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The Finance Ministry on Tuesday said that over 99% of the returns filed are “accepted“ by the Income Tax Department and only a minuscule number is taken up for scrutiny where the taxman has no discretion.“CBDT is already following a trust ba sed approach in tax administration.Over 99% of the tax returns filed by the taxpayers are accepted as such.“Less than 1% of the returns are selected through Computer Aided Scrutiny Selection in a non-discriminatory and non-discretionary manner,“ it said. The ministry today listed the accepted and implemented recommendations of the Tax Administration Reforms Commission (TARC) headed by Parthasarathi Shome. It said CBDT follows a collaborative and solution oriented approach. The Economic Times, New Delhi, 02 March 2016

The Reserve Bank of India delivered on its promise of easier capital recognition norms for banks, including revaluation of real estate, which may release an equivalent of as much as Rs 40,000 crore that could be counted as equity capital. The central bank also allowed banks to recognise some of their foreign currency reserves in their overseas operations and liberalised the treatment of deferred tax liabilities. "On a number of dimensions, we have been stricter than Basel norms,'' RBI Governor Raghuram Rajan had said. "We are looking if there is a possibility that while still remaining conservative, we can allow banks a little more room to use these. For example, you may have real estate assets that we allow only as a fraction of their value to count as capital." RBI's permission to recognise some of the assets of banks, which were till now not permitted, comes at a time when they are struggling to meet capital adequacy norms due to soaring provisions for ba

DECODING THE BUDGET In his Budget speech, the finance minister has announced a change in a specific rule that will lower taxable income Many holding companies of business groups, corporates and MNCs with subsidiaries, and even individuals investing in stocks are awaiting a new `rule' that would allow them to lower tax outgo. The finance minister, in his Budget speech, has announced a change in a specific rule which, according to tax professionals, would allow higher deductions and lower taxable income. According to tax laws, if an assessee earns income that is not chargeable to tax, then the corresponding expenditure for earning such exempt income is not permitted as deduction.Thus, an investment holding company or a corporate receiving dividend income -which is not taxed in the hands of the receiver -cannot deduct the interest cost on borrowings and administrative expenses to reduce tax burden. But since many equity investments do not generate dividend, companies have been insist

In a signal to foreign institutional investors, the Union Budget has made a commitment to implement General Anti Avoidance Rules ( GAAR) on taxes only from April 1, 2017. “The investment sentiment in the country has now turned positive and we need to accelerate this momentum. There are also certain contentious issues relating to GAAR which need to be resolved,” the finance minister said in his speech on Monday. According to experts, this will bring more clarity on the government’s plan of taxing indirect transfers. GAAR aims to check tax avoidance, empowering the tax department to look into transactions deliberately structured to do this. “The industry was hoping GAAR might be postponed again, especially in the light of slowing down of the world economy, BEPS ( the global effort to harmonise tax rules) and the government’s efforts to attract huge foreign investment. However, a further deferment seems unlikely now,” said Rajesh H Gandhi, partner, Deloitte Haskins & Sells. “ It is e

With Union Budget 2016- 17 extending capital gains tax exemption to merger of different plans within a mutual fund scheme, sector officials say it will benefit investors as they will not be liable to pay taxes on these. The latest relief allows a fund house to merge two options within a scheme without additional tax implications. Several MF schemes have multiple options such as dividend, growth and bonus. The intra- merger of plans generally happens when fund houses find the size of a scheme to be sub- optimal. The proposed changes would be effective from April 1and accordingly apply for assessment year 2017- 18 and subsequent ones. Sundeep Sikka, chief executive officer at Reliance MF, says:” The step is part of the simplifying of the merger of schemes so that investors are not at a loss.” Kaustubh Belapurkar, director ( research) at Morningstar India, added: “ I do not see too many mergers happening in this regard.” Business Standard, New Delhi, 02 March 2016

An international body may undertake arbitration in SEZ After income tax incentives announced in the Budget on Monday, units in the GIFT City finance SEZ are expecting relief from certain provisions of the Companies Act and the establishment of a mechanism for appeals. Units in the SEZ will be eligible to 100 per cent tax exemption on income for the first five years and 50 per cent in the next five years. The GIFT City management is in talks with Hong Kong, London, and Singapore arbitration centres and, subject to approval by the government, one of them is likely to set up shop in the SEZ. Companies planning to start operations in the GIFT City SEZ have told the government some provisions of the Companies Act like filing information and formation of boards should not apply to them because they are to be deemed as foreign companies. “We are working with the government on both issues and hope to see progress,” said Ajay Pandey, managing director and group chief executive officer, GIFT C

After sharp criticism of a Budget proposal to tax 60 per cent of the amount withdrawn from the Employees’ Provident Fund, the Union finance ministry will consider suggestions for partially withdrawing it. A finance ministry statement issued on Tuesday afternoon reiterated that 60 per cent of the amount, accumulated through deposits after April 1, 2016 would be taxed, if withdrawn as a lump sum, but also said Finance Minister Arun Jaitley will have a look at it to assess if the tax would be limited to returns on the corpus and take a decision in due course. The statement went on to say there would, however, be no tax, if the sum is invested in an annuity. The ministry also clarified there would be no tax on Public Provident Fund ( PPF). Also, if the annuity sum is withdrawn by the heirs of the contributor, there would be no tax. The Employees Provident Fund, or EPF, is a retirement corpus, in which employees and employers contribute equally over the years of ones employment. Till now,