According to the proposal floated by the finance ministry, the companies will be required to pay taxes as per the TAS, while books of accounts will have to be maintained in accordance with the ICAI norms notified under the Companies Act, 1961
New Delhi: Companies wanting to migrate to the International Financial Reporting System (IFRS) may be spared from maintaining two books of accounts—one under the Companies Act and the other for taxation purposes—if a finance ministry proposal gets implemented, reports PTI.
The proposal, which was floated in a Discussion Paper on Tax Accounting Standards (TAS) issued by the ministry on Monday, aims at ‘reducing the compliance burden on businesses’.
“It would be burdensome for affected tax payers to maintain two sets of books of account i.e. one in accordance with the accounting standards issued by the ICAI/notified under the Companies Act, 1956; and another in accordance with the Accounting Standards notified under the (Income Tax) Act.
“Accordingly, the accounting standards notified under the Act should be made applicable only to the computation of taxable income and a taxpayer should not be required to maintain books of account on the basis of accounting standards notified under the Act,” the paper said.
According to the proposal, the companies will be required to pay taxes as per the TAS, while books of accounts will have to be maintained in accordance with the ICAI norms notified under the Companies Act, 1961.
“The proposed TAS, while enabling smooth transition to IFRS, will provide certainty on accounting issues for tax purposes as it removes alternatives and will cover all tax accounting issues,” the finance ministry discussion paper said.
The Central Board of Direct Taxes (CBDT) has invited suggestions on the paper, prepared by an expert committee, by 11 November 2011.
The committee was formed in 2010 to study the harmonisation of ICAI’s accounting standards with the direct tax laws in India, suggesting methods for determining tax base for the purpose of Minimum Alternate Tax (MAT) in case of companies migrating to IFRS and appropriate amendments to the Income Tax Act in view of transition to IFRS regime.
Though uncertainty still looms over the implementation date of the IFRS, as per the earlier road map laid out by the MCA, companies will have to prepare their accounts as per the new norm in a phased manner, beginning with companies that have a networth of over Rs1,000 crore from 1st April.
Further, while scheduled commercial banks and urban cooperative banks will adopt IFRS from 1 April 2013, all insurance companies will have to convert their opening balance sheets under IFRS from April 2012.
Large listed non-banking finance companies (NBFCs) will converge their opening books of accounts with IFRS norms from 1 April 2013.
Challenging the constitutional validity of SEBI’s circular, a petition filed by a businessman, Deepak Khosla said that not only it allows the SEBI to pass an order for compounding offences under the SEBI Rules and Regulations but also prohibits filing of an appeal against such consent orders
New Delhi: The Delhi High Court on Monday sought a response from the Securities and Exchange Board of India (SEBI) on a plea that challenged the regulator’s 2007 circular enabling Adjudicating Officers (AO) to issue consent orders without fixing guilt of parties involved, reports PTI.
The plea also sought quashing of the circular and cancelling of all consent orders passed by the SEBI or by the AOs in pursuance of the circular.
The circular enables AOs to settle “administrative or civil actions” in cases where a person is prima facie found to have violated rules without fixing the guilt of parties involved.
The petition by a businessman, Deepak Khosla, alleged the impugned circular of SEBI enabled AOs to pass consent orders which deny “important information” to investors pertaining to the offences detected by the regulator.
It said an adjudicating order promotes dissemination of information among the investors as it exposes the violators, their modus operandi and other important aspects, whereas consent orders lead to denial of such important information.
“A consent order doesn’t indicate the investors whether or not intermediaries and other persons they deal with in the securities market are violators,” Mr Khosla said.
Challenging the constitutional validity of the circular, the petition said that not only it allows the SEBI to pass an order for compounding offences under the SEBI Rules and Regulations but also prohibits filing of an appeal against such consent orders.
The petition further said there is no power with SEBI to frame such a ‘Super Amnesty’ scheme, especially since the scheme is completely contrary to the SEBI Rules and Regulations ACT.
A bench of acting chief justice AK Sikri and Justice Rajiv Sahai Endlaw issued a notice to SEBI and asked it to file its response within four weeks and listed it for hearing on 31st January next year.
“The idea is to rationalise STT so that the volumes in the capital markets increase without sacrificing revenue,” a finance ministry official said after a meeting with the representatives of stock exchanges, brokers associations and SEBI
New Delhi: Efforts are on to rationalise the Securities Transaction Tax (STT), a tax levied on sale and purchase of equity, and a decision in this regard could be taken in the 2012 Budget, reports PTI quoting a finance ministry official.
“The idea is to rationalise STT so that the volumes in the capital markets increase without sacrificing revenue,” he said after a meeting of finance ministry officials with the representatives of stock exchanges, brokers associations and Securities and Exchange Board of India (SEBI).
During the meeting, stock brokers urged the finance ministry to remove STT as it was hampering growth of the equity culture in the country.
The finance ministry official, however, ruled out abolition of the levy but said the government would look take on board the concerns of the stock-broking community and was open to rationalise STT.
STT ranges from 0.0125% to 0.025% on sale and purchase of equity. The government collects about Rs7,500 crore per annum from STT.
The ministry, according to the official, will hold another round of discussion on STT with stakeholders in the first week of November.
Market players have been demanding withdrawal of STT ever since it was introduced in 2004. It is argued that STT accounts for 51% of the transaction cost.
The removal of STT would boost volumes on stock markets, according to BSE CEO Madhu Kannan, who attended Monday’s meeting.
“STT was definitely one of the reasons affecting trading in the cash segment,” Mr Kannan said.
Among other issues, the meeting also discussed the possibility of treating STT as advance tax, as was the earlier practice. Under the present norms, STT is treated as business expense and has a bearing on profitability.
“Reverting to the earlier practice would have a similar affect as reduction in the STT,” the official added.
Besides other demands, representatives of the broking community also urged the government not to levy STT on SME exchanges which were likely to become operational on BSE and NSE by mid-December.