Excise Duty and Textile Industries

After a massive outbreak of protest from the part of textile domain, the government decided to possibly dissolve the increase of 10 % excise duty on textiles and branded garments…. Textile merchandisers around the country involved in a demurral were furious and were never withdrawing…. Though with a decision of bringing a partial break off to the levied duty people aren’t still happy eventually continuing to protest for a complete exemption…

This budget was a big bad news for the textile and garment industries as the proposed levying of 10 % excise duty made it inevitable to achieve peace…

Finance Ministry though brought out ideas of reducing the retail prices to 40 to 55 percent…. Sources also say that for an SSI exemption all that the domain needs is to produce a turnover based on the retail sale price this year which amounts to 8.9 crore….This eventually took a turn where the retailers and traders protested with a tag “ big hit to smaller industries” ..

The breakout predominantly happened in West Bengal involving an opposition from some of the famous industries… Ludhianians and people of West Bengal top the strike to deduct excise duty… The clothing manufacturing association of India announced that the strike can take things into further worse conditions with 50,000 units striking and 25 lakh people lined up protesting……

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Transformations in Taxes and Banking Procedures…..

The Indian federal government presented a drat bill in the Parliament a few days back. The bill integrally aims in bringing the GST into action no sooner. GST or the Goods and Service Tax is one of the most talked hot topic of the country where people believe that the taxation process can significantly eliminate the service tax, excise and the customs duty.

The Indian government decided to enhance more than two banking laws and rules relating to voting settings of people who hold considerable shares. GST needs to be enabled because there could be a wider possibility that enhances uniformity in the levying.

The Banking Laws (Amendment) Bill 2011 is one of the bills passed to potentially enrich the central bank’s control ensuring that the bank can access information from mutual funds and other associates concurrently.

The current banking rules allow rights to shareholders no more than 1% in government banks and 9% in case of foreign banks how much ever equities the person holds. The bill proposes to bring an undeviating rate in nationalized and foreign banks as well making it from 1 to 10…The regulations in the bill state that there should be an extra bonus to the shareholders predominantly in accessing their controls.

The bill’s enhancement also deals with the fact that there can be a farther rise in the government banks capital a lot more than what was just $668 million…If the bill gets approved then the next step could possibly be the Reserve Bank of India(RBI) accepting the mergers and setting those free from other acts..

All about NRIs and Tax saving…

Living overseas doesn’t anyway affect possibilities. Indians, living overseas save money in dual aspects branching into putting them predominantly in overseas accounts and Indian accounts. However the Non resident Indian needs to take a look at all the taxation procedures furthermore helping him best understand what Indian taxation is all about.

A NRI should most importantly comprehend the fact that he has to pay taxes for whatever that comes out of his property or assets or investments or far closest, something that belongs to him generating considerable income in India; nevertheless he wouldn’t be paying for what he earned outside the country. Yet again, Foreign Income and Indian Income need to be best taken in with no confusion. Receiving an income in India Wherein generated anywhere not specifically India, this gets termed Indian Income. Foreign Income is when there is an Income generation and obtainment outside the parent country.

With the Income tax act of 1961 there are options that permit tax deductions for NRIs ensuring a complete pass in the designed rules. Certain Incomes for NRIs are tax exempt namely the NRNR and foreign currency deposits, the foreign income, dividend from Indian companies, Mutual funds and long term capital gains triggered from a well known stock exchange with a mutual fund tax exemption at par with citizens, if on getting a fee from a consultancy that holds offers for employees under a sponsored program where money comes from a non resident country.

Areas of deduction are quite possibly flexible. Availing deductions from home loan interests and the EMI are okay. When it comes to savings, then there are lots more tuned options like equity investments, debt investments, NSC, Pension plans and Life Insurance and Fixed deposits.

What NRIs can’t do is that they wouldn’t be allowed to open a PPF account however if it’s already active it shouldn’t be working anymore after maturity.

Investments in National Saving certificates, Senior citizens savings scheme, Post office time deposits are definitely unavailable to NRIs...

NRIs can demand deduction in premium of Health insurance and medical policies. They can also opt for loan deductions in the areas of education, medical facilities and so on.

However every NRI has to best effectively understand rules for an implementation that comes out errorless...

9% growth expected in 2011-2012

The Finance Minister after announcing the Budget and the Finance Bill says there should be an anticipated growth of 9 % in India. The investment rates are no lesser than 35 % and this can trigger the wanted development in FISCAL year 2012. The possible developmental aspect is manipulated to be in and around 9 %...

The budget design is a relaxation from huger levying whatever it struggles from the aspect of inflation. The tax rollback on the health care sector does show a good prospect until there isn’t another levying done where there are news stating that this operation is not going to be a constant relief.

Also concentrating on sectors that encounter higher and partially cut levies, India might come down considerably. Garments, textiles have a huger levying this time and that it has left retailers unhappy. Automobiles had partial cut on their levies which still doesn’t account to their production leading to an increase in the cost of their products. Banishing STPI isn’t a right move letting SMEs suffer higher taxations furthermore suspending the tax holiday procedure.

Food inflation, though cooled for a significant period does seem to have a sharp rise again over a shorter time. This time it is 10.05 % rather than an estimated 9.42% that dated a week back. Taking steps to bring down food inflation doesn’t seem to be credible this time. Comparative signs show that the food inflation stepped down from a steep as to what it was in the last six months.

The levying hike posed on the crude oil prices is one of the biggest perils all over the world. The fuel prices going up the ladder won’t come down. A lot of potentially disastrous events including the Tsunami, Libyan Crisis and the Fukushima Daiichi failure stand behind the hiking. The mid east doesn’t offer satisfyingly finer amounts of oil lifting the prices greatly. This year the country was expected to have 100 million tonnes of oil wherein there was no more than 67 % causing a scarcity of fuel. A barrel is priced around $115 now. The government denied the reduce of levying on petrol until there is a final proposal that restructures the taxation on fuel.

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Tax Prevarications- PAN cards keep multiplying…

A lot of people keep equivocating taxation by surreptitiously possessing many PAN cards (Permanent Account Number)under single identity. This seems to be another perilous issue for the Income tax officials furthermore there are lots already waiting under dodging regular taxation.

The Income Tax Department has released no lesser than 10 crores of PAN cards this year, however the taxes paid don’t anywhere come near half of what the number is. The tax income this year on a comparative scale just rounded up to 340 lakhs and that shows there are lots of other PAN cards which are employed to barely operate on evading taxation.

The officials have plans to stumble on people who possess multiple PAN cards. Drawing on a PAN card is primarily to furnish an identity that is unique and that doesn’t conflict. A consumer can use this PAN card to begin a bank account or any other instance that requires permanent identity. The reason why a PAN card is employed gets completely ruined if there are going to be more than a lot of multiples.

Higher authorities keep checking for duplications with similar names and also those possessing same addresses on the forged versions. This process of checking wouldn’t end rapidly as there are lots holding falsifications in the same. The central Board of Direct Taxes brings out a truth that the pause that comes between the taxes and the PAN cards is predominantly due to the duplications but with lesser chances of considerable death of PAN card holders.

Surveying the issue makes it more clear that death of PAN card holder insignificantly affects the pause that exists between taxations and PAN cards. These need to be directly proportional. If there is going to be an increase in the number of PAN cards issued then it means that there must be a higher tax paid whatever neglecting the amount of people who establish PAN cards as their identities, for paying taxes rather.

All these are required to be broken if there should be a considerable rise in the Gross Domestic Product the market values of the merchandising done in the country. If there is going to be a good rise in the GDP eventually the taxations done would increase.

The rise in the direct taxes were 1.7% in 2005-06 and it hiked to 2.6% in the years 2007-08 wherein it declined to 0.5-0.8% in the past two years indicating how taxations are almost dodged..

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Financial Bill 2011 – Effects on Various Sectors

The financial bill 2011 passed by the Finance Minister had mixed comments predominantly favoring almost all the sectors. The bill chucked the excise duty on the automotive spares to half of what it was before the budget and canceled the 5% percent service tax on health care which was supposedly burdening to patients. The hikes include those of the industries that produce branded clothes and smaller ready made manufacturers.

Those firms that held shares with foreign companies enjoy a tax reduction of around 15%. It doesn’t matter even if they held just 26 %of those possible shares... Exports have to make up to the sad news as there aren’t any tax deductions in their sector dating from April 1, 2005. Such companies have to consider their total profits in calculating the MAT or the maximum alternate tax.

The imports and exports of printers and computer parts have an excise duty reduction and taxation of the pensioned employee has a reduction as well. Power projects enjoy advantages of reduced taxation on the import of silicon wafers. Similarly, import of coal and metallic elements join the tax deduction list.

GST, the most awaited taxation practice would most probably come under action from the year 2012 in the month of April. The withdrawal of taxes in the health care facet is just a relaxation and the finance minister promised that there wouldn’t be any unwanted taxation if GST could come into action. Textiles and garments suffer a tight taxation this time and they have to pay an excise duty of 4.5 % as not given in the budget. There are even announcements by the minister that such industries can opt for tax freeing even if it generated larger turnovers ranging from 8 to 9 crores in the near future.

The tax freedom or exemptions done in the health care sector has relieved a lot of stress. Eventually people feel happy and received it with utmost pleasure. But there are sectors that are quite upset with the effects on their side. The auto motives and garments would obviously be irritated and the car sellers have a serious decision of raising the car prices though they had a chuck of half their taxes.

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Inflation, Banks and Tax saving plans

Inflation, the globally dangerous evil has promoters all over the world. Libyan issue, the Tsunami-earthquake of Japan and the rising fuel prices most prominently cater to the growth of inflation.

When it comes to banks, things are the same but hopes still exist to reduce taxes on longer and shorter terms of deposits. RBI, the master of money keeps hiking its repo rates to increase liquidity yet constantly failing in its measure... The RBI increases its repo rates by 25 base points or half a percent. This hasn’t really helped banks and RBI as well... The repo and reverse repo, though incremented doesn’t drastically change anything. Many analysts conclude that there would be lot more hikes than what it is now from RBI in the near future deducing it to be around 6.5 to 7.5%.

Coal, Iron and Crude oil prices have gone up the ladder ensuring that there is an absolutely negative impact on the global economy. The crude oil prices are in and around $115 a barrel and this is the worst case of the lot.

Banks basically face loss when customers demand for early takeaways of money in case of deposits. Banks have even taken the chance of eliminating the penalty for what they withdraw in the specified premature period. Causing a direct loss to the banks, this again results in RBI increasing its repo rates. To ensure there is uniformity in interest rates, the only way for the retailers is to go for long term deposits where they can reasonably avoid large taxations.

Banks show choices like if there is a lakh deposited then there would be a five year period out of taxation which literally means a tax holiday. Whatsoever the interests that result from the deposit if more than what it has to be, then the extra that comes out is completely taxable. Otherwise schemes wouldn’t make any logical sense.

Once it comes to longer termed fixed deposits then there is one main norm that needs to be kept in mind. Banks while structuring a long term deposit clearly state that the money that is being deposited couldn’t be asked for a retreat in the earlier terms. When the interest rates hike and the investor has surplus funds flowing then he neither can transfer it to his savings account nor can he deny taxation for the surplus.

One of the most successful ideologies implemented is the MF or the Mutual funds. These are basically investments made with linkage of shares on the market. The invested fund is divided into shares and the bank floats these in the market. The rates keep on however multiplying leading to a reasonably good hike in the share values. The NAV or the Net Asset Value is calculated at the end of maturity and this would primarily be the value of the investment made with better and larger increments made than its original value. Long term capital gains are more in case of fixed maturity plans. When an investor deals with real estate then after a fixed period of around 2 or 3 years he has to pay taxes of around 10 or 20 % depending upon indexation process. This indexation table will have values which need to be indulged in the manipulation of taxes for the real estate….

Furthermore there are lots of other taxes saving plans coming up but all that people and RBI hope is to completely chop inflation down though a lot of measures prove ineffective...

Transfer Pricing Provisions on the Budget 2011

Basically Transfer pricing provisions are set of regulations that stepped into India in the year in Finance Act 2001. The rule ensures that India collects the needed amount of tax or most popularly the fair share of its tax when products are shipped to another country for sales. The arm’s length price primarily determines the cost of the product that has to be shipped. Most importantly trading that is made between two countries has to best possibly have a nominal and equal share of gains...

To manipulate the Arm’s length price the 92C of the Income tax act needs to be read where it has perfect strategies for the one who pays tax to easily compute the right arm’s length. The act does provide a special option that allows up to a 5 % border rate for the manipulation of arm’s length price. When there is a variation that shows in and around 5 % then it no way affects sales that operates between the countries.

This 5% margin break doesn’t apply to many of the countries whatsoever it helps a lot of people paying taxes and who predominantly ship products to countries. The government hasn’t approved this but has tagged an option that specifically allows the 5 % margin in cases where there are two or more arm’s length prices required. There isn’t any margin given to people who pay tax for just one operation.

The transfer pricing needs to be made clear so that there aren’t confusions among people who pay taxes for shipping their goods. Over again, the idea has to be that price that comes from selling the product overseas and the arms length price increments to the profit of the taxpayer.

The Income tax rules took a turn announcing the introduction of safe harbor rules where this still remains unimplemented. People are completely devastated by situations where they keep paying a lot where they really don’t have to. So to eventually chunk this down the Government decided to bring rules that favor the tax payer where the transfer price that the tax payer declares is considered ultimate.

The 5% margin thing is what people really want. In almost all transactions, the budget permitted the margin rate in 2010-11 furthermore making a negative statement that these kinds of extra margins would be out of the rule from April 2011. Importers are still waiting for better yet reasonable margin rate...

2011 Budget- The impacts on the Power Facet of India

The power wing or most suitably the Power Facet of India is the most benefited of all the other wings in the economy from the budget this time. The 2011 budget isn’t really the best layout to stay away from the inflation and crises though. The section 80-IA decided to take an extra time formula to file the tax returns. Five year plans in the power wing gets to suffer a lot more than cash deficit. The exclusive postponing or the augmentation of the tax return filings can aid ultra mega projects in growing up and those which are smaller can climb a lot upper inviting possibly the best way around to increase the power production and supply in the Indian power wing. The provisions of the IT act that sections in 80 CCF infers that there would be a decrease of a specified amount unless there is a strong trust that the savings and investments could be positively secured and ordered on a long way.

The strategically important fact is that the overburdening done on the smaller companies needs to be chunked down to a nominal rate. Furthermore the investment option of more than a $30 billion on the foreign institutional investor’s profile where he/she can choose to invest money in bonds those are universally understandable. The incentives on tax can drastically bring up cash feasibilities and a way that optimizes the fund mobility.

When it comes to indirect taxation process, the story gets a finer tuning. There seriously are not any modifications in the rates of service tax and luxury goods tax. The basic customs duty is brought down to 5% operating on parts that are vitally functional on the higher power generation front. The next obvious result is the effective customs rate coming down to a level that can powerfully operate positive development in 15.15% rather conventionally on the 26.85%. An indifference in tax rates between the imports and that which is manufactured inside the border needs to be made. A release from the customs tax is what is desperately required to be exercised on the raw materials, goods connected to machines, bigger power project and tools.

Solar plants set up in the country can thrive only if there is a complete “get away” from the customs tax that clutches on the products that are entities of solar power generators. The customs duty on petroleum significantly went down to a 2.5% rate as to what it is a farther optimistic approach to the power sector growth.

On a complete analysis, the Indian government shouldn’t stop here. The rear end of the 11 plan is to produce the desired 15,000 mw of power; radically modifying the power plans nevertheless a reduction of excise duty on goods.

Fuel Prices hiking due to the lack of elucidation in the tax design

The oil and the fuel prices have gone up in such a way that people find it extremely hard to move on with their daily schedules. Every human being is someway related to this hot rise as they may compulsorily depend upon any variety of transport. India has to take pride in announcing that it is the topper in pricing oil and fuel. The prices are accounted to the price of oil that went high all round the world and lessened supply of petrol to selective countries. The Government has to go for a price that holds good for all the citizens in the country and restructuring of the price tag for diesel is a very important thing to be done.

The tax design has to be modified to Goods and Service Tax, the GST. Treating crude oil and fuel as luxury goods is quite unapt for how its usage is over the world. India has to set up a different functionality to overcome the issue of increasing fuel rates. Bringing down the rates of fuel is the only right way to make sure that there is enough supply, yet moderate usage of fuel. Letting down the prices eventually administers economic safety and strength.

In the near past, the oil companies tried reducing the prices, a way that was chosen for half reduction where this proved dissatisfactory and useless. The economic status in the mid eastern countries better called the “Oil Wells” went up the price ladder to $100 and above for a single barrel. This comes pretty near to what it was in the past with a lot more than a simple $100.

The redesign of the tax policy must be in such a way that it synchronizes with the World crude oil and fuel prices. The GST or the Goods and Service Tax concentrates on bringing uniform tax rates all over the country. Another important point to be stressed is that the VAT or the Value Added Tax must drop down unless and until the overall tax paid or the average tax rate wouldn’t come down to a decent rate.

The crude oil rates are up the graph as the Basic Customs Duty or the BCD is primarily high. To decrease the prices of oil and fuel is to make the Customs duty a finer strategy that introduces a measure setting up a regulation in the tax prices so that the levying doesn’t go irregular. The best way to send increasing taxation out of the house is to set up a criterion that provides money to states that demand Value Added Tax (VAT).

Economists and tax professionals expected the change of Oil and fuel to Goods and Service Taxation norms (GST) but it turned out to be a big mishap as the Government has decided to have a more detailed talk later in the mid quarters. People still conventionally believe that the Oil and Fuel are subject to the Luxury Goods category. Well, where this is untrue and it is the duty of every individual to understand how it affects the prices of oil and fuel. Its time to raise voices else it is going to be “Adding Price Hike to the Fuel”

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Advance Tax Payments Q4- How has it been for Banks, Corporate Houses and Industries?

The Indian companies pay taxes for every three months and are divided into four quarters namely Q1,Q2,Q3 and Q4, where we currently deal with the Q4 or the Fourth quarter Advance Tax Payment and as conventionally these payments strongly reflect the company’s turnover or the bank’s profit. The amounts that the firms pay show how effectively the business or the performance has been for the estimated period. In the banking sector, the foreign banks have paid more advance taxes than the nationalized banks. Though there are a couple of nationalized banks paying reasonably good figures, the private banks stay far ahead of the same. Industries and manufacturers pay very high advance tax as the prices of metals and bi products are rising like summer heat.

The tax payments this year have been vastly different for each field. The Banks this time have had good business deals and much smoother graphs of profit. Except for State Bank of India (SBI) which went down in profits and has paid really less advance tax this time. The bank restructured its pension schemes and this allotment eventually invited disaster in the tax payments. The approximate calculation is around Rs 1400 crore versus Rs 1900 crore. SBI’s growth has gone down significantly. HDFC has paid a better advance tax of Rs. 500 crore and ICICI paid Rs.475 crores. HSBC recorded Rs.449 crore as its tax pay. LIC has paid 931 crore and IDBI logs paying 160 crores of Advance Tax. Standard Chartered bank has paid the same number as it did the last quarter. Citibank and its peers have paid higher amounts of tax but firms like Union Bank’s numbers remained unchanged and Bank of Baroda with a small change. The banks on an overall basis have an 80% percent growth this year. This time the payment of Advance tax has been good and as what the officials expected. RIL and Tata Steel have been the consecutively largest tax payers this time. There are a lot of firms that have even a zero tax payment on their profiles. Abott Healthcare is one among them. The goal for this FISCAL year might most probably be met. The direct taxes have been paid properly this time and it has come around Rs. 1.52 trillion. The famous Tata Group excluding Tata Steels has bad numbers on their list. Though there was a good sales percentage Tata Motors did not pay the anticipated tax amount due to various reasons. The higher tax payments in Tata Steels are due to the rise in the price of metals. L & T has increasingly paid advance tax of Rs.300 crores as to what it paid Rs. 270 crores for the Q4 previous year.

The rise of tax payments may seem positive but it really isn’t a good sign. The increase is just because of the rise in the cost of living and the budget. This can no way judge the rise in the advance tax payments to be fine. The real increase can be notified only if the cost of living is moderate and the prices as well. This time it is indeed a virtual increase.