Export of Goods and Software - Realisation and Repatriation of export proceeds - Liberalisation

RBI had vide A.P.(DIR Series) Circular No.70 dated June 30, 2009 increased the period of realisation and repatriation to India of the amount representing the full export value of goods or software exported, from six months to twelve months from the date of export, subject to review after one year.

The issue has since been reviewed and it has been decided, in consultation with the Government of India, to extend the above relaxation up to March 31, 2011.

 

Click here for the text of the A.P. (DIR Series) Circular No.57 dated June 29, 2010.

Securities Contracts (Regulation) (Amendment) Rules, 2010

Securities Contracts (Regulation) (Amendment) Rules, 2010 Amendment in rules 2 & 19 and insertion of rule 19A.


By Notification No. G.S.R. 469(E), dated 4-6-2010.

Explanatory notes to the provisions of the Finance (No.2) Act, 2009

Explanatory notes to the provisions of the Finance (No.2) Act, 2009 CIRCULAR NO. 05 /2010.

Gratuity Limit increased to Rs. 10 lakhs

Gratuity Limit increased to Rs. 10 lakhs CBDT notification 43 dated June 11, 2010.

New / Revised discusion paper on Direct tax code

Click here for the text of the new discussion paper on direct tax code.

Gratuity exemption limit increased to Rupees 10 lakhs - CBDT press release

The Central Board of Direct Taxes has approved notification of ten lakh rupees as the maximum amount of gratuity entitled to exemption under sub-clause (iii) of clause (10) of section 10 of the Income Tax Act 1961.

The notification will be applicable to employees who retire, or become incapacitated before retirement, or expire, or whose services are terminated, on or after the 24th May 2010.

Click here for the text of the press release No.402/92/2006-MC (30 of 2010)

Clarification regarding Service Tax on re-insurance Commission

In terms of Section 101A (Part IV-A) of the Insurance Act, 1938, every insurer dealing in insurance business is required to re-insure a specified percentage of sum assured with another insurance company.

The insurance company pays premium to the reinsuring company for this service. However, a part of such premium is deducted and kept by the insurance company for meeting the administrative expenditure. In other words, the insurance company and the re-insurance company jointly bear the expenses for running the insurance/reinsurance business. This shared expense is commonly known as ‘commission’ though strictly it is not in the nature of a commission. It may be pertinent to mention that the customer/beneficiary deals only with the insurance company and may not even be aware of the role of re-insurer and the backroom operations between the insurance company and the reinsurer.

As per the provision of the Finance Act, 1994, insurance as well as reinsurance are subject to service tax. The Board has received representations that notices have been issued demanding service tax on the amounts deducted by the insurance company (in other words paid by the reinsurance company) on the ground that it is the consideration for the insurance company providing business auxiliary service (BAS) to the re-insuring company. The notices alleged that the insurance companies are promoting the business of re-insurers thereby providing them the BAS.

The issue has been examined. As explained in para 2 above, the arrangement between the insurance company and the reinsurer is only sharing of expenses and there is no service provided by the insurance company to the re-insurer for a consideration. Since the policy holder may not even be aware of the operations of the re-insurer, it cannot be said that the payment made by the re-insurer to the insurance company is for its business promotion or a service on behalf of the re-insuring company (i.e. Business Auxiliary Service). In fact, it is the reinsurer which provides insurance service to the insurance company. As both the insurance company and reinsurer pay service tax on the entire amount of premium charged by them, the question of charging service tax under any other taxable service does not arise.

The Board desires that all pending cases on this subject may be decided keeping in view the above clarification.

Circular No. 120(a)/2/2010-ST, dated 16-4-2010.

Amendment to public shareholding requirement - Press Release

The Securities Contracts (Regulation) Rules 1957 provide for the requirements which have to be satisfied by companies for the purpose of getting their securities listed on any stock exchange in India. A dispersed shareholding structure is essential for the sustenance of a continuous market for listed securities to provide liquidity to the investors and to discover fair prices. Further, the larger the number of shareholders, the less is the scope for price manipulation. Accordingly, the Finance Minister in his Budget speech for 2009-10, inter- alia, proposed to raise the threshold for non- promoter, public shareholding for all listed companies. To implement the Budget announcement the Securities Contracts(Regulation) (Amendment) Rules, 2010 has been notified.

The salient features of the amendment are as follows:

a) The minimum threshold level of public holding will be 25% for all listed companies.

b) Existing listed companies having less than 25% public holding have to reach the minimum 25% level by an annual addition of not less than 5% to public holding.

c) For new listing, if the post issue capital of the company calculated at offer price is more than Rs. 4000 crore, the company may be allowed to go public with 10% public shareholding and comply with the 25% public shareholding requirement by increasing its public shareholding by at least 5% per annum.

d) For companies whose draft offer document is pending with Securities and Exchange Board of India on or before these amendments are required to comply with 25% public shareholding requirement by increasing its public shareholding by at least 5% per annum, irrespective of the amount of post issue capital of the company calculated at offer price.

e) A company may increase its public shareholding by less than 5% in a year if such increase brings its public shareholding to the level of 25% in that year.

f) The requirement for continuous listing will be the same as the conditions for initial listing.

g) Every listed company shall maintain public shareholding of at least 25%. If the public shareholding in a listed company falls below 25% at any time, such company shall bring the public shareholding to 25% within a maximum period of 12 months from the date of such fall.

_______________________________________________________

F.No.5/35/2006-CM New Delhi, dated June 04, 2010

The Press Information Bureau is requested to give wide publicity to this Press Release.

(K.P.Krishnan)

Joint Secretary to the Government of India

Press Information Officer,

Press Information Bureau, Shastri Bhawan,

New Delhi. 

Amendment to TDS rules

Income-tax (Sixth Amendment) Rules, 2010 - Substitution of rules 30, 31, 31A, 31AA, 37CA and 37D; Form Nos. 16, 16A and 27D; insertion of Form No. 24G and omission of rule 37A.

Click here for the text of the Notification No. 41/2010 [F.No. 142/27/2009-SO(TPL)], dated 31-5-2010.

CBDT Press Release on amended TDS Rules

The Central Board of Direct Taxes (CBDT) have amended the Rules relating to TDS provisions date and mode of payment of tax deducted at source (TDS).

Click here for the text of the press release No.402/92/2006-MC (27 of 2010)