1st- 15th December 2016
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IT ministry asks telcos for cashless action plan

Ravi Shankar Prasad, minister of electronics and information technology, has given a week to mobile telephone service providers for a plan on how to increase cashless transactions, sources said. At a meeting on Friday, Prasad apparently met representatives from Jio, Airtel, Idea, Vodafone and BSNL, among others. Apart from promoting of digital payments, the minister asked them to find ways of making it possible for feature phones to pay and accept e-payments.“The service providers are on-board with the idea and have said they would be ready with a plan in a week. The minister wants the telecom players to come up with different solutions. From our end, we will help them in every way possible,” said a senior official in the ministry.
The latter has also asked the telecom companies to urgently improve their infrastructure, as the government aims to digitise a host of services. The ministry's biggest concern at present is the connectivity issue. “Telecom companies have to reach the interiors, so that we are able to start digital services in rural areas. Point-of-sale machines, mobile wallets and UPI (United Payments Interface) would only work if there's connectivity. The government has also asked (state-owned) BSNL for rapid expansion of its network,” added the official.

Digital payments get FM’s vote of confidence
The measures announced by Finance Minister Arun Jaitley to encourage online transactions, including discounts on petrol and diesel purchase, have reinforced the optimism at digital cash companies.
While they all expect more clarity on the announcements made in the days to come, they say the recent measures, if bundled well into digital transactions, would help massively in promoting digital money in both urban and rural areas.
According to senior officials at the NITI Aayog, they are constantly in touch with all private stakeholders in this regard, trying to come up with new solutions to promote digital cash. "We have had discussions with everyone in the digital transaction system. These talks would continue," said Aayog chief executive Amitabh Kant.
"The finance minister's move to incentivise digital payments will offer a strong support to our ongoing effort in helping the country leapfrog cash generation to digital payment solutions. This will help millions of Indians overcome the hassles of dealing in cash," said Deepak Abbot, senior vice-president at Paytm.
Stakeholders also say they hope the initiatives announced would be same for all modes of digital payment. "While there has been waiver of service tax on card payments, it would hopefully be applicable for all digital payments, including wallets and Aadhaar-enabled payment," said Pramod Saxena, chairman, Oxigen Services India.
Relief for e-commerce firms? Government mulls central registration under GST
Some e-commerce, telecom, and insurance entities might escape the complex prerequisite of separate registration in each state under the proposed goods and services tax (GST) regime, with a leeway or scope for special provisions in the draft law.
According to government officials in the GST Council, the demand of service providers, including ecommerce players, for a central registration might be met in the GST rules after discussion with states.
"We have provided for an enabling provision under the draft law to provide certain companies with centralised registration. There is basically a section for special procedure for certain companies which want to undergo a simplified compliance and registration procedure. The categories will have to be negotiated with the states," said an official. These will be part of the GST rules if approved.
He added that the intent was to make compliance simpler for these service providers and this would be addressed under the rules. The draft law says e-commerce companies, including Flipkart and Amazon, will be required to register in each state under the GST regime, as both central and state laws provide for the tax and also collect at source.
Managerial services provided in India through seconded employees of US based Co. held as 'FTS'
Services rendered by assesse (Intel Corporation), U.S. company, on account of transfer of testers and servers to its Indian subsidiary would not constitute transfer of any technology or know how to bring same under definition of 'royalty' as per section 9(1)(vii).
Where assessee, US company received certain sum from its Indian subsidiary on account of salary, relocation and other related costs of expatriate employees, since, all expatriates were holding managerial position and were experts in their respective fields of managerial skills and were rendering managerial and highly expertise services to Indian subsidiary, sum received by assessee was clearly F.T.S.

Food processing sector may attract existing rates under GST

Food processing industry is unlikely to have any adverse impact in terms of taxation under the proposed GST regime as the sector will continue to be taxed at existing rates, a top Food Processing Ministry official said.
The industry has demanded the sector be levied with minimum tax under the GST regime to fuel growth and attract investments, he said.
Addressing an international conference on 'India Farm 2 Fork 2016', Special Secretary in the Food Processing Ministry J P Meena assured the industry that there will not be any adverse impact of GST regime on the sector.
"The GST regime is unlikely to adversely affect this sector with higher taxation slabs, as the available indication suggests that it would continue to be taxed at existing rates even post GST," a statement issued by PHD Chamber quoted Meena as saying during the event.
The government has reduced significantly the taxes, particularly excise on food processing industries from 10 per cent to 6 per cent, Minister of State for Food Processing Sadhvi Niranjan Jyoti said.
In future, she said the government would take more initiatives to make this sector more vibrant and put on global map, she was quoted as saying in the statement.
On post-harvest losses of agri-produce, Meena earlier said the government is evolving policies to boost food processing and reduce agri-wastage by 50 per cent in the next 5-6 years.

Govt decides to print plastic currency notes
Government on Friday informed Parliament that a decision has been taken to print plastic currency notes and procurement of material has started. “It has been decided to print banknotes based on plastic or polymer substrate. The process of procurement has been initiated,” Minister of State for Finance Arjun Ram Meghwal said in a written reply in Lok Sabha to a query whether the Reserve Bank of India (RBI) proposes to print plastic currency notes in place of paper ones. The central bank for long has been planning to launch plastic currency note after field trials.
In February 2014, the government had informed Parliament that one billion plastic notes of Rs 10 denomination would be introduced in a field trial in five cities selected for their geographical and climatic diversity. The selected cities were Kochi, Mysore, Jaipur, Shimla and Bhubaneswar. Plastic notes have an average life span of about five years and are difficult to imitate. Also, currency notes made of plastic are cleaner than paper ones. Such notes were first introduced in Australia to safeguard against counterfeiting.
Replying to another question, Meghwal said it was informed by RBI in December 2015 that they have received some banknotes of Rs. 1,000 without having security thread which were printed at Currency Note Press (CNP), Nashik, on paper supplied by Security Paper Mill (SPM), Hoshangabad. An enquiry has been initiated by Security Printing and Minting Corporation (SPMCIL) and the units involved (SPM and CNP). “Major penalty chargesheet has been issued to the personnel concerned. Disciplinary proceedings have been initiated as per departmental rules,” the minister said.
Indian Subsidiary held as PE as it was executing and concluding projects on behalf of foreign Parent Company
Section 9 of the Income-tax Act, 1961, read with article 5 of the DTAA between India and Swiss Confederation - Income - Deemed to accrue or arise in India (Permanent Establishment - Dependent agent) - Assessment year 2008-09 - Assessee was a Switzerland based company - During relevant year, assessee received Power Project of NHPC - In order to carry out said project, assessee formed a subsidiary company in India, namely, CIWSPL, represented by director 'V' who was also acting as project coordinator - In course of assessment, assessee submitted that amount received from NHPC was not taxable in India as it did not have any PE in India - Assessing Officer opined that CIWSPL was Indian face of assessee representing company in all practical matters - Thus, to said extent company represented by 'V' was dependent agent of assessee, and therefore could be treated as PE - It was apparent from records that business of assessee had been conducted from address of project coordinator, 'V' and all correspondences relating to prospecting of client, participation in bids, correspondence with customers, signing of contract document, execution of project and closure of project etc. were initiated or routed through business address of CIWSPL - Even otherwise, contract entered into by assessee was not one of assembly, construction or installation rather most of work was in nature of repair and supply of material and, therefore, time limit of 182 days mentioned in clause (j) of article 5.2 of DTAA would not apply - Whether on facts, impugned order passed by Assessing Officer did not require any inference -Held, yes [In favour of revenue].
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