Monthly Archives: April 2016

Tax exemption over specific services

The finance ministry has provided service tax exemption over certain services provided by the government or local authorities. The services are certain registration process where the amount to be paid does not exceed INR 5,000 if service is obtained on a regular basis the annual payment limit is 5,000. The budget made provisions to collect service tax from business entities with more than 10 lakh. The service tax charged is at 15 percent for the services offered by local or government authorities. Contact Uptra Consultancy Services for Company registration and Tax Consultancy Services.
The list of services exempt from tax are availing a passport, visa, drivers license and birth or death certificate, legal registrations( vehicle ), certifications for safety. Services related to approval change of status of land building approval. Fines or penalties will also be exempt from service tax. Service tax will not levied on individuals for obtaining these services from government or local authorities. Telecoms get a major relief as they are exempt from paying service tax over spectrum obtained before April 2016. For spectrum obtained after April 2016 tax will be paid under deferred payment scheme in installments. The telecom will pay service tax on the day of installment if opted for deferred payment for 10 years.
Business organizations can also claim input tax credit over service tax or excise, provided that the services are under non-exempt services list. Input tax credit can be availed over the life-time of the spectrum , that is 20 years. These provisions bring the much required clarity over service tax queries in spectrum usage.

IMF chief presses for tax transparency in multinational companies

Panama papers are the harsh reality of tax evasion and tax heavens used by the multinational companies and corporate world. The problem is not constrained any single country it’s a global issue. The panama papers have names of influential personalities and corporate companies covering half the globe. Still the papers have not been fully revealed, surface scratch of the papers has took the world by storm.
Speaking amid this crisis, the International Monetary Fund chief Christine Lagarde pressed for international financial transparency in tax avoidance among multinational companies. Developing countries are the worst hit due to tax evasion.
Even major countries like Britain lose trillions of pounds due to tax heavens. A study Oxfam showed that even giants like Apple and General electric stash trillions in off-shore accounts.
This deprives the countries of the much needed revenue from corporate world. Lagrade spoke about these issues in the spring meetings of international monetary fund and World Bank.
IMF has decided to propose changes to battle tax evasion along with other international financial organizations.
The G20 summit has signed for automatic information exchange among its member nations with respect to tax evasion. The European Union has also decided to draft a list of tax heavens and issued that big corporate will have to reveal their earnings and tax details.
However tax evasion may seem less of an offence but the complete revelation of “panama papers” is expected to show the kind of activities the money is used for.

G20 nations to fight against tax evasion

G20 leaders sign deal to curb tax evasion and money laundering. The countries have agreed upon exchange of information regarding financial data of foreign accounts.
In the back drop of panama papers leak the communiqué attended by the G20 finance ministers and central bank governors urged the need for strong measures against tax heavens.
The leadership stressed for the need of transparency in financial institutions to prevent money from being used for illegal activities such as funding terror organizations, trafficking and drug deals.
India is also a part of the G7 summit initiative, financial action task force, against money laundering. The task force is operational since 1989.
The G20 also expects all countries to be a part of the automatic information exchange program. Organization of economic cooperation and development (OECD) is working with G20 to indentify jurisdictions which do not cooperate with tax transparency.
IMF also stressed that major multinationals should become transparent with taxes and income. Oxfam organization released data that shows even giants like Apple and General electric stash trillions in off-shore accounts by evading taxes.
India has formed a probe team over the names listed on “panama papers”. There are 500 Indians listed on the list. India does not have an official estimate over the total amount of black money held by Indians but unofficial estimate is around $1.4 trillion.
India is also in agreement with USA over mutual sharing of information in regard with possible tax evasion by its citizens.

Government hits on tax evasion by sellers on e-commerce

The Maharashtra state government is trying to reduce its fiscal deficit by plugging gaps in tax evasion. The government burdened with drought relief in several districts is watching out new sources of revenue like e-commerce websites.
The 2016-17 financial budget by the government is blocking loopholes for avoiding tax and has made registration easier. The service tax system is computerized to have a keen check on payments. Service tax is the major revenue for government (30.08 percent). The state finance minister has provide with an amnesty to pay due taxes. The amnesty period is expected to bring in 500 crore revenue. The defaulter should pay 25 percent of disputed interest and they will be exempted from penalties.
The government will obtain sales-purchase transactions from e-commerce portals; on failing to provide the information the portals will be penalized.
This will get hold of the sellers who evade taxes by showing lesser income. The sellers who have more than 10 lakh turn over are registered with the government. This will give insight whether these sellers pay the dues properly. The move will also get hold of merchants who file lower incomes to evade taxes. The government is adopting to latest techniques to plug-in the gap in revenue deficit

Additional Tax on car purchase

Indian Automakers association expects lower sales for the year 2016 starting from april. This is the second time the projections have been lowered for the year. Last year the car sales stood at 7.24 percent the highest in the past few years. This comes after the government introduces additional taxes on car purchase in the 2016-17 budget. Cars above INR 10 lakh will have an additional 1 percent luxury tax, SUVs and heavy vehicles will be charged 4 percent excess. Even small cars have not been spared by the finance minister; the budget imposes 1 percent infrastructure cess on small cars. Diesel cars have 2.5 percent additional tax.
The decision by the government comes after the increased pollution levels in the country. Finance Minister stated that the increase in taxes was not from a revenue point of view; rather it was raised over environmental concerns.
There was a severe media outcry over increasing pollution levels in major Indian cities. A study on pollution level patterns point to the fact that individual vehicles cause 40 percent pollution in Indian cities. In World Health Organization (WHO) polluted cities of the world list Indian cities have secured 14 places in the top 20.
The Supreme Court banned Diesel cars in Delhi after the city was listed as the most polluted city of the world in the WHO list. Diesel cars account for 40 percent of car sales in India.
Maruti the biggest automaker in India said that the government’ decision in singling out car industry over the pollution issue was unfair.