016-17). 

Non-Section 80C deductions: First, look at all non-Section 80C deductions like the interest paid on home loan, health plans, educational loan. 

Section 80C outflows: Then consider Section 80C-related expenses like children's tuition fees, principal repayment on home loan, pure term life insurance plans premiums. 

Existing Section 80C commitments: Consider all the existing Section 80C commitments to invest/to pay premium such as in Employees' Provident Fund (EPF) and endowment life insurance, respectively 

The exercise above gives you a total of existing commitments under Section 80C, 80D and other deductions. Now, from your gross total income, reduce the amount to arrive at the taxable income. 

If your net income after doing the above calculation is still above the tax exemption limit of Rs 2.5 lakh then you need to look at further tax saving. To reduce taxable income further and provided the limit of section 80C isn't yet exhausted, look for the right Section 80C investments. 

Types of tax-saving instrument 
Within the basket of Section 80C investments, there are two options to choose from: Investments offering "Fixed and assured returns" and those offering "market-linked returns". 

The former primarily includes debt assets, including notified bank deposits with a minimum period of five years, endowment life insurance plans, PPF, NSC, Senior Citizens Savings Scheme (SCSC), etc. The returns are fixed for the entire duration and generally in line with the rates prevalent in the economy and very close to inflation figure. They suit conservative investors whose aim is to preserve capital rather than create wealth. 

The 'market-linked returns' category is primarily the equity-asset class. Here, one can choose from ELSS of mutual funds and Unit-Linked Insurance Plan (ULIP), pension plans and the NPS. The returns are not assured but linked to the performance of the underlying assets such as equity or debt. They have the potential to generate higher inflation adjusted return in the long run to the extent they are based on the equity asset class. 

Tenure 
All the above tax-saving instruments, by nature, are medium to long term products: From a three-year lock-in that comes with ELSS to a 15-year lock-in of PPF. Some like life insurance require annual payments to be made for a longer duration. 

Taxability of income 
Another important factor to consider is the post-tax return of the tax-saving investment. For instance, most fixed and assured returns products such as NSC provide you with Section 80C benefits, but the returns, currently 8 per cent (five-year) annually, are taxable. This makes the effective post-tax return equal to 5.52 per cent for the highest taxpayers. Considering the annual inflation of six per cent, the real return is almost zero! 

Of all the tax-saving tools, only PPF, EPF, ELSS and insurance plans enjoy the EEE status, i.e., the growth is tax-exempt during the three stages of investing, growth and withdrawal. 

Making the right choice 
Firstly, identify your medium and long term goals arising at different stages of your life. A market-linked equity-backed tax-saving instrument is good for long term goals as equities need time to perform. And, before considering a taxable investment, see the tax rate that applies to you and consider the post-tax return. A low post-tax return after adjusting for inflation will not help you in achieving your goals in the long run. Inflation erodes the purchasing power of money, especially over long term. 

Conclusion 
Tax planning should ideally begin at the start of every financial year. Remember, the risks of planning tax-saving in a hurry later are manifold. There is, for instance, a high probability of picking up an unsuitable product. Also, there isn't any one instrument that can help you save tax and at the same time also provide safe, assured and highest return. Your final choice should ideally be based on a gamut of factors rather than solely being driven by returns from the financial product.

Source: economicstimes.com

137% tax if you don't come clean on hidden cash by March 31, IT department warns evaders

The one who does not offer his stash funds under the scheme but is caught with undisclosed income in scrutiny assessment will face 83.25% tax rate.

The Income Tax department today warned black money holders that it has "information" about their illegal deposits and they should avail the soon-to-end PMGKY window to come clean. 

In advertisements issued in leading national dailies, the department said that the "countdown" in this regard has begun and stash holders should declare their black money "or regret later". 

The window under the Pradhan Mantri Garib Kalyan Yojna (PMGKY) closes on March 31. The advertisement said that the "Income Tax department has information about your deposits." 

The department also said that total "confidentiality is ensured" to those who declare their black assets and funds under this scheme. 

It had recently also cautioned stash holders to avail the scheme or face stringent action under Benami laws, adding that the defaulters' names will also be shared with the central probe agencies like theEnforcement Directorate and the CBI. 

The tax and penalty against those who hide their black money and fail to avail the PMGKY could go as high as 137 per cent of the cash deposits made, a senior officer had said, adding the department will not shy away from slapping the newly enacted Benami Transactions Act against defaulters. 

The official explained that a person or entity that opts for PMGKY will have to pay 49.9 per cent tax on the income, whereas a person who does not opt for the scheme but offers his black income in his Income Tax Returns will face a tax and penalty rate of 77.25 per cent. 

The one who does not offer his stash funds under the scheme but is caught with undisclosed income in scrutiny assessment will face 83.25 per cent tax rate. 

For those who do not declare their stash under the PMGKY and are raided will face 107.25 per cent tax and penalty if the undisclosed income is surrendered during the action. 

Those who do not surrender such hidden income even during searches will stand to face the highest level of penalty and tax at 137.25 per cent. 

The Benami Act invites rigorous imprisonment of up to seven years and the violators also stand to be charged under the I-T Act, besides being liable to pay fine up to 25 per cent of fair market value of benami property and other penalties. 

The Centre had come out with the PMGKY scheme after its decision to demonetise high value currency notes of Rs 500 and Rs 1,000 last year. 

A quarter of the total sum will also have to be parked in a non--interest bearing deposit for four years under the said scheme. 

The scheme had commenced on December 17 last.

Source: economicstimes.com

EPFO to discuss making EPF optional for apparel workers

Trade unions are against the move saying this would encourage such an exemption for other sectors as well in future and might defeat the purpose of retirement savings

PTI

EPFO considers amending the EPF & MP Act for making provident fund contributions optional for employees in apparel and made-ups sector. Photo: Bloomberg

New Delhi: Retirement fund body Employees’ Provident Fund Organisation (EPFO) will consider a proposal to amend the Employees’ Provident Fund and Miscellaneous Provisions Act (EPF & MP Act) for making provident fund contributions optional for employees in apparel and made-ups sector at the trustees’ meet on next Thursday.

However, the trade unions are against this move saying this would encourage such an exemption for other sectors as well in future and might defeat the purpose of retirement savings. “The proposal to amend the Act for implementing the Cabinet decision of making EPF contributions optional for employees earning less than Rs15,000 per month is listed on the agenda of EPFO’s trustees meet scheduled on 30 March, 2017,” a source said.

Earlier last year in June, the Centre has brought a package for the textile and apparel sector which was later extended to made-ups also in December 2016. Among other sops in the package, it was announced that EPF shall be made optional for employees earning less than Rs15,000 per month in these segments.

However it was a Cabinet decision but it could not be implemented without amending the EPF & MP Act 1952, the source said. In the present legal framework, the employees as well as employers contribute 12% each towards mandatory contributions towards social security scheme—EPF, EPS and EDLI—run by EPFO.

Once approved by the CBT, the proposal would have to go through the floor test in both the Houses of Parliament. Commenting on the proposal, All India Trade Union Congress Secretary D. L. Sachdev said,

“All central trade unions will oppose this proposal because it would start a new practice of making EPF contributions optional for a set of categories of employees. This will set a wrong precedent.” Besides, the EPFO’s apex decision making body, the Central Board of Trustees (CBT), headed by the labour minister would also take up a proposal of providing health cover to its around 50 lakh pensioners.

Earlier, back of the envelope calculations done by ESI had estimated Rs200 monthly premium per person for providing health cover under its scheme to the EPFO pensioners. The proposal is aimed at providing health cover to EPFO pensioner, who get very little amount as pension and hence healthcare is out of their reach. Besides, the CBT will also discuss the proposal to cover scheme workers like Anganwadi and mid-day meal, under the social security schemes run by the EPFO

Source livemint

Section 66A of IT Act, 2000: What has changed two years on?

The manner in which courts have handled issues of free speech and access to information, in accordance to Section 66A of IT Act, 2000, does not augur well

Shreeja Sen

A file photo of the Supreme Court Photo: Mint

Two years ago, on 24 March 2015, online speech or communication got a boost as the Supreme Court declared a draconian provision—Section 66A of the Information Technology Act, 2000—unconstitutional.

It was group of petitions, but the first was filed by then law student Shreya Singhal, granddaughter of late judge Sunanda Bhandare, in light of the arrest of Shaheen Dhada and Rinu Srinivasan. They were arrested under Section 66A for criticizing the shut down of Mumbai after the death of Shiv Sena leader Bal Thackeray on social networking website Facebook.

The case came to be known as Shreya Singhal versus Union of India, now in the annals of history as a landmark decision in the free speech regime.

The court struck down Section 66A of the IT Act for being “open ended, undefined, and vague” and the words used in the text of the provision being “nebulous in meaning”.

The provision was titled “punishment for sending offensive messages through communication service” and included information shared via a “computer resource or a communication device” known to be “false, but for the purpose of causing annoyance, inconvenience, danger, obstruction, insult, injury, criminal intimidation, enmity, hatred or ill will”.

The wide net cast by the section did not go unnoticed by the apex court which said, “Section 66A is cast so widely that virtually any opinion on any subject would be covered by it, as any serious opinion dissenting with the mores of the day would be caught within its net.”

The ruling also read down the ambit of intermediary liability while constitutional validity of Section 69A (power of Central government to block information through any computer resource for public access) and Section 79 (intermediary liability) of the IT Act and the rules made under it.

Two years have passed since the Shreya Singhal decision. The Supreme Court’s history with civil rights (like free speech) was called “chequered and inconsistent” by lawyer Gautam Bhatia, who writes on these issues, in a recent Mint column.

Last year also saw the court upholding the sections from the Indian Penal Code which punish defamation with up to two years imprisonment.

“In Section 66A, there was immediate relief to a lot of people because it was struck down. Also the ruling with respect to intermediary rules has been immensely beneficial for free speech. However, there are points of concern given that the Supreme Court itself is applying the ruling inconsistently and not expanding or following the course set by it,” said lawyer Apar Gupta, who also represented the non-profit People’s Union for Civil Liberties, a petitioner in the batch of cases with the Shreya Singhal case.

As an example, Gupta referred to a recent interim order by the apex court directing intermediaries to have an in-house mechanism for screening of search results. “It seems to conflict with the Shreya Singhal case,” he said.

The manner in which courts have handled issues of free speech and access to information does not augur well. Gupta said, “At the very least it shows inconsistency by the court and otherwise it shows that Shreya Singhal may be a case in isolation. It undermines the significance of the case.”

Source livemint