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FINANCE BULLETIN
Knowledge multiplies through sharing

Vol. IV/ Issue No.10/Oct/ 2011 (Commenced in May 2007)

Compiled by R. Satyanarayana, M.Com, FICWA E-mail : yadav,satyanarayana@gmail.com Mobile: (91) 949-186-8036

EDITORIAL
Dear friends, Recommendation to increase the PPF deposit Limit to Rs 1 lac, SMS to assesses of the TDS/TCS return processed at TIN, introduction of self assessment in customs, indication by Government that it has not made it compulsory for every company to have a policy on Corporate Social Responsibility though guidelines are applicable to PSUs, registration for free alters from Stock exchanges, SEBI approval to BSE for creating SME exchange and portability in health insurance for individuals and family floater policyholders are some of the welcome features covered in this issue. Increase of Repo and Reverse Repo rates to 8.25% and 7.25% respectively, Forum to resolve wars between different regulators by Competition council of India, companies can test XBRL instance document through MCA validation tool etc., are some more important issues covered in this edition of the Finance Bulletin. Hope readers will find the Finance Bulletin useful in updating on the changes covered in this issue. With regards

INDEX
CONTENTS GENERAL LABOUR LAWS RESERVE BANK OF INDIA ACCOUNTS & AUDIT INCOME TAX CENTRAL EXCISE SERVICE TAX CUSTOMS ACT DGFT COMPANY LAW SEBI FEMA Insurance PAGE No. 2 2 2 3 3 4 4 5 5 5 5 6 6

QUOTES FOR THE MONTH 1. Honesty with oneself is the condition of spiritual integrity -Dr.Sarvepalli Radhakrishnan 2. All change is not growth, as all movement is not forward Ellen Glasglow

Disclaimer: The compiler is not in any way responsible for the result of any action taken on the basis of the contents of this Finance Bulletin.

R. Satyanarayana

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FINANCE BULLETIN
(Professional version)
GENERAL Compulsory registration of marriages may be soon -SC: Supreme Court of India directed the State Government and Central Government to make necessary regulations for compulsory registration of marriage of all Indians vide its judgment in the case of Seema Vs Ashwini Kumar AIR 206 SC 1158 Forum to resolve wars amongst regulators: Competition council to act as Forum to resolve turf wars amongst regulators vide ET th dated 10 Sept,2011. Search & Seizure RTI: Search and Seizure information cannot be obtained under RTI Act vide Allahabad HC decision in the case of MD Overseas Ltd Vs DGIT & Ors (2011) 333 ITR 407 (All). International companies and consumer courts: SC ruled that International companies are answerable to Indian Consumer courts for deficiency in their services provided vide SC decision upholding the apex consumer forms direction to a Lebanese International courier company PTI th dated 19 Sept,2011. Security to ATM users: If someone kidnaps and wants you to draw money from ATMthen enter the reverse password say if your password is 1234 then enter 4321 and money will come from machine and will be visible but cannot be taken from it and further the machine automatically informs the concerned bank and nearby police and

locks the ATM room so that you can save money and life vide Anonymous mail received by me. LABOUR LAWS Deposit limit under PPF scheme enhanced: The committee on comprehensive review of small saving schemes has recommended that the deposit limit under PPF scheme be increased from present RS 70 000 to Rs 100000 and the interest on advances against deposits in PPF scheme be increased from th 1% to 2% vide news dated 6 Sept,2011 Assured return on New Pension Scheme(NPS): A parliamentary panel has recommended that subscribers to the New Pension System (NPS) should get an assured return on their investments that is at least equal to the interest rate given by the Employees' Provident Fund Scheme vide TOI st dated 1 Sept,2011. Know your PF balance: Log on to www.epfindia.com- select know your pf balance and furnish the details state, name and city and your pf number

RESERVE BANK OF INDIA RBI notifies RTGS service charges for members: RBI notified the RTGS service charges for member banks for utilizing the facility of RTGS and the charges comprise of membership fees, transaction fees and time varying fees. If the banks wants to pass on the charges to users of RTGS they should not recover more than what they are paying to RBI and full details can be had from RBI Notification No.RBI/2011-12/166 DPSS CO th RTGS No.388/04.04.002/2011-12 dated 5 Sept, 2011. RBI simplifies External Commercial Borrowing (ECB) procedure: RBI has issued circular simplifying the ECB procedures vide circular No. RBI/2011-12/169 AP DIR 11 th dated 7 Sept,2011

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Substitution of Micro & Small Enterprises in place of SSI: RBI has issued circular substituting the words SSI by using Micro and Small Enterprises vide Circular No.RBI/2011-12/167 RPCD.CO.BC.NO. th 18/03.05.33/2011-12 dated 7 Sept, 2011. Interest from FD-taxability issue: IT : Interest on fixed deposits for a term exceeding more than one year would be rendered to tax only on its receipt from bank on maturity on basis of certificate of TDS issued by bank - [2011] 12 taxmann.com 503 (Cuttack - ITAT). Gift by resident to person outside India: RBI has increased the ceiling of gifts allowable by transfer to persons outside India to US$ 50,000 vide RBI/2011-12/175 AP DIR Circular th No.14 dated 15 Sept, 2011. Basel III Implementation: The RBI has said Indian banks will adhere to the globally agreed timeline for implementation of Basel III norms and guidelines in this regard will be issued in the near future vide The Deccan th Herald dated 28 Aug,2011. Increase in Repo and Reverse Repo rates: RBI increased the Repo and Reverse Repo rates to 8.25% and 7.25% respectively wef th 16 Sept, 2011 vide RBI/2011-2012/182 FMD.MOAG No.63/01.01.01/2011-12 dated th 16 Sept,2011. NBFC returns in revised forms: RBI notified revised forms in which NBFCs are required to submit their various returns vide RBI/201112/195 DNBS(PD).CC. No.243/ nd 03.02.02/2011-12 dated 22 Sept,2011. Parameters for setting up Infrastructure debt funds as MF: The Reserve Bank has announced today that banks and Non Banking Financial Companies (NBFCs) would be eligible to sponsor infrastructure Debt Funds (IDFs), to be set up as Mutual Funds (MFs) and NBFCs. The Securities and Exchange Board of India (SEBI) has amended the (Mutual Funds) Regulations to provide regulatory framework for IDF-MFs by inserting Chapter VI B to the MF Regulations.

ECB guidelines: As a part of Rationalization and Liberalization RBI issued circular Rationalizing and Liberalizing External Commercial Borrowings (ECBs) guidelines wherein it has enhanced the limits of ECB under automatic route to US$ 750 Millions or equivalent in a financial year from the existing limit of US$ 500 Million. besides other liberalizations vide RBI/2011-12/201 A.P. (DIR Series) circular No.27, DatedSeptember 23, 2011. Bridge finance for infrastructure sector: RBI considering the specific needs of the infrastructure sector, has decided to allow Indian companies which are in the infrastructure sector, to import capital goods by availing of short term credit (including buyers / suppliers credit) in the nature of bridge finance, under the approval route, subject to other conditions given in the RBI/2011-12/200 A.P. (DIR Series) circular No. 26, Date September 23, 2011 Guidelines on Securitization Transactions: In the light of the domestic and international financial markets RBI issued draft of revised guidelines on Securitization Transactions vide RBI/2011-12 DBOD. No.BP. /21.04.177/2011-12, DatedSeptember 27, 2011 AADHAR is for KYC norms: Banks can consider AADHAR card reference for KYC norms for opening bank accounts vide CIRCULAR NO. DBOD.AML.BC. NO. 36/14.01.001/2011, DATED 28-9-2011 ACCOUNTS & AUDIT AICPA recommends US public companies to choose IFRS: AICPA recommends to SEC to allow public companies in USA to adopt IFRS th vide Journal of Accountancy dated 18 Aug, 2011. Comments on CAS-4: Cost Accounting Standards Board had invited comments of all concerned on revised draft of CAS-4 and the

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comments to be sent by 1 Oct,2011 by email to casb@icwai.org ICAI and other examining bodies RTI: Supreme court commented that ICAI and other examining bodies needs to get tuned to RTI ACT vide the SC judgment given in the case of ICAI Vs Shaunak H Satya & Others FAXB Taxonomy for XBRL: FASB issues proposed 2010 Taxonomy for XBRL vide nd Journal of Accountancy dated 2 Sept,2011 ICAI issued exposure drafts in line with IFRS: ICAI issued revised exposure drafts in respect of IND AS 28, IND AS 112,IND AS 111, IND AS 27,IND AS 110 calling for comments th by 15 Oct,2011. Quick insights on CA Profession: ICAI has released the book Quick insights on CA Profession which contains the status of Direct and Indirect taxes, Accounting standards, LLP, companies law etc with th status as on 30 June, 2011. XBRL update: Auditors and company secretaries will not be required to certify that filing of accounts under a new electronic format match the original balance sheets, relieving finance professionals from a burdensome compliance in the first year of th this new reporting mode vide ET dated 19 Sept, 2011. XBRL Filing: If companies are interested in test and validate duly prepared XBRL instance document by MCA validation tool they can send the email to xbrl.technical@mca.gov.in Schedule VI: ICAI issued refined Exposure Draft of Guidance Note to Revised Schedule th VI and called for comments by 5 Oct, 2011. ICAI on IND AS: ICAI has issued draft amendments to IND AS 27, 28, 110,111 and th 112 and called for comments by 15 Oct, 2011. Draft guidance note on Revised Schedule VI: ICAI has released draft guidance note on Revised Schedule VI for comments of all stakeholders vide www.icai.org

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INCOME T AX Loss on interest swap valuation: ITAT Mumbai decided that the loss on year end valuation of interest swaps is an allowable business deduction vide decision in the case of ABN Amro securities India Pvt. Ltd Vs ITO ITA No.7073/Mum/06 Business Liability quantified and discharged later: Gujarat High court held that the business liability which has accrued though quantification and payment at a later stage, is an allowable business expenditure vide judgment given in the case of CIT V Alembic Glass Works Ltd TAX Appeal No.729 of 2011. Penalty cannot be imposed without adjudication: SC held that demand levying penalty and interest cannot be issued without adjudicating a case vide the decision given by SC in the case of Kesar Enterprises Ltd Vs State of UP and Others in the Civil th Appeal No.6896 of 2002 decided on 6 July,2011. Due date for submission of ITR V for AY2010-11: The due date for submission of ITR V for AY 2010-11 has been extended st upto 31 Oct,2011 or 120 days from uploading of the IT Return vide News dated th 7 Sept,2011. Bad debts for same year allowable expenditure: Claim for bad debts allowed even if debts are for the same year vide ITAT Mumbai decision in the case of DCIT Vs Rediff.com India Ltd vide ITA No.905/Mum/2008 Interest earned by clubs on deposits: Interest earned by clubs on deposit of surplus funds is taxable and the principle of mutuality is not applicable vide Madras HC in the case of Madras Cricket Club V ITO (2011) 334 ITR 238. Deposit of Excise duty in advance: Deposit of Excise duty in advance is an allowable expenditure under section 43B of the IT Act 1961 vide Delhi HC in the case of CIT Vs Modipon Ltd (No.2) 2011 334 ITR 106 Carry forward of unabsorbed depreciation: For carry forward of unabsorbed Vol. IV / Issue No.10/Oct 2011 Page 4

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depreciation and claim of the same filing of IT Return in time under Sec 139(1) is not necessary vide Delhi HC in the case of CIT Vs Govind Nagar Sugar Ltd 2011 334 ITR 13 Salary TDS No interest to be levied: Employer failed to deduct and pay tax at source, employee needs to pay the same and not liable for interest under section 234B of ITA vide ITAT Uttarakhand HC in the case of DIT & Anr V Maersk Co.Ltd 2011 334 ITR 79 SMS of TDS/TCS statements processed at TIN: NSDL announced that it would send SMS of status of quarterly TDS/TCS statements processed by it to the mobile number furnished in the statements. However, further details can be viewed at rd TIN website vide ET dated 23 Sept,2011. Company can follow cash system for tax purpose: ITAT Mumbai gave decision stating that though companies follow accrual system of accounts for preparing their financial statements, they can follow cash system for the purpose of tax computation vide decision given in the case of DCIT Vs Stup Consultants Pvt. Ltd. Reimbursement to C&F Agent: Payments made by the assessee to C&F agents towards reimbursement of statutory liability paid by C&F agent on behalf of the assessee cannot be considered to be covered under section 194C and hence no TDS is involved vide ITAT Mumbai in the case of ACIT Vs TIOL 440 ITA No.733/Mum/2010 CENTRAL EXCiSEX .Marketability is essential to levy Excise duty: Supreme Court decided that the marketability of the product is essential criteria for levy of excise duty of the products in condition in which it emerges vide decision given in the case of CCE Vs Sundstrand Pvt. Ltd in the case of Civil Appeal th No.4077 of 2033 decided on 30 Aug 2011. E-Filing of Central Excise returns mandatory: CBEC issued amendment circulars amending CE Rules and Cenvat Rules and made mandatory est Filing of CE Returns wef 1 Oct,2011 vide

Notifications No.21 & 22/2011-Central Excise th (N.T) both dated 14 Sept,2011. CENVAT cases appeals to High courts: The appeal
to the High Court is not maintainable in cases involving CENVAT credit entitlement vide CCE Vs. Switchgear & Control Technics (2011 (269) ELT 496.

E-filing and payment of Central excise and service tax: CBEC has issued comprehensive instructions outlining the procedure for electronic filing of Central Excise duty and Service Tax returns and electronic payment of taxes under ACES. The said instructions outline the registration process for new assesses, existing assesses, nonassesses and for Large Taxpayers Unit assesses, steps for preparing and filing of return, use of XML Schema for filing dealers return, procedure for obtaining acknowledgement of e-filed return, procedure for e-payment etc. For details refer to CBEC th Circular No. 956/17/2011-CX dated 28 Sept, 2011. SERVICE TAX Cenvat on Catering services: A manufacturer is entitled to input service credit on catering service provided to its employees - [2011] 13 taxmann.com 4 (Mum. - CESTAT) EPF & ESI received by contractor: EPF and ESI received by contractor is subject to service tax and hence forms part of gross value of services vide CESTAT New Delhi (2011) 13 Taxmann.com 120. SC on Service tax on Renting: The Supreme Court stayed Bombay High Court decision that upheld service tax on the commercial rentals. Bombay High Court had earlier extended the stay up to 30.9.2011 after it upheld the provisions with retrospective effect from 1.6.2007. CUSTOMS ACT Classification under two possible headings decision of SC: If the products are capable of classification under two different chapters then the classification must be under the

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chapter which occurs last in the numerical order vide SC decision in the case of Commissioner of Central Excise Noida Vs Kitply Industries Ltd in Civil Appeal No.9736 th of 2003 decided on 7 Sept,2011. Royalty is part of Assessable value of imports: Royalty payable should be included in the computation of Assessable value of imports for customs duty purpose as decided by Supreme court in the case of CC Vs M/s Living Media (India) Ltd. (2011- TIOL-81). BG waiver for EOUs: The Central Government
has clarified that waiver from requirement of filing of Bank Guarantee in respect of Export Oriented Units (EOUs) will be allowed even if any show cause notice for procedural lapse has been issued to the EOU.vide CBEC circular No. 36 Dt. 12/08/2011

upload of data for Registration- Cum-Membership Certificate (RCMC) on the website of Director General of Foreign Trade (DGFT) by 31/10/2011 so that RCMC number is available in DGFT records and exporters are not required to produce the RCMC certificate while applying for various export promotional schemes vide Trade Notice No. 17 Dt. 23/08/2011. DEPB scheme benefits: A Circular can reduce the benefit under DEPB Scheme prospectively and not retrospectively. - Delhi High Court vide UoI Vs Himsheel International (2011-TIOL-462

Drawback rates notified: CBEC notifies Drawback and All Industry Drawback rates for 2011-12 vide notifications No.68& 69/2011-N.T and Circular No.42/2011-AIR nd dated 22 Sept 2011. COMPANY LAW Expenditure on Corporate Social Responsibility: The Minister of Corporate Affairs informed Rajyasabha that Government has not made it compulsory for every company to have a policy on Corporate Social Responsibility though guidelines have been issued to CPSUs vide ET th dated 4 Sept,2011. Financial statements for limited purpose of IPO/FPO: MCA clarified that the Financial statements for limited purpose of IPO/FPO can be made in the old Schedule VI format th vide General Circular 62/2011 dated 5 Sept,2011. Approval of e-Forms 1,18 & 32 under Companies Act 1956: Since, now companies are being incorporated within 24-48 hours through online approvals the approval of eForms Nos.1,18 and 32 certified by professionals and declaration given by professionals is not going to be implemented th yet vide General Circular No.61 dated 5 Sept,2011. MCA circular on e-Filing of Returns: In view of last minute rush likely to be for e-Filing of Returns with ROC, MCA has issued to plan the schedule of filing by companies as per the schedule indicated in the circular based on the name of the company starting Vol. IV / Issue No.10/Oct 2011 Page 6

Self Assessment under Customs: CBEC issued guidelines for Self Assessment in Customs vide Circular No.39/2011-Customs nd dated 2 Sept,2011. Stuffing of export containers: Revised detailed guidelines have been issued for stuffing of export containers under the supervision of Central Excise officers vide th Circular No.952/13/2011-CX dated 8 Sept,2011.. CBEC waives onsite post clearance for Exporters: CBEC has waived the onsite post clearance for exporters making exports further simplified vide Business Standard th dated 19 Sept,2011. DGFT DEPB scheme to be replaced with new scheme The government is likely to offer a lucrative one-year stop-gap duty reimbursement scheme, replacing a popular tax break for exporters that ends next month st vide EC dated 1 Sept,2011. DEPB will be replaced with Duty drawback scheme from st th 1 Oct 2011 vide EC dated 17 Sept,2011. Upload data of RCMC: The Central
Government has asked all the Export Promotion Councils/Commodity Boards /Authorities to

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Alphabet of the name vide circular which can be downloaded from www.mca.gov.in Draft guidance note of Schedule VI; MCA issued draft guidance note to Schedule VI of Companies Act 1956 inviting comments within 15 days for details refer to www.mca.gov.in Revision in Form 5: MCA has amended the relevant rules and thus revised Form 5 wef th 25 Sept,2011 and the same can be downloaded from www.mca.gov.in Pendency with ROC not to be more than 60 days: Except as provided in the Companies Amendment Regulations 2011 Registrar of Companies shall not keep any document pending for approval and registration or for taking on record or for rejection or otherwise for more than sixty days, from the date of its filing excluding the cases where approval from the Central Government or Regional Director or Company Law Board or Court or any other competent authority is required. These changed time frame is th applicable wef 25 Sept;2011 vide F.No nd 2/13/201 1-CL V dated 22 Sept,2011. National e-Authentication Framework (NeAF): In an attempt to streamline electronic authentication in e-governance applications in the country, the department of information technology (DIT) has formulated a framework to deliver government services in a seamless and paperless manner through the Internet and mobile phones vide The Financial Express th dated 13 Sept, 2011. SEBI Register for free Alerts: Investors now can register for free alerts for free SMSs and emails for day to day alerts in stock th exchanges vide Business Standard dated 5 Aug,2 011. SEBI (Issue of Capital & Disclosure Requirements): SEBI issued gazette notification of SEBI (Issue of Capital & Disclosure Requirements) Regulations 2011

and details can be checked from SEBI notification LAD-NRO/GN/2011rd 12/25/30309 dated 23 Sept,2011. Takeover code: SEBI (substantial acquisition of shares and takeover code) Rgulations2011 has been notified through gazette and will nd be effective from 22 Oct,2011 vide F. No. rd LAD-NRO/GN/2011-12/24/30181 dated 23 Sept,2011. Application cum bidding form and disclosures: In order to make investor friendly and to ensure uniformity in bidding and accuracy SEBI has revised the Format of application cum bidding form and the disclosures to be made vide CIRCULAR NO. CIR/CFD/DIL/4/2011, Dated- September 27, 2011 Price information of past issues handled by Merchant Bankers: SEBI has revised the format for disclosures of price information of past issues handled by Merchant Bankers vide CIRCULAR No. CIR/CFD/DIL/5/2011, Dated- September 27, 2011 Market linked debentures: Companies issuing structured products or market-linked debentures should have a minimum net worth of at least Rs 100 crore, if they want them to be listed on the stock exchanges, the Securities and Exchange Board of India said. The capital markets regulator also stipulated that while the issuers are free to determine the face value for such securities, no invitations for subscription or allotments shall be made for an amount less than Rs10 lakh in any issue. Prescribing guidelines for intermediaries, SEBI has said that only intermediaries regulated by it can sell such securities vide th IMD/DF/17/2011 dated 28 Sept, 2011. SEBI approves SME Exchange: BSE receives SEBI approval for SME Exchange vide The th Hindu Business lines dated 29 Sept, 2011.

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FEMA Simplified procedure for External Commercial Borrowings: RBI has issued revised simplified procedure for ECBs vide th AP DIR (Series) Circular No.11 dated 7 Sept, 2011. Resident Indian can open NRE/ FCNR(B) account: Resident individuals may be permitted to include resident close relative(s) as defined in the Companies Act, 1956 as a joint holder(s) in their EEFC/RFC bank accounts on former or survivor basis. However, such resident Indian close relative, now being made eligible to become joint account holder, shall not be eligible to operate the account during the life time of the resident account holder vide RBI/20115th 12/176 AP AD Circular No.15 dated 1 Sept,2011. NRI/POI can open NRE/FCNR(B) account along with Resident Indian: Further, Resident Indian can operate the NRE/FCNR(B) accounts on Power of Attorney basis RBI/2011-12/174 AP AD Circular No.13 5th dated 1 Sept,2011. Close relative can lend loans to NRI: RBI has decided to permit a resident individual to lend to a Non resident Indian (NRI)/ Person of Indian Origin (PIO) close relative by way of crossed cheque /electronic transfer, subject to the conditions in the circular No. RBI/2011-12/180 AP DIR circular No.18 6th dated 1 Sept 2011. Repayment of loan of NRI by Indian close relative: RBI notified that the repayment of loan granted by authorized dealers to NRI by the close Indian Relative is allowable vide RBI/2011-12/183 AP DIR circular No.19 th dated 16 Sept 2011.

INSURANCE Servicing of health insurance schemes through TPA: IRDA notified TPA as intermediary service provider and they need to take approval from IRDA to operate and can provide services only to Insurance companies and not to others vide circular No. IRDA/NL/CIR/HLTH/2007/09/2011 dated th 6 Sept 2011. IRDA on persistency of life policies: IRDA issued revised guidelines on persistency of Life policies fixing 50% as the Average Persistency rate subject to other conditions contained in the circular No. th IRDA/Life/GDL/GLD/217/09/2011 dated 20 Sept,2011. IRDA issued guidelines to Individual agents defining relative: Revised guidelines have been issued by IRDA defining the term relative and the details can be referred from Ref: IRDA/NL/GDL/Misc/218/09/2011 th dated 20 Sept,2011. ACORD Standards for Insurance markets: IRDA notified a circular indicating creation of Indian specific ACORD Standards for Insurance markets and full details can be taken from IRDA/NL/ORD/CMT/214 th /09/2011 dated 16 Sept, 2011. Health Insurance Portability: IRDA issued guidelines for health insurance portability for individuals and family floater policies issued by non-life insurance companies and st the same are effective from 1 Oct, 2011 vide CIRCULAR NO. IRDA/HLT/MISC/CIR/209 09/2011, DATED 9-9-2011

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