CA Online

Four  Bharatiya Janata Party- ruled states— MadhyaPradesh,Gujarat and Chhattisgarhand Rajasthan —are leading the race ins hifting those who pay the value-added tax(VAT) to the goods and services tax network (GSTN),with more than 70 percent of the dealers enrolled. Despite the uncertainty over the GSTroll-out,theGSTN,which stands for the platform aswellas the body administering it,is in the process of being made ready on April1. The GSTN plans to move most of  the eight million tax payers to the portal by the end of January. Withtheenrolmentdrivestartinginall statesandUnionterritoriesinphases fromNovember8,roughlyhalftheVAT dealersinthecountryhaveregistered withtheGSTNportal.Of5.8million uniqueVATpayers,2.6millionhave listedthemselveswiththeGSTN. “Our idea is to complete the enrolment process by end-January.We are on course to providing backend support by April1,” said a GSTN executive. MadhyaPradesh and Gujarat have reported the most robust response,with78.3percent...

A Deloitte survey shows 58% of respondents want exemption limit to be raised to Rs 5 lakh from Rs 2.5 lakh Finance Minister Arun Jaitley should double the basic income tax exemption limit to Rs.5 lakh per year and raise the ceiling for claiming deduction under Section 80C to Rs.2.50 lakh, according to a survey by tax consultant Deloitte. Almost all respondents want the I-T exemption limit to be raised substantially while 58% of the respondents were in favour of raising it to Rs.5 lakh. “It will place more money in the hands of consumers resulting in increase in demand pick-up. Also, the increase in the slab limit will kick-start savings which will ultimately lead to increase in investment in the system,“ stated a Pre-budget Expectations Survey Report by Deloitte. It said that 71% respondents want the limit of the Section 80C to be increased to Rs.2.50 lakh, from Rs.1.50 lakh. “Given the increase in income levels and inflation, the existing limit is low.Increase in limit will ...

Investment strategy being reworked due to Singapore tax treaty, GAAR arrival from FY18 As the Indian government amended the Singapore treaty to give clarity on taxation, many foreign portfolio investors (FPIs) and private equity firms are exploring new structures and routes for Indian investments, people in the know said. The new routes or structures being explored by the investors are also in the context of GAAR (general anti-avoidance rule) -the direct taxation regulation that is set to come into force from April 1 this year. Many FPIs are taking a relook at their investment strategy in the context of these two main changes, and whether they need to or could change the way they invest to save on some taxes. “There are several recentim pending tax developments that investors will have to look at, including amended tax treaties, GAAR and also, what offshore transactions amount to indirect transfer of shares. In relation to private equity firms, given grandfathering of investmen...

DIPP proposes tax concessions on ESOPs, unlisted securities and convertible instruments Prime Minister Narendra Modi's key Startup India programme may get a boost in the upcoming budget with the industry department drawing up a list of tax concessions on employee stock options, unlisted securities and convertible instruments. The union budget is expected to be announced on February 1. The push comes amid concerns that the startup movement in India was losing steam and there hasn't been a significant improvement in ease of doing business. The Department of Industrial Policy and Promotion (DIPP) has proposed that ESOPs for startups be taxed at the time of sale, when they have greater liquidity to pay taxes and the instruments get a fair valuation. DIPP has also said that the period of long-term capital gains for unlisted securities be reduced from the current limit of 24 months, keeping in mind that investing in startups is risky and subject to a higher rate of tax. “We are...

May put names involved in suspect transactions on website, making explanations mandatory Anyone who has deposited cash or purchased highvalue items after the November 8 demonetisation not in line with income declared in tax returns may have reason to worry as the authorities sift through tonnes of data generated in the past two months or so. They are also using data analytics to parse for points of similarity to see if any attempt has been made to split up transactions to avoid suspicion. The income tax department is likely to put such names on its website soon, making it mandatory for them to explain such transactions. Armed with information on deposits and purchases in the wake of demonetisation, the tax department is pursuing presumed wrongdoing with unprecedented intensity. “We are working on a new online mechanism whereby names of those whose deposits or trans actions do not match will be put up and information be accessed via permanent account number (PAN) of the indivi...

The country’s largest bank State Bank of India (SBI)announced a steep interest rate cut in several years on Sunday,by reducing its marginal cost of funds based lending rate(MCLR)by 90 basis points(bps)across all maturities. With this cut,SBI has passed on benefit of 200 bps since January 2015 to customers,which is more than 175 bps reduction in the Reserve Bank of India’s(RBI)policy rate cut in the same period. The new rates come into force from today.SBI’s one-year MCLR stands reduced to eight percent from 8.9 percent,while the rate on overnight loans is now 7.75 percent,against 8.65 percent. Banks are flush with funds after the note ban, with Rs.12.4 lakh crore having been deposited with banks till December 10.SBI chairman Arundhati Bhattacharya said, “There is huge liquidity with the bank due to the large flow of deposits. This has driven us to reduce lending rates,which, hopefully,will kick-start credit demand and growth.” Two other public sector lenders — Punjab National B...

The Securities and Exchange Board of India (Sebi) is finalising norms for allowing options trade in commodities. The decision is expected to be announced in a couple of weeks. To finalise basic issues, one more meeting of committee of its commodity market advisory committee is likely. Sources say Sebi wishes to have options shall be in sync with futures trade, and as futures contract sellers have a choice of giving delivery on settlement, this should also apply for commodity options. Recently, some stock market participant members had suggested cash settlement in options. Sources say this has not found favour with many members at committee meetings. Many in the Sebi committee fell that in the absence of traditional institutional players in commodity derivatives, such as banks, financial institutions and specially foreign portfolio investors (who usually act as options sellers and take the most risks), commodity options should have delivery-based settlement. As with stocks, opti...

About Rs.4,313 crore of stashed income has been detected by the Income Tax department after conducting over 1,000 raids and survey operations as part of its country-wide operations against black money hoarders post demonetisation. Official sources said the taxman has detected a total of Rs.4,313.79 crore undisclosed income and seized cash and jewellery worth Rs.554.6 crore as part of these operations, as per the data updated till Thursday. Business Standard New Delhi,31st December 2016

The government signed a pact with its Singapore counterpart on Friday, amending their decade-old tax treaty, gaining taxation rights over capital gains. This is the third double taxation avoidance agreement (DTAA) amended so far this financial year with a zero or low tax jurisdiction. The other two were with Mauritius and Cyprus. According to tax consultants, Mauritius would be the most attractive source of investments into India for debt funds and Singapore for equity investments. Mirroring the revised IndiaMauritius DTAA, the government has some grandfathering provisions (having the old rule continuing to apply for some existing situations, with the new one for all future cases) and a two-year transition benefit to investments from Singapore. The revised pact will take effect from April 1, 2017. For two years from that date, capital gains tax will be imposed at 50 per cent of the prevailing domestic rate. The short-term rate is 15 per cent at present. The full rate will apply fro...

With the validity date ended on Friday for normal exchange of old currency notes, the income tax (I-T) department is working on ‘property index cards’ featuring high value realty transactions in the past three years. They’ve also outlined stringent action against those reportedly having deposited unaccounted old currency in someone else’s bank account. Officials are believed to have directed property dealers and registration authorities to give lists of top property deals in descending order of valuation over three years. “Tackling benami (property officially in someone else’s name, to avoid tax) properties and transactions is one of our key items. On the basis of information on property transactions and bank deposits, we have decided to probe such cases under the newly enforced Benami Transactions Act,” said an I-T official. The Act allows violators to be sentenced to a term of up to seven years in jail. “Benami amounts in a bank account will be confiscated and the violator ...

Wheat acreage has risen by 8 per cent to 292.39 lakh hectares, while sowing area of pulses is up 13 per cent at 148.11 lakh hectares so far in the current Rabi (winter-sown) season, helped by good monsoon and higher support price. However, the area under coverage under paddy and coarse cereals is lower than last year. Business Standard New Delhi,31st December 2016