Steel min plans to increase iron ore export duty by 10%

The government proposes to tighten its control on the mining sector through fiscal measures aimed at checking exports of iron ore to the lucrative Chinese market. The steel ministry is working on a proposal to increase the export duty on iron ore from the present 20% to 30% to enhance export deterrence. While the ministry maintains that the rationale behind such a hike is to ensure sufficient supply of raw material for the domestic steel industry, the move also aims to check illegal mining as it continues to flourish in China. “We are looking at another 10% hike across the board in iron ore export duty. The draft of the proposal is being worked out and would be discussed with the commerce and finance ministries,” a steel ministry official said.

Source : http://www.financialexpress.com/news/Steel-min-plans-to-increase-iron-ore-export-duty-by-10-/844251/

Competition Council to act as a forum to resolve turf wars among regulators

The government has said a proposed competition council will act as a forum to resolve turf wars among regulators as it fears a possible rise in disputes once the Competition Commission of India, or CCI, begins to enforce antitrust laws. As inter-regulatory conflicts will eventually hurt consumers and pose investment risks, the "NCPC (National Competition Policy Council) will help avoid overlap of mandate and interpretation of competition, jurisdiction and legislation between CCI and the other regulators," a corporate affairs ministry official said requesting anonymity. The corporate affairs ministry had come out with a draft National Competition Policy in July that seeks to assess existing public policies and ensure that these do not restrict or harm competition. Under this draft policy, it was proposed to set up an NCP Council to facilitate and assist central and state departments in reviewing rules necessary to ensure competition in various sectors.

Source : http://economictimes.indiatimes.com/news/economy/indicators/competition-council-to-act-as-a-forum-to-resolve-turf-wars-among-regulators/articleshow/9929698.cms

This Elephant is Losing FDI Race

Do we in India have enough domestic savings to generate the mammoth capital we need to develop our infrastructure, to educate and create enough jobs for the masses, and to develop in-house technologies? The answer is a clear no and, hence, foreign direct investment (FDI) is needed to capitalise various sectors, as well as to bring in up-to-date technologies, networks, markets, process innovations and other best practices that enhance productivity of both foreign and domestic capital. As per Unctad’s World Investment Report, 2011, FDI into India has declined to $25 billion, a 31% slide, resulting in the country slipping six notches to the 14th spot in global ranking of countries that attracted highest foreign investment. While China has maintained its second spot with increase in FDI to $106 billion, i.e., 400% more than what India could manage, Brazil has raced ahead to the fifth position with $48 billion from its last 15th position and Belgium to the fourth position with $62 billion from its last 17th position, managing almost 160% FDI growth. FDI flows to Bangladesh have increased by 30% and, as some have already pointed out, in percentage terms, even Pakistan has performed better than India.

Source : http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=ETNEW&BaseHref=ETD/2011/09/10&PageLabel=11&EntityId=Ar01102&ViewMode=HTML

RBI clears Enam-Axis Bank deal

The Reserve Bank of India has approved Axis Bank’s revised plan to acquire the broking and investment banking businesses of Enam Securities. This ends nearly 10 months of uncertainty over the deal. The terms of the earlier proposal were revised following the central bank’s discomfort with the structure of the deal that entailed Axis Bank offering shares to Enam, while the acquisition was done by a subsidiary. Sources familiar with the developments said the clearance came a few days earlier. While the details of the revised structure were not known, the sources said it would remain an all-stock deal. The deal would still require approval from other regulators. According to sources, while Axis Bank would acquire Enam’s businesses through shares, the bank’s subsidiary, Axis Securities and Sales, may pay cash to the bank before merging the businesses with itself. The bank’s board will soon meet to take stock.

Source : http://www.business-standard.com/india/news/rbi-clears-enam-axis-bank-deal/448681/

Can RBI move ahead of the curve?

There is now increasing apprehension that, for the 12th time in succession (since February 2010), RBI will resort to monetary tightening in September. For the statistically minded, there is also a contrarian view within RBI against rate hikes (RBI minutes of monetary policy meeting). Before attempting a rationale of such an action, we must state in the interests of full disclosure that we are linked inextricably with an apex business organisation. But we would like you to read on to know and judge the policy action based on plain speak. Plain speak 1: Since July 2011, when RBI increased the rates, the news from the global economy confirmed the worst fears of an impending recession.

Source : http://www.financialexpress.com/news/can-rbi-move-ahead-of-the-curve/844295/

We can regulate unlisted companies if they raise public funds, says SEBI

Market watchdog SEBI on Thursday claimed before the Securities Appellate tribunal (SAT) that the Companies Act gives it enough powers to regulate unlisted companies if such entities have raised funds from the public. “Does SEBI have powers under Section 55A of the Companies Act? My answer is yes. If OFCD is a security under the Securities Act, then it comes under the SEBI Act. And if it comes under the SEBI Act, then SEBI has jurisdiction. SEBI can (therefore) pass a special order to regulate unlisted companies,” SEBI's Counsel, Mr Arvind P. Datar, claimed before SAT. Mr Datar was contesting Sahara Group's claim that its OFCD (optionally fully convertible debentures) were not a public issue and, therefore, cannot be regulated by SEBI.

Source : http://www.thehindubusinessline.com/markets/article2440015.ece

Bombay HC adjourns MCX-SX case to Sept 16

The Bombay high court have adjourned the hearing on the MCX-SX versus Securities and Exchange Board of India (Sebi) case to September 16. Friday’s hearing could have been important, as the date for MCX-SX’s licence renewal to operate as a currency exchange is on September 15. The court had heard both sides but MCX had asked for a few more minutes to argue their case before the judge delivers his verdict. MCX had approached the HC challenging a Sebi order rejecting its application seeking permission to launch equity trading. Sebi had said MCX- SX was not a “fit and proper person”. Last year, Sebi had renewed MCX’s licence on currency derivatives, citing that the matter was in court. The outcome of the case will have a direct bearing on MCX-SX’s curency trading operations. Currently, it is the leading exchange in currency derivative volumes. The other two exchanges are National Stock Exchange (NSE) and United Stock Exchange (USE).

Source : http://www.business-standard.com/india/news/bombay-hc-adjourns-mcx-sx-case-to-sept-16/448664/

Madhya Pradesh posts four fold increase in commercial taxes revenue

Madhya Pradesh has posted a close to four fold increase in commercial taxes revenue over last seven years. This creditable achievement, despite exempting many commodities and reducing rates on some others, is attributable to efficient tax administration, effective curb on evasion and positive attitude of traders. The commercial tax revenue in year 2003-04 was Rs. 3,952.25 crore, which rose to Rs. 12,342.16 crore in 2010-11. This increase assumes greater significance given the fact that VAT on many items has been removed and reduced on some others. These taxes include Central Sales Tax, VAT Entertainment Tax, Hotel Tax, Professional Tax etc. The buoyancy in tax collection has pushed the development of the state. In the year 2003-04, revenue of Rs. 2,916.73 crore was received by way of VAT, Rs. 454 crore through Central Sales Tax, Rs. 392.71 crore as Entertainment Tax, Rs. 184.58 crore and Rs. 4.21 crore as Hotel Tax.

Source : http://www.ummid.com/news/2011/September/09.09.2011/commercial_taxes_in_mp.htm

New duty drawback rate may be lower; panel for 5.5% cap

The Finance Ministry can fix a rate of up to 3 per cent lower for the new duty drawback scheme that will replace the Duty Entitlement Pass book (DEPB) scheme from October 1. Sources told Business Line that the Ministry has already received recommendations from the Saumitra Chaudhuri panel in this regard. Now, work is under way to finalise the scheme. The panel has also suggested capping of new duty drawback rates at 5.5 per cent, the sources added. Currently corporates get DEPB benefit on an average rate of 9 per cent. On the other hand, average duty drawback rates when the Cenvat facility is used are 13-14 per cent. Despite this, DEPB is considered more attractive as the exporters get duty-free scrips or entitlements based on the value of goods exported to pay for import duties. Although the assumption is that all the inputs have been imported, exporters are allowed to use up to 50 per cent domestic inputs.

Source : http://www.thehindubusinessline.com/industry-and-economy/article2439927.ece

Good conscience can prove taxing

Aishwarya Rai's exemplary behaviour in heeding her conscience and returning the signed-up amount, paid to her by UTV for ‘Heroine', is unlikely to win her any sympathies from the Income-Tax Department. The Supreme Court in CIT vs. Ogale Glass Works Ltd (1954) 15 ITR 529 had held that where payment was made to the assessee by a cheque, and the cheque on presentation was not dishonoured, it relates back to the date of receipt. The fact of receipt of the amount, in any case, is not in doubt, which means that the amount will figure as her income for the relevant previous year. I-T RELIEF Surrender of salary usually does not get any relief for an employee. Likewise, return of fees by a professional, does not beget one any relief either. It is certainly not diversion of income by an overriding title, but only an application of income after it has been earned, and in this case, furthermore, received, as clearly held by the Supreme Court eons ago, in the famous Sithaldas Tirathdas case. When an income or a part thereof is diverted before it is earned through an overriding title, it is called a ‘charge' on such income, and hence not taxable in the hands of its earner, whereas when there is no such charge, that is, binding obligation charged on the income, it is very much taxable in the hands of the earner.

Source : http://www.thehindubusinessline.com/opinion/columns/s-murlidharan/article2439792.ece?homepage=true

Time to tax dividend income

There had been considerable lobbying in the past from the Chambers of Commerce, Trade Associations, individual high-income taxpayers and various other quarters, generally before the presentation of the budget, for exempting dividend income from Income-Tax. The main ground given was to avoid double taxation. The argument was that it is wrong to tax the same income twice — once when it is earned by companies in their own assessments, and then to subject such income to tax once again, in the hands of the shareholders, as dividends. In this argument, it was conveniently forgotten that the company and its shareholders are two different legal entities. This position has been undisputedly accepted by courts in India and abroad, and by jurists such as Lord Halsbury. In India, the separate legal entities of the company and the shareholders has been accepted by the Supreme Court, in the case of Mrs Bacha F. Guzdar vs. CIT (1955) 27 ITR 1, where the court has said that “the company is a juristic person and is distinct from the shareholders….”. There is nothing in the Indian law to warrant the assumption that a shareholder, who buys shares, buys any interest in the property of the company, which is a juristic person, entirely different from the shareholders. Hence, there cannot be any injustice and hardship, if the two separate entities are taxed separately.

Source : http://www.thehindubusinessline.com/industry-and-economy/taxation-and-accounts/article2439802.ece?homepage=true

Advance tax evaders to get I-T notice

Income tax department has sent notices to more than 100 companies in non-corporate sector who did not pay advance tax as compared to their revenue in the last financial year. The department has thus warned the company owners to better be careful now and deposit the first instalment of advance tax by September 15 or pay it with interest later. It needs to be mentioned that the companies had filed I-T return last year by self-assessment at the end of the financial year instead of paying advance tax in three equal instalments. After making comparative data, the department came to know about anomalies of the companies and the wide difference between the income and tax compliance. So notices have been sent this year and if the tax filed this year turns out to be less than last year, the companies will have to explain the reason for the same, confirmed sources.

Source : http://www.indianexpress.com/news/advance-tax-evaders-to-get-it-notice/844311/

Easier PAN norms for FIIs, foreign nationals

In a move which could improve the fund flow and provide some stability to the choppy Indian bourses, the finance ministry has relaxed norms for foreign nationals and foreign institutional investors to obtain Permanent Account Numbers (PAN) that could also double up as KYC (know your customer) compliance for any investment they make in Indian stocks. Till now, FIIs or foreign nationals had to obtain a PAN and separately meet KYC requirements prescribed by the market regulator before investing in stocks. The tax obligation on any transaction is twice the due amount if they fail to mention PAN. In the revised rules that come into effect from October 1, a foreign national will have to only produce either h/his citizenship number or taxpayer identification number to obtain a PAN. The government is making amendments in Rule 114 and Form 49A of the Income Tax Rules and has proposed to introduce a new Form 49AA. While Form 49A will be used for Indian citizens, the other is for foreign nationals and FIIs.

Source : http://articles.timesofindia.indiatimes.com/2011-09-09/india-business/30134262_1_foreign-nationals-kyc-pan-card