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Issue #118
COMMUNICATION
COMPLIANCE
COLLABRATION
PSUs seek exemption from paying government huge dividends
Some top state-run firms, under immense pressure to pay a large dividend to fund government spending, are seeking exemption from making huge payouts as that may affect their capital expenditure plans and ratings, officials and industry executives said. The government is insisting that public sector companies pay the maximum possible dividend in this challenging financial year so that additional resources are available for state programmes without breaching the fiscal deficit target.
Slowdown in new investments post demonetization
Investments have fallen sharply post demonetization, slipping to their lowest under the current Narendra Modi-led NDA government, data released by the Centre for Monitoring Indian Economy (CMIE) showed. In the quarter to December, new investment proposals worth Rs 1.25 lakh crore were observed, CMIE said, contrasting it with the average Rs 2.36 lakh crore worth of new investments per quarter in the preceding nine quarters of the Modi government. Data suggests that demonetization has hit the pace of announcement of new investment proposals during the quarter ended December.
- GST delayed, rollout likely to be on 1st Jun 2016.
- Cash withdrwal limits from ATM’s increased to Rs. 4500 per day.
- Incoome Tax Dept. to issue notice to those who bought Car after November 8, 2016
- Rs. 50,000 fine for holding an old currency after December 30, 2016?
- CPE hours compliance date extended till 31 January 2017.
- Currency worth Rs. 5.92 lakhs crore issued since demonitization.
- RBI allows eKYC to use OTP for account opening.
- Paperless ICAI- online submission of ICAI forms.
- AXIS Bank suspends 19 professional. Hires KPMG for forensic audits.
International Section
Bitcoin jumps above $1,000 for first time in three years
Digital currency bitcoin kicked off the new year by jumping above $1,000 for the first time in three years late on Sunday, having outperformed all central-bank-issued currencies with a 125 per cent climb in 2016. Bitcoin - a web-based "cryptocurrency" that has no central authority, relying instead on thousands of computers across the world that validate transactions and add new bitcoins to the system - jumped 2.5 per cent to $1,022 on the Europe-based Bitstamp exchange, its highest since Dec’2013..
India has inspired to act on Black Money: Australia.
Australia has just announced a black money task force in Australia. There’s been some conversation about demonetizing the highest denomination note.
An URGE to become a Cashless Society!
With the current cash flow deficit, people are being forced to make digital payments. Without proper precautions and security policies, the highly reactive nature of cybersecurity leaves us vulnerable to cyberattacks.
One of the biggest financial data breaches in India, exposed in late October, had compromised the financial data of over three million users and victimised major banking companies. The breach occurred when a network of Hitachi ATMs infected with malware enabled hackers to steal users’ login credentials and make illegal transactions. Following this, companies issued new cards and asked customers to limit their ATM usage to those operated by their banks. However, a few weeks after the breach, the demonetisation announcement pushed people to do just the opposite — rush to withdraw money from just any functioning ATM. Till date, there has been no communication from banks or the Reserve Bank of India assuring the public that the infected ATMs have been taken out of service or fixed to prevent further breaches.
Digital transactions:
Over the past week, digital payments have hit record transactions: PayTM said there was a 200 per cent increase in its mobile application downloads and a 250 per cent increase in overall transactions; MobiKwik said its user traffic and merchant queries increased by 200 per cent within a few days of the government’s announcement. Companies such as Oxigen and PayU have also seen a rise in their service usage.
This trend is certainly heading in the right direction if we are moving towards a cashless economy, but the speed of technological development and its integration into our economy far supersedes the speed of defence mechanisms and protocols that could mitigate cyberattacks. Cybersecurity is unparalleled and reactive in nature, which begs the question: is it safe to utilise these new payment platforms?
PayTM, for instance, is certified under the Payment Card Industry Data Security Standard (PCI DSS) 2.0 certification, which is the current industry security standard set by American Express, Visa International, MasterCard Worldwide and a few other international dealers. This is an essential certification for companies that store credit card information. PayTM and other such companies also use 128-bit encryption technology to crypt any information transfer between two systems. It takes more than a hundred trillion years to crack a password under 128-bit encryption.
Read more Info : http://www.thehindu.com/opinion/op-ed/Securing-a-cashless-society/article16723302.ece
Judgements/Tribunals
Content right to :eJurix
Bharti Airtel Ltd. And Anr. Vs. Uoi And Anr. (HC-Delhi)(23 Dec, 2016)
Held: The issue in question, viz., the non-deduction of tax at source resulting in an assesses having to be declared an assesses in default under section 201 of the Act. The court was conscious of the absence of any limitation period in respect of payments to non-residents, for the purpose of Section 195 read with Section 201. Yet, it was held that proceedings could be initiated within reasonable time. The circular relied on by the revenue, furnishing a rationale for not providing limitation: "as it may not be administratively possible to recover the tax from the non- resident", was decisively rejected in G.E. Technologies (supra). Furthermore, the only reason cited by the respondent, i.e. administrative convenience, cannot outweigh the harsh nature of the consequence, which would expose resident payers to the onerous responsibility of maintaining books and documents for an uncertain period of time. Given these considerations, the impugned notices are quashed. The writ petition allowed.
M/s. Shri Lakshmi Steels Vs. Union of India and others. (HC-P&H)(23 Dec, 2016)
Held: Since detention of goods even by the department was also not justified, he is not liable to pay any detention charges demanded by the Shipping Line. The stand taken by the petitioner that the goods imported were cold rolled steel was found to be correct. On the other hand, the stand taken by the Shipping Line was that transportation of goods by the Shipping Line was in pursuance to a contract entered into between the parties, this court does not have the jurisdiction to go into the issues in writ jurisdiction. No doubt, the 2009 Regulations are not applicable on the Shipping Line, however, once it is found that detention of goods for inordinate period was not on account of any fault on the part of the petitioner, he is not liable to be burdened with that cost. It is only the DRI and customs, who should bear the cost, demanded by the Shipping Line. The DRI or customs may get those charges waived off or reduced from the Shipping Line, however, whatever is payable in addition to the freight agreed between the importer and the Shipping Line shall be borne by DRI or customs. Writ petitions allowed.
Reliance Infrastructure Ltd. Vs. Commissioner Of Income Tax, City-Vi, Mumbai. (HC-Bom)(20 Dec, 2016)
Held: It cannot be denied that the amount of deduction claimed under Section 80HHB and Section 35B of the Act is not subjected to Indian Income Tax. The tax paid in Saudi Arabia on income which has accrued and / or arisen in India is not eligible to deduction under Section 91 of the Act. It is not disputed before us that some part of the income on which the tax has been paid abroad is on the income accrued or arisen in India. Therefore, to the extent, the tax is paid abroad on income which has accrued and/or arisen in India, the benefit of Section 91 of the Act is not available. In such a case, an Assesses such as the applicant assesses is entitled to a deduction under Section 40(a)(ii) of the Act. This is so as it is a tax which has been paid abroad for the purpose of arriving global income on which the tax payable in India. Therefore, to the extent the payment of tax in Saudi Arabia on income which has arisen / accrued in India has to be considered in the nature of expenditure incurred or arisen to earn income and not hit by the provisions of Section 40(a)(ii) of the Act. The Reference is disposed of
Blog
Demonetization! Is it worth??
Indian have a penchant to stand in queue…any queue. And with time, we break it to our advantage!
Our PM, Narendra Modi just gave us an opportunity to form huge queues! Or did he?? For some, this is a horrible, horrible step in the wrong direction which shall bring untold misery. Yes, for those used to handling only cash, this is indeed a very, very tough situation. And then there are those who do use other means but got stuck because ATMs wouldn’t throw-up cash and what you need is only cash!
Seen in the right perspective, this is one step whose time had come. When 86% of your currency notes are at the misery of just two denominations, it is obviously time to set things in order! Firstly, these gave rise to an unaccounted economy which could according to experts even over-shadow the accounted brethren! Add to that the fact that a substantial percentage of these currency notes were actually fakes pumped in through various sources, with maximum being smuggled across a
rather porous though heavily guarded border making the whole argument against the move seem rather tame and lame.
A surprisingly strong argument in favor of this exercise could be that an economy which is the 3rd largest (on PPP basis) ranks 76th on the corruption index! It clearly shows how deep unaccounted cash and corruption have spread their tentacles! Very deep indeed!
We discuss here the relative merits and demerits of the move leaving the final conclusion to our readers!
Merits of demonetization:
1. Fiscal measures and cash pump priming which includes timely infusion of currency notes shall henceforth be in check! This in itself results in controlling inflation and foreign currency stability.
2. If it cannot be accounted, it does not exist! In the short run the size of the economy may take a hit but with time with everything coming out into the open, the economy grows and with it, the Govt’s tax kitty! The figure of un-accounted cash yet to enter the system is likely to be to the tune of USD 3 trillion….not small be any measure despite which what we go remains substantial!
3. Banks flush with funds so loans likely to be cheaper! Rate of interest on loans of most kinds is likely to come down. Economy shall have more purchasing power which if the supply side can keep up with, shall lead to growth. Also, interest on FDs is also likely to come down forcing more money into the markets and investment avenues like stocks, mutual funds etc. This shall help in increasing GDP figures.
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https://www.cadashboard.com/blogs/demonetization_is_it_worth
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