CA Online

Growth and potential of e-commerce in India have been extensively commented upon, and unfortunately, this has led to state governments yearning for a share of this pie. The initial forays of state governments to tax e-commerce through the VAT route met with stern opposition in Karnataka and judicial censure from the High Court in Kerala. In the last year or so, state governments seem to have changed strategy and decided to extract their pound of flesh from e-commerce by making a variety of hasty amendments to their entry tax legislations (and in the process, often leaving the said amendments vulnerable to challenge on various legal/constitutional grounds). To illustrate: > West Bengal mandated courier/logistics companies making such deliveries in the state to register themselves and generate waybills through an official portal only after making a mandatory pre-deposit of entry tax, even though the entry tax legislation there was stayed earlier by the Calcutta high court. Thi...

From the beginning of this month, services provided by a government or local authority to a business entity became liable to service tax, with some exemptions. Till enactment of the Finance Act, 2015, these services provided by a government or a local authority (with specific exclusion) were covered by a 'negative list'. Service tax applied only on the 'support service' provided by the government or local authority to a business entity. In the 2015 Act, an enabling provision was made to exclude any services provided by a government or local authority to a business entity from the negative list. This amendment was given effect from April 1 this year, through a notification issued on March 1. Clarifying the effect, the Central Board of Excise and Customs (CBEC) has said any activity undertaken by a government or local authority for any consideration (amount) constitutes a service. The amount charged for this is liable for service tax. It does not matter if such activi...

CRITICISES MARKET REGULATOR  for passing conflicting orders on similar securities law violations The Securities Appellate Tribunal took the capital market regulator to task for passing conflicting orders on similar securities law violations. In an unusually strong rebuke to the Securities and Exchange Board of India (Sebi), the tribunal said the regulator was “blindly supporting“ adjudicating officers, terming its conduct in a case as “disgraceful.“ The Securities Appellate Tribunal (SAT) was hearing the case between Sebi on the one side and Krishna Enterprises and Rajesh Service Centre on the other. The entities had appealed to SAT against Sebi fining them `20 lakh on two securities law violation charges each. The regulator had alleged that the two entities aided Edserve Softsystems in siphoning off proceeds from its initial public offer, thereby causing loss to shareholders. SAT observed that Sebi had charged the entities with two separate violations and accordingly imposed...

Since early days of economic liberalisation, foreign institutional investors (FIIs) have always been an important class of investors in the Indian capital markets. Over the years, India has seen heightened investment activity, which has contributed to the growth and vibrancy of capital markets.  Given its importance, among other things, India has a specific concessional tax regime for FIIs (which has been in place since 1993).  Under the regime, the income earned by FIIs from transactions in Indian securities is classified as capital gains and subjected to lower tax rates. Capital gains earned by FIIs are not subject to withholding taxes in India. Interest income earned by FIIs from government securities or specified corporate debt securities is taxed at rates that are currently as low as five percent. However, there are grey areas in the tax laws that have emerged in the recent past and hence the need to provide FIIs with tax certainty. Two specific areas on which FIIs ne...

The hospitalisation-only aspect of health insurance has long been a pet peeve of policyholders. The idea of paying premiums for an uncertain and even unlikely future event puts many off health covers altogether. Enter outpatient department (OPD) covers from ICICI Lombard, Apollo Munich and, more recently, Cigna TTK, which pay for doctor's consultation, dental treatment, pharmacy bills and so on. Cigna TTK also offers a 'return' of 5% as a bonus if any unutilised balance is carried over to the  next year. So should you opt for them? Financial planners and health insurance experts say the purpose of health insurance is to mitigate risks emanating from huge expenses like hospitalisation bills. "OPD expenditure is not a catastrophic loss and hence, covering the same through insurance is not a sensible decision. If you want a separate fund for such expenses, opt for mutual funds that offer a higher return on investments," says Sudhir Sarnobat, CEO, Medimanage.com, ...