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Budget 2017-18 may turn out to be one of the most trend-setting Budgets to be presented by the National Democratic Alliance government. This is the first time that the Railway Budget has been merged with the Central Finance Budget and there is no distinction between Plan and nonPlan expenditure. This apart, the Budget would be presented on February 1, almost a month earlier than the usual date. Further, preceded by the historic move of demonetisation and expected to be followed by the path-breaking tax reform of goods and services tax (GST), this Budget carries high expectations for both consumers and business owners. With the conclusion of the GST Council’s last meeting, the tax reform’s journey towards realisation has progressed substantially. Resolution between the Centre and the states on the much-debated issue of sharing administrative control over taxpayers should also set the pace to reach the remaining milestones and for the government to roll out GST. The decision that

Fresh PoEM guidelines will affect pharma, energy, automobiles, manufacturing and software companies DILASHASETH New Delhi, 24 January The government on Tuesday issued guidelines to plug tax evasion by shell companies or foreign firms set by groups in India to retain income outside the country, dashing hopes of industry that implementation of these norms would be deferred to next year. The rules will affect companies in industries like pharmaceuticals, automobiles, energy, manufacturing and software. The guidelines have a few safeguards that were not present in draft norms issued in 2015 such as a collegium of officers to vet whether companies are to be taxed on the basis of their place of effective management (PoEM) and test of active business. However, experts warned even then there could be subjectivity in establishing PoEM. The rules outline companies incorporated overseas but with effective control of business and majority of board meeting in India will be considered a

Just days ahead of the Union Budget, a high-powered panel headed by Andhra Pradesh Chief Minister N Chandrababu Naidu on Tuesday recommended imposing tax on cash transactions of at least Rs 50,000 through banks to discourage the excessive use of cash and promote digital payments. “To curb use of cash for large transactions, the ministry of finance should consider levy of banking cash transaction tax (BCTT) on transactions of Rs 50,000 and above,” the panel, constituted by Prime Minister Narendra Modi in November after demonetisation, said in its interim report. “We have submitted the recommendations to the Prime Minister today (Tuesday) and are fairly confident that some of these might be incorporated in the 2017-18 Union Budget,” Naidu later told reporters. The panel wants the Reserve Bank of India (RBI) and the finance ministry to not allow cash transactions above a threshold. However, some experts said that existing measures to curb high-value cash transactions were good e

The income tax department has unveiled the final guidelines to determine if an entity can be considered an Indian resident and taxed here and has made them effective from April 1, 2016 (FY16), dashing the hopes of industry , which expected their implementation from the next financial year. Indian multinationals that have set up arms overseas to raise funds or expand business and foreign companies that outsource high-end critical functions in India to contribute to their global value chain will face tighter scrutiny if they are effectively managed in India. The Central Board of Direct Taxes released the 10-page final guidelines on Tuesday that will help determine the place of effective management (POEM) of companies, applicable from April 1 of the current financial year. The apex direct taxes body made it clear that the objective is to catch those avoiding taxes. “The intent is not to target Indian multinationals which are engaged in business activity outside India.The intent is to

LENS ON A|Cs WITHOUT KYC, DEPOSITS NOT COMMENSURATE WITH INCOME The income-tax department has begun raising queries with regard to what it thinks are suspicious bank deposits, including those made in cooperative banks, said tax officials and consultants with direct knowledge of the matter.The move is part of the government's crackdown on money laundering in the wake of demonetisation. “In the first round, the tax department is focusing on those bank accounts that do not have proper KYC (know your customer) credentials or cash deposits do not correspond with the individual's income,“ said one of them. ET reported on January 19 that the I-T department was looking to question cash deposits exceeding ` . 10 lakh.About 1.5 lakh accountholders have deposited more than ` . 10 lakh each and there have been suspicious cash deposits in one crore accounts belonging to 75 lakh people, ET said. The tax department is specifi cally targeting some people in the first round based on big d

Regulator also wants ELSS investment limit increased to Rs 2 lakh The capital market regulator is said to have asked the finance ministry to ease tax rules for stock trading and investments in mutual funds, measures that should help give the equity market a boost if accepted. In its recommendations to the government ahead of the Union budget, the Securities and Exchange Board of India has suggested lowering the securities transaction tax (STT) for stock trading and reducing the holding period for debt mutual funds to 12 months from 36 months for consideration of long-term capital gains. The regulator has also sought an increase in the investment limit for tax-saving equity mutual fund schemes to Rs.2 lakh from Rs.1.5 lakh. “Sebi has written to the gov ernment that rebates under Section 88E for securities transaction tax paid should be restored,“ said a senior regulatory official. STT, introduced in 2004, was initially fully deductible against the income tax payable. In 2008, th

Total inflows double to Rs.24,862 crore over past year; however, more changes needed, say observers PAVAN BURUGULA Mumbai, 23 January Alternative Investment Funds (AIFs) are reaping dividends from an easier regulatory framework. In the past year, investments made by these entities have increased more than two fold to Rs.24,862 crore, shows data from the Securities and Exchange Board of India (Sebi). AIFs are pooled funds, similar to mutual funds but with more liberal investment norms. The investment size is higher, given the high risk associated with these products. There are three categories. Category-I comprises infrastructure, social venture and small & medium enterprise funds. These attract special concessions, including tax breaks for investors, and were designed to fund capital-intensive sectors. Category-II consists of private and equity funds that are allowed to invest anywhere in any combination. However, these cannot invest in debt except for day-to-day operat