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EC to Meet CBDT Chief, Revenue Secy on I-T Raids

A day after it “strongly advised” the finance ministry to ensure that all enforcement agencies under it were “absolutely neutral, impartial and non-discriminatory” while cracking down on illicit money use in elections, the Election Commission (EC) has called a meeting with the chairman of the Central Board of Direct Taxes (CBDT) and the revenue secretary, ET has learnt. Meanwhile, the chief accountant of the Congress party was summoned for questioning by the income tax department on Monday, sources said. “We expect that senior leaders could be called in for further questioning on Tuesday,” a senior Congress functionary said. Government sources indicated Congress treasurer Ahmed Patel could be called in for questioning on Tuesday. Patel handles all financial matters and the I-T department’s findings on alleged hawala transactions would need to be explained by him.The EC meeting with the CBDT chief and the revenue secretary is expected to be held at Nirvachan Sadan on Tuesday morning. ET…
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Huge burden for players in farm produce as warehouses comes under GST net

The move by the government to bring warehouses under the Goods and Services Tax (GST) net is likely to have a major impact on players in the organised sector who take warehouses on rent as part of their collateral management business. They see a huge burden especially when they deal in farm commodities.Agri commodities collateral management business has flourished the past few years as companies in this space help farmers and processors get finance from banks and non-banking institutions. The new government decision means that they have to pay now 18 per cent GST on the rent they pay for the warehouses in which their collateral commodities are stored. In many cases, such companies themselves finance farmers or their group NBFCs finance them against collateral commodities. Hence these collateral management companies cannot get input credit of the GST they pay on rent because the commodities in which they deal are agri commodities, which do not attract GST. This is a big burden on them.“…

Get ready to file more details in new ITR forms

The disclosure requirement in the income tax return (ITR) forms have been rising in recent years as the income-tax (I-T) department has been using technology extensively to track tax evasion and process returns. But this year, the number of changes made to the ITR forms notified for the assessment year (AY) 2019-20 is probably the highest in the recent time. The changes have been made regarding disclosure of information and computation of income, inter-alia, change in method to disclose salary income, property-wise disclosure of arrears/unrealised rent, and many more for business owners. “Several changes have been made in the forms seeking additional details, which will help in automatically validating or cross-checking the income and other details that the tax authorities may have from other sources,” says Kuldip Kumar, partner and leader - Personal Tax, PwC India. He says that the changes will not only improve the processing of tax returns in an automated environment but also help i…

Govt may nudge PSBs to deal with defaulting firms

The Reserve Bank of India (RBI) will, for the time being, leave it to individual banks to decide how best to deal with corporate loan defaulters, and the government will exercise its majority shareholder rights to nudge staterun banks to take insolvent companies to bankruptcy courts, a government official said on Wednesday. The official’s statement came after the Supreme Court on Tuesday quashed a central bank circular instructing lenders to take defaulters to bankruptcy resolution after 180 days of the default. The government’s approach in the wake of the apex court ruling is to use its ownership rights to ensure that defaulters are firmly dealt with under the bankruptcy code. The central bank will examine the implications of the Supreme Court decision and come up with a considered response, which may take some time.“These things take time. The RBI may not immediately come up with specific guidelines or comments regarding restructuring of loans,” said the official who did not wish to …

Compliance eased for US companies operating in India, says CBDT

India and US will be signing an information-sharing agreement before the end of the fiscal year. Companies headquartered in the US but having operations and taxability in India now need not file country-by-country (CbC) reports in India, according to a pact signed between India’s tax department and the US authorities. In a press release, the Central Board of Direct Taxes (CBDT) has clarified that for such international companies, filing CbC reports in the US would be sufficient. These would then be shared with the Indian tax authority, the CBDT, under an information-sharing agreement which will be signed between the countries before the end of the fiscal year. This will reduce the compliance burden on firms. The deadline for furnishing the CbC report was earlier extended. The Business Standard, 4th April 2019

SC order on RBI circular: More options for banks to tackle defaulting firms

Lenders also have the option of restructuring the loans Lenders to companies which are under stress could now have three options to deal with them if they default on loans: take a haircut as part of a one-time settlement, restructure the loans for a longer tenure as they did when corporate debt restructuring schemes were allowed, or go to the Insolvency and Bankruptcy Code (IBC) for redress. These changes in the options available to lenders come, according to PE funds and bank lawyers who are involved in the IBC process, in the wake of the Supreme Court on Tuesday setting aside the 12 February RBI circular, which allowed a 180-day window to banks to resolve a company default.But they can still find a resolution. According to a Reserve Bank of India circular, a loan becomes a non-performing asset when banks cannot find a way of recovering their money in 90 days. In short, banks still have a window to resolve the default. Lenders can take a haircut as part of a one -time settlement of du…

SC verdict on RBI's Feb 12 circular may delay resolution of stressed assets

The experience of banks with IBC cases so far has been mixed with banks taking an average haircut of 50% With the Supreme Court striking down the Reserve Bank of India's (RBI's) February 12, 2018, circular, the resolution of default accounts, which were filed in various tribunals under the Insolvency and Bankruptcy Code (IBC) after the circular was released, will get delayed further. For erring promoters, it comes as a shot in the arm as they will get an opportunity to resolve their accounts with the banks.  “The SC order puts into question everything the banks have done pursuant to the February 12 circular, including any case filed for insolvency proceedings. It gives all of them (default accounts) another lease of life, but the RBI needs to clarify under what guidelines these debt resolutions will be considered," said Sanjiv Krishnan, partner & leader (deals), PwC India. It would appear that all the restructuring mechanisms such as S4A (Scheme for Sustainable Structu…