Thursday, 21 August 2014
Performance incentive was not to be included in value of services if it wasn’t known while providing
Reassessment accepted on basis of retro-amendment couldn't be challenged later on when HC held it as
Application for condonation of delay must contain factual assertions to substantiate delay in filing
Correlation Between Indian And Global Comexes
As India opened up to global trade in the last two decades amid an increasingly inter-dependent world, global factors and global prices have had a strong effect on Indian commodity prices.
India is a major importer of precious metals, energy, base metals. India’s dependence on imports results in Indian commodity prices at a par with global commodity rates with the rupee and import duty changes causing divergence between local and global prices. India has emerged as a major exporter of wheat and rice in the last few years leading to influence of global grain prices and USD-INR changes on Indian grain prices.
Commodity futures traded on Indian exchanges, which are international in nature, are impacted by price changes in key overseas futures contracts. Futures contract of commodities which have little footprint outside India viz. spices, pulses, etc. are mainly driven by domestic supply and demand factors along with local speculative activities. However, energy, precious and base metals have strong correlation with overseas futures. Even soyabean, cotton, palm oil, sugar, etc. are strongly influenced by global futures price movements.
Currency volatility
Futures of metals and energy commodities viz crude oil, gold, silver, copper, zinc which are actively traded on the domestic bourses show strong correlation with their corresponding global benchmark futures contracts. MCX crude oil futures have a strong correlation of 98.70 per cent with Nymex crude oil futures, with it seldom falling below 97 per cent. Changes in correlation are due to USD-INR volatility. A sharp weakness in the rupee, similar to events in 2013, leads to higher domestic prices even as global prices could be stagnant. Very high correlation values are also seen in MCX gold and MCX silver futures with respect to their benchmark Comex contracts. The 100 days correlation of MCX gold futures with Comex gold futures is near 70 per cent.
For a considerable time in the past, the correlation was high as 99 per cent. However, the volatility in the rupee along with distortion due to increase in import duty of gold and silver contributed to lower correlation in recent times. Relatively newer contracts – gold hedge and silver hedge futures contracts by NCDEX – provide a better alternative to Indian traders who want better correlation with global contracts as prices of these hedge contracts are exclusive of Customs duty, local sales tax/VAT/Octroi and any other charges or levies. Thus these contracts will not be affected by changes in Indian import duty or other duties.
Market hours
MCX copper futures have near 98.20 per cent correlation with LME copper prices. Indian metals and energy futures also have a higher intraday correlation with global futures since Indian commodity markets are active till 11:30 pm at night, coinciding with active overseas market hours. MCX zinc, aluminium, lead and nickel futures contracts also show a very strong correlation with the corresponding benchmark contracts on the LME.
Futures contract in agricultural commodities also exhibit better correlation with international benchmark contracts; however, it is not as strong as it is with metals and energy commodities. NCDEX soyabean futures currently have 100-day correlation at 91.60 per cent which is at the high end of the range.
Deviation in prices
In the last 10 years, this value has oscillated between the range of -40 and 96 per cent. Since soyabeans in India are not freely traded due to high import duty structure, domestic prices are not directly influenced by the global benchmark CBOT soyabean prices. However, India is a large importer of soya oil and is also an important Asian exporter of soyameal. Global changes in soya oil and soyameal prices influence Indian soya oil and meal prices which, in turn, have an effect over domestic prices. NCDEX soya oil futures have 100-day correlation of 89.30 per cent. Similarly, 100-day correlation between MCX crude palm oil futures and BMD crude palm oil futures are at 94.30 per cent indicating very strong correlation. Here too the volatility in the rupee, import duty changes along with domestic supply and demand scenario play a role in deviation between Indian and overseas prices.
Indian wheat futures, currently, have a poor 100-day correlation at -14.60 per cent with CME wheat futures due to rupee volatility, export permits/demand, local supply and demand factors, MSP, etc. This value has been as high as 85 per cent in 2012. Similarly, Indian corn futures currently have a poor 100 day correlation at -24.60 per cent with CBOT corn futures. However, the broad trend in international prices does have an impact on prices of domestic agriculture commodities.
India is the second largest cotton producer and also the second largest cotton exporter in the world. Changes in the in Indian cotton demand and supply scenario affects international prices and vice-versa. The 100-day correlation between ICE cotton and MCX cotton is at 87.80 per cent.
Source:- thehindubusinessline.com
Fieo Sees Exports Reaching $350 Bn This Fiscal
Ahead of release of the new Foreign Trade Policy (FTP), the Federation of Indian Export Organisations (FIEO) is expecting merchandise shipments from India to reach $350 billion compared to $312.35 billion last financial year even as it pressed for reviving the Special Economic Zones and trade pact with China.
Exporters also said that under the FTP, which is expected to be released by mid-September, the government should create an Export Development Fund that will help exporters in increased marketing of their products.
"We reiterate our request to create an Export Development Fund for sustain marketing during 2014-2019 with a target of $750 billion. This would require a CAGR of 19.14% during 2014-19," said M Rafeeque Ahmed, president, FIEO.
Ahmed said new sectors like services, project exports, e-commerce, defense and aerospace should also get proper coverage and facilitated under the gambit of the new FTP which will be effective a period of five years.
Besides, Ahmed also urged for a free trade agreement (FTA) with China and said that Indian industry and exporters should not fear Chinese competition and seek greater investments through the trade route.
However, he also said that the cost of production in rising in China. As a result, a plethora of businesses are relocating from there. Hence, Ahmed said India should grab this opportunity and create conducive environment for these business to come and make India their base.
On the recent trade sanctions by the US and EU on Russia, Ahmed said this should be seen as "entry opportunity" for Indian exporters.
"Sanctions on Russia should serve as an opportunity for India. They are looking at South Africa, Australia and Poland to import items. They should look at India rather so far away. We have to make our presence felt there and should market our products aggressively," he added.
According to Ajay Sahai, director general and CEO, FIEO domestically the government should propel manufacturing by reviving the Special Economic Zones (SEZ). He said that the government should immediately withdraw minimum alternate tax (MAT) and dividend distribution tax (DDT) from the SEZs and bring back investors' confidence.
Additionally, FIEO asked the government to make bring exports under the ambit of priority sector lending by the Reserve Bank of India (RBI). It also demanded extending the benefits of 3 per cent interest subvention scheme to all sectors and extend it will March 2017.
During the April-July exports have reached $107. 83 billion compared to $99.28 billion, according to the Ministry of Commerce and Industry data.
Under the previous government an export target of $500 billion was fixed for 2014-15 as part of a strategy paper for doubling Indian exports.
Source:- business-standard.com
SCN is mandatory prior to adjudication of demand; post-decisional hearing won’t satisfy said require
AO couldn’t invoke Rule 8D without examining nature of exp. attributable to exempt income, says ITAT
Steel Ministry Has Recommended Imposition Of “Quantitative Restrictions” On Import Arrivals In The Ports On The Western Coast.
Cautioning that steel imports from China during the second quarter of FY15 has exceeded “the historic (quarterly) high” of 90 million tonnes, the steel ministry has suggested doubling the import duty on value-added steel products to 15 per cent ad-valorem from 7.5 per cent currently “with immediate effect”.
In a note dated August 12, to the finance ministry, the steel ministry has recommended imposition of “quantitative restrictions” on import arrivals in the ports on the Western coast. Burdened with a surplus steel production capacity of 250 MT, China is trying to push its output into India. Apart from China, steel produced in Japan, South Korea, Ukraine are also finding their way into the domestic markets, the ministry said.
The suggestions are based on representations from the steel companies last month, which say that the import surge from China is hurting them even as they continue to battle paucity of iron ore and muted demand for the alloy. Citing figures provided by the steelmakers, the ministry said while total steel imports from China surged by 100 per cent, it was up by 51 per cent from South Korea. Imports of hot rolled flat steel have increased by 57 per cent. Of this, China saw a 460 per cent increase and South Korea 259 per cent.
SAIL chairman CS Verma told The Indian Express that China is exporting a category of TMT bars (used by realty sector) and its steel makers are availing lower duty and export benefits.
Source:- indianexpress.com
Power Equipment Imports Huge Source Of Black Money
The Supreme Court-appointed Special Investigation Team (SIT) on black money gave its first report to the court on Wednesday and said over-invoicing of power equipment imports was an easy way of generating black money in India.
The sealed cover report submitted to a bench of Justices H L Dattu, Ranjana P Desai and Madan B Lokur identified a number of instances of over-invoicing in power plant machinery and equipment imports. In one such case, an importer had resorted to over-invoicing to the tune of Rs 6,000 crore.
To tackle this fraud on the nation and surreptitious transfer of money abroad, the SIT headed by two former SC judges - Justices M B Shah and Arjit Pasayat - has suggested that all big imports should be scrutinized for over-invoicing.
The SIT is learnt to have suggested that the slab of imports be fixed at Rs 10,000 crore, Rs 9,000 crore and downwards and these cases be assessed afresh for possible over-invoicing under the direct supervision of designated officers known for their competence and integrity.
The bench applauded the efforts of the SIT and said, "We saw the interim report and they (the SIT) are doing their work. Some progress has been made." It sought the next report from the SIT by November 11, giving it more than two months time.
The apex court had set up the SIT, comprising top sleuths from RAW, IB and revenue intelligence, on a PIL by ace criminal lawyer Ram Jethmalani. The court on Wednesday allowed Jethmalani and his counsel Anil Divan to interact with the SIT and give suggestions on bringing back black money stashed abroad by Indians.
The SIT also faulted the UPA government for seeking names of Indian account holders in Liechtenstein Bank under the Double Taxation Avoidance Treaty, which allowed German authorities to give just 30 names despite nearly 1,400 Indians figuring in the list of account holders, sources told TOI.
Jethmalani provided the court with the correspondence he had with German authorities, one of which revealed that Indian government had high-level contacts with German authorities. A letter received by Jethmalani said, "The German side had provided 'hard information' to the Indian side as a result of his letter to the German minister of finance."
The SIT also appeared to agree with Jethmalani that DTAA was not the appropriate route through which India should have sought information on Indians stashing black money in foreign banks.
The SIT said the government needed to take a comprehensive look at such treaties and effect necessary changes to enable Indian agencies to legally seek sharing of data on black money from foreign countries, sources said.
Jethmalani said, "German government had expressed willingness to share the Liechtenstein Bank account holders' names and other data without cost or condition with any requesting country. The government of Indian made no effort whatsoever to secure this information; unfortunately not even the leaders of the opposition (Sushma Swaraj and Arun Jaitley)."
The bench told additional solicitor general Neeraj Kishan Kaul to share with Jethmalani full information obtained from German authorities on Indian account holders. It also asked Kaul to get back to the court with the steps taken by the Union government on amending the treaties with other countries to enable the investigating agencies get effective information about Indians stashing money abroad.
The SIT also felt there was a need to keep close watch on the routes used to transfer black money generated in India to foreign countries, be it hawala or other means. "Tracking locally generated black money and stopping their transfer outside is also an important component of fighting the menace of black money," SIT sources said.
Source:- timesofindia.indiatimes.com