Y.V. Reddy advocates Tobin Tax

Dr Y.V. Reddy, former Governor of RBI, advocated the need for a ‘Tobin Tax’ (a tax on short term speculation in currencies) for India while delivering the S.Guhan Memorial Lecture 2009, in Chennai on Thursday. Pointing out that the idea was considered retrograde and unpractical till recently — both in India and globally, he drew attention to its acceptance by eminent persons such as Mr Paul Volcker, former US Fed Chief, and Lord Turner, current chief of UK’s FSA. He said that the idea could be examined for the forex markets in India and a suitably modified securities transaction tax could be extended to P-note transactions, though they are traded abroad. In a wide-ranging address that looked at a host of issues relating to India’s financial sector, Dr Reddy also called for a “detailed analysis and supervisory review of the incipient tendency towards irresponsible or usurious lending through micro-finance institutions that are profit seeking”. He also drew attention to the “emerging hollowness in traditional lending pattern among banks”. He said that banks are reducing their advances for working capital and funding for agriculture, small business and small and medium industry, because of their lending and investment in other sectors such as mutual funds, private equity, venture capital, and other infrastructure activities besides equity investments. He said that a banking license was given primarily to conduct traditional retail banking activities that are vital to facilitate growth at our stage of development. – www.thehindubusinessline.com

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Affidavit must for gift in kind, over Rs. 50,000, from kin

It must affirm that donor is related to donee






New Delhi: From now on, when you get a gift in kind, valued at more than Rs. 50,000, from your parents or other relatives, make sure you have a sworn affidavit declaring the donor your kin.

The Central Board of Direct Taxes has ruled that any such gift will be taxable for the donee unless it is from relatives or given during occasions such as marriage or by way of inheritance.
On-the-spot verification



“The donee has to get an affidavit affirming the donor to be his mother, father, brother, sister or any other relative so that at the time of claiming exemption under the new arrangement, the income tax assessment officer can have an on-the-spot verification,” a senior IT official said.

An individual could preferably get one affidavit listing all gifts taken in the entire assessment year from different relatives or the same kin. The affidavit would save IT assessees the hassle of proving that the gifts, movable and immovable, were received or inherited from a relative residing in any part of the world. It would also establish the donee’s relationship with the donor, the official said.

The CBDT on September 30 notified that “with effect from October 1.... any gift in kind, being an immovable property or any other property, the value of which exceeds Rs. 50,000, will become taxable in the hands of the donee, being an individual or a Hindu Undivided Family (HUF), as income from other sources...”

The department will not tax gifts received from a relative on the occasion of marriage of the donee, under a will or by way of inheritance, in contemplation of the death of the donor, from any local authority as defined in Section 10(20) of the Act, from any fund or trust established under Section 10(23C) and from any trust or institution registered under Section 12AA.

Assesses will have to file income tax dues on the value of the gift and disclose its taxable value in the returns for the assessment year 2010-11.

Under the IT Act 1961, a relative is defined as a spouse, brother or sister, brother or sister of the spouse, brother or sister of either of the parents, any lineal ascendant or descendant and spouse of any of the relatives. — PTI

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Govt mulls regulator for ‘insolvency professionals’

Govt mulls regulator for ‘insolvency professionals’



The Government is planning to establish a regulator for the growing tribe of insolvency professionals, who specialise in rehabilitation or winding up of sick companies. The Companies Bill, 2009 has given formal recognition to insolvency experts as professionals for the first time, official sources told Business Line. It was felt that there should be a regulator for insolvency professionals, they added.
TO START A COURSE

To cater to the demand, the Institute of Company Secretaries of India (ICSI) would soon start a course for its members on corporate insolvency and restructuring. In this regard, ICSI has tied up with the INSOL International, the London-based global coalition of national associations for lawyers and accountants specialising in insolvency, Mr N.K. Jain, Secretary and CEO, ICSI, said. Currently, there is a Government-recognised nodal body called Insolvency Practitioners Association (IPA) comprising lawyers, company secretaries, chartered accountants and cost and works accountants. Once the Bill becomes an Act, IPA will start its training and awareness programmes. “IPA will help raise the standards of insolvency professionals in India to international levels. Nowadays insolvency matters have become cross-border issues. We need insolvency professionals who can match up to the global best,” Mr Amarjit Singh Chandhiok, President, IPA, said. Thanks to the global financial crisis and economic slowdown, there is an increase in insolvency-related work, said Ms Maneesha Dhir, Secretary, INSOL India, affiliated to INSOL International. “Due to the increasing opportunities, more professionals have begun to specialise in insolvency,” she said.
COMPANY LIQUIDATOR

Currently, only official liquidators help in insolvency proceedings. But the Companies Bill has proposed that a Tribunal can appoint a Company Liquidator from a Government-maintained panel comprising CAs, lawyers, CS, as well as CWAs with at least 10 years experience. “This will also ensure that more professionals specialise in insolvency,” Ms Dhir said. The Bill proposes that insolvency cases would be heard by the National Company Law Tribunal and the setting up of a Rehabilitation and Insolvency Fund. According to International Financial Corporation’s ‘Doing Business 2010’ report, which ranked 183 countries on different parameters of ease of doing business during June 2008-May 2009, India was among the slowest in facilitating the closure of business. It takes as many as seven years on an average to close a business in India, compared with Ireland’s 0.4 years or Japan’s 0.6 years. However, thanks to some reforms such as streamlining procedures and increasing the judges dealing with insolvency cases, India’s rank in closing down a business jumped four places to 138. – www.thehindubusinessline.com

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ICAI seeks info on audit with foreign tie-ups

ICAI seeks info on audit with foreign tie-ups



Institute of Chartered Accountants of India (ICAI) has sought broad-ranging information about the association of its member institutions with foreign auditing firms. The move assumes significance following the accountancy fraud by the promoters of Satyam Computers that brought the role of auditors under scrutiny. The auditors concerned were associate firms of international auditing entity PricewaterHouseCoopers. ICAI is in the process of collecting basic information such as financial statement, details of the agreement, queries related to their functioning, revenue-sharing details and so on from the auditing firms that have foreign associations. Indian auditing firms are registered with ICAI, while foreign firms do not have to be associated with the apex standard-setting body. Though ICAI is yet to reveal what it intends to do with the data, sources said the information is being gathered to study the possibility of tightening regulatory monitoring of foreign firms that function through their Indian associates. “It is a general query to understand how they operate. Notices have been sent to Indian firms whom we regulate and lot of people are responding,” said ICAI President Uttam Prakash Agarwal. Asked what ICAI would do with this information, Agarwal said, “Once we get the data we will apply our mind. "This latest move is part of the regulator's efforts to bring in more transparency and accountability to the accounting profession after Satyam's founder Ramalinga Raju confessed to long-term fraud on January 7. ICAI has already submitted its report on the auditors’ role in the Satyam scandal, in which funds of the IT major were allegedly siphoned off by the Raju family by fudging accounts. The complaint against the auditors was their failure to detect the fraud. The institution is already in the process of curbing the practice of unrestricted registrations of the same entities in various states. The number of registrations one auditing firm can have is likely to be restricted to two. Similarly, ICAI is attempting to prevent all audit firms, whose individual auditor members are under scrutiny for unethical practices, from taking up government auditing contracts. – www.business-standard.com

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New Direct Taxes Code to be introduced in 2011: FM

New Direct Taxes Code to be introduced in 2011: FM



The government will introduce the Direct Taxes Code by April 2011 after examining thoroughly seven proposals such as taxing savings schemes and clamping the Minimum Alternate Tax (MAT) on gross assets that have not found favour with the industry, trade and people at large. After an interaction with industry chambers here today, Finance Minister Pranab Mukherjee said, "The new Direct Taxes Code would have to be passed in the Parliament. It is to be effective from 2011. "He said the Code would be implemented only after "a comprehensive review" of the proposals. Revenue Secretary P V Bhide said, "The draft would be tabled in the Parliament during the winter session or the following session in February. – www.presstrustofindia.com

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FDI norms to cover ltd liability partnerships

FDI norms to cover ltd liability partnerships



The government is working to bring limited liability partnerships (LLPs) within the scope of foreign direct investment guidelines, a move which will facilitate the inflow of overseas capital through a corporate structure that has just recently been allowed in India. LLPs, which combine the features of partnerships and limited liability companies, are the preferred corporate structure for the services sector globally, particularly tax-accounting and law firms. The ministry of corporate affairs, which administers the LLP Act that came into effect in April, and the department of industrial policy and promotion which administers FDI policy, are working to amend FDI guidelines, a government official said. The rule change is expected to happen in a few months. The LLP Act provides for cross-border LLPs but the foreign investment policy, particularly the guidelines for calculating FDI in an Indian company, only covers companies at present. Bringing LLPs within the FDI ambit will facilitate the establishment of cross-border LLPs through which entrepreneurs in India can start business ventures with foreign investors. Since an LLP partner is not liable for the wrongdoing of other partners, entrepreneurs who do not know each other will be willing to come together and start a business. “Like companies, LLPs are also well regulated corporate entities,” the official said, explaining why FDI guidelines should accommodate this corporate structure. Extending the FDI norms to LLPs is expected to give rise to large partnership firms with foreign investment, particularly in the services sector. Nearly 250 LLPs have been registered in India since April, when the LLP Act came into force. Earlier this year the government provided for the taxation of LLPs under the IT Act on lines similar to general partnerships. LLPs are not required to pay dividend distribution tax or a surcharge. – www.economictimes.indiatimes.com

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NO MAILS FOR REFUNDS ISSUED FROM INCOME TAX DEPARTMENT

18:14 IST
 
 


  Information has been received from several quarters that people are receiving electronic mails informing them of their income-tax refunds and seeking their credit card details. The e-mail is sent from the following or similar mailing addresses.

or cvhfus@accounts.net



  It is clarified that the Income Tax Department does not send e-mails regarding refunds and doses not seek any information regarding credit cards of taxpayers.



  Taxpayers are, therefore, cautioned that they should not respond to such mails and if they do so it would be at their risk and responsibility.





BSC/BY-348/09
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MP govt says no to GST

The BJP-ruled Madhya Pradesh government has alleged that the Centre has planned to impose goods and services tax (GST) to ‘indirectly benefit’ the multinational companies. The government today reiterated that it would not adopt GST. Madhya Pradesh is the first state to refuse GST on grounds of losses of Rs 2000 crore annually to the state. State Finance Minister Raghavji, while speaking to Business Standard, cautioned not only against haste in introducing GST, but alleged that states would have reduced fiscal autonomy and multi-tax system. “The new tax system will escalate prices of commoner items and will reduce prices of luxury items. It is not in the interest of the poor,” he said. He added that the central government never wanted the states to stay autonomous in terms of financial independence. “After GST, the state will have to lose a maximum of Rs 2,000 crore annually. The rate of tax will vary from 1 per cent to 12 per cent and will be more on petroleum products. But we will lose Rs 700 crore at one go as we will have to remove central sales tax,” the minister said. “In addition to service tax, there will be five slabs — 1 per cent, 5 per cent, 8 per cent, 12 per cent and another slab for petroleum products. This will create an ambiguity and traders will have to face authorities at the central and state levels. They will also have to file separate returns for state and central level taxes,” he added. The new tax system would replace excise duty and service tax at the Centre and value-added tax (VAT) and local taxes at the state level. Besides Madhya Pradesh, Chhattisgarh, Haryana and Tamil Nadu also have reservations on GST. “We are not strictly opposing the GST but we want the Centre should not impose it in haste,” Raghav ji said. He said even foodgrain would attract tax and as a result, not only traders but farmers will also be affected with the new system. – www.business-standard.com

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Insurance claims may be taxable under new code

Insurance claims may be taxable under new code



The insurance claims paid to policy holders in the event of death or disability will be subject to payment of income tax if the new Direct Taxes Code proposals are implemented. The Code proposes that contributions by the insured are subject to the EET method of taxation of savings. This means that the sum received under a life insurance policy, including any bonus, is taxed. Only a pure life insurance policy is exempted from tax. In a pure life insurance policy, the policy holder receives money only when death occurs. Life insurance companies are perturbed that the tax proposal could hit their business. Life insurers are taking up the issue with the government through the Life Insurance Council. According to an insurance company official, the council is sending its suggestions to the government and the regulator. “Even if you are in the lower tax bracket, when you get the sum assured, it will be a lumpsum amount. This would catapult you to a higher tax bracket and you will pay higher taxes,” said Mr Kamalji Sahay, CEO, Star Union Dai-ichi Life Insurance. Only term insurance policies would be exempted. Both ULIPs and traditional products would be taxed. The return would be taxed even in case of disability or death, said Mr Mr V. Srinivasan, Chief Financial Officer, Bharti AXA Life Insurance. The Direct Taxes Code has a section which says that maturity proceeds of an insurance policy shall be exempt only if the premium does not exceed 5 per cent of the capital sum assured. This means that for a premium of Rs 10,000, the sum assured will be exempted only if it is greater than Rs 2 lakh. However, most of the products sold by companies do not match this criteria, Mr Srinivasan said. There is also ambiguity on whether only the returns will be taxed and not the principal. It is not clear whether the tax would be applied on the basis of the real value of money invested or on the nominal value, Mr S.B. Mathur, Secretary-General, Life Insurance Council, said. For example, a person buying a traditional endowment plan could get a sum assured of Rs 5 lakh by paying a premium of Rs 4 lakh. It is not clear whether the policy holder would be taxed on the difference (Rs 1 lakh) or on the total sum assured of Rs 5 lakh that he receives at the end of the policy tenure. – www.thehindubusinessline.com


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Audit watchdogs may get more service sway

NEW DELHI: The government is considering a proposal to authorise the country’s

three statutorily recognised institutes in the fields of
accounting, company
secretaryship and cost accounting to expand their ambit of functioning by providing services in all three areas. The proposal, however, is being opposed by the regulators themselves as many feel that it would lead to the end of specialisation and loss of functional and regulatory autonomy, a government official, who did not want to be identified, said.

The proposal, mooted by the ministry of corporate affairs, is now being deliberated upon by professional bodies including the Institute of Chartered Accountants of India (ICAI), Institute of Company Secretaries of India (ICSI) and Institute of Cost and Works Accountants of India (ICWAI).

The government, which is mulling key amendments relating to the work of all the three institutes, felt the need to club their regulatory functions so as to give them greater powers as well as make them more accountable in cases of any default in service by them, the official pointed out. This assumes relevance in the light of the fraudulent activities carried out in Satyam (now Mahindra Satyam) where professional lapses took place at various levels.

ICAI, ICSI and ICWAI are institutes that serve as parent organs for the chartered accountants, company secretaries and cost accountants, respectively, and prepare functional as well as regulatory guidelines pertaining to their own field of work. All three institutes have been formed under separate Acts of Parliament, with their registered members entrusted to do specific work that is exclusive to them.

To give the proposal a final shape and get it implemented, the government will have to go through a process of amendment of the Acts under which the institutes have been established. Even as the proposal is at a stage of discussion, the ICAI and the ICSI have voiced their opposition to the said move. They have said the qualification and regulatory function presently exercised by a single institute should not be separated.

Source:ET
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States Agree on Dual GST Rates

States have finally reached a consensus on having two basic rates under the Goods and Services Tax (GST), slated to be rolled out on April 1, 2010. There will be one standard rate of taxation and another low rate of taxation for essential commodities.

“A consensus has been reached between state finance ministers regarding the two basic rates of taxation. Some items will also be exempted from the tax and there will be another rate of tax for precious metals like gold and silver,” said Asim Dasgupta, chairman of the empowered committee of state finance ministers.

He also added that some small and medium enterprises would stay outside the ambit of GST. The exact rates have not been decided yet. Dasgupta also said the Centre was expected to have a good deal of conformity to the GST structure.

Decisions have also been taken to set up a joint working group to decide on a framework on constitutional amendment for implementing GST and a model legislation for the proposed tax.

“The working group will be set up immediately and the report regarding constitutional amendment will be submitted in a month. It is a small amendment to empower states to levy taxes,” Dasgupta added.

The draft legislation was expected to be ready in two months. Dasgupta said this would give the government time to take feedback from stakeholders and amend the legislative structure accordingly.

The joint working group will include representatives from the state and Centre, as well as the law ministry and the Central Board of Direct Taxes.At a separate meeting, finance ministers of BJP-ruled states discussed the introduction of GST. Former Union finance minister Yashwant Sinha, who attended the meeting, told Business Standard that the states had some concerns whether the introduction of GST would lead to revenue loss and rising prices of essential commodities.

Besides, there were apprehensions about the new regime impacting the taxation powers of the state. “These concerns are state-wise,” Sinha said, adding that even Congress-ruled Haryana and UPA-ruled Tamil Nadu have expressed concerns over the proposed tax.

On whether the April 2010 deadline was achievable, Sinha said: “Consensus among states was more important than the date of implementation.” He said the BJP-ruled states decided to take up their concerns with the empowered committee and the Union government. Sinha said GST was more complicated than the value added tax (VAT), since the latter involved taxation by only the state governments.

Dasgupta has called for a meeting with finance ministry officials on September 22 to discuss the rate of GST.

On being asked whether the GST rollout was possible by the end of the current financial year, Dasgupta said: “It is very possible to roll out the tax structure in 3-4 months, but we don’t have a day to lose.”

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Setting up of new National Institutes of Technology (NITs)

13:51 IST
Cabinet Decision


The Union Cabinet today approved setting up of new National Institutes of Technology (NITs). These new NITs will be established in Manipur; Meghalaya; Mizoram; Nagaland; Goa (which will also cater to UTs of Daman & Diu, Dadra & Nagar Haveli and Lakshdweep); Pudducherry (which will also cater to Andaman & Nicobar Islands); Sikkim; Delhi (which will also cater to Chandigarh) and Uttrakhand.

  The process for setting up of these new NITs will start in 2009-10 with formation of their respective societies, constitution of their Board of Governors, appointment of Directors, etc. The admissions in these new NITs will be made from the academic session 2010-11 and NITs will start classes either in campuses taken on lease or temporarily in mentor NITs. Work for construction of campuses for these new NITs will also be initiated subject to the land being provided free of cost by the concerned States/UTs. The process of setting up will be completed over a period of five year.

  The new NITs are being setup so as to cater to the needs of States/UTs which do not have NITs as of now. This will meet a long standing demand of these States/UTs. These Institutes will be covered under the National Institutes of Technology Act, 2007 making them institutions of national importance, which will ultimately help in addressing the aspirations of people especially of the North East region where 6 new NITs are to be established. The new NITs will be able to provide high quality education to many of the bright students from these States/UTs, as 50% of the seats are to be filled from the eligible students from these States/UTs. Many of the States/UTs where these new NITs are being opened, especially those in North East are lacking in national level technical institutions. This will bring such States of North East in the main stream of the technical education.

  The new NITs will increase in output of high quality:

(i) By producing engineering and science graduates in the short run and postgraduates and Ph.Ds in the long run;

(ii) By providing teachers for Engineering and Science subjects at College/University level; and

(iii) By developing Research & Development and Intellectual Property generation in Engineering and Science, in the long run.

The new approved NITs are categprized under two Schemes, as follows:

(a) Scheme “A” consisting of proposed NITs at Manipur, Meghalaya, Mizoram, Nagaland, Goa, which will also cater to UTs of Daman & Diu, Dadra & Nagar Haveli and Lakshadweep, Pudducherry, which will cater to Andaman & Nicobar Islands also and Sikkim; and

(b) Scheme “B” consisting of approved NITs at Delhi (which will also cater to Chandigarh) and Uttrakahand.

Each of the NIT under scheme A will be established at a cost of Rs.250 crore while each of the NIT in scheme B will be set up at a cost of Rs.300 crore. Total project cost is Rs.2600 crore. During 11th Plan the expenditure will be of the order of Rs.540 crore and for the year 2009-2010 expenditure will be of the order of Rs.50 crore.

Main beneficiaries will be the students from the States/UTs which at present do not have NITs as seats will be earmarked for such students in these NITs along with seats earmarked to be filled on all India merit basis.

Presently there are 20 National Institutes of Technology (NITs), located at Agartala, Allahabad, Bhopal, Calicut, Durgapur, Hamirpur, Jaipur, Jalandhar, Jamshedpur, Kurukshetra, Nagpur, Patna, Raipur, Rourkela, Silchar, Srinagar, Surat, Surathkal, Tiruchirapalli and Warangal. Seventeen of these NITs were earlier known as regional Engineering Colleges (RECs). These RECs were set up as joint and co-operative ventures of the Central and State Governments with an aim to meet the increased demand for technically qualified manpower. In 2003, the Seventeen erstwhile Regional Engineering Colleges (RECs) were rechristened as National Institution of Technology (NITs) and taken over as fully funded institutes of the Central Government and granted deemed university status. Subsequently, Bihar College of Engineering, Patna; Government Engineering College, Raipur; and Tripura Engineering College, Agartala, were also converted into NITs in 2004, 2005 and 2006 respectively. NITs are governed by National Institutes of Technology Act, 2007 which came into force w.e.f. 15th August 2007. The NIT Act 2007 declares these NITs as institutions of national importance.

50% of the seats in NITs at Under Graduate level are filled from the eligible students of the State where the NIT is located. Remaining seats are filled on all India merit basis. However, Students of States/UTs which are not having NITs have complained being at a disadvantage, though this Ministry if compensating such States/UTs by way of allocating supernumerary seats in NITs. To address this problem, MHRD has proposed to set up new NITs, provision for which is available in the 11th Five Year Plan, so as to cater to the needs of non-NIT States/UTs.

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Shri R. Bandyopadhyay takes over as the New Secretary, Ministry of Corporate Affairs SHRI ANURAG GOYAL JOINS THE COMPETITION COMMISSION OF INDIA AS MEMBER

Shri R. Bandyopadhyay joined as the new Secretary in the Ministry of Corporate Affairs here today. An IAS officer of 1974 batch, Shri Bandyopadhyay has worked in various capacities in the spheres of Planning & Programme implementation, Energy , Power, Communication & IT, Commerce and Industry. Before joining the Ministry of Corporate Affairs, he was the Secretary, D/o Public Enterprise, Ministry of Heavy Industries & Public Enterprises.

Shri R. Bandyopadyay has replaced Shri Anurag Goel, who has joined as Member, Competition Commission of India

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Sebi may issue norms on SME bourses soon

Sebi may issue norms on SME bourses soon



The Securities and Exchange Board of India (Sebi) may soon issue rules for setting up stock exchanges dedicated to small and medium enterprises (SMEs). “Sebi is working on the concept paper on SME exchanges. It may soon release the guidelines,” Minister of State for Micro, Small and Medium Enterprises (MSMEs) Dinsha Patel said at a seminar organised by MCX-SX and the Society for Capital Market Research and Development here today. He said SMEs were not able to raise capital through the market since they could not meet the listing and trading requirements of BSE and NSE. Hence, a separate exchange for them was required, he added. He said India could use experiences of SMEs listed on stock exchange in countries like the US, the UK, Japan and China. MSME Secretary Dinesh Rai said there should be more than one exchange for SMEs. “Sebi is working on the guidelines keeping in mind the nature of SMEs. I feel strongly that we need to have more than one SME exchange,” he said. There are over 13 million MSMEs in the country employing about 42 million people. BSE, NSE and the new entrant, MCX Stock Exchange (MCX-SX), had shown an interest in setting up an SME exchange, said an industry source. MCX-SX Vice-Chairman Jignesh Shah said India did not have mature venture capitalists to fund small and medium firms and the stock exchange was the only place where they could raise capital. “We are waiting for Sebi guidelines to offer services to SMEs on our platform,” he said. Speaking on the sidelines of the seminar, the minister said the ministry had approached defence and railways ministries asking them to procure 20 per cent of their requirements from MSMEs. – www.business-standard.com

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I-T dept unleashes new computer bloodhound

I-T dept unleashes new computer bloodhound



The Central Board of Direct Taxes (CBDT) has introduced a new software programme, called ‘360 degree profiling’, which would provide automatic alerts for scrutiny assessment of an individual or a company to the income tax department, based on its investments and expenditure. According to official sources, the software is aimed at quick identification of cases for scrutiny where tax default or tax evasion seems present. It would save a lot of time for officers, who could focus on cases picked up objectively, rather than fishing and selecting cases on subjective judgement. Thus, it would also speed tax recovery. “It will be a map of Permanent Account Numbers (PANs), with alerts for the officer to carry on scrutiny assessment. Earlier, it would take days just to identify the related entities, which could end up in identifying a maximum of four to five assessees,” explained an official source. The software will throw up a PAN for scrutiny only when there are some aberrations in the investments, expenses and cash money expenditure made by an assessee or if the investments do not match with the income. Thus, the income-tax officer could just check the relevant returns filed or ask for details of other tax returns. ‘360 degree profiling’ is a PAN-based software which tracks an individual or a company as an assessee, and tracks all related PANs of other companies or enterprises to which the original assessee has made payments or investments. “Entry of one PAN can generate a display of numerous PANs, where each one is a possible lead for investigation, since it is attached to the original PAN entry. If the other PAN does not provide any conclusive evidence for further investigation, it will be dropped,” said the official source. The department, over the years, has developed a massive data of PANs by making it compulsory for returns and, more recently, making electronic filing of returns mandatory for companies. If a company has made such investments, the software will exhibit PANs of all related entities of the company — its board of directors, major shareholders, etc. And, following these leads, another set of PANs will be displayed in which these entities have made investments or spent money on. This process will go on and an entire PAN “tree” will be made from one PAN. Similarly, if the assessee belongs to a Hindu Undivided Family (HUF), search on the PAN of one entity of the HUF could throw up numerous PANs related to the original assessee. The department has also decided to hasten the process of clearance of high-demand cases from the stage of appealing to the commissioner of appeals, so that officials could press for recovery. In such cases, even if the assessee proposes to approach higher courts for further appeal, it would first have to make the payments and then appeal. – www.business-standard.com

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Financial crisis not to have much impact on remittances: RBI

Financial crisis not to have much impact on remittances: RBI



Global financial crisis has so far failed to significantly slow down inflow of remittances in India, the Reserve Bank said. "Available information indicates that inward remittances to India have not been impacted significantly by the economic crisis," the RBI said in its annual report contradicting popular perception of a severe impact on remittances. According to the World Bank estimates (July 2009), remittance flows to developing countries, which increased to $ 328 bn in 2008 from $ 285 bn in 2007, are projected to decline by 7.3 per cent in 2009, the RBI said. Europe and Central Asia are expected to experience the largest decline (15 per cent) among all developing regions in 2009. However, remittance flows to South Asia are expected to decline more modestly by 4 per cent, the report said. India remained the top recipient of migrant remittances with $ 52 bn in 2008 as against $ 38.7 bn, it said citing the World Bank estimates, and added remittance flows to South Asia have continued strong growth in 2009. Uncertainties in oil prices might have "induced the workers to remit their money to India as a hedging mechanism due to its relatively better growth prospects", the report noted as one of the factors for higher remittances in India. Another reason for the growth of remittances to South Asia and East Asia appears to be a switch in the motivation for remittances from consumption to investment, the RBI said. Falling asset prices, rising interest rate differentials, hike in interest rate ceilings on NRI deposits since September 2008, and a depreciation of the local currency have attracted investments from migrants, it said. The continued strong growth of remittances in 2009, it pointed out, is also due to the fact that the Gulf Cooperation Council (GCC) countries, a major destination for Asian migrants, have not significantly reduced hiring migrants. GCC countries are following a long-term strategy of infrastructure development funded by the accumulated reserves and are unlikely to slow down such investments and lay off migrant workers in large numbers, the annual report said. Though there could be some slowdown in remittances in the near term due to the recession in advanced economies and sharp moderation in the Middle East, remittances are expected to return to positive growth in 2010 and 2011, it said. – www.economictimes.indiatimes.com

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ICAI insurance-specific accounting norms likely in 2-3 months

ICAI insurance-specific accounting norms likely in 2-3 months



The Institute of Chartered Accountants of India (ICAI) is likely to come out with insurance specific accounting standards in the next three months, a top official said. "We are likely to come out with it (insurance sector accounting standards) in the next two-three months," ICAI President, Uttam Prakash Agarwal, told PTI here. A group of experts has been appointed for the purpose. Agarwal had earlier said that the standards, which will initially come in the form of recommendations, would give a thorough and fair view of accounts of the insurance companies. The recommendations once approved will become mandatory. Currently, there are 32 common notified accounting standards for all companies of various sectors. The new accounting standards would be additional to the existing 32 standards and give more insights about accounts of insurance companies. – www.economictimes.indiatimes.com


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Meet on e-payment of VAT

Meet on e-payment of VAT



The Commercial Taxes Deputy Commissioner, Mattancherry, in association with the Indian Chamber of Commerce & Industry, had convened a meeting on e-payment of VAT for the benefit of the business community. Senior officials of the designated banks, State Bank of India and State Bank of Travancore participated. The department officials spoke about the advantages of the new system to be introduced from September 1, and the bank officials explained the procedures for opening zero balance account. The representatives of the business community made a plea that implementation of e-payment be extended at least by one month. They said the guidelines were put up on the department's Web site only at the end of this month and it will take time to meet the stipulated requirements. – www.thehindubusinessline.com

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CBDT panel for posting officers in tax havens

Income tax officials from India could be posted in the tax haven nations to collect information about tax evasion from these countries, if a proposal made by a committee set up to investigate abuse of tax treaties goes through. According to the recommendations of the committee, there could also be a special team set up to investigate evasion in cross border transactions, a finance ministry source said. The Central Board of Direct Taxes (CBDT) had set up the committee to examine the investigation issues in which abuse of tax treaties and evasion through tax havens are involved. “The committee has suggested various other sources of information, including placing of department officers in key centres used for tax evasion,” said the source. Also, the committee suggested to have separate investigation units to handle cases involving cross border transactions in tax havens. “Considering the specialised nature of investigation required to deal with cases involving cross border transactions, there is a need for separate investigation units to handle such cases having cross border transactions involving tax havens and round tripping electronic transfers etc,” said the source. – www.business-standard.com

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Clarification regarding deduction of tax at source from payments of second installment of arrears to Government employees on account of implementation of Sixth Central Pay Commission's recommendations

Clarification regarding deduction of tax at source from payments of second installment of arrears to Government employees on account of implementation of Sixth Central Pay Commission's recommendations

Circular No. 6/2009, dated 31-8-2009

Under the provisions of Section 192 of the Income-tax Act, an employer is required to deduct tax at source from any payments in the nature of salary, which inter alia also includes any arrear payments. The Implementation Cell of the Department of Expenditure, Govt of India, vide its Office Order dated 30th Aug' 08 had stated that 40% of the aggregate arrear (first installment of arrears) would be payable during FY 2008-09. In Circular No. 09/2008 dated 29th Sept. 2008 issued from this office it was stated that during 2008-09 the tax has to be deducted at source on this 40% of aggregate arrear during FY 2008-09. The OM,F.No-1//1/2008-IC, of the Implementation Cell of the Department of Expenditure, Govt of India, vide its order dated 25th August, 2009 has stated that the remaining 60% of the aggregate arrear ( second installment of arrears) would be paid to the concerned Government servants during FY 2009-10. Such arrangements could be followed by State Governments also.

In this regard, all the DDOs and PAOs as the case may be, in the Central/State Government and various organizations under them are advised to compute the correct tax liability of every employee on second installment of arrears drawn by him and immediately recover the full tax liability along with education cess thereon at the rates in force. The deduction of tax at source on such arrear payment should not be deferred in any circumstance. They should further ensure that the tax so recovered is paid to the account of Central Government account immediately as per the Income Tax Rules, 1962. The DDOs/PAOs are further advised that they should ensure that the PAN details of the deductees (recipient of arrears) are correctly quoted in the relevant quarterly e-TDS returns filed by them so that the Government Servants get proper credit of their tax deducted in their respective income tax returns.

DDOs/PAOs who fail to comply with the provisions of Section 192 of the Income-tax Act, 1961 would be liable to pay interest under section 201(1)/(1A) of Income Tax Act along with other penal consequences.

Hindi version will follow.


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