Vodafone deal: Tax dept. seeks over Rs. 32,000 cr from Hutchison

  One of the most controversial economic issues in the last five years was the tax dispute between Vodafone and the tax department. The case originated after the revenue’s (tax department) notice to Vodafone that the company has to pay a capital gains tax of nearly Rs 11000 crores from its purchase of Hutchison Essar Telecom Company from Hutch. The entire dispute centered on the question that whether an indirect transfer of property located in India can be taxed under the relevant section 9(1) (i) of the Income-tax Act. The section instructs imposition of capital gains tax when the capital assets are transferred directly from one company to another. Indirect transfer means when the shares of a company is transferred, the underlying asset is also transferred to the buyer. At

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Clarifications on computation of book profit for the purposes of levy of Minimum Alternate Tax (MAT) under section 115JB of the Income-tax Act, 1961 for Indian Accounting Standards (Ind AS) compliant companies

  Circular Number 24/2017 F. No 133/23/2015-TPL Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes (TPL Division) **** Dated 25th July, 2017 Subject: Clarifications on computation of book profit for the purposes of levy of Minimum Alternate Tax (MAT) under section 115JB of the Income-tax Act, 1961 for Indian Accounting Standards (Ind AS) compliant companies. Central Government notified the Indian Accounting Standards (Ind AS) which are converged with International Financial Reporting Standards (IFRS) vide Companies (Indian Accounting Standards) Rules, 2015. Consequently, the Finance Act, 2017, has amended the provisions of section 115JB of the Income-tax Act, 1961 (‘the Act’) for Ind AS compliant companies w.e.f. 1st day of April, 2017 (A.Y. 2017-18). The Central Board of Direct Taxes (‘the Board ‘) has received representations

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Good news for India Inc as GST Council may consider raising input tax credit 

  India Inc., looking to scale down inventory ahead of the expected rollout of the goods and services tax (GST) on July 1 to overcome the tax credit problem, may have something to cheer about. The GST Council will consider raising input tax credit from the current 40% at its meeting on Saturday. “There is a proposal to raise it… the council will take it up,” said a government official. It could be pegged higher at 50-60%. According to the draft transition law, companies can get credit of up to 40% of their central GST liability against excise duty already paid on stocks lying with traders or retailers when GST is implemented. This has prompted many in the consumer goods sector to cut down on inventory lying with distributors, dealers

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GST to allow companies in tax-free zones to claim refund 

India is working on a new system to allow companies with units in tax-free zones to claim refund of the Goods and Services Tax (GST), helping ensure a smooth transition to the new regime for businesses located in industrially marginal areas. “The Department of Industrial Policy and Promotion is working on a scheme that will replace the current system, built on areabased exemptions, once we switch over to the GST,” a government official, privy to the deliberations, told. Area-based programmes allow businesses in special-category states with a low industrial base, such as Himachal Pradesh, Uttrakhand, and the Seven Sisters of the Northeast, exemptions from the payment of central taxes such as excise duty and some other state levies. DIPP would build the new framework, keeping in view the development needs

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Tax Incidence on Entertainment Services under GST : CBEC Press Release

  PRESS RELEASE Tax Incidence on Entertainment Services under GST Taxes on entertainments and amusements (covered by the erstwhile entry 62 of State List of the Constitution) have been subsumed under GST except to the extent of taxes on entertainments and amusements levied by a Panchayat or a Municipality. 2. The rate of GST approved by GST Council on services by way of admission to entertainment events or cinematography films in cinema theatres is 28%. However, the entertainment tax rates in respect of exhibition of cinematography films in theaters/cinema halls, currently levied by States are as high as 100% in some of the States. 3. The rate of entertainment tax on cable TV and Direct-To-Home (DTH) levied by States is in the range of 10%-30% in many States. Apart from

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Demonetisation will widen tax base: Finance Ministry to Par panel 

  Demonetisation will lead to a wider tax base and lower interest rates, thus paving the way for “sustainable faster economic growth”, the Finance Ministry has said. In a written response to the Parliament’s Public Accounts Committee (PAC), the Revenue Department said that due to withdrawal of old high-value notes, the idle/hidden cash has come into the formal system which will be utilised for productive purposes. “Targeted verification of suspect substantial deposits is likely to widen and deepen the tax base,” it said. It is easier to track the cash which has returned to banking channels, thus making tax evasion “more difficult”, it added. Further, increased availability of funds with banks and “lowering of interest rates” are expected to enhance credit disbursal, promoting investments in productive economic activities and giving

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Law on taxing indirect transfer of shares likely to be amended 

Days after issuing a clarification on taxing indirect transfer of shares which sparked concerns among foreign investors, the government may be looking at amending the regulation, two persons in the know told. “The government has received representations from many foreign investors. The government could take a relook at amending the law around taxing indirect transfer of shares,” a senior tax official close to the development said. Many foreign portfolio investors (FPIs), their custodians, private equity and venture capital funds reached out to Central Board of Direct Taxes (CBDT) and market regulator SEBI with their concerns. “I have myself read one of the representations and while it may be too early to say what the amendment could be, the government can amend the regulations,” he added. Many industry trackers expect the

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CBDT identifies 67.54 lakh income tax non-filers for FY15 

  The Income Tax Department has identified an additional 67.54 lakh potential non-filers who carried out high value transactions in 2014-15 but did not file return of income. The Non-Filers Monitoring System (NMS) was initiated by CBDT, the policy making body of I-T Department, for identification of non-filers with potential tax liabilities. “The Income Tax Department has conducted the fifth cycle of data matching which has identified an additional 67.54 lakh potential non-filers who have carried out high value transactions in the financial year 2014-15 but did not file return of income for the relevant assessment year i.e. AY 2015-16,” CBDT said in a statement. Non-filers have been identified based on data analytics carried out by the Systems Directorate of Central Board of Direct Taxes (CBDT) about whom specific information

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Use old notes to pay taxes, penalty under IDS: Modi govt 

The Income Tax department today said now-defunct Rs 500 and Rs 1,000 notes can be used till December 30 for paying tax on disclosures made under the tax evasion amnesty scheme. The government has come out with Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana (PMGKY), 2016, under which those with unaccounted cash were offered a chance to come clean by paying 50 per cent of it as tax, penalty and surcharge, while parking an additional 25 per cent in a non-interest bearing deposit for four years. “It is stated that up to December 30, 2016, the payment towards tax, surcharge, penalty and deposit under the PMGKY can be made in old bank notes of rupees 500 and rupees 1000 denomination issued by the RBI,” a finance ministry

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FM Jaitley hints at low tax rates due to demonetisation, digi-payments 

  Finance Minister Arun Jaitley today hinted at lower direct and indirect tax rates in the future as demonetisation results in higher tax revenues from unaccounted wealth coming into system. He also warned of a “very heavy price” that unscrupulous elements will have to pay for amassing large amounts of cash unlawfully, saying agencies are keeping a close eye on cash accumulations. The November 8 announcement by government to demonetise high value notes has in one stroke junked 86 per cent of the currency in circulation and holders of the discontinued notes can deposit them in banks before the end of the year and withdraw money in new currency. The money being deposited has to be accounted for and taxes paid – 50 per cent on voluntary disclosures of unaccounted

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