September 24: The Indian rupee strengthened to its highest level in nine years on Monday, spurred by expectations of strong inflows into the stock market.
At 9.01 am, the partially convertible rupee was at 39.83/85 per dollar, a level it last traded in May 1998, up from Friday’s close of 39.90/91.
The benchmark Sensex crossed the 16,900-mark in morning deals on Tuesday on alternate bouts of buying and selling, ahead of expiry of September contract on Thursday. The BSE 30-share Sensex resumed slightly better at 16,890.75 and immediately dipped to a low of 16,811.00 on weak global cues.
But emergence of buying and short-coverings at lower levels ahead of the expiry of September series on Thursday pulled it back to a high of 16,915.91 before being quoted at 16,826.97 at 1030 hrs, a mere fall of 18.86 points over on Monday’s close of 16,845.83.
The broad-based S&P CNX Nifty of the National Stock Exchange (NSE) also moved in a range of 4,953.90, a new intra-day peak, and 4,915.00 before quoting at 4,920.95 at 1030 hrs from previous close of 4,932.20, a decline of 11.25 points.
Realty and capital goods counters attracted fresh profit-booking at higher levels.
Top heavyweight and gainer in the current rally Reliance Industries (RIL) also fell on selling.
Foreign Institutional Investors (FIIs), the main driving force behind current rally, remained heavy buyers after US rate cuts on September 18. They picked up shares worth 6,228.83 crore since September 19, including overnight provisional figures of Rs 1,190.53 crore.
Meanwhile, most of the Asian indices were trading in negative terrain following feeble trend on Wall Street on Monday.
n a move that could boost profitability of exporters, the government is considering issue of duty-free scrips to offset various state-level taxes. The levies include sales tax on petroleum products, central sales tax (CST), electricity duty, octroi, mandi fees, purchase tax, octroi, development tax and toll tax.
The education cess and similar levies should also be neutralised through the proposed duty-free scrips, which can be used by exporters to pay Customs duty on imported inputs, the department of commerce has said in a Cabinet note on the proposed replacement for the popular duty entitlement passbook (DEPB) scheme.
Exporters could save up to 4% of the value of their exports through the new instrument and this would provide substantial boost to them at a time when rupee appreciation has made international competition stiffer, officials said.
While sales tax on petroleum products is over 20% in several states, others levy 25% electricity duty. States such as Gujarat and Goa charge 25% on the power generated by companies for captive use, trade sources said.
Similar is the view in the case of octroi, mandi fees, purchase tax, toll tax and development tax. These may be small levies, but they add up to a substantial amount, accounting for an estimated 4% of the value of the goods exported. The commerce ministry’s proposal has been forwarded to the department of revenue, law ministry and the Planning Commission, officials said. It is likely to be taken up by the Union Cabinet soon, they added.
Don’t be surprised if your organisation receives a directive from the Institute of Chartered Accountants of India (ICAI) asking you to verify the membership of your chartered accountant (CA). The ICAI, a statutory body established under the Chartered Accountants Act 1949, will soon ask companies to ensure that CAs employed by them are registered members of ICAI.
ICAI has already started shooting letters to major corporate houses to ensure that they verify the membership of their CAs. It is estimated that as many as 60,000 CAs are not registered with ICAI that is empowered to take disciplinary actions against its members in case of any accounting malpractice. ICAI believes that there are at least 15,000 to 20,000 CAs employed in India who are not the members of the institute. CAs now settled out of India are also not enthusiastic about retaining their membership with ICAI since they are practicing under the foreign authorities. “Companies employing CAs must ensure that they are registered with ICAI so that the institute can take disciplinary action against him or her in case of any accounting fraud or violation of code of conduct,” chairman, ICAI’s Committee for Members in Industry, said Uttam Agarwal.
He added that ICAI will not be able to punish the culprit CA if he is not registered with institute in the scenario when accounting standards are becoming stringent day by day. According to Mr Agarwal, CAs avoid registration on account of carelessness since corporates ask only for their passing certificate at the time of recruitment and not the registration number with ICAI.
The registration and renewal fees are very much nominal for membership, he said. It may be mentioned here that CAs in the industry have now outnumbered the practicing CAs. Out of about 1.40 lakh CAs, about 75,000 are employed in the industry. With increasing rush of corporates to the ICAI centres for recruitment, the institute has made it mandatory for fresh pass outs to apply for membership before participating in the campus interviews
CBDT has enhanced the scope of filling Etds/Etcs return by amending the rule 31A(applicable on etds) and 31AA(applicable on etcs) vide Income-tax (Ninth Amendment) Rules, 2007 NOTIFICATION No. 238/2007, dated 30-8-2007.Now following person are liable to file etds/etcs return.
1. All Government department/office or
2. All companies.or
3. All person required to get his accounts audited under section 44AB in the immediately preceding financial year; or
4 The number of deductees’ records in a quarterly statement for any quarter of the immediately preceding financial year is equal to or more than fifty
The feel good factor created by the responses to my earlier column on Service Tax liability went on an upward curve when a circular was issued last week by the Ministry of Finance to consolidate procedural issues relating to service tax in availing CENVAT credit, in view of significant changes in law. The circular clarifies the person providing taxable services, except for specific instances where the liability to pay the tax is on the receiver, is the person liable to deposit the tax and register with the department as assessee.
The circular further elaborates that for compliance with CENVAT Credit Rules, in availing and utilisation of credit by recipient of the taxable service, invoices issued under Rules 4A & 4B should reflect the cesses separately leviable, as though implying that the tax is indeed collectible.
The concept of service tax input and output credits in relation to taxable services was introduced well after the 1998 amendment, which shifted the tax burden on the provider. The Service Tax Credit Rules 2002, permitted a service provider to take credit of the service tax paid by him on services provided, i.e. the output services, if his input service, which is received and consumed in relation to providing the output service is in the same category of taxable service. In 2004, the Finance Act extended the scope of service tax credit to goods and services to enable both manufacturers and service providers to utilise the entire gamut of eligible inputs. A move towards a unified goods and services tax regime, the outcome was the CENVAT Credit Rules, 2004 which brought in its ambit capital goods used for manufacture of final products or for providing an output service. The definition of input services was widened to include any service used by a provider to provide his output service or by a manufacturer in relation to establishment costs – which could range from renovation to sales promotion. The restriction on availability of credit for the same taxable service was removed. This combination of a dual regime with a dual role for the assessee created considerable confusion as while the output service provider could now avail credit on input/capital goods, the manufacturer’s capital goods were not necessarily the same for the provider.
To dispel such confusion the circular provides an example of a manufacturer of steel sheets procuring duty paid steel ingots as input, and availing CENVAT Credit of the excise duty thereon. The finished goods or output steel sheets are cleared on the payment of excise duty and despatched to the customer, for which the manufacturer engages the service of a goods transport agency, and as consignor pays service tax on the transport service for the transportation of the goods, but the input credit taken on the ingots cannot be utilised for the service tax charges and tax paid, though statutorily the liability to pay tax for this taxable service is the recipient’s, the transport service is provided by the agency. A bare reading of this would imply that the manufacture consignor though liable to pay tax on his output service, cannot avail the credit because he doesn’t provide the service. Therefore, subject to exceptions, if the provider is the one to avail credit and cannot pass it on, then he also has to pay the tax.
Having said this much, Clause 10.1 of the circular rounds it up stating that any amount collected by a person as service tax from any other person, even if “not permissible in terms of the service tax law”, is required to be deposited with the central government, as obviously retention of such amount would be regarded as unjust enrichment. This reinforces the position that service tax may be recovered from the recipient under a contractual provision. It is another matter that the CENVAT Credit Rules offer a tax advantageous option for the recipient to voluntarily pay service tax in order that he may avail credit against his output service and manufacture. While this is workable in business arrangements, that there is no legal sanction for recovery of service tax from the customer though recognised in the circular, does not address the remedy of an adhoc consumer having no business relatable activity with output services or goods to avail credit against the tax which he pays regularly in addition to all other taxes – direct and indirect. Clearly the government is not ready to take this point head on, as long as the tax collections are met.
Kumkum Sen is a Partner at Rajinder Narain & Co, and can be reached at kumkumsen AT rnclegal.com
3rd Sept 2007
Enhanced entitlement to train Articled Assistants notified.enhancement has come into operation effective from 17th August, 2007
The month of July is associated with the time for filing returns of income by individual taxpayers. The government has recently notified new forms for filing income tax returns. These forms replace the old ones. Any person planning to file her return for the year ended 31 March 2007 (relevant to income tax assessment year 2007-08) will have to use the new forms (see Ready Reckoner).
All the new return forms have a common prefix - ITR. Although the amendment in the Income Tax Rules, 1962 mentions that the new forms apply for the assessment year 2007-08 and subsequent years, the notes at the end of the new forms say that the forms are applicable only for assessment year 2007-08.
Perhaps, the government may change the forms yet again. The new forms are now mandatory for assessment year 2007-08. Old forms can be used for earlier assessment years.
Finance minister P. Chidambaram believes that the return forms in India are the simplest in the world. But does that make our tax returns simple? Old saral was a simple one-page form while the new forms - eight in number - are between two and 20 pages. This excludes the long list of instructions attached to each of these.Taxpayer and trigger scrutiny assessment. Some observations on the forms:
The process is simple for only a small segment of taxpayers deriving income only from salary and interest - they need to fill the simplest of the lot, form ITR-1.
The old saral was more like a summary sheet, wherein the taxpayers had to give their income information through one-liners. Now, taxpayers need to read the instructions carefully as they are required to fill small details, which were annexed earlier.
HYDERABAD/NEW DELHI: The idea of an exit tax on graduates from India’s highly subsidised institutes like the Indian Institutes of Technology and the Indian Institutes of Management is back on the horizon, with the parliamentary standing committee on human resource development suggesting it.
The logic is simple — the exchequer subsidises these students who then go on to earn substantial sums by working for multinationals abroad and the Indian exchequer gets very little for its investment.
The concept of taxing graduates is not new. The UR Rao Committee, set up in 2003 by the NDA government to look into the workings of the All India Council for Technical Education (AICTE), had suggested that the industry which employees these students should pay a cess.
The cess would help the government recover the cost of subsidising these students. The committee’s report was submitted to the then HRD minister Murli Manohar Joshi. Follow-up action on the committee’s recommendation could not be taken as the NDA government was voted out.
Source: ET
The ITD has issued the ITR 1 to 4 on the net to be filled and got printed. But why there is so much delay in other forms? whether the ITD waiting the last few days in due dates i.e near October? Is it not an extra burden on the assessees and their consultants to fill the forms by hand only?