DIRECT TAX - Nangia & Co

Tax & Regulatory Newsletter
Issue 05 – AUGUST, 2010
NANGIA & CO.
Chartered Accountants
New Delhi – Mumbai - Dehradun
Rates
In the first year of implementation, the lower rate for goods shall be
6% and the standard rate would be 10% under CGST and SGST.
Services would be charged at 8% under both CGST and SGST. These
rates would ensure a single rate for CGST and SGST in the range of
12% to 20% in the first year of implementation;
During the second year of GST implementation the lower rate on
goods would be maintained at 6% and the standard rate would be
reduced to 9% under both CGST and SGST though such reduction
would be subject to the revenue receipt of the Center and the State;
During the third year of GST implementation, the lower rate for goods
would be increased to 8% and the standard rate reduced to 8% for
both CGST and SGST. The rate for services under both CGST and SGST
would also continue to be 8%.
FEMA/RBI & FDI POLICY
[Source: PIB press release dated July 21, 2010]
External Commercial Borrowing Policy – Take-out
Finance
Existing norms do not permit refinancing of domestic Rupee loans
with External Commercial Borrowing *“ECB”+. However, keeping in
view the special funding needs of the infrastructure sector the ECB
policy has been reviewed and a scheme of take-out finance has been
introduced wherein take-out financing arrangements have been
permitted through ECB, under the approval route, for refinancing of
Rupee loans availed of from the domestic banks by eligible borrowers
in the sea port and airport, roads including bridges and power sectors
for the development of new projects.
The following conditions were mandated to be complied with - :
The Corporate developing the infrastructure project is to have a
tripartite agreement with domestic banks and overseas
recognized lenders for either a conditional or unconditional takeout
of the loan within three years of the scheduled Commercial
Operation Date. The scheduled date of occurrence of the take-out
is to be clearly mentioned in the agreement;
The loan is to have a minimum average maturity period of seven
years;
The domestic bank financing the infrastructure project is to
comply with the extant prudential norms relating to take-out
financing;
The fee payable, if any, to the overseas lender until the take-out is
not to exceed 100 bps per annum;
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