CA Online

Govt says report about controversial tax on foreign investors to be made public only after scrutiny A governmentappointed panel submitted its report on minimum alternate tax (MAT) on foreign institutional investors (FIIs) on Friday, but the finance ministry did not disclose its contents, adding to uncertainties over the controversial levy that had rattled investors. The high-level Justice AP Shah Committee submitted a 66-page report to the government on the applicability of MAT on FIIs. The government had tasked the Shah panel, formed in May, to look into the applicability of MAT, a kind of tax on capital gains made by FIIs. A string of tax notices to FIIs in March had spooked markets, which were hit by anxieties over retrospective taxation of foreign funds. The tax department had issued notices to 68 FIIs seeking 602 crore as unpaid MAT over the past years. Finance minister Arun Jaitley in budget 2015-16 proposed to scrap MAT. FIIs are hoping that the government will wai

STARING AT UNCERTAINTY 11 bills await nod as govt, Oppn harden positions One of independent India’s biggest economic reforms, the goods and services tax, may miss its rollout deadline next year as an acrimonious face-off between the government and Opposition threatens to wash out Parliament’s monsoon session, sources said on Friday. The key reform bill that aims to create a unified national tax market has a slim chance of making its April 1, 2016 deadline if the government fails to pass a pending Constitution amendment bill during the ongoing session because the states may not have enough time to approve it. A Constitutional amendment has to be passed by a majority in both Houses of Parliament with two-thirds of the members voting — a condition likely to be fulfilled only in the winter session, usually held in December. Once it passes Parliament, it has to be approved in the same manner by a majority of the 29 states but the GST’s road is made tougher by looming state electio

The finance ministry on Friday sought to downplay a contentious suggestion by a government- appointed committee about taking away the veto power of the Reserve Bank of India governor in the proposed monetary policy committee ( MPC). It also highlighted the point that the committee was appointed by the previous United Progressive Alliance government and the incumbent one had common ground with the RBI governor on veto power. The consultation paper on the Indian Financial Code was not the last word on the RBI’s powers, said a senior finance ministry official. Other sources said the ministry had broad understanding with the RBI governor on veto rights. The government had no intention of diluting the power or autonomy of the RBI, they said. They also underscored the point that a decision to grant veto power to the governor would be taken at the " highest" level. On Thursday, a revised draft by the Financial Sector Legislative Reforms Commission ( FSLRC) was put up on th

The Special Investigation Team (SIT) on black money has suggested amechanism for proactive detection of shell companies and deterrent penal provisions against persons involved in setting them up. It also wanted those making donation and recieving it in cash to be prosecuted under the prevention of corruption act ( PCA), particularly in the context of private schools and colleges. In its third report, made public on Friday by the finance ministry, the SIT wanted the Serious Frauds investigation Office (SFIO) to use MCA 21 filings to detect black money and more teeth for the Directorate of Revenue Intelligence ( DRI) to investigate in special economic zones. Pointing out that schools and colleges are accepting large donations by cash, running in even more than ? 1 crore, SIT wanted them to be booked under PCA, deeming them to be public servant. The SIT recommended the SFIO, which comes under the ministry of corporate affairs (MCA), actively and regularly mine the ministry’s ( MCA21)

Asks market regulator to check creation of such wealth via stock exchanges, P- notes A Supreme Court- appointed special investigation team (SIT) on unaccounted money has come down heavily on the creation of such funds through stock exchanges and participatory notes ( P- notes). In a report, the SIT said the Securities and Exchange Board of India ( Sebi) should have an effective monitoring mechanism to study unusual rises in stock prices and the use of stock exchanges to evade taxes through long- term capital gains. Sebi has also been asked to put in place a mechanism to monitor the beneficial owners of P- notes. The SIT has recognised the recent steps taken by the regulator to scrutinise cases of tax evasion through exchanges. Sebi has been sharing such information with the income tax department. Now, the SIT has directed it to share that with the Financial Intelligence Unit, too. The investigation into market manipulations shows the modus operandi involves companies with

Governor can’t supersede RBI-govt joint panel’s decisions, can only cast vote in the event of a tie The government has proposed to effectively take away the Reserve Bank of India (RBI) governor’s overriding powers on interest rate decisions, a move that could dilute the central bank’s status as an independent and autonomous monetary authority. The government instead has proposed to give an additional vote to the RBI governor in case of a tie in any meetings of a yet-to-be set up monetary policy committee, which will decide on interest rate hikes and cuts. These proposals are part of the revised draft Indian Financial Code (IFC) that the finance ministry put out on Thursday. The ministry has sought further comments from public by August 8. The government is likely to follow this up by moving to enact a an Indian Financial Code (IFC) Bill which will subsume more than 60 archaic legislations to make them contemporary. The IFC is based on the recommendations of the Financial Se

For compliance to be valid, pay the entire penalty plus tax within the allowed deadline One of the concerns regarding the one- time settlement window under the Undisclosed Foreign Income and Foreign Assets Bill, 2015 ( Black Money Act) is that the information could be misused. Tax payers are worried they could be subject to stringent scrutiny by assessing officers ( AOs) on their income, assets, and bank accounts. According to experts, this problem can be addressed to some extent by filing directly, online or physically, with a separate cell and not through the regular procedure. Suresh Surana, founder of RSM Astute Consulting, says, “By allowing e- filing for the one- time settlement and not going through AOs but to a separate government cell directly, the sanctity of the information will be maintained. The information will not be leaked and AOs will not be able to use this information to ask questions about other assets or bank accounts of tax- payers,’’ he says. Under the on