• Small Discription For Image - 1.

  • Small Discription For Image - 2.

  • Small Discription For Image - 3.

  • Small Discription For Image - 4.

New Post


Thursday, May 15, 2008
no image


Exporters can now expect to get service tax refunds well in time as the Central Board of Excise and Customs (CBEC) issued instructions to field formations to ensure timely and expeditious payment of refunds. A monitoring system has also been put in place. Any claim not finalized within 30 days from the date of filing will have to be reported by the concerned commissioner to chief commissioner. Also, any refund claim not finalized within 45 days has to be reported to CBEC. A special proforma has been given with the instructions for reporting any delay to the Chief Commissioner or the member (service tax) of CBEC. The board has also instructed field officers to make efforts to dispose of refund claims of small and medium exporters on a priority basis.
no image


In the Budget 2008-09, the finance ministry had proposed to withdraw the tax holiday for all refineries that begin operations after April, 2009.The finance ministry ruled out introduction of Advance Pricing Agreement (APA) programme for deciding tax liability of companies. An APA
is a binding contract between a taxpayer and the tax authority under which the two parties agree on the transfer pricing policy for some transactions of the taxpayers over a period of time.
no image


Taxpayers can now deduct tax at source on rents after reducing the service tax component on the rentals for commercial space. Service Tax paid by the tenant does not partake the nature of income of
the landlord. The landlord only acts as a collecting agency for Government for collection of service tax. Therefore, it has been decided that Tax Deduction at Source (TDS) under Section 194-I of Income Tax Act would be required to be made on the amount of rent paid / payable without including the service tax, as clarified by the Central Board of Direct Taxes (CBDT).
no image


To check the status of their refund, taxpayers can now log in at https:/tin.tin.nsdl.com/ oltas/refundstatuslogin.html. If there is a problem, they can contact the assessing officer or the refund banker, the State Bank of India.In case of any grievance, taxpayers can also contact the additional
commissioner in charge of the range or the income tax ombudsman. This facility is not for companies and trusts.
no image


In a recent ruling, the Supreme Court has said that while calculating book profits under MAT provisions, no adjustment can be made to the depreciation provided in the books of accounts as per the rates provided under the income-tax rules, even if these rates are higher than those prescribed under the company law. In this case, the assessee prepared profit and loss account by debiting depreciation at the rates prescribed by the I-T rules. The assessing officer was of the view that while calculating book profit under MAT provision, assessee is obliged to work out profit after charging depreciation as per the schedules of the Companies Act and is not allowed to debit the depreciation as per the I-T Rules. The Supreme Court applied the ratio laid down in judgment of Apollo Tyres, wherein it was held that the AO does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the explanation to Section 115-J. On this ground, it allowed the assessee’s claim to deduct depreciation as per IT Rules while computing book
profit for MAT.
no image


The Punjab and Haryana High Court has held that a Cable TV operator is liable to deduct tax from the payments made to licencor or distributor of TV Channels, for obtaining TV signals under section 194C of the IT Act. In the relevant case, the assessee, a cable TV network operator, had entered into
contract with licencor or distributor of TV channels for local cable distribution system. It paid airing charges to the licencor or distributor for broadcasting of programs without deducting tax. The assessing officer took the view that assessee was required to deduct tax at source (TDS) under section 194C of the I-T Act. The high court observed that the definition of ‘work’ includes broadcasting and telecasting under section 194C of the I-T Act. Further, it was clear from the agreement that the assessee obtained ‘broadcasting and telecasting’ rights of TV channels and thereafter it distributed
among st ultimate customer. Therefore, what assessee transacted for with the licencor and distributor certainly includes within its ambit broadcasting and telecasting facility. So, it was liable to deduct TDS on the payments.
no image


Section 40(a)(ia) of the Act presently provides for a dis allowance of an expense if the tax to be withheld on such expense has either not been withheld or is withheld but not deposited (or belatedly
deposited) with the Government. The proposed amendment seeks to provide relief from the scheme
of dis allowance under section 40(a)(ia) in cases of payments relating to the last month (March) of a financial year. Accordingly, in respect of tax to be withheld during the month of march, as long as the tax is deposited on or before the due date of submission of return of income (now September 30 of the immediately following financial year), there would be no dis allowance. This change is with retrospective effect from April 1, 2004. For all other payments, there is no change and where tax to be withheld has not been withheld or tax that is withheld has not been deposited into the Government account before the end of the financial year, no deduction shall be allowed and the deduction shall be allowed only in the year in which tax withheld is actually deposited with the Government.
no image


Investors who buy shares with borrowed money from institutions cannot claim tax deduction on interest paid on such debt, a tax tribunal has ruled. Giving its ruling in a case where two companies had claimed tax deduction on interest paid over the sum borrowed from Reliance Capital, the Mumbai bench of the Income-Tax Appellate Tribunal has held that “no deduction is allowable to
the assessee in respect of interest paid on borrowed funds”. Under the Income-tax Act, a firm or an individual can claim a tax deduction on the interest paid in respect of capital borrowed for the purpose of a business or profession while the investment in shares could not be considered a business or profession.
no image


The tax holiday available under Sections 10 A / 10 B to units in STPI, EHTP, FTZ and EOU’s was set to expire on March 31, 2009. The amendment to the Finance Bill, 2008 extends the sunset date of the tax holiday by one year. Consequently, the tax holiday shall now be available to eligible units (which
have not completed ten years of their tax holiday period) up to March 31, 2010.
no image


The US Federal Reserve lowered a key interest rate by a modest quarter percentage point in what may be the last of a series of cuts aimed at aiding an economy hit hard by a housing slump and credit market turmoil. The Fed’s action takes the bellwether federal funds rate to 2%, the lowest since December 2004. It was the seventh reduction in a campaign that has brought rates down by 3.25 percentage points since mid-September.
no image


In a move that could significantly ease bank investment in their non-banking activities such as insurance and financial services, the Reserve Bank of India has exempted their joint ventures and overseas subsidiaries from an investment limit on affiliates. Earlier norms on para-banking activities stated that investment by a bank in a subsidiary company, financial services company, financial institutions and stock and other exchanges could not exceed 10 % of its paid-up share capital and
reserves. On a cumulative basis, the limit was fixed at 20 % of the bank’s paid-up capital and reserves.
no image


It has been decided that the interest subvention on export credit be continued for one more year from April 1, 2008 till March 31, 2009 on the terms and conditions as they existed on March 31, 2008. However, while allowing this benefit it is to be ensured that the interest rate after subvention does not fall below 7 % which is the rate applicable to agriculture sector under priority sector lending.
no image


Derivatives and its accounting implications have recently drawn major controversy. ICAI mandated provisioning of mark to market (M2M) losses on derivatives or as an alternative allowed compliance to AS-30. The controversy is much larger. The quantum of losses on derivatives is unknown, the
participants have limited knowledge of this financial engineering and the Indian public and institutions have been taken for a ride by Multi National Financial Advisers assuring them fancy returns. In a meeting of Asian Development Bank, P. Chidambaram, Union Minister of Finance, has indicated the government intention to ban derivative trading in food articles. It is being alleged that the recent inflationary tendency in metal, oil, gold and other commodities worldwide are a result of speculative activity in the commodity stock exchanges and would require closer scrutiny. The Indian commodity market is primarily dealing in commodity futures and 99% of the trade is settled without any relationship with delivery of commodities. A section of arbitragers having deep pockets acquire huge quantities of commodities, store them and then sell the same in futures market, creating a pressure on supply. In certain cases, the quantum of positions taken by speculators and market makers in the futures market is huge and is many times as compared to actual supply or production. The Futures Market Commission needs substantial professionalism to improve regulatory practices.

Similarly in the equity derivative, the futures and options have fueled speculative tendency and have
increased volatility of the equity market. In the downfall of May 2006 and January, 2008, Lakhs of small investors burned their fingers by incurring substantial losses in the derivative segment. Equity derivative market also has no linkage with the actual delivery of the stocks and shares and all transactions are speculative. The hedging transactions are very limited and most of the derivatives trading is in open positions without any underlying stocks or transactions. Derivative trading was banned in India in early 60’s arising out of large scale manipulations commonly known as Mundra scam. The rsth&eanh market has turned into sophisticated futures – option market, but risk and issue are similar. The derivative market has instigated gambling and betting mind set in a large cross section of the society. A large number of large and mid-sized investors are investing their money in ok;nk cktkj i.e. derivative market. The government had banned lottery business in most parts of India to save the masses from the betting cult. We, the intellectual organ of the society need to examine this issue very closely and to see whether derivatives are delivering value by really providing hedge
mechanism for genuine transactions. Is it an effective mechanism for risk mitigation or management?
The intellectuals need to ponder on this crucial issue of “Is there a case to limit the derivative market only to those who have underlying delivery positions or should the government need to continue to permit open possession, betting and speculation and ultimately leading to gambling tendencies against the interest of the common man and societal values”. The complex issue of derivative in
foreign exchange market requires a separate debate to bring in more regulatory checks and balances by insisting on transparency in OTC transactions. The derivative market in foreign exchange is limited only to underlying actual positions by Reserve Bank of India. RBI as a regulator has played an important role in keeping the devil of derivative under control in India. The fall of World Com,Enron and several giants in US and now a complete disaster in the US economy contributed by the sub-prime are indications of the risk created by derivative. Most of the large financial services Companies including JP Morgan, Goldman Sach, Merrill Lynch, ICICI Bank, Citibank, Barclays, Lehman and various other leaders of the financial services sector have burned millions of dollars in the sub-prime derivatives. It is reported that due to its complex nature, Indian public sector banks could not understand the product too well; and their purchasing of derivative products from smart foreign banks without understanding the underlying risks have jeopardized the public money. As per a recent estimate, corporate India may be sitting on a $3 billion to $5 billion (Rs 12,000 crore - Rs 20,000 crore) notional loss on its exposure to foreign exchange derivatives, alone. Is India ready to face such a huge crisis, if it happens here? Or we need to bring risk management practices or controls
to obviate major financial losses to the common man endangering the economy?
A public debate is needed.