CA Online

The proposal by Central Board of Direct Taxes (CBDT) to use Aadhar database to verify PAN card recipients will need cabinet approval as it involves multiple agencies of the central government, saidaspokesperson for the body. “Currently it takes up to three weeks to verify the applicant. If the Aadhaar database has all the latest details ofaperson including address, finger prints, that can be used for verification of the PAN applicant and reduce the time taken,” Meenakshi Goswami, CBDT spokesperson, said. Goswami said the proposal has not yet been finalised. The CBDT is working on using the extensive Aadhaar database and its eKYC norms to verify those applying for PAN cards. The idea is that it will drastically reduce the time taken to verify fromafew weeks to fivesix days. KYC is know your customer. Business Standard New Delhi,16th February 2017

The Securities and Exchange Board of India (Sebi) is considering rule changes to allow integration of market intermediaries like brokers in the derivatives markets, before integrating the exchanges for allowing commodities and equity/ currency on single platform. The current Sebi regulations do not permit an equity exchange to trade in commodities and vice versa. Separate exchanges, therefore, are required to offer trade in different financial segments. Similarly, market intermediaries like brokers are required to float separate entities for facilitating trade in equities/ currencies and commodities. ASebi source said, “We are weighing integration of brokers and other intermediaries to facilitate trade under one umbrella in all segments and financial instruments. Once, integration of intermediaries is complete, we would consider integration of exchanges.” Market participants have made several representations to the regulator, seeking integration of all segments, especially ...

Foreign institutional investors (FPIs) issuing participatory notes (P-notes) have decided to impose a 7.5 per cent tax on those who want to use these off-shore derivative instruments to bet on India’s equity market. Although, P-note holders are not subject to any domestic tax laws as they are not registered directly in India, the liability of short capital gains tax (STCG) fall on FPIs issuing these instruments.  The tax department considers registered FPI as a single entity for assessment and is not concerned with multiple P-note deals that it has cut with various un-registered clients. For FPIs, the dilemma was how to appropriately pass on the short term capital gains tax to P-note holders.  So, irrespective of whether P-note holding clients made profit or loss, FPIs will have to pay tax if there was profit recorded on their books, said lawyers and consultants who advise foreign investors. FPIs thus have decided to impose 7.5% tax on any new P-note being issued post March 3...

The Food Safety and Standards Authority of India (FSSAI) on Tuesday said it has set up a scientific panel on “food fortification and nutrition” to help fight malnutrition in the country. On 2 February, the regulator notified a draft plan to make supply of fortified food mandatory for government-supported schemes such as midday meal at schools, integrated child development services (ICDS) and public distribution system (PDS). FSSAI will carry out the exercise in collaboration with the Union ministry of women and child development. Mint New Delhi,15th Februray 2017

The Insolvency and Bankruptcy Board of India, or IBBI, on Tuesday sought public comments on draft rules outlining the process that companies can follow for voluntary liquidation under the Insolvency and Bankruptcy Code, 2016. A company that has not defaulted on loans may initiate voluntary liquidation subject to certain conditions, according to the bankruptcy code. In case of default or debt outstanding, the company should be able to pay it off from the sale of assets. In case of voluntary liquidation, the law also requires shareholders of the company to pass a special resolution in a general meeting requiring the company to be liquidated voluntarily and appointing an insolvency professional to act as the liquidator. The consent of the creditors needs to be obtained to voluntarily liquidate a company in case of debt. A working group on bankruptcy has submitted draft regulations for voluntary liquidation of companies. The draft rules for fast-track corporate insolvency resolution ...

Faced with legal difficulties in allowing options trading in commodities, the Securities and Exchange Board of India (Sebi) has decided to let in new institutional players in commodity futures to improve the depth of the market. Although the regulator had floatedadiscussion paper to allow options in commodities first and then let in more players, it seems to come up againstalegal snag. Sources close to the development said that “till the legal framework for allowing options is cleared, Sebi will allow new players. Indian and overseas private equity funds and venture funds registered with Sebi under category 3 alternative investment funds (AIF) will be permitted first as their regulation permit them to participate in listed and unlisted derivatives. Mutual funds, which are also regulated by Sebi, will be permitted after that. In the next phase, insurers and other financial institutions will come, and in the third leg banks will be permitted. These require the respective sectoral r...

Union labour minister Bandaru Dattatreya on Tuesday said 8.65 per cent interest on employees provident fund deposits for this financial year will be okayed by finance ministry and there is no difference of opinion. Business Standard New Delhi,15th February 2017

Private equity (PE) investors want capital markets regulator Securities and Exchange Board of India (Sebi) to relax the lockin requirement on pre-initial public offer (IPO) shareholding. The current regulations clash with their fund philosophy and often prevent them from getting time-bound exits. Under the current Issue of Capital and Disclosure Requirements (ICDR) regulations, pre-IPO shares are locked in for a period of one year and the minimum contribution of promoters is locked for three years. Sources said PEs and venture capitalists (VCs) recently met Sebi seeking relaxation in the lock-in criteria, particularly in companies where they are construed as promoters by virtue of their rights and shareholding in the company. Legal experts say the issue is more relevant in the new-age companies and start-ups, which don’t have promoters in the true sense and are largely incubated by various funds. They add the wide definition of “promoter” is creating difficulties for some inves...

BANKS LIKELY TO MISS THEIR TARGETS AS BAD LOANS CONTINUE TO PILE UP TOUGH TIMES For the top 8 lenders, recoveries have fallen nearly a quarter between Q2 and Q3 Demonetisation has not only dampened banks' core business of lending, it has also hit them where it hurts -loan recovery. Recoveries from bad assets have fallen nearly a quarter among the top 8 lenders. Banks, which had set lofty targets for loan recoveries at the start of the year after the Asset Quality Review exercise, are likely to miss their targets as bad loans continue to pile up. Top banks recovered . 7,909 crore from such loans at just ` the end of the December quarter against Rs.10,177 crore at the end of the September quarter. These numbers are dismal, especially when compared with the quantum of dodgy loans banks have accumulated since December last year. Data compiled by ETIG shows that at the end of September 2015, banks' absolute gross non-performing assets stood at Rs. 3.50 lakh crore, which clim...

Income Tax Dept to scrutinise paintings, antique jewellery and vintage cars bought at lower price A recent tweak in tax rules is worrying a billionaire Indian promoter who purchased four expensive paintings from a private seller earlier this year. The buyer had paid about 80% of the price in cash and the remaining through one of his companies, according to a person in the know. This was convenient for both, the buyer and the seller. The promoter had been advised by a tax expert that paying for expensive art through a company would help avoid tax scrutiny on that amount. The seller, on the other hand, showed only 20% of the actual income and paid tax on that. Such maneuvers, however, will no longer escape taxation. From the next financial year, such deals will start coming under income tax scrutiny -expensive paintings, antique jewellery, vintage cars, real estate or any other art bought by companies will now face income tax scrutiny and tax will be demanded if real price or fai...

The Income Tax Department has issued refunds amounting to Rs.1.42 lakh crore in the current fiscal so far, 41.5% higher than a year ago, after processing 4.19 core income tax returns. The department said in a statement that 92% of the refunds issued are below Rs.50,000 due to the high priority given to expeditious issue of refunds to small taxpayers. Only 2% of refunds less than Rs.50,000 remain to be issued, the department said. Many of these pertain to returns filed recently or cases where the taxpayer's response to the department is awaited, it said. The department advised taxpayers to verify and update their email address and mobile number on the e-filing portal to receive electronic communication.The Centralised Processing Centre processed 92% of all returns within 60 days. As many as 4.01 crore returns were e-filed till February 10, marking a 20% increase over FY16. The Economic Times New Delhi,14th February 2017