100% asset cover

Issuer is required to maintain 100% asset cover (earlier 100% security cover) sufficient to discharge
the principal amount at all times for the debt securities issued. Issuer shall disclose the extent and nature of security created and maintained to the stock exchange on half-yearly basis and also in the annual financial statements. Issuer shall submit a certificate from practicing chartered accountants to the debenture trustee on half-yearly basis regarding maintenance of 100% asset cover along with the half-yearly financial results.

Issuers whose equity shares are listed

Issuers can issue unsecured debt instruments and list the same on the stock exchange provided there is 100% asset cover.The requirements of equity listing agreement for submission of a draft offer document to SEBI for observations and obtaining an acknowledgement card are not applicable to an issue of debt securities made pursuant to SEBI (Issue and Listing of Debt Securities) Regulations, 2008.

Issuers whose equity shares are not listed
Submission of financial statements: Issuer to publish / furnish to the stock exchange audited or un-audited (subject to limited review) financial results on a half-yearly basis within 45 days from the end of the half- year.

Security deposit of 1% of issue proceeds: Issuer are required to give a security deposit @ 1% of the
debt securities offered for subscription to the public, of which 50% should be paid in cash (subject to
maximum of Rs. 30 million) and the balance amount can be provided for by way of a bank guarantee.

Statement of deviation in use of issue proceeds: Issuer is required to furnish to the stock exchange, on a half yearly basis, a statement indicating material deviations, if any, in the use of proceeds of debt
securities from the objects stated in the offer document.

More powers to broker

• Broker to have documentary evidence of clients' financial details
• Brokers empowered to refuse orders for penny stocks, sell clients' securities without notice, deregister a client.
• Running account authorization to be renewed at least once a year.

National Securities Depository (NSDL) has launched a facility named SIMPLE (Submission of Instruction through Mobile Phone Login Easily), which will enable investors to submit delivery instructions to transfer securities to their broker account (Clearing Member Pool Account). For the purpose of availing this service, investors have to register for SPEED-e service (facility to submit delivery instructions through the internet) as a password user through NSDL Depository Participants.

Securities and Exchange Board of India (SEBI) has allowed registered stockbrokers to transact mutual fund units on behalf of their clients through the stock exchange mechanism.

To ensure smooth flow of traffic on highways, Uttar Pradesh government has decided to do away with the system of toll tax at various bridges. However, the decision would not affect toll bridges on national highways and highways built on PPP, DBFO and BOT models.

The Central Board of Direct Taxes (CBDT) has come out with the basic ground rules for the functioning of Dispute Resolution Panels (DRP). The concept of DRPs was announced in Budge 2009-10 to ensure faster resolution of transfer pricing and other international tax related disputes. The rules deal with aspects such as the places where the DRPs would be set up, its jurisdiction, constitution, manner of approaching it, procedure relating to the hearings etc. The DRP is basically a collegium of three commissioners. The orders of the DRP are binding on the Revenue Department. The Centre proposes to constitute eight panels across major cities - Delhi, Mumbai, Kolkata, Chennai, Bangalore, Ahmedabad, Pune and Hyderabad.

The Supreme Court (SC) has modified the compensation awarded by the Delhi high court in a road accident because of higher deduction in calculation the loss of income. In this case, baby Radhika vs. Oriental Insurance Co., the earning member died at 32, and his annual income was nearly Rs 2 lakh. The tribunal awarded Rs 45 lakh, but reduced by the high court to Rs 5.8 lakh. The high court deducted two-thirds of the income as expenses of the deceased, though normally it was one-third. The SC agreed with the one-third formula.

The Supreme Court has stated that when there are serious allegations of malpractices and manipulation of accounts of a firm, the dispute cannot be properly dealt with by an arbitrator. It would be appropriate to let the civil court decide.

Shareholders can now cast their votes on corporate proposals through the click of a mouse without having to worry whether their response has reached the company or not. CDSL ventures (CVL), a wholly owned subsidiary of Central Depository Services (India) has launched the e-voting system for listed companies. The e-voting system would permit a company or its registrar to set up the schedule on the e-voting website and upload the resolution and register of shareholders. CVL would then generate and print a password on a pin mailer for each shareholder, which would be communicated to them along with the notices of the resolutions. Shareholders can access the e-voting website and cast their votes at any time during the voting period at a place of their convenience.

When a person signs a document, there is a presumption he has read it and understood it and only
then he had affixed his signature, the SC stated in the judgement, Grasim Industries Ltd. vs. Agarwal Steel. The presumption is stronger in the case of businesspersons as money is involved. The SC stated this while setting aside the judgement of the Madhya Pradesh high court in an arbitration case.

In an important judgment, the Bombay high court held that a moneylender, who does not possess a license, cannot approach the criminal court if a repayment cheque given by debtor bounces. The court has held that carrying on money-lending business without license debars a person from recovering the amount through court. The High Court further noted that as per section 10 of Bombay Money Lenders Act, 1946 no court shall pass a decree in favour of a money lender unless the court is satisfied that the moneylender held a valid license at relevant time.

The Ministry of Commerce & Industry has issued an instruction to all development commissioners clarifying that Net Foreign Exchange Earning (NFE) for SEZ units is to be calculated in rupee terms only. In case a unit claims that the NFE is negative due to foreign exchange fluctuations, the Approval Committee may consider the same, on case to case basis, provided the NFE computations are certified by the Authorized Banker of the unit.

A division bench of the Bombay high court has allowed the appeal of Tata Motors and reiterated that even in respect of job work where the final product is dutiable, Cenvat Credit can be availed of. The appeal was against the order of the Customs, Excise & Service Tax Appellate Tribunal.

In a decision that could impact companies with operations in the north-east Jammu & Kashmir and
Himachal Pradesh, a tax tribunal in Amritsar has ruled recently that such entities will be liable to pay tax on Central excise duty refunds.

The Income-Tax department will recover close to Rs. 1,000 crore from infrastructure development companies, after a recent tax tribunal order clarified that the exemption available for infrastructure development cannot be extended to contractors or subcontractors. The order puts an end to the practice of contractors and subcontractors claiming benefits under section 80 IA of Income-tax Act, which was incorporated to encourage investment in infrastructure projects.

The Assessee company is in the business of manufacturing audio magnetic sound heads used in a
variety of audio systems. It entered into an agreement with a Singapore Company (M/s Sankyo Seiki Pvt Ltd.) for supply of plant know how and product know how. Supply of plant know how includes delivery of technical and engineering data, design, drawings, sketches and photographs. The agreement was entered into in Singapore. The agreement is valid for a period of five years after which the data and technical know how would remain the property of assessee company for full and free use. The assessee applied for No Objection Certificate (NOC) for remittance of amounts to the foreign company without deduction of tax at source on the ground that no income had accrued in India. NOC was denied by the Assessing Officer (AO) holding the same as fee for technical services under the Income Tax Act, 1961. The Commissioner of Income–tax (Appeals) allowed assessee’s claim and directed the AO to issue the NOC. On appeal by revenue, the Appellate Tribunal upheld the decision of the CIT(A) and held that the payments related to acquisition of plant know how outside India and no income of the foreign company arose in India. The Appellate Tribunal further held that the payments were also outside the ambit of the extended definition of royalty under the Act. The revenue, thereafter, filed an appeal before the High Court. The High Court held that the payment to the Singapore Company was towards purchase of the plant and not towards royalty since the title in the documents was transferred to the assessee company outside India for its full and free use.

The Delhi Income Tax Appellate Tribunal (ITAT) in the case of DCIT vs Dolphin Drilling Pte. Ltd.
(Taxpayer) has held that the conversion of business income earned in foreign currency into INR, in
accordance with Rule 115 of the Indian Tax Law (ITL), is to be made by adopting the conversion rate
prevailing at the end of the tax year. It also held that the Taxpayer, a company incorporated in Singapore and engaged in the business of hiring out drill-ship in India, is entitled to claim depreciation on the value of the drill-ship.

The Delhi Income-tax Appellate Tribunal (ITAT) has held that difference of opinion cannot be a ground for levying penalty in transfer pricing issues. The ITAT said there should be sufficient ground to believe that the assessee had malafide intention before levying a penalty under section 271(I)(c) of the Income Tax Act.

As per new rule of the Tax department, Third party administrators (TPAs) facilitating cashless treatment in hospitals for individuals holding health insurance will have to deduct tax upfront while making payments to hospitals on behalf of patients. The 10% tax to be deducted (TDS) will affect working capital management of hospitals and, thereby, erode profitability marginally. The Central Board of Direct Taxes has issued a circular making it mandatory for TPAs to deduct tax at source on payments to hospitals.

Granting Income Tax relief to companies for deductions for contributions to provident fund (PF),
the Supreme Court has dismissed over 60 appeals by the commissioner of income tax. The Finance Act 2003, which operated from April 1, 2004, deleted a provision relating to deduction against PF and other welfare funds. According to the deleted provisions, if the contribution stood paid after the date of filing of returns, it stood disallowed. This resulted in hardship as the financial year did not coincide with the accounting year in many cases. After a representation to the government and the Kelkar committee report, the provision was deleted. In the present batch of appeals, the government took the stand that the benefit would accrue to the employers from 2004 after the amendment, and not retrospectively from 1988. The court ruled it was not an amendment but a "curative" step and therefore applicable since 1988.

Foreign companies or individuals, including foreign institutional investors, having business or profession in India can enjoy lower capital gains tax on off-market deals if the stocks are purchased in foreign currency.According to a recent decision of the Mumbai bench of the Income Tax Appellate Tribunal, non-resident companies and individuals are entitled to a beneficial rate of tax of 10% on long-term capital gains arising from the sale of shares of listed entities. Earlier, non-resident assesses were taxed at the rate of 20%. Currently, off-market deals attract a capital gains tax of 20% with indexation benefit (where the gains is adjusted for inflation) and 10% without indexation benefit. While this was largely perceived to apply to residents, the tribunal has now spelt out that foreigners
are also entitled to the lower rate of tax. Further tribunal said that there should not be any discrimination between a foreign and an Indian entity in this regard.

Non-banking finance companies providing funds to infrastructure sector will be able to raise foreign debt more easily as the Reserve Bank of India (RBI) and the government deciding to allow these entities to access foreign funds from all lending agencies.

The Union Cabinet, on November 5, 2009, approved a proposal of the Department of Industrial Policy & Promotion, Ministry of Commerce & Industry to permit the following payments under automatic route and subject to FEMA (Current Account Transaction) Rules, 2000; without any restriction:

• Payments for royalty / lumps sum fee for technology transfer
• Payments for use of trademark/ brand name

Market regulator Securities and Exchange Board of India's (SEBI) latest decision to mandate disclosure of balance sheets by companies on a half-yearly basis is being viewed as a precursor for listed companies to mandatory disclose their cash flow statements. Auditors said that move will improve transparency by giving investors a better picture of the financial health of the company. The two half yearly balance sheets may not be exhaustive, compared to the one provided to the investors at the end of the year. But using the two balance sheets, an investor will be able to work out the cash flow details of the company.

Minister of state for road transport and highways, RPN Singh informed the Rajya Sabha that Highway projects worth about Rs 1,10,000 crore will be executed in the country over the next three years. According to him the Government has formulated work plans for National Highways sector for 2009-10 for projects aggregating to 15,911 Km. Out of this, 11,947 Kms are under various phases of National Highway Development Project (NHDP) that are being implemented through National Highways Authority of India at an approximate cost of more than Rs. 100,000 crore. The remaining 3,964 Km under NHDP Phase-VI-A and other projects are to be implemented through NHAI and the state government at an approximate cost of Rs 9,892 crore.

Under pressure from employees' representatives, a key advisory body of retirement fund manager,
Employee Provident Fund Organization (EPFO) has rejected the Finance Ministry's proposal to invest 3% to 5% of the Rs. 2.57 lakh crore corpus in stock indices. It is now left to EFPO's apex body, Central Board of Trustees, to take a call on the Finance and Investment Committee's recommendations to reject the Finance Ministry proposal of investing in stock indices.

Regulators seized six more US Banks bringing the tally of failures to 130 this year as the banking industry continues to suffer under the weight of deteriorating loans.

To lend transparency, Reserve Bank of India(RBI)has directed banks to disclose the commission they
received from mutual funds and insurers for referring their products to customers.

The Reserve Bank of India (RBI) has said that the banks have violated Foreign Exchange Regulations
Act (FEMA) while transacting in currency derivatives in the last few years. The central bank has stated in a submission to the Orissa High Court in response to a public interest litigation that violation of FEMA guidelines were committed by banks and exporters, who in many cases entered into derivative contracts far in excess of their genuine underlying exposure and also tried to use the hedging tools as profit making tools. The central bank may further penalize those who violated FEMA norms.

Life Insurance Corporation of India (LIC), has pumped around Rs. 26,000 crore into the equities
markets (April 2009-October 2009). In comparison, overseas funds during the same period have bought Indian stock worth about $16 billion. The largest insurer in the country has also increased its
investments in non convertible debentures of many blue chip companies and has invested a little over Rs 17,000 crore in the same period. NCDs are structured debt product that cannot be converted into equity shares of the issuing company but carry a high interest rate. The life insurer has also disbursed close to Rs 5,000 crore towards various infrastructure projects including power, roads, airport and education in the current financial year.

International Finance Corporation (IFC), the commercial lending arm of the World Bank, is looking
at hiking exposure to Indian entities provided it gets more capital support. According to Lars Thunell,
executive vice president & chief executive of the IFC, IFC is currently committed to invest $1 billion annually and this may increase that if it gets the $2.4 billion capital support that it has asked its shareholders. India is one of the largest markets for IFC investments and its current India exposure is around $3.4 billion. IFC among other things plans to increase its lending support to the small and medium enterprises (SMEs) through the commercial banks in the country.

In what would make online commerce faster for customers, the Reserve Bank of India has mandated
that all payments for such transactions be credited directly to merchants, instead of getting cleared by
intermediaries such as CC Avenue and Paypal. Currently until a payment is authorized and processed
by intermediaries, a transaction is not completed. For instance, online retailers such as eBay do not ship goods purchased online unless funds are credited to their account, before being routed through an intermediary. CC Avenue, Bill Desk, Direct Pay, ICICI Pay Seal and Paypal are among major payment gateways in India.

The Indian Diaspora has more than doubled the money parked with various Indian banks during April- September 2009. As per latest data released by RBI, Indian banks have mobilized $2.7 billion during April- September 2009 from non-resident Indians (NRIs) against inflows worth $1.1 billion in the year-ago period.

The government and the Reserve Bank of India (RBI) have decided to withdraw, from January a facility that allowed Indian firms to buy back foreign currency convertible bonds (FCCBs) issued to an overseas investors, in yet another move to unwind another measures introduced last year at the height of global credit crisis.

The recent decision of Reserve Bank of India and Government of India to delegate the powers of at the central statutory level as well as at the level of branches to the Board of Directors of concerned Banks have brought the greatest risk to the public sector Banks and entire financial system. Recently when the central statutory auditors of several public sector banks were to be appointed, within 48 hours of a green signal from the Reserve Bank of India, Public Sector Banks' Chairman and the top management quickly selected the 'auditors of their choice'. The names of selected Auditors were sent to RBI even without following any transparent procedure. No meetings of Audit committees or Board of Directors were held in most of the banks for selection of names. RBI proposes to provide similar choice to the banks' top management to select the auditors at the branch level. This will further put all the public sector banks to greater risk of fraud and material misstatement very seriously. The manner in which the top managements have chosen "comfortable" auditors at the head office level, similarly
they will appoint comfortable auditors at the crucial branch level in the name of autonomy. How an auditor selected by the chairman and the top management of the bank will be able to review and
critically comment on the decision of the top management? This seems to be a very big criminal conspiracy on the part of certain interested quarters with perceptible questionable and malicious intentions and only appropriate corrective actions by bringing back the appointment of auditors with RBI itself can save the entire financial system from big risk of a fraud. In case RBI is not very comfortable in appointing auditors, an independent regulatory authority can appoint Auditors in consultation with ICAI.  The top management will put necessary undue influence to avoid making provisions for non-performing assets, and not to comment on unauthorized business, non compliance of RBI instructions, reckless advancing of money and lack of due diligence on the part of top management of public sector banks. This is a very serious issue and requires intervention at the level of Honorable Prime Minister, Finance Minister and CAG so that this menace can be restricted at this stage itself. We openly call upon the society, media, the bureaucracy and the thinkers and most importantly the intelligentsia of the society to mull over this great risk to the Indian financial system. In fact it is important for the society to ensure that all banks including private sector banks, foreign banks are subjected to audit by independent auditors appointed in a transparent manner from a panel by an independent regulatory authority completely independent of the top management, failing which the society will greatly suffer. In US, about 135 banks have failed in last one year and there have been few cases in India of failure of banks; and in all those cases auditors were appointed by those who are in-charge of governance. Auditors' independence is under biggest threat in the Indian financial sector. The banking system and the society should take lessons from failure of Satyam or failures of Global Trust Bank and should come forward for an appointment of independent auditors. It is the responsibility of the society to provide adequate strength, powers and independence to the auditors
and not to leave the appointment, remuneration and removal of auditors at the mercy of those who are in charge of governance.

Let us take some lessons before it is too late.

The House of Lords in a famous historical decision announced "Auditor is a watch-dog and is not a blood hound". It is well established that the role of an auditor is to provide an assurance against the fraud, error and misstatement. No auditor can provide insurance or a guarantee against fraud or error.
In United States, 135 banks have been wound up in last 12 months. Similarly Lehman Brothers, one of the largest investment bankers in the world was liquidated suddenly within a period of 3 months
from a very strong position. Similar corporate failures took place like Enron and World Com in US but later on after a long trial in US, the US Justice Department decided to drop Arthur Andersen's prosecution.

Whenever there is a corporate fraud or reported major financial indiscipline, it is natural that the society and the other stake holders will ask "what the auditor was doing". In case when after unbiased investigations, it is revealed that the auditor has been grossly negligent, it may be appropriate to professionally punish the auditor and also to levy financial penalty through disciplinary process. It would be dangerous to assume that the auditor was grossly negligent in all cases where the fraud or material error is detected. It is important to understand the ground realities of the audit process including the manner in which the audit is conducted or can be conducted and what is the mandate given to an auditor. The auditor can at best act as a watch-dog against fraud and error, which would really mean that the auditors presence, due diligence and audit process provide a deterrent against
fraud and error. The audit also assures the overall financial discipline and a check on the working of
internal controls in an organization and their efficacy of working. The society and the stake holders on the other hand expect that once an auditor is appointed and the Audit is conducted, no fraud or error should occur and that the auditor should exercise necessary due diligence and detailed audit procedure to ensure a complete safeguard against fraud and error.

This is a big expectation gap from what an audit is and what is perceived as 'the auditor should be'.

The proposed provisions in Companies Bill 2009 proposing imposition of imprisonment up to one year, even for technical non-compliance, is completely unacceptable in the current perspective unless the position of auditors are transformed from a watch-dog to blood hound. And that will certainly change the face of auditor, alter radically the nature and the process of audit in addition to heavy time or cost implications to the businesses. Needless to say, in that situation rights and powers of the auditors shall surely be required not only of a police investigative officer. Are the businesses ready for it, is government appreciative of it or for that matter is that situation required at all? These are the question society and all concerned need to answer and have a concurrence upon.

The society, the government and the judiciary cannot and should not punish an auditor by imprisonment before impartial trial unless prime facie , the auditor is knowingly and willingly party to a fraud or the nature of fraud and / or mis-statement in the financial statement is such that a criminal conspiracy, criminal breach of trust or criminal abatement can be established. Unless a criminal involvement of an auditor is established beyond doubt, it may be completely inappropriate to provide for imprisonment as a penalty. In case auditors are found guilty, in some exceptional cases of gross negligence they can be punished by the Institute of Chartered Accountants by withdrawal of his Certificate of Practice for an appropriate period commensurate to the nature and gravity of the guilt besides imposing necessary financial penalty. We all need to educate the society, bureaucracy, media
and the judiciary about the role of an auditor. The recent trend of arresting the auditors and not even
granting the bail at a stage when the guilt of an auditor is not established is against the principles of natural justice. We need to provide a fair trial and in case the evidences establish the criminal guilt, the criminal prosecution, imprisonment and harsh penalty should be imposed.

The Institute of Chartered Accountants of India (ICAI) has sought details on reports of alleged discrepancies in the books of the Anil Dhirubhai Ambani Group’s flagship company, Reliance
Communications (RCom), to see if it needs to initiate any action against the telecom major’s auditor.
The Department of Telecom (DoT) has appointed independent auditor that scrutinized the accounts
of RCom had found that the telecom major has under-reported revenues of Rs. 2,799 crore to the
Government, resulting in under-payment of Rs. 315 crore as license fee and spectrum charges during 2006-08.

The government has begun random audits of IT companies across the country on possible violations of the Software Technology Parks of India (STPI) Act, even as it mulls extending the benefits of this legislation to 2015.

The Securities and Exchange Board of India has proposed changes to the way public share offerings
are done, spelt out guidelines for smaller companies to raise capital through share sales, and called for more disclosures from listed companies to prevent delayed shocks in the form of holes in the books of accounts.

• Companies listed on SME exchanges to be exempted from eligibility norms applicable for IPOs & FPOs
• Minimum IPO application size and trading lot for small and medium enterprises to be Rs.1 lakh
• Companies wanting to list on SME platform should have maximum Rs.25 crore paid-up capital. For listing on NSE and BSE, minimum paid-up capital of Rs.10 crore to be required
• Shares reserved for a company’s employees in public issues will have a ceiling of Rs.1 lakh on the value of allotment per employee
• All listed entities, with subsidiaries, have an option to submit consolidated financial statements as per IFRS, but these entities will have to continue filing their standalone results as per Indian GAAP
• Companies have to give half yearly disclosure of balance-sheet items with audited figures or unaudited figures with limited review
• Companies will mandatory disclose audited results within 45 days of the end of the quarter. Results have to be disclosed within 60 days for those companies that opt to submit annual audited results on a stand-alone basis

US prosecutors who used wiretaps to make their insider trading case against billionaire Raj
Rajaratnam, founder of hedge fund firm Galleon Group, intent to use similar tactics to fight future
crimes on Wall Street.

China raised the amount that foreign funds can invest in stocks by 25% to $ 1 billion, encouraging
inflows after the benchmark index slumped into a bear market in August.

The Securities and Exchange Board of India (SEBI) has allowed stock exchanges to extend trading time by almost two-and-a-half hours, permitting them to operate between 9 a.m. and 5 p.m.

National Stock Exchange (NSE) has advised its members to ensure compliance with the Financial
Action Task Force (FATF)’s public statement, which is to protect the international financial system from the abuse of money laundering and terrorist financing.

Mukesh Ambani’s Reliance Industries (RIL) proposes give one bonus share for every share owned in the company for the first time in 12 years in a move intended to instill confidence in investors about the company’s growth prospects.

According to the Securities and Exchange Board of India (SEBI), all trades in corporate bonds
between mutual funds, foreign institutional investors, venture capital funds and RBI-regulated
entities would be cleared and settled through the National Securities Clearing Corporation or the
Indian Clearing Corporation from December 1, 2009.

Investors can now trade on the Bombay Stock Exchange in Exchange Traded Funds (ETFs) that
are exclusively available on the National Stock Exchange (NSE).

Pursuant to the recommendations made by the Secondary Market Advisory Committee of SEBI
and discussions with major stock exchanges and with a view to expand the reach of the markets
for exchange traded products, it has been decided to allow SEBI registered stock brokers (including
trading members of stock exchanges) to provide access to clients through authorized persons. The
framework governing the market access through authorized persons is prescribed. This framework
provides the minimum requirements and the stock exchanges and stock brokers may prescribe
additional requirements, as they may deem appropriate, in the interest of investors and market.
The authorized person shall not receive or pay any money or securities in its own name or account.
All receipts and payments of securities and funds shall be in the name or account of stock broker.
The authorized person shall receive his remuneration - fees, charges, commission, salary,
etc. - for his services only from the stock broker and he shall not charge any amount from the
clients.

A special bench of the Income Tax Appellate Tribunal (ITAT), Delhi has held that fees paid by
Indian broadcasting companies to foreign satellite service providers can be taxed in India. The foreign satellite companies held the view that the amount received by them from India cannot be taxed in India because they have no material or men or machinery or a combination of them in India.

The Punjab Government has decided to pay interest on delay in refund of value added tax (VAT) under the new industrial policy 2009. The time period for issuing VAT refunds has also been reduced
from 90 days to 60 days.

In a setback to telecom major Vodafone Essar, the Income Tax department has issued a show cause
notice to Vodafone International Holdings, alleging tax evasion in its $ 11.2 billion deal with Hutchison Telecommunications International Ltd. in 2007.In the 531-page notice sent under Section 201(1) and 201(1A) of the IT Act, 1961, it asked Vodafone to explain why it should not be held that “the tax department has competent jurisdiction to proceed against it for the default of non-deduction of tax at source” in the transaction.

The empowered committee of the State Finance Ministers has come up with the first discussion paper on Goods and Services Tax. The broad contours of the proposed GST structure are as under:

PROPOSED GST STRUCTURE
DUAL GST MODEL
The GST shall have two components:

• one levied by the Centre (CGST i.e Central GST ) and
• the other levied by the States (SGST i.e State GST)

Foreign investment in India can come broadly in form of

• Foreign Direct Investments (FDI)
• Foreign Portfolio Investments

It is clarified that service tax is not chargeable on the services provided in respect of tour undertaken
for carrying out Haj and Umrah Pilgrimage in Saudi Arabia by Indian pilgrims considering these as
export of service, provided they fulfill the other conditions of export as provided in Export of
Service Rules.

Egypt has offered India an exclusive industrial area in the Suez Canal Development Zone. India has
become the first country to which Egypt has made this rare offer.

The Reserve Bank of India (RBI) has decided to permit recognized stock exchanges to offer
currency futures contracts in currency pairs of Euro-INR, Japanese Yen-INR and Pound Sterling-INR, in addition to the US dollar-rupee contracts which are already permitted.

The Government of India has decided to include ready made garments along with textiles under the
rupee export credit interest rates subvention scheme with retrospective effect from December 1, 2008.

Interest rates on loans to commercial real estate sector may move up with the Reserve Bank of
India (RBI), increasing the provisioning requirement for advances to this sector from the present level of 0.4 per cent to 1 per cent.

As RBI has mandated that no bank can charge more than the prime lending rate for loans up to
Rs.2,00,000, bank have been working on thin margin but on the other hand, micro finance
institutions (MFIs) charge between 25 per cent and 50 per cent, with their average lending rate
hovering around 30 per cent.

Essar Group’s telecom holding company (ETHL Communications) has raised Rs. 4,280 crore by
issuing rated, listed, zero coupon, non-convertible debentures (NCDs) through private placement to
part finance the group’s refinery and steel businesses. The issue which opened on October 7, 2009 was oversubscribed by more than three times with over 20 investors across mutual funds, insurance companies and corporates. The Non-Convertible debenture issue was sold in two separate series of Rs. 2,250 crore each, maturing in July 2011 and December 2011. The yield for the series A and series B is 9.15% and 9.25% respectively.

Special Refinance Facility (SRF) to banks withdrawn under Section 17(3B) of the Reserve
Bank of India Act, 1934. In terms of this facility all scheduled commercial banks (excluding RRBs)
are provided refinance from the Reserve Bank equivalent to up to 1.0 per cent of each bank’s
Net Demand and Time Liabilities (NDTL). As per Second Quarter Review of Monetary Policy
2009-10, Banks cannot avail fresh refinance from the Reserve Bank under this facility from now
on wards.

Government will provide interest subvention of 2% p.a. to Public Sector Banks in respect of short-
term production credit up to Rs.3 lakh provided to farmers. This amount of subvention will be
calculated on the crop loan amount from the date of its disbursement/drawal up to the date of
repayment or up to the date beyond which the outstanding loan becomes overdue i.e. March 31,
2010 for Kharif and June 30, 2010 for Rabi, respectively, whichever is earlier, subject to a
maximum period of one year. This subvention will be available to Public Sector Banks on the
condition that they make available short-term credit at ground level at 7% p.a.

Mauritius vice prime minister and finance minister Ramakrishna Sithanen has strongly supported the
Double Taxation Avoidance Treaty (DTAA) it has with India. According to him, it is not a one-off
treaty between the two countries but that both the countries have such treaties with many other
countries and it is unfair to single out Mauritius and any unilateral move to change the terms of
the treaty would be in violation of international laws. He further said that the proposed direct tax
code of India which proposes treaty over-riding is also a unilateral move and against international
laws.

• Base Rate at 8.55 per cent taking 2008-09 data.
• Sub-base rate lending not viable.
• Norms to be applicable on loans with duration of one year and above, including working capital loans.
• Lending below Base Rate not to exceed 15 per cent of total incremental lending for the financial year.
• All new and existing loans that come up for renewal to come under the new rate.
• All loan categories currently not linked to the Base Rate, except credit card receivables,  loans to banks’ own employees, etc.
• Administered lending rate for small borrowers be deregulated.

The ceiling on interest rates on pre-shipment rupee export credit up to 270 days and post-shipment
rupee export credit up to 180 days had been stipulated at BPLR minus 2.5 per cent, valid up to
October 31, 2009. It has been decided to extend the validity of the above dispensation up to April
30, 2010.

The elections to the Central Council of the Institute of Chartered Accountants of India are scheduled on 4th and 5th December, 2009. At this juncture, it is therefore important to analyze some of the key agendas before the CA profession to be taken up by the Council of the Institute with the consultative process and the active participation of the members.

• Employment Opportunities: It is important to harness national and international employment opportunities for newly qualified Chartered Accountants as well as for mid- level and top level management positions.
• It is important to restructure education and training and to provide residential course for significant skill up-gradation of members empowering them to compete with MBAs and other professions globally.
• Introduction of IFRS and International Accounting and Auditing Standards have increased complexities coupled with extensive compliance requirements. We have chalked out a plan for simplification and reduction in complexities in accounting and audit especially for small and medium enterprises/ companies.
• Auditors’ Independence and appointment:The position of auditors has to be strengthened and duly empowered with independence. The power to appoint auditors by Board of Directors or those charged with governance has severely impacted the efficacy of audit.
• It is important to strongly pursue with RBI, MCA, SEBI and other regulatory authorities for appointment of Chartered Accountants as independent auditors, joint auditors and special auditors through empanelment in banks, listed entities and other entities in which public is substantially interested  and it is also important to ensure transparency in appointments.
• Professional Fee Scale: It is important to prescribe that the norms of eligibility for tendering are within reasonable professional standards and are not highly leveraged to suit to specific section. It is necessary to introduce minimum fee benchmark for all tendering assignments and to prohibit tendering in specific professional areas.
• To prescribe minimum fee benchmark for concurrent, revenue and inspection audit of banks, insurance, co-operative societies, public sector enterprises etc.
• To fully involve the members in industry in the Institute’s affairs and as members of the Councils, Committees and professional development and technical groups to utilize their immense talent to the advantage of the profession.
• To empower Chartered Accountants to be elevated as CFOs, CEOs and as entrepreneurs for setting up industries, businesses, funds and service organizations.
• To significantly increase professional opportunities for members in practice especially for younger members and smaller firms.

The Securities and Exchange Board of India (SEBI) has made Indian Depository Receipts (IDRs) more attractive by extending the concept of anchor investors to IDRs and mandating a 30 per cent quota for retail investors in such issues.

Securities And Exchange Board of India (SEBI) has decided that it would bring out applicable accounting standards to be followed by a listed company undergoing corporate restructuring by way of merger, demerger or amalgamation. Such listed companies will have to submit an auditor's certificate to the stock exchanges to the effect that the accounting treatment followed in respect of financials contained in the corporate restructuring scheme, is as prescribed by SEBI. The Board will prescribe 'applicable accounting standards' through an amendment to the listing agreements.

DO's and DON'Ts

• Abstain from indicating of assuring returns
• Protect clients' interest
• Avoid commission-driven malpractices
• Highlight risk factors to investors, avoid misrepresentation
• Maintain investors' confidentiality

The portfolio manager may discontinue the services to those clients who are not co-operating for opening separate client accounts, after serving at least three notices, and return the securities/funds to the client. The portfolio manager shall maintain such client-wise records for a period of eight years.

The National Consumer Commission (NCC) has ruled that banks cannot unilaterally change its schemes as it might amount to "deficiency of service". As per NCC, Conversion of the account from one scheme to another should be done after taking the consent of the account holders.

The interest paid on delayed compensation to land owners by companies or entities building SEZs,
industrial parks and infrastructure developments, and payments by electricity distribution companies to transmission line owners will now attract tax.

The Reserve Bank of India (RBI) has classified loans to Special Economic Zones as infrastructure lending. The policy instructions came about a month after the finance ministry had allowed SEZ developers to access overseas loans through the external commercial borrowing route. RBI has also said exposure of banks towards acquisition of SEZ units or purchase and working capital requirements, loans to developers, who have entered in to lease contracts with units for a period
equal to the repayment time of the credit availed and loans to captive SEZs, like the ones being developed by Infosys and TCS will be treated as infrastructure lending.

In a bid to monitor import of electricity from power plants in the neighboring countries, the government has clarified that electricity from overseas generation facilities will be allowed in to the country only if a license is obtained. According to CBEC guidelines, electric power has a tariff code of 27160000 and attracts an import duty of Rs. 2,000 per 1,000 kwh.

The Central Board of Direct Taxes has issued instructions to take all returns filed by companies paying royalty on mining contracts for scrutiny assessment. The CBDT has directed that the interest payments on delayed compensation and wheeling charges paid by electricity distribution companies to transmission line owners will be subject to tax deducted at source under section 194A. Under Section 194A, "which deals with tax deducted at source on interest other than interest on securities", TDS will be deducted at 20.6 per cent. The board has directed the department to make a scrutiny of all companies, especially the loss making ones, to have deferred TDS payments. The board has also asked the department to take return of all sports bodies engaged in commercial activities and private educational institutions for scrutiny assessment. This is because the definition of charitable purpose has been amended, making some of the income of trusts taxable.

The Central Board of Direct Taxes has pegged the cost inflation index for 2009-10 at '632', a 'larger jump' compared with the index level of '582' for 2008-09 and '551' for 2007-08.

The Supreme Court held that profit from Duty Entitlement Passbook Scheme (DEPB) and Duty
Drawback Scheme could not be said to be profit derived from the business of an industrial undertaking eligible for deduction under Section 80-IB of the Income Tax Act.

The Income tax department seeks to raise Rs. 125 crore from stock brokers who hold membership card with stock exchanges.The decision to send demand notices to card holding brokers came after a recent high court ruling which held that the depreciation cannot be claimed on membership cards, while calculating tax liabilities.

The Karnataka High Court has ruled that technology firms are subject to withholding tax (deduction of tax at source) on purchase of software from global vendors such as Microsoft. This would push
technology firms and branded software distributors into a corner as they will be required to withhold 10- 20% on their software sale.The division bench of Justice DV Shylendra Kumar and Justice Arvind Kumar pronounced the judgment while upholding an appeal by the income-tax department that technology firms were legally obliged to withhold tax on software purchases. The order is with retrospective effect.

Acquisition of unlisted foreign companies by Indian corporate has come under the scanner of income tax authorities who plan to scrutinize the deals to ensure they are not being structured to evade tax. Deals involving equity swaps are particularly in focus, as these could be used to transfer part-ownership of Indian companies to overseas jurisdictions. Valuation of unlisted entities in many countries is an unregulated area as no public interest is involved. This allows acquisition of unlisted foreign companies at inflated valuations. As a result, a large amount of cash or ownership of Indian company moves to a foreign entity and essentially amounts to asset-stripping of the domestic firm, which could have tax implications. The fundamental objective behind the department's proposal is to prevent tax evasion by domestic entities, as they may not declare actual profit or gain through these transactions.

ITAT has ruled that Pick-up and drop transport facility provided by employers is not a perquisite and hence not liable to tax. In a decision that has implications for sectors such as BPO and IT, the Mumbai Income Tax Appellate Tribunal has held that companies providing such a facility were not liable to deduct tax on the expenditure incurred on it.

As per new press note issued by the government, any foreign investment of more than 24 per cent in a non- micro or small industrial unit that makes items reserved for SMEs will require prior approval of the FIPB.

Banks are now permitted to issue guarantee for amount not exceeding USD 500,000 or its equivalent
in favour of a non-resident service provider, on behalf of a resident customer who is a service importer, subject to following conditions

• Satisfied about the bona fides of the transaction
• Ensure submission of documentary evidence for import of services
• Guarantee to secure direct contractual liability arising out of a contract between a resident & a non-resident.

The limit for advance remittance for all admissible current account transactions for import of services
without bank guarantee has been raised from USD 100,000 to USD 500,000 or its equivalent. It is clarified that the increase in the limit for advance remittance for all admissible current account transactions for import of services without bank guarantee is not applicable for a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments.

The government has decided that a newly-formed company 'not having operations or downstream
investments' should not attract para 5 of Press Note 4 if its proposed field of business is clearly defined and does not require prior approval. Press Note 4 divides foreign investment-seeking companies into four classes: ones that undertake only business operations, ones that undertake business as well as investment, ones that undertake only investment and ones that do neither. According to guidelines, the companies that undertake only investment activities or the ones that have neither investment not business operations need government approval for foreign investment, but the conditional relaxation is for the second category. Such companies can now raise foreign investment up to the limit allowed in that business activity since the intention of doing business is evident from a company's charter filed with the registrar of companies.

According to the circular issued to the insurers and agents (both individual and corporate), the agreement between the agent and the insurer must be for a  minimum of three years, unless there is instance of fraud or non-performance. Moreover, the onus of servicing the existing policies would lie with the insurer. This includes verification of the details of the policyholders by the insurer and the agent and identifying officials for future servicing of the policies. The circular adds that all policies are to be serviced by the insurer in keeping with the standards prescribed.

Considering the importance of systems audit in the technology driven asset management activity, it has been decided that mutual funds shall have a systems audit conducted by an independent CISA/CISM qualified or equivalent auditor (DISA). The systems audit should be comprehensive
encompassing audit of systems and processes inter alia related to examination of integration of front office system with the back office system, fund accounting system for calculation of net asset values, financial accounting and reporting system for the AMC, Unit-holder administration and servicing systems for customer service, funds flow process, system processes for meeting regulatory requirements, prudential investment limits and access rights to systems interface. Accordingly, MF are advised to get the above systems audit conducted once in two years. For the financial years April 2008 - March 2010, the systems audit should be completed by September 30, 2010.

On an account turning NPA, banks should reverse the interest already charged and not collected by debiting Profit and Loss account, and stop further application of interest. However, banks may continue to record such accrued interest in a Memorandum account in their books, as is the practice currently followed by some banks. For the purpose of computing Gross Advances, interest recorded in the Memorandum account should not be taken into account.

The Hon'ble High Court of Judicature at Bombay observed that the bank granting finance to housing /
development projects should insist on disclosure of the charge / or any other liability on the plot, in the brochure, pamphlets etc., which may be published by developer / owner inviting public at large to purchase flats and properties. The Court also added that this obviously would be part of the terms and
conditions on which the loan may be sanctioned by the bank.

It has been decided that NBFCs may participate in the designated interest rate futures exchanges
recognized by SEBI, as clients, subject to RBI / SEBI guidelines in the matter, for the purpose of hedging their underlying exposures. NBFCs participating in IRF exchanges may submit the data in this regard half yearly, in the format prescribed by RBI/SEBI.

To enable RBI to verify that the 'fit and proper' character of the management of NBFCs is continuously maintained, it has been decided that any take over / acquisition of shares of a deposit taking NBFC or merger/amalgamation of a deposit taking NBFC with another entity or any merger/
amalgamation of an entity with a deposit accepting NBFC that would give the acquirer / another entity control of the deposit accepting NBFC, would require prior permission of RBI.

Reserve Bank of India (RBI) has relaxed the norms for credit off-take for the hospitality sector. Under the new guidelines, hotels have been taken out of the real estate exposure for banks. However,
the rider in the guidelines is that it will be applicable to “those entrepreneurs who themselves run
these ventures”. As a result, the loans becoming cheaper as well as easier to avail for the hospitality
sector.

Non-convertible debentures (NCDs) of less than one- year maturity will now be regulated jointly by financial and market regulators. The decision was taken at a meeting between the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). The two regulators agreed that NCDs needs to be regulated following huge investments by mutual funds in fixed income plans and banks as it posed a systemic risk in case there was any problem in redemption of these instruments.

The Reserve Bank of India (RBI) is not in favour of a multiple Benchmark Prime Lending Rate (BPLR) mechanism as proposed by bankers. BPLR is the rate at which banks should lend to the more creditworthy customers, and factors in the cost of funds, factors in the risk, the operational cost and a margin.However, corporate loans with a tenure of less than a year and housing loans could be kept outside the purview of the new reference rate mechanism.

It has been decided by the RBI to extend the interest subvention of 2% on rupee export credit for a further period of six months i.e. from October 1, 2009 till March 31, 2010 to the same sectors and on the same terms and conditions.

The Reserve Bank of India (RBI) has told banks to meticulously assess the inherent group risk on
borrowal accounts coming under the real estate category. Further, while assessing the loan requirements of large builders/land developers, banks should carefully analyse the financial credentials / viability of the borrowers on a consolidated basis supported by the consolidated accounts / position of the group. Banks should also examine the financial credentials/ viability of the relevant unconsolidated related entities such as special purpose vehicles (SPVs).The current practice in the real estate sector is that builders / developers hive off each project as a special purpose vehicle so that projects are ring-fenced from each other.

It has been decided to include loans granted by banks in respect of following activities under Micro and Small (Service) Enterprises within the priority sector, provided such enterprises satisfy the definition of Micro and Small (Service) Enterprises

• Consultancy Services including Management Services
• Composite Broker Services in Risk and Insurance Management
• Third Party Administration (TPA) Services for Medical Insurance Claims of Policy Holders
• Seed Grading Services
• Training-cum-Incubator Centre
• Educational Institutions
• Training Institutes
• Retail Trade
• Practice of Law, i.e. legal services
• Trading in medical instruments (brand new)
• Placement and Management Consultancy Services and
• Advertising agency and Training centres

The profession of chartered accountants is facing new challenges as well as larger opportunities. The course curriculum of the Institute has been revised continuously to cater to the changing needs of industrial and service sector as well as potential clientele. The education delivery system of the Institute is further required to be geared up to provide for high quality and low cost structured class room education to students of chartered accountancy. It is not only important to provide detailed classroom teaching at the CA Intermediate level (PCC/IPCC) as well as at the Final level, it is all the more important to provide for the effective class-room education to build capable professionals, duly equipped with communication, presentation and professional skills. The class-room education is to be supplemented by practical case study, group working, group discussion and effective monitoring of practical training being provided to the students of chartered accountancy. It is very important to bring forth a high level of quality education and training across India to all sections of students undergoing training in large, medium and small chartered accountant firms. The class-room education can be provided on the platform of the Institute, may be held on Saturdays and Sundays, to improve real competitive edge of the chartered accountants over other professions and to inculcate skills to develop management skills and entrepreneurial skills among st CA profession. In the process support to the students in mufussil towns will be inevitable and important. Lot of migration to big cities
happens only because of opportunities of class room education available there. Why the students leave the coziness of their homes at the young age and take unwarranted stress amidst the anxiety of big city life. Time to rethink.

The Indian industry and service sector has shown impressive recovery and the capital market is towards new take off. The growth of the Indian economy as well as the international economy has
started regaining momentum. In this backdrop, it is important to prepare the profession of Chartered
Accountants to reap the increasing opportunities knocking at the door. The following important initiatives are required to be taken at the level of institute and the profession:

• Undertake comprehensive branding of CAs
• Organize campus interviews for placement and employment of chartered accountants in industry and service sector in a more planned and effective manner.
• It is important to leverage various centers of excellence, education forums and professional development forums of the Institute and the profession to further enhance and update the specialized professional skills with enhanced presentation and communication profile of chartered accountants to enable them to reap the opportunities which they duly deserve.

Government of India Cash Management Bills will be treated as Government of India Treasury Bills and accordingly shall be treated as Statutory Liquidity Ratio (SLR) securities.

The Supreme Court has said that in order to assess the damage claim, the insurance companies cannot appoint surveyor after surveyor to get a tailor-made report. If the report of the damage surveyor is not acceptable, the insurance companies have to give valid reason(s) for rejecting such a report. The court said, scheme of section 64-UM of the Insurance Act, 1938 particularly its sub-sections (2), (3) and (4)
would show that the insurer cannot appoint a second surveyor just as a routine matter. If for any valid reason the report of the surveyor is not acceptable to the insuree, it must specify cogent reasons, without which it is not free to appoint second surveyor or surveyors till it gets a report which would satisfy its interest. Alternatively, it can be stated that there must be sufficient ground to disagree with the findings of surveyor/surveyors. There is no prohibition in the Insurance Act for appointment of second surveyor by the insurance company, but while doing so, they has to give satisfactory reasons for not accepting the report of the first surveyor and the need to appoint second surveyor.

The Insurance Regulatory and Development Authority  (IRDA) has extended the deadline to September 1, 2009 for collecting the Permanent Account Number (PAN) from people purchasing insurance policies in which annualized premiums exceed Rs. 1 lakh. 

Insurance Regulatory and Development Authority (IRDA) has issued the final guidelines on corporate governance for the insurance sector, focusing on key areas such as control functions, board of directors, governance structure and disclosures. According to IRDA guidelines on disclosure
requirements, insurers should provide quantitative and qualitative information on their financial and operating ratios, namely, incurred claim, commission and expenses ratios. The disclosure should have actual solvency margin vis-à-vis the required margin, policy lapse ratio by the life insurers and any other matters.

The Ministry of Corporate Affairs (MCA) has formed a core group to converge India's Accounting
Standards with the International Financial Reporting Standards (IFRS) to enhance comparability and
reporting transparency of India Inc's Financial Statements

In a development which surprised analysts, economists, central banks and their own Governments,
the economies of Germany and France moved out of recession with both reporting that their GDP grew up 0.3% quarter-on-quarter in April to June 2009, instead of a drop of about -2%.

The MSCI World Index has increased 12% in the past month and according to President Barrack
Obama, last week's unexpected drop in the US unemployment rate is an indication that the worst may
be over.

American fund houses have launched five more India-funds (ETFs) to tap the growth potential of
Asia's third-largest economy that defied the global recession to post an impressive growth rate of 6.7% last financial year.

Securities and Exchange Board of India (SEBI) has issued guidelines for trading in interest rate futures, as per which the 10-year Government securities can be traded on bourses, a development that will deepen the debt market. According to the guidelines, the contract size for the futures trading would be Rs. 2 lakh with a maximum maturity period of 12 months. The contracts cycle would consist of four fixed quarterly contracts expiring in March, June, September and December.
The notional coupon rate for such trade would be 7% to be compounded every six months.

Securities and Exchange Board of India (SEBI) has issued guidelines for trading in interest rate futures, as per which the 10-year Government securities can be traded on bourses, a development that will deepen the debt market. According to the guidelines, the contract size for the futures trading would be Rs. 2 lakh with a maximum maturity period of 12 months. The contracts cycle would consist of four fixed quarterly contracts expiring in March, June, September and December.
The notional coupon rate for such trade would be 7% to be compounded every six months.

Securities and Exchange Board of India (SEBI) has issued guidelines for trading in interest rate futures, as per which the 10-year Government securities can be traded on bourses, a development that will deepen the debt market. According to the guidelines, the contract size for the futures trading would be Rs. 2 lakh with a maximum maturity period of 12 months. The contracts cycle would consist of four fixed quarterly contracts expiring in March, June, September and December.
The notional coupon rate for such trade would be 7% to be compounded every six months.

Securities and Exchange Board of India (SEBI) has clarified that mutual funds should comply with charging the same exit load to all classes of unit holders.

The Securities and Exchange Board of India has directed mutual fund (MF) industry body, Association of Mutual Funds in India (AMFI), to ensure that MF investors wanting to switch distributors are not asked to get a No-Objection Certificate (NOC) from his existing distributor. The regulator feels such a requirement tantamount to restrictive trade practice.

Securities and Exchange Board of India (SEBI) has reduced the time period taken for finalization of basis of allotment in the rights issues to 15 days from the earlier period of 42 days from the date of closure of the issue. In view of this, it has been decided to amend clause 8.19 of the SEBI (DIP) Guidelines 2000 to provide that the issuer company can utilize the issue proceeds only after the basis of allotment is finalized.

The capital market regulator Securities and Exchange Board of India (SEBI) has barred Austral Coke and Projects Ltd. from raising further funds from the capital market till further orders. An investigation by the income tax department on the residential and business premises of Austral Group revealed that the company has shown bogus purchase and sales worth Rs. 553 crore and Rs. 495 crore, respectively, in the accounts books of the company.

The Bombay Stock Exchange (BSE) has launched an index that will track the value of newly listed companies for a period of up to two years after listing. To start with, it will comprise 45 companies that were listed in the past two years. The base date of the BSE IPO Index is May 3, 2004 and the base value 1,000 Points.

In a move to promote Application Supported by Blocked Amount (ASBA), Securities and Exchange Board of India (SEBI) has clarified that in a public issue, companies will pay a commission to the bank, in addition to the broker, for facilitating this process. ASBA is an arrangement for retail investors where the money does not leave the public issue applicant's bank account till the shares are allotted to that person.

The Bombay High Court (HC) has reserved its judgement in an appeal filed by the Income Tax (I-T)
Department against Bombay Stock Exchange (BSE) brokers who have claimed depreciation on their stock exchange membership cards while calculating tax liabilities. The I-T department's case was that the cards are not the property of the cardholders, but a privilege given to them. Also, it was not capable of diminishing in value due to wear and tear and cannot be depreciated. But brokers argued that it was a license for the firms to carry on their trading activities. It was a commercial right and the firms were entitled to claim depreciation for this intangible asset under the I-T Act.

The Bombay High Court (HC) has reserved its judgement in an appeal filed by the Income Tax (I-T)
Department against Bombay Stock Exchange (BSE) brokers who have claimed depreciation on their stock exchange membership cards while calculating tax liabilities. The I-T department's case was that the cards are not the property of the cardholders, but a privilege given to them. Also, it was not capable of diminishing in value due to wear and tear and cannot be depreciated. But brokers argued that it was a license for the firms to carry on their trading activities. It was a commercial right and the firms were entitled to claim depreciation for this intangible asset under the I-T Act.

The Central Board of direct Taxes (CBDT) has advised its field formations to scrutinize all cases in which companies have amortized foreign exchange losses under the one time discretion allowed by the Government through an amendment to Accounting Standard 11 (AS 11).

Educational institutes having multiple objectives, including imparting education, cannot be denied the
benefit of income tax exemption, the Delhi High Court has ruled. Under the relevant case, the Bench rejected the argument of the Income Tax Department that Jaypee Institute could not be registered under the Act as it was also providing extramural studies, extension programme and field outreach activities, besides imparting education.

A new clause 17A read as "Amount inadmissible under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006" has been inserted by the Central Board of Direct Taxes in Form No.3CD in Appendix II of the Income-tax Rules, 1962 .Accordingly, the tax auditor is required to state the amount of interest inadmissible under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.

The Ministry of Corporate Affairs (MCA) wants other ministries, state governments and sectoral regulators to recognize Limited Liability Partnerships (LLPs) after over 100 entities registered under the LLP Act.

The Central Board of Excise and Customs has clarified that liability to interest would arise where CENVAT credit is wrongly taken but reversed by the taxpayer even before utilization. Rule 14 of the CENVAT Credit Rules, 2004 ('CENVAT Rules') provides for recovery of credit taken or utilized wrongly along with interest. In the case of CCE vs Maruti Udyog Limited [2007 (214) ELT 173 (P&H)], the High Court had held that the taxpayer is not liable to pay interest where credit was taken but not utilized. The Special Leave Petition ('SLP') against this order was dismissed by the Hon'ble Supreme Court.The Board observed that the High Court decision in Maruti Udyog Limited was delivered in the context of erstwhile Rule 57-I of the Central Excise Rules, 1944 ('Erstwhile Rules') and that the dismissal of the SLP by the Supreme Court was not a judgment. The Board clarified that interest shall be recoverable when credit has been wrongly taken, even if it has not been utilized, in terms of the wordings of Rule 14 of the CENVAT Rules.

In a judgement that stands to benefit contract manufacturers like fast moving consumer goods
(FMCG), pharmaceutical and cosmetic majors, the Bombay High Court has ruled that beverage major
Coca- Cola could avail of tax credit on the service tax it pays for advertising and promotions.

In a clear anti-inflationary move, the finance ministry has rolled back the proposal to impose a 10.3% service tax on goods transported by the railways.

• The maximum quantum of housing loan that can be granted to an individual borrower by a State / Central Cooperative Bank stands revised to Rs. 20 lakh. However, in case of a bank having a net worth of Rs. 100 crore and above [as per the assessment made in NABARD's latest inspection report], the limit will be Rs. 30 lakh.
• The aggregate of housing loans outstanding on any day against individuals, institutions, and societies should not exceed 10 % of total loans and advances of the bank as on March 31 of the preceding year. However, this limit can be exceeded to the extent of funds obtained for the purpose from the higher financing agency and refinance from the National Housing Bank.
• It is clarified that housing loans would not include finance to commercial real estate sector as it has already been advised vide RBI circular No. RPCD.CO.RF.BC No.109/07.38.01/2008-09 dated May 25, 2009.
• For repairs, additions, alterations etc. to the existing houses, the maximum amount of loan per individual borrower stands revised to Rs. 1 lakh.

• The maximum quantum of housing loan that can be granted to an individual borrower by a State / Central Cooperative Bank stands revised to Rs. 20 lakh. However, in case of a bank having a net worth of Rs. 100 crore and above [as per the assessment made in NABARD's latest inspection report], the limit will be Rs. 30 lakh.
• It is clarified that housing loans would not include finance to commercial real estate sector as it has already been advised vide RBI circular No. RPCD.CO.RF.BC No.109/07.38.01/2008-09 dated May 25, 2009.
• The aggregate of housing loans outstanding on any day against individuals, institutions, and societies should not exceed 10 % of total loans and advances of the bank as on March 31 of the preceding year. However, this limit can be exceeded to the extent of funds obtained for the purpose from the higher financing agency and refinance from the National Housing Bank.
• For repairs, additions, alterations etc. to the existing houses, the maximum amount of loan per individual borrower stands revised to Rs. 1 lakh.

• The maximum quantum of housing loan that can be granted to an individual borrower by a State / Central Cooperative Bank stands revised to Rs. 20 lakh. However, in case of a bank having a net worth of Rs. 100 crore and above [as per the assessment made in NABARD's latest inspection report], the limit will be Rs. 30 lakh.
• It is clarified that housing loans would not include finance to commercial real estate sector as it has already been advised vide RBI circular No. RPCD.CO.RF.BC No.109/07.38.01/2008-09 dated May 25, 2009.
• For repairs, additions, alterations etc. to the existing houses, the maximum amount of loan per individual borrower stands revised to Rs. 1 lakh.

• The maximum quantum of housing loan that can be granted to an individual borrower by a State / Central Cooperative Bank stands revised to Rs. 20 lakh. However, in case of a bank having a net worth of Rs. 100 crore and above [as per the assessment made in NABARD's latest inspection report], the limit will be Rs. 30 lakh.
• It is clarified that housing loans would not include finance to commercial real estate sector as it has already been advised vide RBI circular No. RPCD.CO.RF.BC No.109/07.38.01/2008-09 dated May 25, 2009.
• For repairs, additions, alterations etc. to the existing houses, the maximum amount of loan per individual borrower stands revised to Rs. 1 lakh.

• The maximum quantum of housing loan that can be granted to an individual borrower by a State / Central Cooperative Bank stands revised to Rs. 20 lakh. However, in case of a bank having a net worth of Rs. 100 crore and above [as per the assessment made in NABARD's latest inspection report], the limit will be Rs. 30 lakh.
• It is clarified that housing loans would not include finance to commercial real estate sector as it has already been advised vide RBI circular No. RPCD.CO.RF.BC No.109/07.38.01/2008-09 dated May 25, 2009.
• For repairs, additions, alterations etc. to the existing houses, the maximum amount of loan per individual borrower stands revised to Rs. 1 lakh.

• The maximum quantum of housing loan that can be granted to an individual borrower by a State / Central Cooperative Bank stands revised to Rs. 20 lakh. However, in case of a bank having a net worth of Rs. 100 crore and above [as per the assessment made in NABARD's latest inspection report], the limit will be Rs. 30 lakh.
• It is clarified that housing loans would not include finance to commercial real estate sector as it has already been advised vide RBI circular No. RPCD.CO.RF.BC No.109/07.38.01/2008-09 dated May 25, 2009.
• For repairs, additions, alterations etc. to the existing houses, the maximum amount of loan per individual borrower stands revised to Rs. 1 lakh.