India Amends Double Taxation Avoidance Agreement with Kuwait

CBDT on 4th May notified that The Government of India and Government of the State of Kuwait have Amended Double Taxation Avoidance Agreement (DTAA). The Amended Protocol can be downloaded by clicking here

CBDT Doubles Exemption Limit Conveyance Allowance

Vide Notification No. 39/2015/F. No.142/02/2015-TPL, CBDT doubled conveyance allowance from Rs. 800 per month to Rs. 1600 per month for employees to meet his expenditure for the purpose of commuting between the place of his residence and the place of his duty.

The Exemption limit for person who is blind or orthopaedically handicapped with disability of lower extremities, the said limits is doubled from Rs. 1600 per month to Rs. 3200 per month.

The said notification can be downloaded by clicking here –> cbdt-doubles-exemption-limit-of-conveyance-allowance-revised-limit-notified

Companies (Auditor’s Report) Order 2015

Two days after ICAI Announcement on Applicability of CARO 2003 & Additional Reporting Under Companies Act 2013, Ministry of Corporate Affairs has notified Companies (Auditor’s Report) Order 2015.

The said Order can be downloaded by clicking here –>> Companies_Auditors_Report_Order_2015

ICAI Announcement on Applicability of CARO 2003 & Additional Reporting Under Companies Act 2013

ICAI in its Announcement said that the Companies Act, 1956 has ceased to have effect from 01st April, 2014. As a corollary, even the Companies (Auditor’s Report) Order, 2003 issued under section 227(4A) of the said Act also ceases to have effect from the said date.

Section 143(11) of the Companies Act, 2013 which came into force from 01st April, 2014 provides that “the Central Government may, in consultation with the National Financial Reporting Authority, by general or special order, direct, in respect of such class or description of companies, as may be specified in the order, that the auditor’s report shall also include a statement on such matters as may be specified therein.”

Accordingly, it may be noted that as when an Order is notified by the Central Government under section 143(11) of the Companies Act, 2013, the members would be required to report thereon as a part of their statutory audit reports.

Until the aforesaid Order is issued, no additional reporting under section 143(11) of the Companies Act, 2013 is required by the Auditors for the financial year 2014-15.

The ICAI Announcement can be downloaded by clicking here –> ICAI – Announcement on CARO Reporting

RBI notifies hike in FDI cap in insurance sector

The Reserve Bank of India (RBI) on Wednesday notified government’s decision to raise foreign direct investment (FDI) limit in the insurance sector to 49 per cent.

“The extant FDI policy for insurance sector has since been reviewed and further liberalised. Accordingly, with immediate effect, FDI in insurance sector shall be permitted up to 49 per cent subject to the revised conditions,” RBI said in a notification.

RBI has also included a new term ‘Other Insurance Intermediaries appointed under the provisions of Insurance Regulatory and Development Authority Act, 1999’ under the definition of ‘Insurance’.

The RBI notification follows Department of Industrial Policy and Promotion (DIPP), Commerce Ministry’s press note in March regarding operationalisation of increased FDI limit of up to 49 per cent in the insurance sector.

“…consolidated FDI policy, effective from April 17, 2014 is amended,” said the Press Note from the DIPP.

Press notes are official documents issued by DIPP through which new FDI policies or changes in existing ones come into effect.

As per the guidelines, FDI of up to 26 per cent come under automatic route and beyond 26 per cent and up to 49 per cent government approval is needed.

“An Indian insurance company shall ensure that its ownership and control remains at all times in the hands of resident Indian entities. Any increase of foreign investment of an Indian insurance company shall be in accordance with the pricing guidelines specified by Reserve Bank under the Foreign Exchange Management Act, 1999,” RBI added.

The FDI cap in the sector has been hiked to 49 per cent and that includes foreign investment in the forms of FPI, FII, QFI, FVCI, NRI and DR.

A foreign player can now invest in insurance company, insurance brokers, third party administrators, surveyors and loss assessors and other insurance intermediaries appointed under the provisions of IRDA Act 1999.

RBI/2014-15/545 A. P. (DIR Series) Circular No.94 can be downloaded by clicking here –>RBI Increases FDI in Insurance

Interest rate of Sukanaya Scheme and 5 Year Senior Citizen Saving Scheme increased by 0.1% w.e.f. April 1, 2015

Government of India increased the interest rate on Sukanaya Scheme & 5 year Senior Citizen Saving Scheme by 0.1% w.e.f. 01 April 2015.

 

Source: PRESS RELEASE, DATED 31-3-2015

The Press Release can be downloaded by clicking here –> Sukanya Samriddhi Scheme & Senior Citizen Saving Scheme

MCA clarifies that Amounts received by Private Companies as loan from Members, Directors or Relatives prior to 01 April 2014 shall not be treated as Deposit

Much awaited relief is granted by the Ministry of Corporate Affairs vide its General Circular No. 05/2015, wherein it has clarified that amounts received by the Private Limited Companies from their members, directors or their relatives prior to 1st April 2014 shall not be treated as deposits in terms of Section 58A of the Companies Act 2013 and Companies (Acceptance of Deposits) Rules, 2014.

However the relief is subject to the condition that the financial statement for the financial year commencing on or after 1st April 2014 shall disclose, in its notes to financial statement, the figure of such amounts and the accounting head in which such amounts have been shown in the financial statements.

Further, any renewal or acceptance of the fresh deposits on or after 1st April 2014 shall be in accordance with the provisions of Section 58A of the Companies Act 2013 and the rules made thereunder.

The General Circular can be downloaded by clicking here –>General_Circular_5-2015 – Clarification on Deposits of Private Companies

Draft Circular – Section 234A – INTEREST FOR DEFAULTS IN FURNISHING RETURN OF INCOME

DRAFT CIRCULAR NO. 2/2015 [F.NO.385/03/2015-IT(B), DATED 10-2-2015

Based on the Suprement Court Ruling in case of CIT v. Prannoy Roy, 309 ITR 231 (2009), CBDT has decided that interest under Section 234A shall not be levied on the Self Assessment Tax paid by the assessee before the due date of filing return of income.

The circular can be downloaded by clicking –> Interest under Section 234A

SAFE HARBOUR RULES FOR SPECIFIED DOMESTIC TRANSACTION NOTIFIED

SAFE HARBOUR RULES FOR SPECIFIED DOMESTIC TRANSACTION NOTIFIED

INCOME-TAX (SECOND AMENDMENT) RULES, 2015 – AMENDMENT IN RULES 10D, 10TA AND INSERTION OF RULES 10TH, 10THA, 10THB, 10THC, 10THD AND FORM 3CEFB

NOTIFICATION NO. 11/2015 [F.NO.142/7/2014-TPL]/SO 350(E), DATED 4-2-2015

In exercise of the powers conferred by sections 92CB and 92D read with section 295 of the Income-tax Act, 1961(43 of 1961), CBDT inserts new rule, RULE 10TH (SAFE HARBOUR RULES FOR SPECIFIED DOMESTIC TRANSACTION)

Rule 10THA: (INSERTED AFTER RULE TG)

Eligible Assessee : The ‘eligible assessee’ means a person who has exercised a valid option for application of safe harbour rules in accordance with the provisions of rule 10THC, and is a Government company engaged in the business of generation, transmission or distribution of electricity.

Rule 10THB:

Eligible Specified Domestic Transaction: Eligible SDT means SDT undertaken by eligible assessee and comprises of the following

  1. Supply of electricity by generating company; or
  2. Transmission of Electricity; or
  3. Wheeling of Electricity

Rule 10THC:

(1) Safe Harbour

Where an eligible assessee has entered into eligible SDT in any previous year relevant to an assessment year and option exercised by the said eligible assessee is treated to be validly exercised under Rule 10THD, the transfer price declared by the assessee in respect of such transaction shall be accepted by the tax authorities, if it is in accordance with the circumstances as specified in Rule 10THC (2)

(2) Circumstances referred to in Rule 10THC (1) in respect of eligible SDT shall be determined as tabulated below:

Sr. No.

Eligible SDT

Circumstances

1

Supply of electricity, transmission of electricity, wheeling of electricity referred to in items (i), (ii) or (iii) of rule THB, as the case may be.

The tariff in respect of supply of electricity, transmission of electricity, wheeling of electricity, as the case may be, is determined by the Appropriate Commission in accordance with the provisions of the Electricity Act, 2003 (36 of 2003).

 (3) No comparability adjustment and allowance under the second proviso to sub-section (2) of section 92C shall be made to the transfer price declared by the eligible assessee and accepted under sub-rule (1)

(4) The provisions of sections 92D and 92E in respect of a specified domestic transaction shall apply irrespective of the fact that the assessee exercises his option for safe harbour in respect of such transaction.

Rule 10THD:

Procedure: Rule 10THD lays down the procedure in which the eligible assessee shall avail the option of safe harbour rule.

CBDT amends rule 10D for maintenance of the documents for eligible assessees entering into eligible SDT referred to in Rule 10TH:

Insertion of Rule 10D(2A) after Rule 10D(2):

“(2A) Nothing contained in sub-rule (1), insofar as it relates to an eligible specified domestic transaction referred to in rule 10 THB, shall apply in a case of an eligible assessee referred to in rule 10 THA and, the said eligible assessee, shall keep and maintain the following information and documents, namely:—

  1. a description of the ownership structure of the assessee enterprise with details of shares or other ownership interest held therein by other enterprises;
  2. a broad description of the business of the assessee and the industry in which the assessee operates, and of the business of the associated enterprises with whom the assessee has transacted;
  3. the nature and terms (including prices) of specified domestic transactions entered into with each associated enterprise and the quantum and the value of each such transaction or class of such transaction;
  4. a record of proceedings if any before the regulatory commission and orders of such commission relating to the specified domestic transaction;
  5. a record of the actual working carried out for determining the transfer price of the specified domestic transaction;
  6. the assumptions, policies and price negotiations, if any, which have critically affected the determination of the transfer price;
  7. any other information, data or document, including information or data relating to the associated enterprise, which may be relevant for determination of the transfer price.;”

 RULE 10T shall be re-termed as SAFE HARBOUR RULES FOR INTERNATIONAL TRANSACTIONS

NOTIFICATION NO. 11/2015 [F.NO.142/7/2014-TPL]/SO 350(E), DATED 4-2-2015 can be downloaded by clicking here –> SAFE HAROUR RULE FOR SDT NOTIFIED

Sukanya Samriddhi Account Notified for Deduction under section 80C(2)(viii)

CBDT notified opening of “Sukanya Samriddhi Account” as eligible investment for the purpose of Deduction under section 80C(2)(viii) of the Income Tax Act, 1961.

The Notification can be downloaded by clicking –> Sukanya Samriddhi Account Notified for Deduction under section 80C(2)(viii)