S. 40(a)(ia) TDS: Special Bench verdict in Merilyn Shipping is not good law The assessee incurred expenditure on which TDS ought to have been deducted but was not. The AO disallowed the expenditure u/s 40(a)(ia). On appeal, the Tribunal relied on Merilyn Shipping & Transports 146 TTJ 1 (Viz) (SB) and held that the disallowance u/s 40(a)(ia) could be made only for the expenditure that is “payable” as of 31st March and not for the amounts that have already been “paid” during the year. On appeal by the department to the High Court, HELD reversing the Special Bench: |
Wednesday 5 June 2013
CIT vs. Crescent Export Syndicate (Calcutta High Court)
SAT upheld penalty levied by SEBI as promoter failed to disclose pledging of shares and their revoca
Interest was payable on delayed refund of ST even if refund arose under exemption notification
INCOME TAX APPELLATE TRIBUNAL, NEW DELHI CONSTITUTION OF BENCHES FROM 10.06.2013 TO 13.06.2013
Sec. 54 only requires investment of cap gains, which can be in several independent residential units
Relieved after filing your income tax return? Challenges may still await you
The Tax return filing for most of us is like the toughest exam, it brings nervousness and trouble and when completed, there is a sigh of relief!
We often consider filing of the tax return is the end of the whole story. There is misconception that once the tax return has been filed, work is over until the next tax return filing deadline. This is what even Gaurav thought when he filed his tax return for the year 2011-12.
Gaurav is a software engineer with an IT company and his personal tax situation is not very complex. His only sources of income are salary received from his employer and a small amount of interest from his savings bank accounts. He reported these incomes and filed his tax return before 31 July 2012 and took a deep breath, he too thought it is all over.
He was a relieved man until one day, when he received an e-mail from the tax department. "An e-mail from the tax department" - he thought he had landed in trouble. Shivering and tensed, he opens the mail which said that his ITR-V was not received by the Income tax Department - CPC, Bangalore. And there he sat, now confused what 'ITR-V' meant and not knowing what was he supposed to do next. He quickly caught hold of his return files and glanced through the papers of his last tax return. He realized that the acknowledgement of the income tax return is called the ITR-V. When he read the document hard, he found a caption on it reading that it is required to be signed and sent to the Income tax Department - CPC, Bangalore within 120 days of e-filing of his tax return. "How could I miss this?", so thought Gaurav as he quickly signed the ITR-V and sent it off through Speed Post.
Gaurav soon realized that tax return filing may not necessarily end with the deadline. One needs to watch out a host of other factors even after filing of the tax return.
A few days later while I was sitting with Gaurav I offered him a few handy tips that one should be vigilant of even after the tax returns have been filed. Here are the tips for the readers:
The process of return filing is complete only once a signed copy of the ITR-V has been sent to the Income tax Department - CPC, Bangalore after e-filing of the return. The ITR-V should be sent within 120 days of filing of the return.
It is necessary that the credit of taxes deducted at source as claimed in the tax return is also appropriately reflected in the Form 26As. If not your refund may not be processed. In case the credit in the Form 26As does not match with the amount claimed in the tax return, you may have to approach the deductor of tax and ask him to revise his quarterly TDS tax return. Once the deductor's quarterly TDS return has been revised, the credit will automatically get updated in the Form 26As.
Be watchful of emails, letters and notices received from the Income tax Department and respond to them within the requisite time. The process of responding to the notices has been simplified now and in many cases one can directly send the details and documents to the Income tax Department - CPC, Bangalore online.
The Indian tax authorities follow a well laid out procedure for assessment of income and taxes. As provided in the India tax law, after the preparation of a tax return, the total income and tax of an individual is re-assessed by the tax office. Tax returns to be assessed by the tax officer are chosen on a random basis. If the tax office determines any differences in the amount of income or tax, they send an intimation/notice to the individual. One must be promptly respond to such notices.
If you have missed the deadline for filing of your tax return, you may still be able to file your tax return after the deadline. A belated Income-tax return for the tax year 2012-13 can be filed upto 31 March 2015. However, in such a case, the following points need to be noted:
a)A belated return cannot be revised if certain errors / omissions are discovered after filing the return of income
b)Certain losses under some heads of income cannot be carried forward to subsequent years for being set-off against future income
c)If any taxes remain unpaid, then simple interest @1% per month is payable on such outstanding tax liability upto the date of payment of such tax. In case the return of income is not filed within 1 year from the end of financial year, the tax officer has the power to levy a penalty of Rs 5,000.
Be careful of spam e-mails on income tax refunds. Such e-mails may ask you to disclose your Permanent Account Number and personal information which can be misused by the sender.
With these simple tips, we hope the tax return filing will no more be life's toughest exam.
Failure to Deposit TDS On Time Will Attract Penalty: CBDT
Failure to deposit timely and correct TDS or TCS will now attract a penalty ranging from Rs 200 to Rs one lakh by the Income Tax department.
All the Tax Deducted at Source (TDS) range offices of the department across the country have been asked by the Central Board of Direct Taxes (CBDT) to ensure compliance in this area and also inform and make aware the authorised deductors about this new action being initiated by the taxman.
According to the new instructions issued, a deductor, either government or private, will have to submit a "compulsory" fine of Rs 200 for delay in filing either TDS or Tax Collected at Source (TCS) every day beyond the stipulated date of remittance of these category of taxes.
Similarly, the penalty would be between Rs 10,000 to Rs one lakh for furnishing incorrect information or failure to file the collection statement within the due date.
"The assessing officer of the department will use sections 234E and 271H of the I-T Act to ensure that TDS or TCS collections are not delayed or faltered. The department, in many cases, has found that deductors delay for long the filing of these category of taxes even after deducting it from the salary of their employees," a senior official said.
The TDS regime has to be strengthened and hence such measures are important, the official said.
A big chunk of 41 per cent, in the total tax collections in the last fiscal, came from the TDS category alone.
During financial year 2012-13, Rs 2,30,188 crore tax was collected under the TDS category while the total direct taxes collections stood at 5,58,970 crore.
The department, during its recent deliberations with top I-T and CBDT officials here, has also decided to strengthen its regime for obtaining TDS from salaries of employees in order to collect more revenue under this category.
Taxation issues may cripple radio expansion
Radio is one of the highest regulated media in the Indian context. Right from purchasing the spectrum to paying music royalty, radio broadcasters have to bear a number of taxes and fees. With the advent of Phase III, broadcasters’ tax implications will go up, adding either to their capital cost or operational cost.
In 2011, the government raised the FDI limit in the radio sector from 20 to 26 per cent. Nonetheless, the FDI limit for radio is still the lowest in the Indian broadcasting space and has failed to attract foreign investors, leaving broadcasters to deal with their own woes.
License woes
Radio players are currently dealing with a number of direct and indirect taxes, which are likely to increase post Phase III expansion, depending on the policies then designed or altered by the government. To start with, for a new radio station, players have to give a one-time license fee and an annual license fee – a recurring amount which has to be paid to the government every year. While the one time license fee is a part of the capital cost, the treatment of the fee is a major issue.
Also, there is no clarity on whether new license obtained will be housed in an existing company or a new one? In case of an existing venture, the expenses incurred will be allowed as revenue expenditure and expenses incurred in setting up a new station will be treated as capital expenditure, in which no deduction of expenses will be available.
Tax loses
Radio broadcasters often face issues in breaking even the investment made and due to the slow economy, are usually faced by low y-o-y growth. Thus, a number of times, radio players have significant tax losses brought forward. Under the Income Tax Act, 1961, taxes can be carried forward only for a period of eight years and no carry back of such tax losses is permitted. Thus, radio players will have to look at effective methods of utilisation of tax loses to avoid added expense.
Indirect taxes
While direct taxes and unclear license policies are a major headache for radio broadcasters, indirect taxes hold the biggest consideration for the growing radio industry. Major indirect taxes applicable to the radio industry are service tax, value added tax, custom duty and stamp duty.
Radio owners need to pay a service tax on the ad revenues earned each year. Service tax rate currently is 12.36 per cent. Also, broadcasters have to pay copyright of sound recordings or music which is levied with the service tax.
Radio industry pays VAT for expenses such as royalty paid on music as it is an expense to the radio station. However, given that the radio players do not enter into a lot of revenue transactions that attract VAT, the amount charged to them remains unutilised and results in an additional cost to them. Similarly, custom duty and stamp duty as well imply additional costs for radio players that need to be abolished soon.
Tax implication is something that is the eating up radio players already. Burdened with this kind of expenses already, Phase III expansion will mean a lot of investment for radio players. With FDI giving no relieve to the industry and the existing government support, expansion at the current expenses is indeed going to be a hard ball to play.
Penalty under sec. 76 would mean exclusion of sec. 78 penalty; revenue can’t impose both simultaneou
Dgft Inks Mou With Delhi Govt For Use Of E-Brc
5-Jun-2013
NEW DELHI: Directorate General of Foreign Trade (DGFT), under the commerce ministry, today signed an agreement with Delhi government for the use of electronic Bank Realisation Certificate (e-BRC), a move which will help in reducing transactions cost of exporters.
The e-BRC initiative leads to electronic transmission of foreign exchange realisation certificate from the banks to the DGFT's server on a daily basis. With this facility, there will be minimum human interface between the Commerce Ministry and the exporting community for grant of benefits.
It would help reduce transaction cost to exporters, who will not be required to make any request to bank for issuance of bank export and realisation certificate.
It establishs a seamless electronic data interchange connectivity among DGFT, banks and exporters.
Transmission of bank realisation against shipping bills has been made mandatory from August 2012.
"Eighty-one banks have transmitted more than 38 lakhs e-BRC to DGFT. DGFT has requested State Governments to use e-BRC in their efforts to refund VAT and other related tax administration. The central/state government departments have shown commendable response to this initiative," an official statement said.
The government of Delhi has become the second state to sign the MoU after Maharashtra.
"MoU was signed between DGFT and Commissioner (Trade and Taxes), Government of NCT of Delhi here today for the use of e-BRC," it said.
Source:-economictimes.indiatimes.com
Pharmaceutical Exports Slow Down Due To Approval Delays And Recalls
5-Jun-2013
HYDERABAD: India's pharmaceutical exports grew at less than half the pace it did last year, hurt by delays in drug approvals and products recalls in some of its key markets. In dollar terms, pharmaceutical exports rose 9.9% in fiscal 2013, compared with 23% a year earlier. But a weaker Indian currency — which fell about 18% over the last year — meant that pharma exports grew 25% in rupee terms.
This is the first time in the recent years that the Indian pharma exports saw single digit growth in dollar terms. "Europe has faced recession with two countries — Spain and Italy — suffering the most. The United States and Europe account for nearly half of Indian pharma exports and growth in exports to both these regions saw a significant decline," said PV Appaji, Director-General, Pharmaceutical Exports Promotion Council (Pharmexcil). Pharmexcil now expects the sector to grow at 17% for the current fiscal, said Appaji. The commerce ministry, which had set a target of $25-billion (Rs 1,41,750 crore) worth of exports by March 2014, has shifted the deadline to March 2016, he added.
Pharmaceutical exports from the country during 2012-13 stood at $14.59 billion (Rs 79,500 crore), up from $13.26 billion (Rs 63,500 crore) the previous year.
"Most Indian pharmaceutical companies were affected by macroeconomic factors like high interest rates and inflation. However, the rupee weakening against most major global currencies has come as a major help to the net exporting firms," said an analyst with a Mumbai-based brokerage who did not wish to be identified.
While exports to North America grew 13.44% to $4 billion (about Rs 22,000 crore) , those to Europe rose marginally to $2.63 billion. A year-ago, exports to North America and Europe had grown 33% and 30%, respectively. Natco Pharma's Chief Financial Officer, P Bhaskara Narayana, and Angel Broking's pharma analyst, Sarabjit Kaur Nangra, attributed the slowdown in growth to delayed approvals from regulators and drug recalls.
Ranbaxy, Dr Reddy's and GlenmarkBSE 0.51 % are among the top Indian companies that recalled their products during the last fiscal because of various issues. RanbaxyBSE 1.30 % recalled its generic Lipitor, Dr Reddy's its anti-depression drug Citalopram and Glenmark recalled Montelukast sodium tablets. "Large-cap Indian pharma companies like Dr Reddy's have performed well in the US market last fiscal and many big companies have given good guidance of 20% for the current fiscal," said Nangra. "The problem in growth is mostly being faced by the small and medium pharma companies."
Source:-economictimes.indiatimes.com
Cargo Exports From Tiruchi Airport Soar
5-Jun-2013
Cargo exports from Tiruchi Airport continue to climb up steadily and the Airports Authority of India is expecting over 50 per cent growth during the current financial year. The air cargo terminal here has registered a high of 410 tonnes of cargo during May.
Vegetables and fruits account for a major portion of the volumes, despite the slump in production owing to the drought conditions and the spurt in the price of various vegetables. But for this, the volume would have been much higher, airport sources said.
In March this year, the air cargo terminal had handled 395 tonnes and the figure has touched 410 tonnes in May. The previous high was 313 tonnes handled in January early this year. Cargo exports from the airport had registered 44 per cent growth in 2012-13 and this year the growth is expected to be more than 50 per cent. The cargo terminal handled 2,920 tonnes of cargo in 2012-13 against 2,022 tonnes recorded in the previous financial year. “We expect to handle a minimum of 4,500 tonnes during the current fiscal,” S. Dharmaraj, Airport Director, told The Hindu.
Airport officials attribute the steady growth to increase in uplift capacity, especially after Tiger Airways started lifting cargo from here to Singapore in September last year. Sri Lankan Airlines, Air Asia, and Mihin Lanka, were the other carriers lifting cargo from here. With Air Asia expected to introduce a third daily frequency on the Tiruchi-Kuala Lumpur sector from July, the uplift capacity would increase further, Mr. Dharmaraj said.
Consignments were mainly sent to Kuwait, Dubai, Colombo, Singapore, Kuala Lumpur, and Colombo. The export market to Europe was still untapped for want of connectivity, said A. Moorthy, Branch Manager, Skyfield India Pvt. Ltd., a major clearing and forwarding agency in Tiruchi.
“There is much more demand for vegetables and fruits even from Gulf countries. But given the capacity constraints, we could not cater to the demand. If more airlines introduce services to the city, we can export more,” Mr. Moorthy said. The AAI was extending full support with consignments being handled even on Sundays at the cargo terminal, he added. The composition of the cargo exported from Tiruchi was expanding gradually to include readymade garments, fabrics, leather goods, pharma products, fish, and crabs.
However, assorted vegetables and fruits constitute more than 85 per cent of the volumes.
The slump in production caused by drought in the region was impacting on the exports, say some of the exporters. “Even though we don’t mind the price rise, we could not meet the orders fully as we face problems in procurement as production has come down of late,” says a representative of another export agency.
Source:-www.thehindu.com
Fdi To Our Defence: Dependence On Imports Can Be Cut By Allowing Foreign Companies To Produce Weapons In India
The chorus for increasing the foreign direct investment (FDI) limit in the defence sector is growing louder by the day. The parliamentary standing committee on defence has also now urged the government to raise the limit to mitigate the "steadily expanding deficiency in defence modernisation". Yet, there is a danger that the issue will be relegated to the back burner as in the past.
The recurring and dominant theme of those who oppose the increase is that the defence sector must be the monopoly of the defence public sector undertakings. The putative reason for not relaxing the ceiling is that it would make the Indian defence sector hostage to foreign companies, jeopardising our national security. This is a rather tenuous argument.
Unfortunately, when it comes to policy changes in the defence sector, we resist change, are slow learners and only yield whencrisis is upon us. The delay in the decision to share the Long Term Integrated Perspective Plan (LTIPP) with private industry announced last month is an illustrative instance.
A strong case for both increasing the FDI and sharing the LTIPP was made in a seminar at the Institute for Defence Studies and Analyses five years ago. But it took a defence scandal to engender a change in policy.
Are there so many negatives in relaxing our FDI policy? A careful analysis would reveal that there is much to be gained in taking a more liberal approach.
First, among the nations with comparable or large military budgets, or even the Brics, none are so dependent on imports as India is. Russia and China are in a completely different league, though the latter has only recently built its capacity through a slew of measures ranging from clandestine procurement of technology to reverse engineering.
Around 70% of India`s defence equipment is imported and if the total value of the foreign components in the equipment/platforms assembled/manufactured in India is computed, the dependency would be higher. As a result, of the estimated $80-100 billion capital acquisition over the next five years, defence wares worth upwards of $63 billion would have to be imported. This will hurt our security more than higher foreign equity of some defence companies may. A nation that would have to face several challenges as it strives to become a greater economic power, cannot afford to be so dependent on imported weapons.
To reduce dependence on imports, the creation of an ecosystem that allows foreign companies to establish industries in the country is imperative. We could, perhaps, take some lessons from the Brazilian experience of bolstering its military-industrial complex, harnessing foreign technology through a liberal policy.
Brazil amended its restrictive 1988 federal constitution that prohibited foreign investment in certain sectors, including defence, in 1995, allowing even 100% investment by foreign companies in the defence sector. The policy has helped expand the country`s domestic production capability and enhanced its defence export prospects. For instance, Helibras of Brazil, which manufactures/assembles advanced helicopters for the three forces, is 85% owned by Eurocopter, the European aviation giant.
Secondly, India`s domestic defence industry requires foreign technology to build production capacity to supply sophisticated weapons to our armed forces. It has to be sourced from companies/nations that safeguard their defence technologies jealously by encouraging them through a compensatory mechanism.
Thirdly, 26% FDI is too small to attract major players. According to Indian company law, 26% equity holding only enables the shareholder to prevent special resolutions. It does not give them the freedom to appoint directors or determine their remunerations. It also limits the profit of such companies. Why then should a company transfer technology and create competition for the parent companies?
India can take several steps to bridge the technology gap.
First, have no limit on FDI. Vary the limit on a case-to-case basis depending on what a company may be proposing to establish in India. If the technology is necessary to fill critical gaps in Indian technology, allow even 100% and impose conditions such as the hiring of Indian engineers and sourcing components indigenously. This would help the development of ancillary industries.
Second, depending on the type of equipment that would be manufactured, assure the company continuing orders for a decade or so in the form of repeat orders. Impose conditions necessitating technology upgradation of equipment when they are available with the parent company.
Third, link FDI with offsets. Allow higher percentage of ownership to incentivise a company that wins a defence contract to establish production facilities that would fill domestic technology gaps. As an adjunct strategy, allow a combination of higher ownership with the use of multipliers (giving higher credit value) in discharging offset obligations when specialised equipment is manufactured in India.
Fourth, where higher equity is allowed, impose export obligations on the entity. This would encourage the parent company to outsource from India.
Fifth, allow some sort of price preference for defence companies in India that do not have more than 49% foreign ownership. It would encourage foreign firms to progressively reduce their holdings while at the same time retaining their interest in Indian entities.
It is time that we took some bold steps to strengthen our own military-industrial complex. The seemingly sacrosanct figure of the present 26% ceiling on foreign investment in defence appears to have attained the inviolability that crossing the Rubicon had for the returning Roman legions. This has to change and change now.
Source:-timesofindia.indiatimes.com
Gold Import Duty Hiked To 8% To Rein In Demand
NEW DELHI: The government raised the import duty on gold and platinum by another two percentage points on Wednesday to discourage buying that threatens to worsen India's already high current account deficit.
The yellow metal, the demand for which is mostly met for imports, will now attract 8% import duty against 6% levied earlier, marking third such increase in about a year but the measure does not seem to have helped.
The decision comes close a day after the Reserve Bank of India tightened gold import rules. The duty changes will be effective immediately.
According to the World Gold Council, India could import as much as 400 tonnes of gold in the first three months of the current financial, a 200% annual increase, raising the chances that the current account deficit could worsen in the new financial year. India imported 162 tonnes of gold in May alone.
"The import duty on gold has been increased from 6% to 8%," revenue secretary Sumit Bose said.
The Indian rupee has fallen nearly 5.2% against the dollar since May amidst rising concerns that the country will find it difficult to fund its current account deficit that is projected to touch record high of 5% of GDP last year if the US Fed scaled down its quantitative easing programme.
Finance minister had said on Monday that the government could consider more measures to curb gold imports. "Necessarily, we will have to check," he had said after a meeting of the Financial Stability Development Council (FSDC) that deliberated on the issue.
Chief economic advisor Raghuram Rajan had also supported the measures to dampen demand even as he backed longterm solutions to discourage people from buying gold.
The government has been trying to make financial investments attractive to wean away people who bought gold as inflation hedge, recently launched inflation-index bonds were one such measure.
"Hopefully, the CPI inflation coming down will help that process but in the meantime the measures that the RBI announced can be way of throwing sand in the wheels so that we don't get excess," Rajan had said on Tuesday justifying measures. India imported $52.5 billion worth of gold and silver in 2012-13, down marginally from $56.7 billion in the previous fiscal as record high prices and increase in import duty to 6% from 2% last year dampened demand, but the sharp correction in prices in last few months has spurred buying.
Gold and silver imports more than doubled to $7.5 billion in April, the commerce ministry said last month. India imported 257 tonnes of gold in January-March quarter, up 27% from a year ago. Excise duty was also raised in line with the changes in the import. Duty on gold dore bars and ores was raised to 6% from 5%.
Source:-economictimes.indiatimes.com
Before investing make sure that your money is protected
Entities that can raise public deposits
RBI allows banks, cooperatives and some non-banking fi nance companies (NBFCs) to accept deposits. RBI issues special licences to these NBFCs including housing fi nance companies for raising deposits up to a certain limit. Some companies are authorised by the ministry of corporate affairs to raise deposits from the public.
Cooperative credit societies and salary earners' societies can accept deposits only from their members. Others are not legally allowed to raise deposits. NBFCs registered with the RBI are not allowed to raise deposits unless by way of a deposit accepting certificate. Unincorporated bodies like individuals, partnership fi rms and other association of individuals cannot raise deposits, even if they do fi nancial business.
RBI follows a restrictive policy in allowing companies to raise deposits. Protection of depositors' interest is the RBI's supreme concern. Banks are the most regulated fi nancial entities and therefore the safest as far as your money is concerned. The maximum interest rate that an NBFC can pay to a depositor is 12.5% a year.
But, banks can fail too. The Deposit Insurance and Credit Guarantee Corporation insures deposits up to Rs 1 lakh. This means depositors' money up to Rs 1 lakh is safe and they will get back anything up to this limit even if a bank fails.
NBFCs Permitted to Raise Deposits
There are some 257 NBFCs that are allowed to raise deposits. The list is available on the RBI's website (www.rbi.org.in — sitemap — NBFC list — list of NBFCs allowed to accept deposits).
Collective investment schemes are not deposits
Collective investment schemes are schemes where companies raise money as advance for delivering goods or services at a future date. RBI does not regulate them and does not treat this collection of money as a deposit. The Securities & Exchange Board of India does.
RBI bars chit funds from accepting deposits
Chit funds are legal under the Chit Funds Act, 1982, which is a central act but administered by state governments. Chit funds can raise money from their members. RBI barred these entities from accepting deposits from the public in 2009 and can prosecute them in case they violate the law. Violation of deposit-accepting rules is a criminal offence.
If unincorporated entities are found accepting public deposits, they are liable for criminal action. Further, NBFCs are prohibited by RBI from associating with any unincorporated bodies. If NBFCs associate themselves with proprietorship/partnership firms accepting deposits in contravention of the RBI Act, they are also liable to be prosecuted.