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1st- 15th October 2016
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Here are the highlights of our newsletter from 1st to 15th October.
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Adoption of GST poised to boost India's medium-term growth: IMF

Asserting that India has shown that progress on reforms could "ignite" business investment, the IMF today said the adoption of goods and services tax is poised to boost the country's medium-term growth. "India's strong reform push in 2016 is welcome and should continue apace. Adoption of the goods and services tax is poised to boost India's medium-term growth," the IMF said in its latest Asia Pacific regional economic update.
FM: Centre, states can levy excise duty, service tax, VAT for 1 year after notification of GST Act
Laying to rest doubts on the government's powers to levy indirect taxes after the notification of the Constitution Amendment Act for the Goods and Services Tax, Finance Minister Arun Jaitley said the new legislation empowers the government to continue levying excise duty, service tax and value added tax (VAT) till September 16, 2017.
"Until one year after the provisions of the Constitution (101st Amendment) Act, 2016, are brought into force, the Constitution empowers the Central Government to levy excise duty on manufacturing, and service tax on the supply of services," he informed the Parliamentary Consultative Committee attached to the Ministry of Finance.
He further added that the Constitution Amendment Act, similarly, also empowers the state governments to levy sales tax or VAT on the sale of goods till that time for the same time period.
Union Budget will be announced on Feb 1, Economic Survey to be out on Jan 31
The time table for the Union Budget has been advanced by one month and is being scheduled for February 01, 2017. Arvind Subramanian, the Chief Economic Adviser, said the Economic Survey will be out on Jan31.
"The time-table is fixed. It is going to be the day before the budget and since the budget is going to be on 1st of February, we have to table it on the last day of January. So, it has been advanced by exactly one month", Subramanian told ET.
Speaking on the Goods and Services Tax (GST), Subramanian said the GST rate should be below 20%. "The GST is really a game changing reform but I do not think one should ascribe anything to one reform measure. But GST is of such a magnitude that it seems to have impressed foreign investors. We had actually suggested a range between 17 and 19%. Taking into account the Indian situation, the margin should err on the side of lower rates rather than higher rates," he told ET.
No relief in procurement norms for start-ups
Government agencies may not relax procurement norms for start-ups on prior experience and turnover criteria in respect of goods that have implications on public safety and health. Earlier, the government had said all central ministries and department “may relax” condition of prior turnover and prior experience in public procurement to all start-ups if they meet quality and technical specifications. However, a doubt had arisen if it makes optional for central ministries and departments to relax condition of prior experience and turnover in public procurement to start-ups, said a office memorandum of expenditure department.

Auto industry demands two rates under GST

With the government looking at rolling out GST from the next financial year, Society of Indian Automobile Manufacturers (SIAM) said there should be only two rates for passenger vehicles instead of the four at present. The industry body said standard rates must apply on small cars, two-wheelers, three-wheelers and commercial vehicles, while bigger cars should attract 8 per cent more than the standard rate. "There should be only two rates for conventional vehicles," a statement from SIAM said. "While for a long time there were only two rates of excise duties on passenger cars, in recent years, the bigger car rates have fragmented and today we have four rates for passenger cars excluding electric vehicles and hybrid electric for which lower rates are applicable," the statement said. It also pitched for a lower GST rate for electric vehicles, hybrid electric vehicles and other alternative fuel vehicles, which should be at least 8 per cent less than the standard rate. "In view of the current scenario, there is a need to look at GST rate for automobiles sensitively," SIAM said.
SIAM said its "members have committed to building the nation responsibly and as such no automotive product should be clubbed with goods that are health hazard, like cigarettes, pan masala, liquor, etc."

RBI updates master direction for direct investment by resident in Joint venture or wholly owned subsidiary abroad
Direct investments by residents in Joint Venture (JV) and Wholly Owned Subsidiary (WOS) abroad are being allowed, in terms of clause (a) of sub-section (3) of section 6 of the Foreign Exchange Management Act, 1999, (42 of 1999) read with Notification No. FEMA.120/RB-2004 dated July 7, 2004, (GSR 757 (E) dated November 19, 2004), viz. Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004. These Regulations are amended from time to time to incorporate the changes in the regulatory framework and published through amendment notifications. 2. Within the contours of the Regulations, Reserve Bank of India also issues directions to Authorised Persons under Section 11 of the Foreign Exchange Management Act (FEMA), 1999. These directions lay down the modalities as to how the foreign exchange business has to be conducted by the Authorised Persons with their customers/ constituents with a view to implementing the regulations framed. 3. Instructions issued on Direct Investment by Residents in Joint Venture (JV)/ Wholly Owned Subsidiary (WOS) Abroad have been compiled in this Master Direction. The list of underlying circulars/ notifications which form the basis of this Master Direction is furnished in the Appendix. Reporting instructions can be found in Master Direction on Reporting (Master Direction No. 18 dated January 1, 2016).
MCA to withdraw old incorporation Form INC-29 from November 1, 2016
MCA to withdraw e-Form INC-29 (Integrated Incorporation Form) with effect from November 1, 2016. Accordingly, INC-29 will no longer be available on the MCA21 portal and stakeholders will not be able to file any previously downloaded versions with effect from November 1, 2016. Stakeholders are requested to plan accordingly and use SPICe (Simplified Proforma for Incorporating Company electronically), INC-2 (One Person Company), or INC-7 (Incorporation of Company) e-Forms, as applicable.
Neeraj Bhagat & Company is a team of distinguished chartered accountant, corporate financial advisors and tax consultants in India. Our firm of chartered accountants represents a coalition of specialized skills that is geared to offer sound financial solutions and advices. The organization is a congregation of professionally qualified and experienced persons who are committed to add value and optimize the benefits accruing to clients.


Neeraj Bhagat & Co.
New Delhi, Gurgaon, Mumbai
www.neerajbhagat.in 

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