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and 10B of the Act. For details of the circular, please refer to the BMR Buzz dated January 22, 2013. Source: Circular No 1/2013, issued by CBDT Link: www.itatonline.org External Commercial Borrowings limit for Infrastructure Finance Companies revised RBI has made an upward revision of the limit for External Commercial Borrowings (“ECB”) for non banking finance companies categorized as Infrastructure Finance Companies (“IFC”). IFC can now raise ECB to the extent of 75 percent of net owned funds including the outstanding ECB. IFC desirous of availing ECB beyond 75 percent of their owned funds would require the approval of RBI under the approval route. Hedging requirement for currency risk has been reduced from 100 percent of exposure to 75 percent of exposure. Source: Circular No 69 dated January 7, 2013, issued by RBI Link: http://www.rbi.org.in External commercial borrowings for micro finance institutions and non – government organisations to be fully hedged RBI has mandated all authorised dealer banks to ensure that ECB raised by micro finance institutions and non – government organisations to be fully hedged. Source: Circular No 63/RBI dated December 20, 2012, issued by RBI Link: http://www.rbi.org.in Sin Maarten has been notified as specified territory under section 90(2) of the Act Central Government has notified Sin Maarten, a part of Kingdom of Netherlands as specified territory under section 90(2) of the Act. Source: Notification No 54/2012 dated December 17, 2012, issued by CBDT Link: http://law.incometaxindia.gov.in/DIT/Notifications.aspx Certification requirement introduced in Rule 112F of the Rules Rule 112F of the Rules, outlining the cases wherein investigating officer (“IO”) is not required to issue notice for assessing income for 6 years immediately preceding the year of search, has been amended to provide certain certification requirement to be complied with by the IO. Such certification shall also be sent to the AO and Commissioner of Income Tax having jurisdiction over the assessee. Source: Circular No 10/2012 dated December 31, 2012, issued by CBDT Link: http://law.incometaxindia.gov.in/DIT/Circulars.aspx Low cost affordable housing projects notified as eligible end use for ECB RBI has notified low cost affordable housing projects (“LCAHP”) as eligible end use for ECB under approval route. Salient features of the scheme are as under: Along with developers of LCAHP, Housing Finance Companies (“HFC”) and National Housing Bank (“NHB”) can also avail the ECB facility Projects should have minimum 60 percent floor space index (“FSI”) reserved for units with maximum carpet area of 60 square meters Slum rehabilitation projects are also eligible subject to necessary approvals of necessary authorities ECB proceeds cannot be used for acquisition of land NHB shall be the nodal agency for deciding the eligibility of project for ECB Upper cap of USD 1 billion is fixed for the financial year 2012-13, subject to annual review All other conditions applicable to ECB need to be complied with Source: Circular No 61 dated December 17, 2012, issued by RBI Link: http://rbi.org.in/scripts/NotificationUser.aspxId=7757&Mode=0
Step by step instructions for grant of refunds issued by income tax department With a view to reduce the problems raised due to mismatch of tax and tax withholding credits, the Income tax department has issued Instruction No 1 dated November 27, 2012 which contains a step by step procedure for adjustment of refunds to be followed by the AOs and the centralized processing centre. Source: Instruction No 1 dated November 27, 2012, issued by Director of Income tax (Systems) Link: www.itatonline.org Ministry of Corporate Affairs notifies change in form DIN 4 Ministry of Corporate Affairs (“MCA”) has added a paragraph in the certification requirement part of Form DIN 4 which is required to be filed to intimate change in the details of directors. Director Identification Number (“DIN”) is a unique identity number which is assigned to an individual who wishes to become a director of any Indian company. Source: Notification (F NO 5/80/2012 – CLV) dated December 24, 2012, issued by MCA Link: www.taxmann.com New form 18 and DIN 1 notified by MCA MCA has notified new Form 18 and DIN 1 which is required to be filed to intimate any change in registered office of the company and to obtain new DIN respectively. Source: Notification (F NO 5/80/2012 – CLV) dated December 24, 2012, issued by MCA Source: www.taxmann.com Indirect tax Value Added Tax (“VAT”) / Central Sales Tax (“CST”) Kora maal (brass ware) after polishing and engraving continues to be same commodity and there is no change in the identity of goods The taxpayer was engaged in purchase of kora maal (brass ware) from manufacturer and after engraving and polishing, selling the same to a dealer outside state who is stated to have exported the same. The Revenue Authorities raised demand of purchase tax under section 3AAAA of the Uttar Pradesh Trade Tax Act, 1948 (“UP Trade Tax Act, 1948”) against the taxpayer on the basis that engraving and polishing changes the identity of goods after its purchase. Aggrieved by it, the taxpayer filed an appeal before the first appellate authority. Snippet As a part of measures to shore up revenues, the Finance Ministry may reinstate import duty on crude oil in Budget 2013. In June 2011, customs duty on crude oil imports had been done away with. Source: The Economic Times The matter finally reached the HC where the Revenue Authorities contended that the inextricable link of purchase with the exports required for claiming the exemption has not been demonstrated in the present case and hence the matter should be remanded back to the sales tax tribunal for examination of this aspect. The HC held that even if the sale was not inextricably linked to export and the sale of polished kora maal was an independent sale of goods to a dealer outside state, the same would qualify as a sale in the course of interstate trade or commerce and would be exempt from payment of purchase tax (proviso (iii) to section 3AAAA of the UP Trade Tax Act, 1948 inter alia exempts the levy of purchase tax on goods which the purchasing dealer resells in the same form and condition in the course of interstate trade). Accordingly, the HC dismissed the revision petition. Commissioner trade tax, UP, Lucknow v Pioneer India [2012-56-VST-323 (All)] ‘Harpic’ and ‘Lizol’ classified under Drugs and Cosmetics Act, 1940 but having the primary quality of disinfectant fall under the definition of pesticides liable to be taxed at 4 percent and Mortein mosquito repellents are liable to be taxed at 12.5 per cent (rates applicable during the disputed period) in Andhra Pradesh The taxpayer was engaged in manufacture and sale of Lizol (floor cleaner), Harpic (toilet cleaner) and Mortein mosquito repellents. The Revenue Authorities contended that these goods were liable to be taxed at 12.5 percent by virtue of being covered under the exclusion of entry 88 of Schedule IV to the Andhra Pradesh Value Added Tax, 2005 (“AP VAT Act”) which covers drugs and medicines excluding products capable of being used as cosmetics and toilet preparations and mosquito repellents in any form. The taxpayer contended that though Lizol and Harpic are manufactured under drugs license but are disinfectants capable of destroying germs fall within the category of pesticides covered by entry 20 of Schedule IV to the AP VAT Act (which levies tax at 4
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