Latest Updates
Industrial Park Scheme Eligible for Deduction Under Section 80IA of I-T ACT Extended to 31st March 2011
The Central Board of Direct Taxes (CBDT) has amended the Industrial Park Scheme 2008 and Rule 18C of the Income Tax Rules, 1962 to give effect to the extension of the ending date of operation of the Scheme to 31st March 2011.
Under the Industrial Park Scheme 2008, the undertaking notified under rule 18C of the Income Tax Rules, 1962, which begins to develop and operate or maintain and operate an industrial park anytime during the period beginning the 1st day of April 2006 and ending on the 31st day of March 2009, is entitled to benefits under section 80IA(4)(iii) of the Income Tax Act, 1961. The Finance Act (No.2) 2009 had extended the ending date of the scheme from 31st March 2009 to 31st March 2011.
CORPORATE MINISTRY STARTED CONSULTATIONS ON FEASIBILITY OF SETTING UP NCLT.
The ministry of corporate affairs (MCA) has started a round of consultations with the law ministry on the feasibility of setting up a National Company Law Tribunal (NCLT) in the next one year. While talking to FE, corporate affairs secretary R Bandyopadhyay said the government will accept the directives of the Supreme Court but will work out the logistics involved.
’The government will accept the directives of the Supreme Court but then what will be the consequential changes needed that has to be done,’ Bandyopadhyay said. When asked about the time frame when NCLT will be set up, Bandyopadhyay said, ’Everybody is speaking in terms of one year because the normal system is like that.’
NCLT was first mooted in the Companies Act, 2002 to take over the functions Board for Industrial and Financial Reconstruction, the appellate authority for Industrial and Financial Reconstruction and the Company Law Board in winding up of companies. It is expected to bring about key changes in the resolving corporate disputes.
Bandyopadhyay said MCA was also looking to bring about widespread industry awareness programmes through an India Investor Week starting July this year. It aims to not only expand the investor base but also encourage people to diversify away from the traditional assets like gold.
The government will organise 3,000 programmes across the country by roping in professional institutes like Institute of Chartered Accountants of India, Institute of Cost and Works Accountants of India and the Institute of Company Secretaries of India. Even industry chambers like CII, Ficci, Assocham and PHD Chamber would be a part of this exercise.
’It is the duty of the ministry to inform people of the risks involved,’ Bandyopadhyay said. He added that the initiative is in part of a larger effort by the ministry to function in a transparent manner. ’Enlightened regulation and inclusive growth are the two mottos of this ministry,’ Bandyopadhyay said.
In the aftermath of the Satyam scandal the ministry of corporate affairs has adopted several means to create accountability among the corporate houses and organise investor education programmes. In December 2009 the ministry for the first time came out with a voluntary set of guidelines on corporate governance for India Inc. This is separate from the Sebi’s listing agreement.
TDS RATE U/S 206AA - IF NO PAN TDS TO BE @20%
As per the recent amendments W.e.f 01/04/2010, on non-submission of PAN, Tax is to be deducted @ higher of prescribed rate or 20%.
The Finance (No.2) Bill, 2009 had introduced a new section 206AA in the Income-tax Act, 1961 (ITA), which provides that every recipient of income is required to furnish its Permanent Account Number (PAN) i.e. tax registration number to the payer.
From the new financial year, Assessees will have to pay a higher income tax at source if they do not have a Permanent Account Number (PAN). Tax at higher of the prescribed rate or 20 percent will be deducted on all transactions liable to tax deduction at source (TDS), if the person liable to the tax does not possess a PAN.
All those liable to pay the tax, including non-residents, need to obtain a PAN by March 31, 2010. This number has to be communicated to those liable to deduct tax before the tax is actually deducted on transactions after that date.
As such, all financial transactions without PAN will attract tax from April 1, 2010. The Income Tax Department has already made it mandatory for employers to quote PAN of their employees and parties from whom tax is deducted while filing TDS returns.
According to the new provisions, declaration by a taxpayer under Section 197A for non-deduction of TDS on payments will not be valid if it is given without quoting PAN. The certificate for deduction at a lower rate or no deduction will not be given by the assessing officer under Section 197 in the absence of PAN.
Henceforth any person eligible for deduction fails to do so, he will have to pay 20 percent TDS instead of two percent on rental payments for plant and machinery and 10 percent on land and building.
Government likely to allow export of sugar to EU
NEW DELHI: The government may allow export of 10,000 tonne of sugar to the European Union (EU) as the sugar situation in the country has become comfortable with increased supplies and stable prices, an official said.
In February this year, the Centre was forced to revoke its decision to allow export of sugar under the EU’s preferential zero duty quota following protests from the opposition as prices of sugar were still ruling high.
The consumer affairs ministry has asked the commerce department, the nodal ministry which issues orders for exports and imports, to consider its proposal for allowing quota sugar export to the EU. The commerce department wants the empowered group of ministers (EGoM) on food, that is scheduled to meet later this week, to take stock of the sugar situation in the country before taking a final decision on the issue.
"We have no problems in allowing exports as long as all departments are comfortable with it," a commerce department official told ET.
The EU allows India duty-free exports of 10,000 tonne of sugar annually under its special ’preferential sugar’ import quota scheme. The opening is very lucrative for Indian sugar exporters as they manage to get attractive prices in the EU market.
This year when the directorate general of foreign trade (DGFT) issued the order for the quota of 2009-10, the Opposition was up in arms as prices of sugar was still ruling high at Rs 43-45 per kg. The government was forced to revoke the export orders owing to sensitivity of the issue.
There has been a marked improvement in the sugar situation in the country as well as globally since then with prices dropping to about Rs 30-32 per kg. Some economists are predicting a global sugar surplus of 2-3 million tonnes this year after a deficit of 8 million tonnes in 2009-10, while India is expected to produce 24-25 million tonnes in 2010-11, from an estimated 18.5 million tonnes in 2009-10.
RBI circular- Prohibiting alterations/corrections on cheques
Prohibiting alterations/corrections on cheques:
Effective July 11 2010
- Customers would not be allowed to alter the payee name or amount (in figure & words) while issuing cheques.
- Cheques issued with alteration/ corrections with respect to the payee name or payment amount would not be accepted or honoured by the bank.
- For any change in the payee’s name, cheques amount (amount in figures or in words) etc., fresh cheques should be issued by the customer.
Government plans to relax contiguity norms for special economic zones
The government plans to relax the contiguity norms for special economic zones, a move that will benefit developers of zones such as Navi Mumbai SEZ in Maharashtra and Iffco Kisan SEZ in Andhra Pradesh. The existing guidelines, which stipulate continuity within SEZs, would have forced developers to invest in building bridges and flyovers over railway lines or water bodies falling within such zones, even if they are located in the non-processing areas where there is no production activity.
&quto;Since tax sops are not given for operations in non-processing areas, the board of approval for SEZs is of the view that the government could relax contiguity norms there,&quto; a commerce department official said, requesting anonymity.
In areas where maintaining contiguity would be mandatory, the government may offer tax-breaks on inputs needed for constructing bridges or flyovers, he said.
The BoA, comprising officials from the ministries of commerce, finance, agriculture and home, clears SEZ proposals and takes decisions concerning operation of such zones.
The decision, if implemented, could benefit the Rs 5,000-crore Navi Mumbai SEZ promoted by Anand Jain, a close associate of Reliance Industries’ chief Mukesh Ambani, and the Rs 2,400-crore Iffco Kisan SEZ. These SEZs have highways and railway lines passing through them.
’The idea behind the contiguity norms is to have control over the processing area as tax exemptions are given for that area. Even if the rules are relaxed for non-processing areas, there wouldn’t be any issue of tax evasion,’ said Hitender Mehta, a Gurgaon-based consultant and SEZ expert.
The board of approval for SEZs is of the view that relaxing contiguity norms for developers cannot be ad hoc and there has to be some established criteria in place, said another government official, who also asked not to be named. &quto;Formal instructions on the matter may be issued so that people cant say that decisions are being taken to favour a particular developer,&quto; he said. He said the commerce ministry is trying to convince the revenue department to offer tax breaks on building material in cases where contiguity is mandatory. &quto;The bridges and flyovers would also be part of the SEZ, so should be eligible for tax breaks,&quto; he said.
Mr Mehta, however, said since contiguity of the zone would be established only when the bridges and flyovers are built, they may not be ineligible for tax sops.
An SEZ is an area within a country where the economic laws are more liberal. Such zones are created to encourage export-oriented industrialisation.
DGFT Public Notice No. 74/2009-2014 Amendment of SION A-1667
PUBLIC NOTICE NO. 74/2009-2014, NEW DELHI: DATED: 08/06/2010
Subject:Amendment of SION A-1667
In exercise of the powers conferred under Paragraph 2.4 of the Foreign Trade Policy, 2009-14 and Paragraph 1.1 of the Handbook of Procedures (Vol.1), the Director General of Foreign Trade hereby makes the following amendments/corrections in the Handbook of Procedures, Vol.II, 2009-2014, as amended from time to time.
2.In the statement of Standard Input Output Norms (SION) as contained in the Handbook of Procedures (Vol.II), 2009-2014, as amended from time to time, amendments/corrections are made against SION entry at A-1667 as mentioned in ANNEXURE ’’A’’ to this Public Notice. This issues in public interest
(R. S. Gujral)
Director General of Foreign Trade and
ex-officio Special Secretary to the Government of India
(Issued from F. No. 01/87/171/00001/AM11/DES-VII)
ANNEXURE ’’A’’ to Public Notice No. 74/2009-2014
Dated: 08.06.2010
| Export Item | QTY | Import Item | QTY | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Automobile Tyres reinforced with Nylon tyre-cord Warp-sheet or rayon tyre cord warp-sheet | 100 kg |
| |||||||||||||||||||||||||
Note: 1. In case of Bus/Truck Tyres, out of the total quantity 8.6 kgs. the quantity of SBR allowed is up to 3 kgs (maximum) and the quantity of PBR allowed is 5.6 kgs.
2. The above norm is also applicable for Tubeless Tyres with Natural Rubber Inner Liner.
3. If the firm import Dipped fabric, items allowed for dipping i.e. Resorcinol and V.P. Latex shall not be allowed but a weight of 0.61 kg may be added.
Exemption from Tax for Gratuity Payments Enhanced From Rs. 3.5 Lakh to Rs. 10 Lakh
The Central Board of Direct Taxes has approved notification of ten lakh rupees as the maximum amount of gratuity entitled to exemption under sub-clause (iii) of clause (10) of section 10 of the Income Tax Act 1961. The notification will be applicable to employees who retire, or become incapacitated before retirement, or expire, or whose services are terminated, on or after the 24th May 2010.
Government unveils revised Direct Tax Code
The Government today (June 15, 2010) came up with a new draft of the Direct Tax Code that has been put for public comments till June.
The Government hopes to bring Direct Tax Code Draft Bill in monsoon session of Parliament. The new tax code has proposed a Minimum Alternate Tax (MAT) on companies calculated with reference to the ’’value of gross assets’’. The rate of MAT will be 0.25 per cent of the value of gross assets in the case of banking companies and 2 per cent of the value of gross assets in the case of all other companies. The MAT has been proposed as a final tax which means that it will not be allowed to be carried forward for claiming tax credit in subsequent years.
The new tax code has proposed to continue the current tax treatment for provident fund investments. So provident fund investments would continue to be treated under exempt exempt and exempt (EEE) regime which means that the investments would be tax exempt at the investment stage, earnings stage (when interests are earned) and withdrawal stage. The pure insurance products have also been treated on EEE basis.
EEE method of taxation for Government Provident Fund (GPF), Public Provident Fund (PPF) and Recognised Provident Funds (RPFs) and the pension scheme administered by Pension Fund Regulatory and Development Authority. Approved pure life insurance products and annuity schemes will also be subject to EEE method of tax treatment. In order to achieve the objective of long term savings, the rules for contribution as well as withdrawal will be harmonised and made uniform so that such savings are actually made and utilised by the taxpayer for the long term.
In a major change, under the new code, the current distinction between short-term investment asset and long-term investment asset on the basis of the length of holding of the asset will be eliminated. Income under the head Capital Gains will be considered as income from ordinary sources in case of all taxpayers including non-residents. It will be taxed at the rate applicable to that taxpayer.
Currently, short-term capital gains arising on transfer of listed equity shares or units of equity oriented funds are being taxed at 15 per cent and long term capital gain arising on transfer of such assets is exempt from tax. The withdrawal of this regime will raise the tax liability and may cause fluctuations in the capital market.
The new draft code proposes to abolish Securities Transaction Tax. It also proposes that net wealth in excess of Rs 50 crore will be charged at 0.25 per cent as wealth tax.
The issues which this Revised Discussion Paper addresses are:
i. Minimum Alternate Tax (MAT) - Gross assets vis-a-vis book profit.
ii. Tax treatment of savings - Exempt Exempt Tax (EET) vis-a-vis Exempt Exempt Exempt (EEE) basis.
iii. Taxation of income from employment - Retirement benefits and perquisites.
iv. Taxation of income from house property.
v. Taxation of capital gains
vi. Taxation of non-profit organisations
vii. Special Economic Zones Taxation of existing units
viii. Concept of Residence in the case of a company incorporated outside India.
ix. Double Taxation Avoidance Agreement (DTAA) vis-a-vis domestic law.
x. Wealth Tax.
xi. General Anti Avoidance Rule (GAAR).
Re-inclusion and Amendments in Essential Commodities Act, 1955
Re-inclusion of Cotton Seed as Essential Commodity under the Essential Commodities Act, 1955 Extension of period of validity
The Union Cabinet today (June 10, 2010) gave its approval to extend the period of validity of the continuation of Cotton Seed as an essential commodity beyond the initial period of six months for a further period of six months w.e.f. 22.6.2010.
With the extension of the validity period, the Government would continue to be empowered to regulate production, quality, distribution etc. of Cotton Seed and to curb the sale and spread of spurious Cotton Seed. Quality, production, distribution, etc. aspects of cotton seed will be subject to regulation under Seed Control Order 1983 thereby ensuring quality of seed particularly private hybrids of cotton/Bt Cotton seeds increasing the productivity and production. It is necessary to regulate the aspects of production, distribution and quality in the interest of the farming community and to prevent seed producers from resorting to unregulated trade practices.
As and when the Seed Bill is passed by the Parliament, rules are framed under the new Act and the new Act is brought fully into force, Cotton seeds would be regulated under this new regulation. Thereafter the notification of cotton seeds under the EC Act would be withdrawn.
Amendment to the Essential Commodities Act 1955 relating to determination of price of levy sugar
Amendment to the Essential Commodities Act 1955 relating to determination of price of levy sugar The Union Cabinet today approved insertion of a new Explanation under sub-section (3C) of Section 3 of the Essential Commodities Act 1955. This amendment is being made only as a measure of legal safeguard to clarify beyond doubt that the factors of price of levy sugar mentioned in sub-section (3C) do not include the price paid or payable under any order or any enactment of any State Government and any price agreed to between the producer and the grower of sugarcane. The approved amendment does not, in any way, alter the present status regarding the power of the State Governments to fix the State Advised Price of sugarcane.
Government Raised Threshold for Public Shareholding in Listed Companies
The Government has made amendments to the Securities Contracts (Regulation) Rules. The salient features of the amendment are as follows:
a) The minimum threshold level of public holding will be 25% for all listed companies.
b) Existing listed companies having less than 25% public holding have to reach the minimum 25% level by an annual addition of not less than 5% to public holding.
c) For new listing, if the post issue capital of the company calculated at offer price is more than Rs. 4000 crore, the company may be allowed to go public with 10% public shareholding and comply with the 25% public shareholding requirement by increasing its public shareholding by at least 5% per annum.
d) For companies whose draft offer document is pending with Securities and Exchange Board of India on or before these amendments are required to comply with 25% public shareholding requirement by increasing its public shareholding by at least 5% per annum, irrespective of the amount of post issue capital of the company calculated at offer price.
e) A company may increase its public shareholding by less than 5% in a year if such increase brings its public shareholding to the level of 25% in that year.
f) The requirement for continuous listing will be the same as the conditions for initial listing.
g) Every listed company shall maintain public shareholding of at least 25%. If the public shareholding in a listed company falls below 25% at any time, such company shall bring the public shareholding to 25% within a maximum period of 12 months from the date of such fall.
The Securities Contracts (Regulation) Rules 1957 provide for the requirements which have to be satisfied by companies for the purpose of getting their securities listed on any stock exchange in India. A dispersed shareholding structure is essential for the sustenance of a continuous market for listed securities to provide liquidity to the investors and to discover fair prices. Further, the larger the number of shareholders, the less is the scope for price manipulation. Accordingly, the Finance Minister in his Budget speech for 2009-10, inter- alia, proposed to raise the threshold for non- promoter, public shareholding for all listed companies. To implement the Budget announcement the Securities Contracts (Regulation) (Amendment) Rules, 2010 have been notified today.
CBDT Amended Rules Relating to TDS
The Central Board of Direct Taxes (CBDT) have amended the Rules relating to TDS provisions date and mode of payment of tax deducted at source (TDS), TDS certificate and filing of ’statement of TDS’ (TDS return) vide Notification No.41/2010; SO No.1261(E) dated 31.05.2010. The amended rules will apply only in respect of tax deducted on or after 1st day of April 2010.
Forms for TDS certificate have been revised to include the receipt number of the TDS return filed by the deductor. Now the Tax-deduction Account Number (TAN) of the deductor, Permanent Account Number (PAN) of the deductee, and Receipt number of TDS return filed by the deductor will form the unique identification for allowing tax credit claimed by the taxpayer in his income-tax return.
Government Authorities (Pay and Accounts Officer or Treasury Officer or Cheque Drawing and Disbursing Officer) responsible for crediting tax deducted at source to the credit of the Central Government by book-entry are now required to electronically file a monthly statement in a new Form No. 24G containing details of credit of TDS to the agency authorised by the Director General of Income-tax (Systems).
Due date for furnishing TDS return for the last quarter of the financial year has been modified to 15th May (from earlier 15th June). The revised due dates for furnishing TDS return are
| Sl. No. | Date of ending of the quarter of the financial year | Due date |
|---|---|---|
| 1. | 30th June | 15th July of the financial year |
| 2. | 30th September | 15th October of the financial year |
| 3. | 31st December | 15th January of the financial year |
| 4. | 31st March | 15th May of the financial year immediately following the financial year in which deduction is made |
Due date for furnishing TDS certificate to the employee or deductee or payee is revised as under
| Sl. No. | Category | Periodicity of furnishing TDS certificate | Due date |
|---|---|---|---|
| 1. | Salary(Form No.16) | Annual | By 31st day of May of the financial year immediately following the financial year in which the income was paid and tax deducted |
| 2. | Non-Salary(Form No.16A) | Quarterly | Within fifteen days from the due date for furnishing the ’statement of TDS’ |
Enhancement of Wage Ceiling under ESI
MINISTRY OF LABOUR AND EMPLOYMENT
| New Delhi, 20th April, 2010 |
G.S.R. (E)- The following draft rules further to amend the Employees' State Insurance(Central) Rules, 1950 were published as required under sub-section(l) of section 95 of the Employees' State Insurance Act, 1948 (34 of 1948) in the notification of the Government of Indian in the Ministry of Labour & Employment vide No. G.S.R.164(E), dated the 26th February, 2010, in the Gazette of India, Part Il, Section 3, Sub-section (i), dated 27th February, 2010 for inviting objections and suggestions from all persons likely to be affected thereby till the expiry of the period of thirty days from the date on which the copies of the Gazette of India in which the said notification was published, were made available to the public;
And whereas the copies of the said Gazette were made available to the public on 27th February, 2010;
And whereas, objections and suggestions received from persons likely to be affected thereby have been considered by the Government;
Now, therefore, in exercise of powers conferred by section 95 of the Employees' State Insurance Act, 1948, the Central Government, after consultation with Employees' State Insurance Corporation, hereby makes the following rules further to amend the Employees' State Insurance (Central) Rules, 1950, namely:-
1. These Rules may be called the Employees’ State Insurance (Central) Amendment Rules, 2010.
2. These shall come into force from the lst day of May, 2010.
3. In the Employees’ State Insurance (Central) Rules, 1950, in Rule 50, for the words ’ten thousand’, wherever they occur, the words "fifteen thousand" shall be substituted.
| [F. No. S-38025/04/2010 -SS-I] Sd/- S.D. XAVIER Under Secretary |
Marriage Laws (Amendment) Bill,2010
BACKGROUNDER
The Marriage Laws (Amendment) Bill, 2010 seeks to further amend the Hindu Marriage Ackt,1955 and the Special Marriage Act, 1954 so as to provide therein irretrievable break down of marriage as a ground of divorce.
At present, various grounds for dissolution of marriage by a decree of divorce are laid down in section 13 of the Hindu Marriage Act,1955. The grounds inter alia include adultery, cruelty, desertion, conversion to another religion, unsoundness of mind, virulent and incurable form of leprosy, venereal disease in a communicable form, renouncement of the world and not heard as being alive for a period of seven years or more. Section 27 of the Special Marriage Act, 1954 also lays down similar grounds.
However, section 13-B of the Hindu Marriage Act and section 28 of the Special Marriage Act provide for divorce by mutual consent as a ground for presenting a petition for dissolution of marriage. The said sections inter alia provide that a petition for dissolution of marriage by mutual consent, if not withdrawn before six months after its presentation or not later than 18 months, then, the court may, on being satisfied after making inquiry, grant decree of divorce by mutual consent. However, it has been observed that the parties who have filed petition for mutual consent suffer in case one of the parties abstains himself or herself from court proceedings and keeps the divorce proceedings inconclusive. This has been causing considerable hardship to the party in dire need of divorce as the marriage has become a broken institution.
Incidentally, it may be pertinent to point out here that a legal proposition has been recommended by the Law Commission of India in its 217th Report on ’Irretrievable Breakdown of Marriage- Another Ground for Divorce’. Further, the Hon,ble Supreme Court, it the case of Ms Jorden Diengdeh Vs S.S.Chopra reported in AIR 1985 SC 935 and in the case of Naveen Kohli Vs Neelu Kohli reported in AIR 2006 SC 1675, has observed and recommended that irretrievable breakdown of marriage should be incorporated as another ground for grant of divorce.
In order to mitigate hardship thus caused, it is proposed to include irretrievable breakdown of marriage as a ground of divorce under the aforesaid Acts.
Easy Exit Scheme, 2010