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Showing posts from August 1, 2015

New Accounting Standards Give Cos Tax Jitters

Companies put aside funds for potential tax penalties as CFOs and experts say ICDS contradicts some I-T Act provisions

Indian companies are expecting litigations and increased tax demands this year due to confusion around computing their income under the new accounting standards the government has introduced.

According to chief financial officers and taxation experts, the income computation and accounting standards (ICDS) contradict with some provisions of the existent Income Tax Act, putting them in a catch-22 situation and prompting many to put aside some funds for potential tax penalties.

“There are lot of discussions with companies about how we must tackle some of the contradictions between ICDS and the Income-Tax Act,“ said Rajesh H Gandhi, part andhi, part ner, tax, at Deloitte Haskins & Sells. “Some of the examples (areas of contradictions) include taxation of interest income on time basis, revenue recognition of services under percentage completion method, taxation of retenti…

Govt working on Changes in 66A of IT Act

Government is working on restoring with “suitable modifications“ the section 66A of IT Act which was struck down by the Supreme Court. The Ministry of Home Affairs has constituted a committee to examine the implications of the apex court judgement and “suggest restoring of 66A of Information Technology Act 2000 with suitable modifications,“ Telecom Minister Ravi Shankar Prasad said onFriday.

The Economic Times, New Delhi, 1st August 2015

Govt could compromise on land Bill 2015

Reconciled to the fact that it will have no option but to cave in to the diktat of the Opposition on the 2015 Land Acquisition Resettlement and Rehabilitation ( LARR) Bill in the Rajya Sabha where it is in a minority, the Narendra Modi- led National Democratic Alliance ( NDA) government is preparing to virtually abandon its own Bill. This could cause even more legislative and policy confusion on land acquisition.

The 2013 LARR was sought to be amended and replaced by LARR 2015, to make land acquisition easier for certain categories of projects, to give aboost to industrial activity. The requirement of social impact analysis (SIA) and consent of land losers was waived for this category. The Lok Sabha passed LARR 2015 and 44 members of the Congress walked out to show they disagreed.

When the Bill came to the Rajya Sabha, the House demanded a panel study it, as even an amended version had been changed substantially by the Lok Sabha. The committee, which has 15 Bharatiya Janata Party member…

Sebi eases delisting compliance

Making delisting norms easier, Sebi on Friday said promoters would have to ensure that at least 25 per cent of the minority shareholders participated in such a process or they should demonstrate that all the investors had been approached.

Business Standard, New Delhi, 1st August 2015

Easing rules might increase short- term flows and volatility

Freeing foreign portfolio investment ( FPI) up to 49 per cent across all key sectors, as the government has done, might lead to more flow of short- term money. And, raise the volatility in capital markets, worry some.

However, the government has played down the fears, saying it would rather curb existing misuse of FPI caps.

The government on Thursday said it had decided to allow FPI up to 49 per cent through the automatic route in most sectors. And, all types of foreign investments – FDI, FII, NRI, FVCI, QFI, LLPs and DRs – have been subsumed into a single cap in each sector.

Directly impacted by the liberalisation are expansion in pharmaceuticals, power exchanges, stock exchanges, credit information companies, commodity exchanges, single- brand retail, insurance and pensions, and publication of facsimile editions of foreign newspapers, scientific and technical journals.

The worry, says Dev Raj Singh, executive director ( tax and regulatory services), EY, is that, “ All these sectors wil…

Obligation for the Month of August 2015

Event DateActApplicable FormObligation04-Aug-2015D-VATDVAT-48Return of TDS for Jun quarter in DVAT-4806-Aug-2015Service TaxChallan No.GAR-7E-Payment of Service Tax for July by Cos07-Aug-2015Income TaxForm No.15G, 15H,27CSubmission of Forms received in July  to IT Commissioner07-Aug-2015Income TaxChallan No.ITNS-281Payment of TDS/TCS deducted/collected in July10-Aug-2015ExciseER-1Return for Non SSI assessees for July10-Aug-2015ExciseER-2Return for EOUs for July10-Aug-2015ExciseER-6Return by units paying duty >  1 crore (CENVAT + PLA) for July12-Aug-2015D-VATBE - 2Advance information for 2nd fortnight of Aug of functions with booking cost > Rs 1 lakh in Banquet Halls,hotels etc.15-Aug-2015Income TaxForm 16AIssue of QuarterlyTDS certificate for June quarter by Govt. deductors.15-Aug-2015D-VATDVAT-20E-Payment of DVAT TDS for the month of July15-Aug-2015Providend FundElectronic Challan cum Return (ECR)E-Payment of PF for July( Cheque to be cleared by 20th)21-Aug-2015ESIESI ChallanE-P…

Sebi warns against illegal fund-raising

Takes Action Against 194 Cos, Of Which 104 Are In Bengal

West Bengal has more number of companies raising money illegally from gullible investors by offering shares and debentures than all the other states combined in India. Of the 194 companies against whom Sebi has taken action for raising money by issuing non-convertible and convertible preference shares, non-convertible and convertible debentures, and also equity shares, 104 are from the eastern Indian state, data analyzed from a Sebi release showed.

The state with the second biggest lot in the Sebi list is Madhya Pradesh with 27 companies, while the third highest lot is from Odisha with 14 companies.

On Friday , the market regulator warned people not to invest in companies which raise money illegally by issuing these instruments through the private placement route. Termed as `Deemed Public Issues (DPIs)', these companies usually collect money by selling illegally shares and debentures to a large number of gullible investors. The…

Non-salaried ITR forms out

The Central Board of Direct Taxes (CBDT) has notified the revised income tax (I-T) return forms for non-salaried individuals for the assessment year 2015-16 (financial year 2014-15, which ended as of March 31, 2015).

Of forms ITR-3 to ITR-7, companies are required to file their tax returns using form ITR-6 which, as compared to earlier years, calls for a plethora of additional disclosures. Some of these disclosures, such as corporate social responsibility (CSR) expenditure, relate to new regulations applicable to India Inc for the first time during the financial year 2014-15. Others have been introduced to enable tax authorities to keep better track of overseas assets and income.The latter could help tax authorities detect money laundering.

For the year ended March 31, 2015, India Inc has incurred for the first time expenditure towards CSR. Such expenditure is not treated as business expenditure under section 37 (1) of the I-T Act and is not allowed as a deduction for tax purposes (in o…

FPIs need to file tax returns in ITR-6

The Central Board of Direct Taxes (CBDT) has prescribed forms ITR-3 to ITR-7 for taxpayers such as sole proprietors (businessmen or professionals), limited liability partnerships, partnership firms, Hindu Undivided Families (HUFs) and companies (see table).

It has also notified that foreign portfolio investors (FPIs) have to file their tax returns using ITR-6. These entities are now required to state their Sebi registration number.

In India, long-term capital gains arising on sale of Indian securities via a stock market against which securities transaction tax (STT) has been paid are exempt from capital gains tax. In contrast, shortterm capital gains are taxable in India. However, under a few tax treaties -such as the tax treaty with Mauritius -even short-term capital gains are tax-exempt in India.

The ITR-6 form now calls for detailed disclosure of short-term capital gains by non-resident taxpayers (which would include FPIs) who have availed of treaty benefits. These taxpayers are requi…

Updates of the Day

1. Merely because the assessee made a claim which is not acceptable ipso facto cannot be said to have made a wrong claim by furnishing inaccurate particulars attracting penalty under Section 271(1) (c) of the Income Tax Act.[ Principal CIT vs. G.K. Properties PVT LTD, Andhra High Court]

2. Versions of company forms 20B, 23AC, 21A, 23ACA, 66, 23ACA (XBRL), 4 LLP, FC-4, 23B, and FC-1 are modified w.e.f. 01.08.2015.

3. VAT not applicable on transfer of right to use of goods if effective possession and control of the goods are not transferred.[ High Court of Delhi: Hari Durga Travels vs. CTT]

4. Exemption applicable to “execution of works contracts relating to buildings, bridges, roads and canals” under Rajasthan Sales Tax Act, also extends to fixing profile safety steel barriers at hazardous locations on national highway, as the same are relatable to roads itself. [Rajasthan High Court CTO vs. Penar Industries Ltd]

5. RBI has reviewed the guidelines on restructuring of advances given by NBF…