August 2015 Newsletter - SNR - Chartered Accountants2015.pdfSNR&company chartered accountants Volume 6 Issue 8, August 2015 Newsletter Bringing value through Expertise Highlights ŸMAT

SNR& company

charteredaccountants

Volume 6 Issue 8, August 2015

NewsletterBringing value through Expertise

Highlights

Ÿ MAT row: Investors, banks want SC to hear them with CastletonŸ CBDT raises cost inflation index by 5.57% for 2015-16Ÿ Taxman should treat MNCs with care: ShomeŸ Disclosures to enjoy immunity from PMLA: Black money FAQsŸ I-T dept to bring one crore new people under tax net this fiscal

Ÿ Boost for Make in India: Local manufacturers of mobile phones, laptops regain tariff advantage with CBEC notificationŸ RBI tightens NPA rule on credit card duesŸ Jaitley introduces bill to replace Negotiable Instruments ordinanceŸ Companies can file ‘unaudited’ financial statements of foreign subsidiaries, says MCAŸ Sebi may take action against companies for not hiring female directorŸ Companies get more time for filing annual returns with MCAŸ Government asks Sebi to tweak rules on related party transactions to make it at par with Companies Act 2013

Ÿ Place of Supply' rules for e-commerce under GST on anvilŸ Service charge collected by hotels is not service tax: FinMinŸ New norms for manual scrutiny of service tax returns from August

For private circulation only among clients and associates Page 1 of 8

Direct Tax

MAT row: Investors, banks want SC to hear them with CastletonIn the ongoing row over the imposition of minimum alternate tax (MAT) on foreign investors, global banks and investor lobby groups have requested the Supreme Court to hear them along with Mauritius-based Castleton Investment (CIL), which has sought clarity on tax consequences on foreign companies who do not have permanent establishment in India. CIL has challenged the AAR’s order that held that the company would have to pay MAT on capital gains arising from sale of shares, thereby withdrawing the benefit available under the India-Mauritius double tax avoidance agreement.The Authority had ruled that the provisions of Section 115JB will be applicable to foreign companies who do not have permanent establishment (PE) in India. This, according to the company, will nullify the benefits provided under the treaty. The company said that the impugned order of the Authority was not in line with the view taken by it in its earlier rulings, in the case of Timken Company and Praxiar Pacific, that have attained finality now.

www.snr.net.in

SNR& company


Bringing value through Expertise


CBDT raises cost inflation index by 5.57% for 2015-16The Central Board of Direct Taxes (CBDT) has specified value for the cost inflation index for 2015-16. Last year, the index was ‘1024’ and this year it is ‘1081’. This would mean that there has been a 5.57 per cent rise in the cost inflation index for 2015-16. A cost inflation index helps reduce the inflationary gains, thereby reducing the long-term capital gains tax payout for a taxpayer. The cost of acquisition as well as the cost of improvement is adjusted for inflation between the date of purchase and date of sale (through the cost inflation index) before the long-term capital gain is ascertained.


Taxman should treat MNCs with care: Shome

In its quest to collect taxes from multinational companies (MNCs), the government should not create a structure that makes their operations completely unviable, said Parthasarathi Shome, former Chairman, Tax Administrative Reforms Commission. “The basic thing to remember is that India is part and parcel of a much wider world. We are not closed anymore, we are not autarchic,” he said.

Disclosures to enjoy immunity from PMLA: Black money FAQsIn a bid to encourage tax evaders to avail of the compliance window provided for declaring undisclosed foreign assets under the new black money Act, the government has clarified that it won’t take action against individuals whose declaration is found ineligible due to it having prior information under tax treaty. In another concession, along with I-T Act, Customs Act, FEMA, Wealth Tax Act and Companies Act, declarations made under the new Act will also not attract penalties under the Prevention of Money Laundering Act (PMLA), the tax department clarified. While the FAQs make it clear that those who have acquired undisclosed foreign assets through corruption money will not be eligible for availing of the compliance window, tax evaders will be able to claim capital gains on sale of such assets in future, which they have declared and paid for tax and penalty. Under the new act, tax will also be chargeable for assessment year 2016-17 for which the relevant previous year is 2015-16. Accordingly, the act and the compliance provisions would be effective July 1. A person who has inherited any property acquired from unexplained sources of investment will have to declare the same on the fair market value of the property, which will be higher of its cost of acquisition and the sale price.


www.snr.net.in


Indirect Tax

As part of GST roll out, the Revenue Department will prepare 'Place of Supply' rules that will comprehensively cover taxation of e-commerce, an official said. These rules will be important as the Goods and Services Tax will be destination based and levied at the point of delivery. They will help determine the location of supply of goods or services as also whether the supply is intra-state or inter-state. To be drafted by the Central Board of Excise and Customs for GST implementation, the rules will take into account the sales through e-commerce, CBEC Member V S Krishnan said. "E-commerce is a sunrise industry. In next 3-4 years, it is likely to boom. The Place of Supply rules will have to be drafted carefully to take this into account," he said. "They are essential and extremely important because there are pan-India services like banking, telecom, insurance where it is not so easy to locate the recipient of service... E-commerce will also have to be taken care of through these rules," he added.

Place of Supply' rules for e-commerce under GST on anvil


The income tax department has launched an ambitious drive to bring under its net one crore new taxpayers, after the government recently asked the official to achieve the target within the current financial year. As part of the government’s initiative to broaden the base, the Central Board of Direct Taxes (CBDT), apex policy making body, this week activated all field formations of the department to achieve the goal.

I-T dept to bring one crore new people under tax net this fiscal


SNR& company



www.snr.net.in

New norms for manual scrutiny of service tax returns from AugustCentral Board of Excise and Customs (CBEC) will start detailed manual scrutiny of service tax returns of assessees based on risk parameters under modified norms from August 1. CBEC, the Finance Ministry said, has issued revised 2009 guidelines on manual scrutiny of service tax returns in view of the legal changes brought about by the Negative List based taxation of services and administrative changes like creation of separate Commissionerates for Audit. As per a CBEC circular, the detailed return scrutiny would be conducted in respect of such assessees whose total tax paid for 2014-15 is below Rs 50 lakh. However, the assessees who are subject to service tax audits would not be covered under the detailed scrutiny programme. "In an era of self assessment of tax liability by the assessees, compliance verification assumes greater importance. Scrutiny is one of the three prongs of compliance verification, the other two being audit and anti evasion," the Ministry said. The selection of the asseessees for the purpose of manual scrutiny, the CBEC circular said, would be made under three bands -- where the Service Tax is paid up to Rs 10 lakh, Rs 10-25 lakh and Rs 25-50 lakh in 2014-15.

Service charge collected by hotels is not service tax: FinMinThe government has clarified that “service charge” collected by certain restaurants and hotels is not “service tax”, which is levied at a rate of 5.6 per cent on the total bill. In a statement, the Finance Ministry said some hotels, restaurants and eateries, besides charging for the food and beverages, are also levying “service charges” in their bills which are retained by them. Some of the consumers have a misapprehension that these “service charges” are being collected by the restaurant on behalf of the government as tax, it added. “It is c l a r i f i e d t h a t t h e s e ‘ s e r v i c e c h a r g e s ’ c o l l e c t e d b y t h e restaurants/hotels/eateries are retained by the restaurants/hotels/eateries and are not ‘service tax’ imposed by the government,” the Ministry said. In case of air-conditioned eateries and hotels, the service tax at the rate of 14 per cent is charged only on 40 per cent of the bill amount. The effective service tax rate in respect of services provided in relation to serving of food or beverage by a restaurant, eating joint or mess having the facility of air-conditioning or central air-heating in any part of the establishment is 5.6 per cent of the total amount charged.


SNR& company



www.snr.net.in


RBI tightens NPA rule on credit card duesLabelling a credit card customer as a non-performing asset just became more easier for banks with the Reserve Bank of India tightening norms on dues. The RBI has asked banks to consider the due date on which the customer is supposed to pay the minimum amount towards credit card dues while calculating the 90-day period beyond which the customer will be considered an NPA if there is no payment made. According to RBI data, banks issued more than 1,78,000 credit cards in April and the outstanding credit cards issued went up to 2.12 crore. As of May end, credit card outstanding amounted to Rs 32,400 crore, a growth of 23% year-on-year.

RBI / FEMA

India has restored a key tariff advantage to local manufacturers that was snatched away following a Supreme Court judgement, giving a boost to prime minister Narendra Modi's 'Make in India' campaign. Domestic manufacturers of electronic items such as mobile phones, laptops and tablets will get a boost from this incentive, as will others such as coal producers. The Central Board of Excise and Customs, the apex indirect taxes body, has said only those manufacturing goods in India can enjoy a concessional 2% duty regime without availing of tax credit on inputs, not importers who will have to pay 12.5% countervailing duty. The Supreme Court, in a case related to SRF Ltd, a manufacturer of chemical-based intermediates, had ruled that importers could avail of lower duty regime if they did not take tax credits. This had put to risk the nascent plans of foreign investors such as Taiwan-based Foxconn Technology Group and Softbank of Japan to set up manufacturing facilities in the country and placed at a disadvantage the existing plants of Samsung Electronics Co. and Huawei Technologies Co. Mobile phones attract excise duty of 1% and a 1% National Calamity and Contingency Duty if no central value added tax (CENVAT) credit on inputs used is claimed, while a 12.5% countervailing duty is levied on imported devices. This gave a clear tariff advantage of 10.5% to local manufacturers. But the SC ruling in the SRF case said importers would pay only 2% duty if they did not avail of CENVAT credit, putting them on par with local manufacturers. The government has filed a special leave petition against the decision but keeping in view the urgency of the situation, issued a notification that will apply prospectively. For the period March to July, the decision of the apex court on its petition would apply. Experts said the move will boost the government's 'Make in India' programme.

Boost for Make in India: Local manufacturers of mobile phones, laptops regain tariff advantage with CBEC notification


SNR& company



www.snr.net.in


Jaitley introduces bill to replace Negotiable Instruments ordinanceThe Finance Minister Arun Jaitley had introduced in the Lok Sabha a new bill that sought to replace the Negotiable Instruments ordinance promulgated in mid-June this year. This bill – Negotiable Instruments (amendment) Bill 2015 – seeks to provide a place of jurisdiction that is fair to both the complainant and the accused (in cases filed for dishonour of cheques). The objective is to ensure a fair trial in cheque bounce cases. The Modi-led government had to issue an ordinance so as to fast-track resolution of cheque-bounce cases. The ordinance had sought to remove the ambiguity on territorial jurisdiction over dishonour of cheques. This ordinance had provided that all cheque-bounce cases can be filed only in a court within whose local jurisdiction the bank branch of the payee is situated, and where the payee presents the cheque for payment.

Companies can file ‘unaudited’ financial statements of foreign subsidiaries, says MCAThe Corporate Affairs Ministry (MCA) has relaxed the norms requiring Indian companies with overseas subsidiaries to file ‘audited’ financial statements of such foreign subsidiaries with the Registrar of Companies in India. After consulting with the CA Institute, the MCA has now clarified that even ‘unaudited’ financial statements of the foreign subsidiaries could be filed with the RoCs and this would be treated as due compliance of Indian company law. This dispensation will be allowed in case of a foreign subsidiary which is not required to get its financial statements audited as per legal requirements prevalent in the country of its incorporation; and which does not get its financial statements audited. MCA has also clarified that the unaudited accounts would need to be translated in English, if the original accounts are not in English. Moreover, the format of financial statements of foreign subsidiaries should be, as far as possible, in accordance with the Companies Act 2013.

SEBI/Corporate Laws


SNR& company



www.snr.net.in


Sebi may take action against companies for not hiring female directorMarket regulator Sebi may take action against companies who have not appointed women directors on their boards to meet the requirements of the new Companies Act. Stock exchanges have fined over 500 listed companies who had not complied. "As per the provisions of the Sebi circular, BSE has till date issued advisory letters to 530 companies regarding levy of fines for non-compliance with the said provision within the prescribed timelines," said a statement from BSE. The NSE has fined 260 companies. However, both stock exchanges have not disclosed the names of the firms which were penalised.

Companies get more time for filing annual returns with MCAWith relevant electronic forms still not ready, the Ministry of Corporate Affairs has given more time for firms to file their financial statements and annual returns under provisions of the new companies law. Firms can make such filings without any additional fee till October 31.

Government asks Sebi to tweak rules on related party transactions to make it at par with Companies Act 2013The Securities and Exchange Board of India (Sebi) may find itself on a tricky terrain over the government's nudge to change rules on related party transactions in corporates. In a move towards promoting ease of doing business, the ministry of corporate affairs (MCA) has asked the regulator to tweak rules to make them at par with those under the Companies Act 2013. This has raised concerns among market participants about a dilution in Sebi's stand on protection of minority shareholders. Experts and shareholder advisory firms, which believe Sebi should hold its ground on the issue, will soon take up the matter with the regulator. The MCA changed its stand on related party transactions in 2014, when it lowered the threshold for minority shareholder votes for listed companies from 75% to 50% for passing resolutions. It also allowed voting by 'related parties' while barring only 'interested parties'.


SNR& company



www.snr.net.in


Stock Indices Opening[ 01-July-2015]

Closing[31-July-2015]

Change (%)

Sensex 27823.65 28114.56 1.03 %

Nifty 8376.25 8532.85 1.84 %

Dow Jones 17638.12 17689.86 0.29 %

FTSE 6520.98 6696.28 2.62 %

Gold INR 26,455.00/ 10gm INR 24,717.00/ 10gm -7.03 %

Silver INR 35,602.00/ Kg INR 33,970.00/ Kg -4.80 %

US ($) - INR 64.00 Euro (€) - INR 70.16 GBP (£) - INR 99.83

Source - Global Indices, BSE, NSE, RBI, MCX INDIA

For suggestions and feedback click here

Contact Us:

Mumbai10 - 11, Ground Floor, Chintamani Plaza,

Andheri-Kurla Road, Andheri East, Mumbai, Maharashtra- 400 099 (India)

Ph: +91 22 67251231

PuneOffice no 5 and 6, Kalashree Apartment,

Opposite Bank of Maharashtra, Karve Road, Pune 411004 (India) Ph: +91 20 25435788

E-mail: [email protected],

Gurgaon110-111, Plot No. 56, Institutional Area,

Sector - 44, Gurgaon – 122002, Haryana (India)Ph: +91 9953475125

BangaloreNo 605, Second Floor, 62nd Cross, 5th Block, Rajajinagar,

Bangalore Karnataka - 560010 (India)Ph: +91 80 23350133

Website: www.snr.net.in

Click here to unsubscribe for newsletter

Notes:Copyright and ownership of all contents of this newsletter belong to SNR & Company except third-party resources.

Disclaimer

The information contained in this newsletter is of general nature and is not intended to address the issues of any particular individual or entity. Though the firm has taken due care in the preparation of this newsletter to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Further, the information contained herein is not intended to constitute any legal advice and the firm will not accept any responsibility towards those who rely solely on the contents of this newsletter. The material provided in this newsletter is for information purpose only and it is advised to take appropriate professional advice before acting on the information contained in the newsletter.

DelhiA-15, Second Floor, Hauz Khas, New Delhi - 110016 (India)

Ph: +91 11 26856421, 41655801, 26855884Fax: +91 11 26567540

SNR& company



www.snr.net.in

mailto:[email protected]&subject=newsletter:suggestions and feedback

mailto:[email protected]&subject=newsletter:unsubscribe request

August 2015 Newsletter - SNR - Chartered Accountants2015.pdfSNR&company chartered accountants Volume 6 Issue 8, August 2015 Newsletter Bringing value through Expertise Highlights ŸMAT

Documents