The Authority of Advance Rulings (AAR) has said that the tax residency certificate given by
Mauritius authorities is adequate to avail tax benefits under the India-Mauritius tax treaty and
rejected tax authorities attempt to apply principles of anti-avoidance akin to proposed General Anti-
Avoidance Rules (GAAR).

The Supreme Court has asked Essar Oil to pay Rs 1,000 crore to the Gujarat Government by July 30 to avoid any coercive action. The directive came on the company's plea that it may be allowed to pay the amount towards the first instalment of its total sales tax / VAT liability.

Parthasarathi Shome, one of the architects of the proposed goods and service tax, does not expect
the government to implement GST regime before 2014 as the next Lok Sabha election may delay
preparations for the eagerly awaited tax reform.

The Supreme Court has held that appeals against the findings of the Authority of Advance
Rulings (AAR) must be made for the high courts. The Authority of Advance Rulings (AAR)
findings can't be challenged directly before the apex court.

Prime Minister Manmohan Singh has indicated the General Anti-Avoidance Rules (GAAR) would
be written afresh, as the government strove to undo the damage to investor sentiment seen after
the rules were proposed in the Budget. A new panel headed by taxation expert Parthasarathi Shome, the head of Indian Council for Research on International Economic Relations (ICRIER) and a former adviser to the finance minister during P Chidambaram's tenure between 2004 and 2008, will draft fresh GAAR guidelines and prepare a road map for its implementation to be submitted to the government by Sep. 30. Meanwhile, Foreign institutional investors (FIIs) have sought an unqualified exemption from the application of General Anti-Avoidance Rules (GAAR).

A large number of entities, which have been used for investing billions of dollars in the Indian
markets, have come under the scanner of financial sector regulators The Securities Exchange Board
of India (SEBI) and the Reserve Bank of India (RBI) for possible routing of illicit wealth of
Indians and NRIs back into the country.

The Central Board of Direct Taxes (CBDT) has extended the due date for filing income tax returns
for assessment year 2012-2013 by a month to August 31, considering the power failure in many
parts of the country.

After six years of deliberations, Mauritius has finally agreed to tweak its tax treaty with India to
address the issue of round tripping of funds. However, the affirmation came with a rider that
any domestic legislation like the General Anti-Avoidance Rules (GAAR) should not override the
treaty. Mauritius has proposed a limitation of benefit (LoB) clause in the three-decade old double
taxation avoidance agreement (DTAA) between the two countries. The clause limits tax benefits
under the treaty to resident investors who fulfill certain conditions. India's treaty with Singapore
has this clause.

• Draft Complaint carefully; don't leave clues about your identity
• Submit Specific details in your complaint that can be verified
• Don't send any follow-up letters or expect acknowledgements
• If more details are, the CVC will contact you
• Anonymous and pseudonymous complaints won't be examined
• Mention your name and address on either the top or bottom of the complaint or in an attached letter
• Send complaints in sealed envelopes, marked 'Under public Interest Disclosure'

Ministry of corporate affairs (MCA) has integrated LLP system into MCA21 system with effect from
11th June 2012. LLPs incorporated under earlier LP system (i.e.before 11.6.12) which functions with both designated partners and Ordinary Partners are required to update /verify the detail prior to filing/
uploading forms. This can be carried out from any login; however, it should be authenticated by
DSC of designated Partners of the LLP at the final submission. For LLPs which function only
with designated partners, the above process is not required.

The Competition Commission of India (CCI) has approved the proposed amalgamation of Maruti
Suzuki India Ltd (MSI) and Suzuki Powertrain India Ltd (SPIL) on the grounds that the proposed
combination is not likely to have an appreciable adverse effect on competition in India.

NDTV has sued the global TV rating agency, Nielsen, for billions of dollars for allegedly
manipulating viewership data.

1. Service provided or agreed to be provided by a director of a company to the said company is 100% taxable vide notification no. 30/2012 - Service tax, dated 20.06.2012, vide GSR no. 472(E)
2. "Security services" means services relating to the security of any property, whether movable or immovable, or of any person, in any manner and includes the services of investigation, detection or verification, of any fact or activity vide notification no. 36/2012 - Service tax dated 20.06.2012 vide GSR no. 478 (E)

The Reserve Bank of India (RBI) has allowed Qualified Foreign Investors (QFIs) to invest in debt
securities on a "Repatriation Basis". The eligible securities that foreign investors have been permitted
to buy are listed non-convertible bonds of Indian companies and listed units of MF debt Scheme
among others.

To boost the micro insurance sector, the Insurance Regulatory and Development Authority (IRDA) has proposed to allow broadening of the product portfolio and distribution network, by allowing
more entities to sell the products. It has proposed to allow cooperative banks, regional rural banks, primary agricultural co- operative societies and individuals (shopkeepers,medical store owners, petrol pump owners, public telephone operators) to act as micro insurance agents. Noting the sector's business performance was far below the potential, the regulator has decided to revisit the regulations. The Micro Insurance Regulations prescribe a framework within which insurers can offer affordable
products in this regard. Insurance Regulatory and Development Authority (IRDA) notes a majority of the products offered are basic ones, and mostly term assurance. It has asked insurers to consider diversifying the portfolio of micro insurance products by including savings-linked and health cover features.

The Securities Appellate Tribunal (SAT) has asked the Securities Exchange board of India
(SEBI) to note that synchronized trading is unfair only if it leads to price manipulation.
The Securities Appellate Tribunal (SAT) said that synchronized trades were not illegal. They turn
illegal only if used to manipulate scrip prices. The fact that trades were carried out only for four
days during investigation period and were spread over three months with substantial time
difference between trades was ignored by Securities and Exchange board of India (SEBI).

The Securities and Exchange Board of India (SEBI) has said that shares owned by ex-employees, allotted through ESOPs (Employee Stock Options), cannot be sold for a period of one year pursuant to an initial public offering (IPO) by the company.

The new eligibility criteria for the derivatives segment given by the Securities Exchange Board
of India (SEBI) will weed out about a fifth of the current crop of stocks in the futures and options
(F&O) segment.

The Securities and Exchange Board of India (SEBI) has decided in that in consultation with
Registrars Association of India (RAIN), Stock Exchanges and market participants to reduce the
time-line for registering the transfer of shares to 15 days. The same time-line shall also be
applicable for transfer of debt securities.

The Supreme Court has said that mines and minerals are part of the nation's wealth, upholding
the Jharkhand government's decision. This judgement may have wide ramification.

Standard Chartered Bank, the largest foreign bank in the country in terms of branch presence, has
sold Rs 900-1,000 crore of distressed assets to Mumbai-based International Asset Reconstruction Company (IARC), in an all-cash deal.

The government is set to allow Asset Reconstruction Companies (ARCs), such as
Arcil, Pegasus and Reliance ARC, to convert the bad loans they acquire from banks into equity in
the debtor company in a move aimed at making corporate turnaround an easier and remunerative
business in the wake of slowing economic growth.

Private equity player Bain Capital Partners has agreed to buy 30 per cent stake in Genpact for
$1 billion, valuing India's largest business process outsourcing and Technology Company at $3.29
billion (Rs 18,095 crore).

The finance ministry has directed the Public Sector Banks (PSBs) to continue providing loans and banking facilities to exporters, whose shipments are passing through the ports of Iran for onward shipment to other countries. This move is intended to prevent the newly imposed US sanctions on Iran from impacting country's trade as a lot of exporters use Iranian ports as transit point for onward movement of goods to the markets in the Middle East and CIS countries. Except the state-owned UCO Bank, other PSBs cannot do business with Iranian companies, or with Indian companies having commercial dealings with Iran, as fallout of sanctions imposed by the US on Iran. But PSBs have also been denying credit facilities to even those exporters who use the Iran ports such as Bandar Abbas as
a transit point. The official sources have said that the department of financial services has directed
banks to provide seamless credit services and other facilities to such exporters. Exporters use
Iran as a transit point for sending shipments to many other countries such as Afghanistan.

Banks dealing in foreign exchange will now need not to submit data on non-resident deposits
accounts in physical format.

The Reserve Bank of India (RBI) has amended regulation 5A in following manner: "A person resident in India may enter into currency futures or currency options on a stock exchange recognized under section 4 of the Securities Contract (Regulation) Act, 1956, to hedge an exposure to risk or otherwise, subject to such terms and conditions as may be set forth in the directions issued by the Reserve Bank of India from time to time."

The Reserve Bank of India (RBI) has added several activities under the priority sector lending
category, but has retained the overall target at 40% for commercial banks. The Reserve Bank of India (RBI) also revised guidelines of priority sector lending based on the recommendations of the committee formed to study the existing norms under the chairmanship of MV Nair. Loans to all micro and small manufacturing companies, loans to food and a groprocessing units, to distressed farmers and loans for setting up off-grid renewable energy solutions are now included in priority sector lending. Also home loans of up to Rs 25 lakh in metropolitan areas having population above 10 lakh, education loans of up to Rs 10 lakh in India and up to Rs 15 lakh for overseas, overdraft of up to  50,000 in no-frills accounts are included.Banks' investments in securitised loans, wherein  the underlying qualifies for priority sector label, will be included in priority sector lending target.
However, the interest rate on the underlying loan must not exceed the base rate plus 8% of the
investing bank.

• Greenfield Clusters : 50 % of Project cost @ Rs. 50 Crores for every 100 acres
• Brownfield Clusters: 75% of Project cost with ceiling of Rs. 50 Crores
• Assistance for SPVs managing EMCs
• Eligible sectors: Telecom, IT Hardware, Consumer Electronics, LEDs, LEDs, Strategic Electronics, Avionics, Industrial Electronics, Nano-electronics, Semi-conductors chips & Chip Components and EMS
• Scheme available for 5 years
• Scheme detail available at www.mit.gov.in
• Application will be received as per guidelines to be announced shortly.

Chakravarthy Rangarajan,the influential chairman of the Prime Ministers Economic Advisory
Council has said that the Reserve Bank of India (RBI) should consider licensing new banks even
without amending the Banking Regulation Act.

Micro finance Institutions (MFI)-NBFCs have been allowed operational flexibility whereby the
interest rate that they can charge on individual loans can exceed the earlier cap of 26 per cent. However, the flexibility on pricing loans comes with a caveat that the maximum variance permitted for individual loans between the minimum and maximum interest rate cannot exceed 4 per cent. Micro finance Institutions (MFIs) have to ensure that the average interest rate on loans during a financial year does not exceed the average borrowing cost during that period plus the margin  within the prescribed cap. Even as the cap on interest rate has been removed, the Reserve Bank of India (RBI) has persisted with the cap on margins - 10 per cent for large Micro finance Institutions (MFIs) (with loan portfolio exceeding Rs 100 crore) and 12 per cent for others.

The Union Cabinet has decided to fix Rs 14,000 crore as the base price for the upcoming spectrum auction. It has also decided to continue with the existing slab system for collecting spectrum usage charges.

The Reserve Bank of India (RBI) has eased the norms for banks to restructure derivatives
contracts by allowing them to partially or fully terminate the contract before maturity. The Central Bank said in a notice said that in such cases, if the Mark to Market (MTM) value of the derivative contract is not cash settled, banks may permit payment in instalments of the crystallised MTM of such derivative contracts (including Forex Forward Contracts).

The Govt of India has reviewed the policy relating to calculation of downstream investments by a banking company incorporated in India, which is owned and/or controlled by non-residents/ a
non-resident entity (s). A new Note below paragraph 3.10.4.1 in FDI policy is inserted as below:
"Downstream investment/s made by a banking company, as defined in clause (c) of Section 5
of the Banking Regulation Act, 1949, incorporated in India, which is owned and/or controlled by
non-residents/non-resident entity(s), under Corporate Debt Restructuring (CDR), or other  loan restructuring mechanism, or in trading books, or for acquisition of shares due to defaults  in loans, shall not count towards indirect foreign investment. However, their 'strategic downstream  investment' shall count towards indirect foreign investment. For this purpose, 'strategic downstream investments' would mean investment by these banking companies in their subsidiaries, joint ventures and associates."

The Reserve Bank of India (RBI) working group has recommended an increase in provisioning and
also doing away with regulatory concession towards classification of such loans in two years. It has suggested that banks must provide for 5% against restructured loans that are classified as standard, instead of the current 2%. Promoters must make good 15% of the fall in fair value, or 2% of the restructured amount, whichever is higher.

CA profession has been rendering highly valuable services to the national economy and the society. The integrity, independence, capability, credibility, competence and a complete devoted professionalism for growth of their clients and employers have brought in a new sense of confidence in the government about the profession. There could be some minor exceptions but largely Indian chartered accountants are highly respected and valued for their professionalism. 97th Amendment in the Constitution of India made in the month of November, 2011 (effective from February, 2012) by inserting Article 43B has made formation of cooperative as fundamental right of the citizens of India. Detailed provisions have been made for formation, administration and dissolution of cooperatives. Para 2432M of newly inserted Part IXB provides for mandatory audit of accounts of cooperative societies. States are required to maintain a panel of auditors for cooperatives to select auditor for them and get their accounts audited. Consequent to constitutional amendment, all the State Governments are required to amend their co-operative Societies Acts on or before February, 2013 to incorporate provisions in line with the matters provided in the Constitution including mandatory audit by chartered accountants. On the one hand it is going to be a big professional opportunity and on the other hand it shall strengthen the cooperative movement in the country with the professional help and
support by the CA fraternity. Practicing chartered accountants have to rise to the occasion and prove to the Government that faith imposed by it on the profession was a correct move. There are many more new professional opportunities knocking our door and we will bring the same to your knowledge on an ongoing basis.

The Indian economy is today suffering from a negative sentiment arising out of several developments in the past few months, including:-

• The taxation wing of the government has generated a lot of unnecessary heat by bringing in General Anti Avoidance Rule (GAAR), direct tax code, retrospective amendment in tax legislation, a complete denial of Double Taxation Avoidance Treaty, continuance of threats to review all international transactions, investments and various kinds of business transactions with a special negative approach. This has severely impacted genuine business activities including foreign direct investment, Indian investment outside India, most importantly even the local investments and new business decisions and actions.
• A large agitation against corruption in the politics and bureaucracy has diverted their guns on Indian businessman. The Indian businessman is not only feeling harassed by corruption but also by unending investigation, questioning, arrest, prosecution and similar other emotional, psychological and legal pressure.
• The decision of the top judiciary to even question  policy decisions being taken by the politicians and officials of the government have resulted into delays, either no decisions or too safe decisions resulting into very poor growth of the concerned sector. e.g. hefty spectrum fee for 2G Telecom, lack of coal mines and coal linkages for power sector, poor new initiatives in the infrastructure sector have severally impacted growth of business.
• The capital market is suffering from lack of positive initiative to build confidence among the investors and only cosmetic changes are being  brought in.

A threat of Central Vigilance Commission, CBI, search, raid, arrest and prosecutions have created a lack of directions of the policy in the government, bankers, bureaucrats, businessman and various sectors of the economy. A policy decision by parliament/cabinet supporting transparent policy decisions and amnesty to committee and group decisions is a must.

Pricing of public issue: SEBI need to bring out a major policy shift and ensure that the public issues are priced on the basis of independent valuation by Valuers appointed by SEBI and also there should be a mandatory provision for compulsory bonus issues in favour of the public subscribers, in case the shares issued at a hefty premium and the share price rules substantially below their issue price. For example, in case public is issued shares at Rs. 500 and its market price is below Rs. 400 for more than 3 months in the 1st year of the issue, then the new public shareholders should be issued additional shares on the basis of 52
week average price. In the above example in case the average price is Rs. 100 the new shareholder should get additional 5 times shares as bonus shares so that the real issue price of the share is determined by the average market price. SEBI also need to mandate  special Audit of all large listed companies by ICAI /SEBI committee appointed CAs.

Funds and economic policy: It is important to provide support to the Indian businesses by providing adequate risk capital from Government sponsored PE funds, loans at reasonable rates, stable and visionary economic policy. Banks need to play a developmental role and insistences on collaterals need to be done  away with. The power sector need hand holding for fuel linkage and financial closure. Housing, real Estate and infrastructure sector is suffering from high cost debt.

Agriculture: The state governments need to withdraw all Mandi taxes and charges. There cannot
be restriction on free movement, storage and sales of agro produce. Equity support by FI for storage and capacity to hold stocks by farmers need policy initiatives. New crops development should take a front seat.

The tax laws need to be business friendly and survey, searches and raids by tax officials need to be barred; responsibility should be fixed for high pitch assessments. Requiring all large tax payers to be
subjected to 100 % scrutiny is a negative mindset. Foreign countries pressure to dilute FDI guidelines
against national interest cannot and should not be accepted.

We sincerely hope from the government to give positive signals to the Indian economy by taking
major steps which are business friendly and are growth oriented. The developmental role of the 
government need to be supreme and the regulatory role should remain more as a balancing exercise and not a threat to the continuing growth of businesses.