- Cabinet permits foreign investment through automatic route in 'other financial services', if they are under regulators such as Sebi and RBI.
- Present regulations stipulate that FDI would be allowed on automatic route for only 18 specified NBFC activities after fulfilling prescribed minimum capitalisation norms mentioned therein.
- Besides commodity broking, foreign investment would also be allowed to come into asset finance companies, depository participants and infrastructure debt funds, sources said. Minimum capital requirements would be the same as fixed by the regulators.
- At present, 18 areas under NBFCs are allowed to attract 100 per cent foreign investment. These include merchant banking, underwriting, portfolio management services, investment advisory services, financial consultancy, stock broking and asset management.
- Foreign investment can still come in to the activities not regulated by financial sector regulators, but only through the approved route. This means via the Foreign Investment Promotion Board or the Cabinet Committee on Economic Affairs.
Monday, September 19, 2016
A bench headed by Justice Dipak Mishra said that it would clarify within two weeks whether the new or the old arbitration law will apply to cases pending in the courts before commencement of the amended arbitration Act, which came into force on October 23, 2015. Under the unamended Act, if an application for setting aside an arbitral award was filed, such arbitral award could not be enforced until the application is refused. This prevented the award-holder from enjoying the fruits of his success merely because the unsuccessful party had filed an application against the award. However, after the amendment to Section 36, an arbitral award now becomes enforceable on expiry of three months from the date on which it is made irrespective of whether an application for setting aside the arbitral award has been filed unless the court grants stay of operation of the arbitral award.
- In terms of section 194A, TDS provisions will not apply to loan processing fees paid to any banking company to which Banking Regulations Act, 1949 applies
- Guarantee fee paid to bank is not in nature of commission or brokerage under ambit of section 194H as there exists no principal-agent relationship.
Issuance of debentures in lieu of overdue interest couldn't be held as actual payments under sec. 43B
Losses of amalgamating co. could be set-off even if HC approved amalgamation scheme after date of filing of return
Rent receipts taxable as business profits and not as house property income if letting out is business of assessee
Private equity (PE) investors and venture capital (VC) funds from Mauritius might have to negotiate terms to advance the dates of conversion of their instruments into equity before April 1, 2017, if they don't want to draw capital gains tax. This is so, because the government is likely to tax quasi-equity instruments, if these are converted into equity after April 1, 2017, under the revised India-Mauritius double taxation avoidance agreement (DTAA). However, if the Quasi equity (Convertible Debentures / Convertible Preference shares) are sold before conversion even as per revised DTAA with Mauritius, no capital gain tax will arise in India for Mauritius' companies. The only change brought out by Indo-Mauritius DTAA is imposing tax on transfer of equity shares of the Indian company by the Mauritius' company, which was earlier exempt
flagship programme for the CBDT does not want to leave any stone unturned in ensuring that the
scheme remains a hit and its procedures easy to comply with.
commodities market who may opt for such option.
Central Repository of Information on Large Credits (CRILC), which became functional in FY15, ascertains that banks and non-banking financial companies (NBFCs) need to furnish credit information on borrowers, who have an aggregate fund and non-fund based exposure of Rs 5 crore and above. This centralised database allows the banking regulator as well as the lender to have access to the bad loans of corporates in the system.
them. The credit report plays an important role in the loan application process. The score works
as a first impression for the lender-higher the score, better the chances of the loan being approved.
Further RBI said that the objective of providing the free credit report would not be fully met if this report includes details that figure in the full credit report that is accessed by the credit institutions while considering the request for fresh credit facilities.
essentially overnight money. The central bank also proposed allowing listed companies to lend longer tenure money to banks through the repo market mechanism. This will have an impact on interest rates, the bond market, and liquidity in the banking system.
- Allows banks to raise money through masala bonds
- Allows entities exposed to exchange rate risk hedge up to $30 million.
- Pushes firms to access bond market for their funding needs beyond a limit.
- Allows FPIs to trade on NDS-OS and directly in corp bond market.
- Proposes to accept corporate bonds in repo
No extended period on non-payment of ST as service recipient can otherwise claim credit of reverse charge payment
- Rebate of State Levies Scheme (ROSL)
In order to boost garment exports, the revenue department has started the process to operationalise the Rs 5,500-crore ROSL scheme from September 20, under which exporters will be compensated for state levies. The ROSL will provide for remission of state levies in addition to the Duty Drawback Scheme on export of garments on an average basis only.
- Duty Drawback
The government has introduced duty drawback of 3.2 per cent to 4.7 per cent (depending on the category) for exports of non-fabric inputs made from imported fabrics under special advance authorisation scheme. This will boost export of expensive apparels made from imported fabrics.
- Provident Fund
Special incentives has also been announced for provident fund contribution to be funded by government.
Exporters can file Cenvat refund claim within 1 year from last date of quarter in which proceeds are realized
Residency Status (PRS) to foreign investors who meet some set criteria in respect of minimum
investment and employment generation.
Push for foreign investment :-
- Minimum investment criteria of Rs.10 crore within 18 months or Rs.25 crore within 36 months.
- Minimum employment generation of 20 resident Indians every financial year.
- PRS granted for up to 20 years.
- Multiple-entry visa without any stay stipulation for PRS holder, spouse, dependants.
- Exemption from registration requirements.
- Allowed to purchase one residential property to live in.
- Spouse/dependants can work in private sector under relaxed salary stipulation.
peer-to-peer (P2P) lending business. RBI has proposed registering P2P lending platforms as non-banking financial companies (NBFCs).The banking regulator put out a discussion paper on P2P on its website. Online P2P lending companies work as marketplaces that bring individual borrowers and lenders together for loan transactions without the intervention of traditional financial institutions
such as banks and NBFCs. RBI said it would be "prudent" to regulate the business because of "the
impact it can have on traditional banking channels" and NBFCs and its "potential to disrupt the
financial sector and throw up surprises". In 2015 alone, around 20 new online P2P lending companies were launched in India. At present, there are around 30 start-ups in the P2P lending business in India. The banking regulator sees a role for P2P lending, as evident in its paper, and its language seems to suggest the kind of light touch people prefer when a regulator sets out to define the rules for an emerging business.
- Under this, banks can convert a portion of loans they are owned into equity.
- The idea is that if the company does well in the years to come, banks should benefit.
- This lowers the overall debt burden.
- Terms for remaining loan amount,(sustainable debt) can't be changed.
RBI has hinted that loan should be structured in a way that it accelerates repayment if cos make
unexpected gains. The formula for assessing sustainable debt -- cash flow available from the
current or immediate level of operations. The formula for assessing sustainable debt -- cash
flow available from the current or immediate level of operations.
third-party fraud on the account or card, provided the customer notifies the bank within three working days of receiving the communication from the bank regarding an unauthorised transaction. In case of delay in reporting, the liability should be limited to not more than Rs 5,000, RBI said.
The RBI would soon put in place a framework for accreditation of credit counsellors who are expected to serve as facilitators for small businesses. For bridging the information asymmetry on the MSME borrowers side, RBI is initiating a process for putting in place a framework for accreditation of credit counsellors who are expected to serve as facilitators and enablers for micro and small entrepreneurs. Since MSMEs are typically enterprises with little credit histories and with inadequate expertise in preparing financial statements, credit counsellors will assist the borrowers in preparing their project reports and also help banks make better informed credit decisions.
The Finance Ministry has come out with the fifth set of frequently asked questions providing clarifications for the Income Declaration Scheme.
- The FAQs provide clarification that fictitious liabilities in an audited balance-sheet can be disclosed under the scheme without linking it to the investment in any specific asset.
- Further, income declared under the scheme for an earlier assessment year can be taken into account to explain related transactions.
As a result of FAQ no. 1 & 2 of the Circular dated 18th August, 2016 issued by CBDT, it is clear that it is not mandatory under the IDS 2016, to declare assets and the assessee can choose to declare the undisclosed income in any preceding assessment years. Section 183(1) of the Finance act, 2016 permit declaration of undisclosed income. Section 183(2) is only optional and applies to cases "where the income chargeable to tax is declared in the form of investment in any asset, the FMV of such asset as on the date on commencement of this scheme shall be deemed to be undisclosed income for the purpose of subsection (1)" of Section 183. Accordingly it is the option of assessee to declare undisclosed income in the form of assets or income. It may be appropriate to interpret that once income is declared, the Income so declared can be used to explain acquisition of assets, write back of fictitious liability, or to explain source of certain transactions which are being or may be questioned during assessment proceedings in terms of Section 142/143, Section 148 or Section 153A/153C. Accordingly, once the income is so declared in any preceding AY, the proceedings under Section 142/143, Section 148 or Section 153A/153C, the assessee can explain the source of acquisition or basis of certain transactions, on the basis of such income not disclosed under IDS.
- Adverse action will not be taken against the declarant by the Financial Intelligence Unit solely on the basis of cash deposits made in banks consequent to declarations made under the scheme.
- Finally, the period of holding of assets declared under the scheme will be taken on the basis of actual date of acquisition of the asset and not June 1, 2016, as was clarified earlier.
- Immovable property The Finance Ministry has also clarified that under the scheme, whenever an immovable property is evidenced by a registered deed, the declarant will have the option to mention the fair market value of such property by applying the cost inflation index to the stamp duty value of the property.
- Cash payment of taxes or income disclosed allowed to be deposited in bank.
- There won't be any scrutiny of such cash payment of taxes or deposit of income.
- Valuation by registered valuers won't be questioned.
- Entire holding period of asset to be considered to decide capital gains liability.
- Market value as on June 1, 2016 to be taxed.
- This value to be considered cost price when property sold.
- Indexation benefit only from April 1, 2016.
- In the case of bogus donations, entire weighted donations to be taxed.
- Fictitious loans, creditors, advances received, shares capital can be disclosed as income of any preceding AY and these liabilities can be written back as reserves.