The labour ministry has changed the definition of pensionable salary for foreign employees, including Indian citizens working aboard. Pensionable salary of foreign or international employees
contributing to Employees Provident Fund Organization (EPFO) will now be average monthly pay drawn during the entire contributory period of service instead of the average of last 12 month's salary. The new definition is not applicable on domestic EPFO subscribers as they are already regulated by a ceiling of 6500 per month placed by employee pension scheme, 1995(EPS) on their pensionable salary. This means that the employer's contribution of 8.33% of eligible earning of the employee
to the EPS cannot exceed Rs. 6500 per month even if the calculated sum is higher. The ceiling does not exist for the international employee.

The Supreme Court ruled in Paschimanchal Vidyut Vitran Nigam vs. DVS Steels & Alloys that a rule requiring the new owner of the premises to clear electricity arrears of the former was valid. The
distribution company in this case, successor to UP Electricity Board, insisted on the company to pay the arrears of the former owner before getting the connection.

According to the Supreme Court, there could be arbitration of disputes between a company and its director who also functions as an employee,. The Supreme Court said that as a director is involved in policy making, the contract is not merely one of employment, Consultancy agreements are commercial.

The Insurance Regulatory & Development Authority (IRDA) has taken free pricing to next level by giving non-life insurance companies more freedom to design their own products. Both individual and
businesses, who buy non-life insurance, can now look forward to policies that are either more comprehensive or better designed to meet their requirement.

In a bid to give some relief to exporters, the government simplify the refund based service tax exemption scheme on taxable services attributable to exports, the time limit for filing refund claims has been extended from 60 days to six months.

Essar Gujarat Limited (Essar) imported certain goods in three consignments and transferred the goods directly from the port to the factory of the loan licensee (being the taxpayer). The taxpayer availed Cenvat credit of the countervailing duty (CVD) paid by Essar. The Revenue sought to deny the credit on the ground that goods were received in the factory under the cover of delivery challans, which were not the appropriate documents for availing of credit. The Supreme Court held that the taxpayer produced the triplicate copy of the bill of entry in respect of two consignments; and hence, was entitled to Cenvat credit. However, in respect of the third consignment, the taxpayer did not produce the triplicate copy of the bill of entry; hence, the credit was not admissible.

The Supreme Court held that filing a bill of entry was mandatory for importers to obtain release of goods. Further, the Apex Court observed that filing of the bill of entry was required for custom appraisal. Accordingly, the Supreme Court here permitted the Revenue to en cash the bank guarantee on the grounds that the goods had been released.

The taxpayer was engaged in the business of oil exploration and had entered into a Production Sharing Contract (PSC) with the Government along with other consortium members. The taxpayer
claimed deduction of foreign exchange loss arising on the translation of expenses incurred in foreign currency at the end of the accounting period. The Assessing Officer (AO) held that the loss recognised by the taxpayer was notional and accordingly, did not allow deduction for such loss.
On appeal, the Income tax Appellate Tribunal (Tribunal) and the High Court held that loss arising on account of devaluation of rupee was allowable for tax purposes in the year in which the same had
been incurred. On appeal by the Revenue authorities before the Supreme Court, the Court observed that the PSC established an independent mechanism for the treatment of costs, expenses, income,
profits, etc incurred or earned by the consortium members engaged in oil exploration. Accordingly, the accounting and tax treatment of expenditure / income provided for in the PSC prevailed over
the normal provisions of the Act. The PSC was considered to represent a distinct, complete code, which provided for specific accounting and tax treatment of income/ expenses. In the instant case,
since the PSC provided that the loss arising on account of foreign currency translation could be claimed as a tax deduction in the same year, such expenses were required to be allowed as a tax deduction.

The High court in the case of CIT vs KLM Royal Dutch Airline, upheld the tribunal decision, which said that the assessee did not derive any income other than profits from the operation of aircraft in international traffic and hence, in terms of articles 8, the same was not subject to tax in the Netherlands.

In a setback to Vodafone, the Bombay high court dismissed the telco's writ petition against the income tax department's show cause notice seeking around $1.7 billion as capital gains tax. Vodafone will now move to the Supreme Court. The high court is learnt to have dismissed the plea mainly on
the ground that there is no "patent illegality" in I-T Department's show cause notice. Also, as per sources, the petitioner, Vodafone international, has suppressed a very important agreement dated February 11, 2007, between Hutchison and Vodafone international. Vodafone, based on advice
received, continues to believe that the transaction is not subject to tax in India and is confident of positive outcome ultimately.

• Three slabs of excise duty-14%, 12% and 8% applicable to non petroleum products have been reduced by 4% each. Revised rates will be 10%, 8% & 4%
• Duty on cotton textiles and textiles articles has been reduced from 4% to nil.
• Ad-valorem on car of 1500 cc and above has been reduced from 24% to 20%.
• Duty on cement has been reduced from 12% to 8%.
• Naphtha, imported for generation of electric energy, has been fully exempted from basic custom duty.
• Export duty of 8% on iron ore fines has been withdrawn
• Export duty on iron ore lumps has been reduced by 10% to 5%.

RBI said in the draft guidelines that "The liabilities on account of repo borrowing would be included in the net demand and time liabilities calculation for maintenance of cash reserve ratio. However, inter bank repo transactions would continue to be netted, as hitherto".

Housing finance companies are the latest to get access to the special liquidity facility extended by the Reserve Bank of India (RBI) to mutual funds and non-banking finance companies (NBFCs). The
central bank has also extended the liquidity adjustment facility (LAF) from its current deadline of March 31, 2009 to June 30 2009.

RBI has decided to reduce the fixed repo rate under the Liquidity Adjustment Facility (LAF) by 100 basis points from 7.5 per cent to 6.5 per cent and the reverse repo rate by 100 basis points from 6 per cent to 5 percent with effect from December 8, 2008.

• Provisioning Norms: The provisioning requirements in case of Tier II UCBs for all types of standard assets stand reduced to a uniform level of 0.40 per cent except in the case of direct advances to agricultural and SME sectors, which shall continue to attract a provisioning of 0.25 per cent, as hitherto. Tier I UCBs will continue to make a general provision of 0.25% on all their standard assets
• Loans and advances secured by commercial real estate: Such loans would attract a risk weight of 100 per cent as against the extant risk weight of 150 per cent.
• Loans and advances to NBFCs: The risk weights on exposure to such companies will remain unchanged at 100 per cent.

Interest Rates effective from November 28, 2008 to April 30, 2009 will not be exceeding BPLR* minus 2.5 percentage points per annum for the following categories of Export Credit.

Categories of Export Credit

Pre-shipment Credit

• Up to 270 days
• Against incentives receivable from Government covered by ECGC Guarantee up to 90 days.

The unprecedented invasion on Indian sovereignty by terrorists has shaken the very nerves of every Indian. It is a warning signal to the entire society to be more vigilant, more demanding and more forthcoming to defend themselves. It is necessary to brutally weed out all terrorists and also to strategically eliminate terrorism. Terrorists have no religion. Hindu, Muslim, Sikh, Christian, Jain and Bodh all the religions teach and preach to inculcate human values, to ensure a peaceful and constructive living for one and all to make this mother earth a beautiful place for humanity to survive and flourish. There is no reason to have suspicion or to divide the society in the name of religion. We all have to live together with mutual trust and harmony. Faith is the most important element which needs to be kept by word, by thoughts and conduct by each and every member of society. Polity and the politicians are one of the most important necessities of society and for successful and effective
functioning of democracy. Unnecessarily maligning politicians as a class will only desist good people to join politics, which will be suicidal for society. At the same time, the time has come where politicians have to do soul searching that power is not for enjoyment but to serve citizenry. Only the citizens with the zeal to serve with righteous virtues are needed in the polity. Some important suggestions to be considered by the society, thinkers, politicians and opinion makers of this country are as follows:

• Strategically create mutual trust and faith among various religions, classes of society. Involve religious leaders proactively.
• Deal aggressively with the terrorists, their supply line in terms of logistics, money, arms and ammunitions and most importantly banish moral and local support.
• Internationally ensure that terrorists are not able to have access to arms and ammunitions. All soverign countries, manufactures and dealers of arms and ammunitions must have self regulatory and ethical Code of Conduct in place to ensure that they do not eventually serve the terrorism by supplying, directly or indirectly, their products to unwarranted elements. Failure to follow a well publicized code of ethics in this regard can be made very severely punishable by international collective action.
• It is important to have a very quick trial and punishment mechanism for terrorists. In most cases it may not be necessary to give them benefit of principles of natural justice, civil liberties and human rights. Terrorists cannot have any rights of any kind whatsoever.
• The design of terrorists and the forces behind them for aggression against India is to destabilize our economy, tourism, the economic growth and our strategy to become number one economic power in the world. We cannot permit any invasion of any kind.
• The media, including the electronic and print media may be subjected to ethical discipline by ensuring that the terrorist activities are least publicized to reduce the impact of terrorism. Terrorist understand very well that the media is there to make their (in)human acts known to all. Once publicity is restricted the brutal and evil designs of terrorist will not be propagated.
• It is very important to ensure that the names of the terrorists are not published or publicized with a view to maintain religious harmony, as the names, most of the times give wrong signals and result to provide benefit to divisive forces only. Terrorist is a terrorist, has no religion.
• There is need to have a hard talk with Pakistan and if necessary to aggressively weed out terrorist camps by combat action. 

The recent turmoil in the US economy has shaken the confidence of the Indian businesses in the economic and monetary system of the world. The sentiments have been hurt very significantly. The distress sale of Indian Companies shares by foreign investors of more than US $ 25 billion, non renewal of short-term international funding of about US $ 50 billion and reduction in growth rate of foreign direct investments during last 3 months have impacted the exchange rate, market sentiment,
international demand for exports and the resultant reduction in confidence of the Indian businesses. We must thank Dr. Manmohan Singh that after assuming the charge of Finance Minister he has been able to very quickly take very important strategic action including substantial reduction in excise duty rates and certain initial steps to improve the liquidity into the system. This is indicative of only a very good beginning towards the future steps which may be inevitable to provide necessary impetus
to growth.

The Government of India, the thinkers and the opinion makers may consider the following suggestions for immediate implementation for revival of growth rate of the Indian economy:

• As a sequel to reduction in excise duty, it may be very important to immediately announce reduction in service tax rates to 8% and 4% slabs to give boost to the service sector. In view of CENVAT this is also a natural requirement.
• The central government and the State governments need to consider reduction of VAT rate comprehensively to provide further fuel to the growth path. The Chartered Accountants community is quite confident that even if the rates are reduced by 40% to 50%, the overall collection of the revenue of the Government will be rather more as compared to the collection in terms of the present rate, by improved compliance and improved business activities due to higher demand.
• It is important to immediately announce deficit funded infrastructure projects by at least Rs. 200000 crore for immediate commencement of their implementation to put back necessary confidence into the economy.
• The reduction in commodity prices including oil, metal and other important commodities internationally is a natural correction in the backdrop of speculative rise in prices in last 2 years.
• The Real Estate Sector and the Infrastructure Sector will require special attention of the Government. The comprehensive reduction of interest rates, taxes on these sectors and adequate money supply will be necessary to stimulate the growth of housing, real estate and infrastructure sector.
• Special incentive package is needed to boost tourism and hospitality industry. Aviation is seen severely hit, flights moving at abysmally low capacity, lower travel by businesses warrant removal of FBT.
• Inflation cannot be the 1st agenda as an economy. The important agenda at this stage would be to bring back the activity and positive outlook into the economy. A substantial reduction in CRR and SLR would be mandatory as the Indian Banking Sector will need at least additional flow of Rs. 2 lakh crore within next 2 months which can be released from the system by the Reserve Bank of India.
• The Indian banking sector and the financial market need not have apprehension about possible NPA's and should not desist from lending. The position of the Indian economy and the Indian businesses is reasonably strong and apprehensions of the banking sector is mainly impacting adequate flow of money and has adversely reduced the growth rate of M3 (Money supply).