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Companies operating across more than 35 industries pay taxes at an effective rate of less than 25% and large companies pay taxes at a lower rate compared to smaller firms. In addition, the overall effective tax rate is only around 23.2% against the statutory tax rate of 32-34%. These are some of the reasons why the government is eager to phase out exemptions. Indeed, this will mean that despite a reduction in tax rates to 25%, its tax revenue will see an increase. In line with the budget announcement by finance minister Arun Jaitley of gradually reducing corporate tax rates to 25% from 30%, the government on Friday released a draft roadmap for phasing out corporate tax exemptions in the next two years. The phasing out of these exemptions is expected to impact fresh investments into SEZs, research and development as well as hit profit of companies operating in sectors such as infrastructure, IT, natural gas explorers and pharmaceuticals. All such investments currently get tax so...

Low rate likely to be acceptable to all, ensure compliance A key panel on goods and services tax is likely to recommend a revenue-neutral rate of about 18%. The group, headed by Chief Economic Adviser Arvind Subramanian, has zeroed in on the rate after considering various scenarios, brightening the chances for this important reform as the low rate should be acceptable to everyone. “It has worked out to about 18%,“ a government official privy to discussions said. Another official said the range for the tax could be 16-18%. GST, which seeks to replace a host of central and state indirect taxes on goods along with services tax, will create a pan-India market and is expected to help lift the country's gross domestic product (GDP) by 1-2%. A revenue-neutral rate means a rate at which there would be no revenue loss to the Centre or states under GST compared with current collections Low rate will help boost compliance and also cut the pain from increase in tax rate on services, wh...

At a meeting of the joint committee of Parliament examining the land acquisition Bill, Opposition members of the panel on Monday demanded the Bill be withdrawn now that the ordinance, which was identical to the Bill, has lapsed. They also demanded that Prime Minister Narendra Modi appear before the panel to explain the Bill. Bharatiya Janata Party and Shiv Sena members of the committee opposed both demands. Business Stnadard, New Delhi, 24th Nov. 2015

Govt proposes clean-up of rules that govern the prices of imports by related parties to reduce delays and disputes India proposes a major clean-up of decade-and-a-halfold rules that govern the prices of imports by related parties ­ such as arms of multinationals from their parent in an attempt to reduce delays and disputes and make it easier to do business. The finance ministry is not just looking at changing the rules but also the process itself, which is riddled with delays and cumbersome paperwork. “There is a need for a fresh look at these rules...A lot of water has flowed over 14 years,“ a finance ministry official told ET. With `ease of doing business' the guiding principle, the government now proposes to make the process swifter and introduce an electronic interface. One option is to link valuations to audits, a procedure that's considered more sound and thorough and followed internationally. Transactions between related parties usually do not follow normal b...

New issues likely to offer 7.25-7.5%, against 6.85-7.1% yield on old bonds Many investors are keeping their gunpowder dry these days by selling their taxfree bond units subscribed in 2012-2014. These investors are gearing up for the large taxfree bond issuances from National Highways Authority of India (NHAI) and Indian Railway Finance Corporation (IRFC) totaling around ` . 16,500 crore that are likely to hit the market in mid-December. These bonds are likely to be offered at higher yields than the existing ones that are traded on the bourses. These investors -both high networth and retail -will use the cash generated from the sale to apply for the forthcoming issues. The new tax-free bonds are likely to offer investors anywhere between 7.25 and 7.5%, while yields on old tax-free bonds are around 6.85-7.1%. The arbitrage will help investors make about 50 basis points. For example, the 8.3% NHAI bond issued in 2012 and maturing in January 2027, trades at Rs.1,119 in the secondar...

The government is looking to further simplify income tax return forms to help taxpayers fill them without seeking help from experts and the revenue department has set up a committee in this regard. The committee, according to sources, will be headed by a joint secretary level officer and would include chartered accountants and tax experts. "The tax department is trying to further simplify the return form so that no outside help is needed by those who want to file returns on their own," a source said. ALSO READ:  Income tax reforms that will make life less taxing The effort would be to come out with a simple formula for indexation to help assessees compute capital gains on sale of assets, the source added. "The Committee would also look into the possibility of reducing the number of pages in the return form," the source said. The Income Tax department had in June come out with a simplified tax return form for salaried class. Filers now have to disclose ...

Updates Of the Day 1.Government had proposed to implement its decision to phase out corporate tax exemptions and deductions by profit linked, investment linked and area based deductions will be phased out for both corporate and non-corporate tax payers etc. 2.Finance minister launched the “e-Sahyog” pilot project of the Income-tax. 3.If percentage of commission earned from AE transactions is higher than AE transactions no addition can be made. [ITAT held in Sumitomo Corporation India Pvt. Ltd]. 4.Form DS-2 mandatory for goods vehicles entering Delhi. File online/via SMS. Penalty of Rs. 50,000/-for non-compliance. Visit www.dvat.gov.in for details. 5.RBI allows Regional Rural Banks to provide internet banking to customers. Government issues draft rules to replace Trademarks Rules, 2002; Objections/suggestions to the rules shall be sent to Additional Secretary to the Government of India, Ministry of Commerce & Industry, DIPP. For more News Like us on https://www.facebook.com/c...

Place of effective management guidelines to affect pharma, energy, and manufacturing In an attempt to tighten loopholes to deter tax evasion by Indian multinational companies, the government is set to come out with guidelines on place of effective management ( POEM) in the coming few days. This will consider companies with effective control in India a resident liable to pay tax in the country. The norms will affect companies in sectors like pharma, energy, manufacturing, software. Meanwhile, companies have started restructuring operations to ensure that key decision- making is done outside the country and decisionmakers are out of the country at the time of decision- making to ensure compliance with POEM. “The POEM guidelines are almost ready. They should be out in the coming few days. We are aware of industry concerns. All new things have some complications, but the guidelines will offer sufficient clarity to companies regarding compliance. We have incorporated suggestions f...

To widen mandatory quoting of PAN, scope for annual information returns After cracking down on unaccounted money stashed abroad by Indians, the government is now working to curb domestic flow of black money, by plugging gaps in regulations. At present, the Central Board of Direct Taxes ( CBDT) is looking to rationalise income- tax rules; the move includes widening of coverage for mandatory quoting of permanent account number ( PAN) for specified transactions. Also, it is considering expanding the scope of mandatory annual information returns ( AIRs) for third- party agencies, to capture greater information, in line with the government’s efforts to build a large database for checking tax evasion and the flow of black money in the economy. “To curtail the flow of domestic black money in the economy, we are working to strengthen capture of information by rationalising two rules under the income- tax act — mandatory issuance of PAN card and the mandatory annual information returns ...

Work in Progress Revamp of social security laws on the cards to help improve ease of doing business, build support for labour reforms Private sector workers need not stay on in their jobs for fear of losing gratuity benefits and working women can look forward to six months of maternity leave soon as part of the government's plan to consolidate all employee benefits. The government is looking at a complete overhaul of social security laws to substantially enhance benefits to the country's more than 400 million workers besides improving the ease of doing business in India, measures it sees as building support for other labour reforms in the works, said a senior official. The labour ministry is finalising the social security code that would amalgamate half a dozen laws to simplify social security regulations besides allowing working women to avail longer maternity leave and make gratuity portable. The key laws that will be subsumed under such a social security code inclu...

Even as the government gets ready for Parliament’s winter session, which begins on Thursday, whether or not the constitution amendment Bill for implementation of the goods and services tax ( GST) will be debated and passed in the Rajya Sabha during this session remains uncertain. A meeting of the ruling National Democratic Alliance (NDA) will be held on Tuesday to make sure the Treasury benches are on the same page. Strategy meetings will also be held for floor coordination and the sequence in which Bills will be brought in the two houses, besides an all- party meeting before the session. Among the Bills that are pending in the Rajya Sabha are the Child Labour ( Prohibition and Regulation) Amendment Bill, 2012; the Real Estate (Regulation and Development) Bill, 2013 ( as reported by a select committee of the Rajya Sabha); the Prevention of Corruption ( Amendment) Bill, 2013, the Anti- Hijacking Bill, 2014; the GST Bill ( the Constitution Amendment Bill, 2014) as passed by the Lok S...