Taxation
e-commerce to come under GST
The published draft bill of the destination-based, dual VAT-type Goods and Services Tax has clarified that all e-commerce transactions will attract GST which will be collected by the service operator as soon as the supplier receives payment.
 
The model GST law approved at the state finance ministers' meeting in Kolakata on Tuesday says: "Every electronic commerce operator shall, at the time of credit of any amount to the account of the supplier of goods and/or services or at the time of payment of any amount in cash or by any other mode, whichever is earlier, collect an amount representing consideration towards the supply of goods and/or services made through it."
 
Bringing e-commerce under the purview of GST, which will unify the myriad indirect taxes, is likely to end the kind of recent arbitrary moves by state governments of Uttarakhand, Assam and Bihar that imposed a 10% entry tax on goods sold online.
 
e-commerce companies have to currently deal with a complex tax framework involving VAT, central sales tax (CST), excise, and service taxes.
 
For instance, for digital downloads involving material like software, music and e-books, confusion over whether the transaction is for sale of goods attracting VAT and CST, or a provision of service liable for service tax, has led to many litigations.
 
All forms of "supply" of goods or services such as sale, transfer, barter, exchange, license, rental, lease and import of services of goods and services made for a consideration by will attract CGST (central levy) and SGST (state levy).
 
As GST will apply on "supply", the erstwhile taxable heads such as "manufacture", "sale", and "provision of services", among others will lose relevance, said Pune-based GST expert Pritam Mahure.
 
"Further, certain supplies, even if made without consideration, such as permanent transfer of business assets, assets retained after deregistration etcetera will attract GST. Even 'barter' of goods, transaction which were hitherto untaxed in VAT regime, will attract GST," Mahure said.
 
The liability to pay CGST or SGST will arise at the time of supply. Separate provisions in the model law prescribe what will apply as time of supply for goods and services.
 
"Given that there could be many parameters in determining 'time' of supply, maintaining reconciliation between revenue as per financials and as per GST could be a major challenge to meet for businesses," he added.
 
With GST to be applicable according to whether a transaction is a "intra-state" or "inter-state", the draft law provides separate provisions which will help an assessee determine the place of supply for goods and services.
 
The states will draft their own State GST based on the draft model law with minor variations, incorporating state-specific exemptions.
 
GST would be payable on the "transaction value", being the price actually paid or payable, and said to include all expenses in relation to sale such as packing and commission.
 
As the threshold limit, the draft GST law proposes the amount of Rs.10 lakh, and that of Rs.5 lakh for northeastern states including Sikkim.
 
An Authority for Advance Ruling is proposed to be located in every state, comprising one central GST member and one state GST member.
 
The law also provides for the creation of an Appellate Authority in each state.
 
The draft bill includes a composition levy, wherein a person with an annual turnover of less than Rs50 lakh on the sale of goods and services in a single state will have to pay a tax of "not less than one per cent".
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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India's aviation policy pushes affordable, convenient flying
India has unveiled its long-awaited aviation policy with a roadmap to support 300 million air travellers in five years and steps to make air travel affordable and convenient. It also recasts the controversial norms on national carriers to flying abroad.
 
Besides sops to make India a hub for aircraft maintenance, the policy proposes an all-inclusive tariff of Rs 2,500 per ticket for each flying hour to promote regional routes and facilitate more people to travel at lower costs with incentives for airport developers, operators and carriers.
 
One of the most contentious rules that had split the domestic airlines was the 5/20 norm of five-year operation and a 20-aircraft fleet to qualify to fly overseas. The five-year wait is now done away with, but airlines will need 20 aircraft and fly 20 per cent on domestic routes.
 
The new policy was approved by a cabinet meeting chaired by Prime Minister Narendra Modi after several years of discussions, following which a revised draft policy was last uploaded by the civil aviation ministry on October 30 last year for comments from stakeholders.
 
Civil Aviation Minister Pusapati Ashok Gajapathi Raju said it was for the first time that India has an integrated civil aviation policy that has been crafted after some 450 responses and talks with all stakeholders -- airlines, airport operators and informal consultations among ministers.
 
The ambitious policy seeks to make India figure among the three largest aviation hubs in terms of passengers within the next decade from the 10th position now, while promoting the entire chain of aviation infrastructure: from cargo and maintenance to charter services and manufacturing.
 
Civil Aviation Secretary Rajeev Nayan Choubey said while India built more than 350 airports and airstrips during and after World War II, many of them are inoperational. A new scheme will seek to revive as many as possible as no-frills airports at an investment of Rs.50 crore each.
 
This will be a a part of the regional connectivity scheme that will kick-off from July, along with a cap in all-inclusive fare of Rs 2,500 per ticket per hour of flying, and viability gap funding for airline operators. Excise duty in such airports will be just 2 per cent on fuel.
 
"Apart from funding, there will not be any airport charges -- like for landing, parking as also navigation -- to the un-connected airport. The service tax will also be reduced by 90 per cent on the ticket which would make the effective rate come down to 1.2 per cent," Choubey said.
 
The government also intends to develop India as an MRO (maintenance, repair and overhaul) hub to attract business from foreign airlines with sops such as a service tax concession, customs duty exemption for tools, self-certification for parts and a longer, six-month stay for foreign aircraft to park in India.
 
"The maintenance, repair and overhaul (MRO) business of Indian carriers is alone around Rs 5,000 crore, 90 per cent of which is currently spent outside India," said the policy document. It seeks to get India this share, than airlines going to Sri Lanka, Singapore, Malaysia and the UAE.
 
Broadly, the policy dwells on upgrade of airports, regional connectivity, easing of norms for flying abroad, liberalisation of open skies regime, development of cargo hubs, chopper services, attracting investments in maintenance and ground handling and security.
 
Officials said norms for choppers and how to utilise the excess manpower in terms of pilots will be announced separately. The ground handling policy, which has come under criticism for making the cost of operations costly has also been recast to allow airlines carry out self-handling. 
 
Otherwise there will be three independent ground-handling agencies, including those associated with Air India, at every large airport. The number of such agencies in other airports will be decided by the operator.
 
As per the data furnished by the Airports Authority of India (AAI), the country had seen 168.89 million domestic and over 54 million international air travellers in 2015-16.
 
The new norms on flying overseas are expected to benefit at least two new entrants -- Vistara and AirAsia. India currently has 15 scheduled carriers. Three international carriers have stakes in Indian carriers -- Singapore Airlines with the Tatas in Vistara, AirAsia again with the Tatas and Etihad in Jet Airways.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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SEBI finally initiates action against NDTV, promoters
The Securities and Exchange Board of India (SEBI) has finally initiated approved enforcement action against New Delhi Television Ltd (NDTV) and its promoters Prannoy Roy and Radhika Roy and RRPR Holdings Pvt Ltd, for the company's failure to multiple disclosure information to Exchanges. 
 
In a notice issued on 8 June 2016, the market regulator said, "...(SEBI) conducted an examination of certain non-compliance by you in the matter of NDTV Ltd and prima facie found that you have violated SEBI Act, 1992 and SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (Takeover Regulations). In view of this, SEBI has decided to initiate/ launch adjudication proceedings against you under section 15A (b) of the SEBI Act for the alleged violation."
 
However, sources tracking the issue point out that this covers only a few issues in a voluminous body of data and facts available with the regulator; it is not clear at the moment whether this is merely SEBI's initial action or the only issues that it plans to examine at length.  
 
Replying to the SEBI notice, NDTV has taken the stand that the violations in the notice are merely procedural. Its communication to the stock exchanges says, "The Company is of the opinion that the alleged non-compliance referred in the show cause notice (SCN) are technical/procedural in nature. The Company and its Promoters are in the process of seeking legal advice to take appropriate action in the said matter."
 
The SEBI examination into alleged violations against NDTV, its promoters and major shareholders found non-compliance in certain deals like when General Atlantic sold 7.73% of its stake in the company to Mr Roy and Mrs Roy on 26 December 2007. Following this transaction, NDTV promoters made an open offer. However, they did not comply with the Takeover Regulations for the same transaction on National Stock Exchange (NSE). The due date for disclosure of the General Atlantic share sale was 28 December 2007. The information appeared on BSE, but there was no information disclosed on NSE. On 14 January 2016, NDTV via an email informed NSE about the transaction, the findings from SEBI says.
 
 
Similarly, when Indiabulls Financial Services Ltd bought 6.40% stake in NDTV on 1 January 2008, the information was not disclosed to the exchanges for over seven years, SEBI found out. This information was shared by NDTV to BSE on 3 July 2015 and to NSE on 14 January 2016.
 
 
SEBI says NDTV and its promoters also failed to disclose the information about promoters' stake sale to Goldman Sachs Investment (Mauritius) Ltd on 17 April 2008, to GS Mace Holding Holdings Ltd with Goldman Sachs Investment (Mauritius) Ltd as PAC on 14 July 2008. This stake was sold by both the Roys and RRPR Holdings Pvt Ltd. Only the deal with Goldman Sachs Investment (Mauritius) Ltd on 17 April 2008 was disclosed by the company, the SEBI notice says.
 
 
 
Following the open offer, NDTV promoters bought 20.28% stake in the company on 3 July 2008. However, this information was not shared with the exchanges for over seven years. NDTV disclosed this information to BSE on 3 July 2015 and to NSE on 14 January 2016 as per the finding from the market regulator.
 
 
Two years later, on 8 March 2010, both Prannoy and Radhika Roy bought 5.55% stake each in NDTV from RRPR Holdings Pvt Ltd. According to SEBI finding, while this disclosure was made on BSE, there was no information shared with NSE till 14 January 2016, which is violation of Takeover Regulations.
 
 
NDTV also failed to disclosed information to NSE about its annual filing. The company shared its annual disclosure for 2008 with NSE after a delay of 170 days. For the 2010 annual disclosure, NDTV shared the information with BSE, but failed to do the same with NSE till 14 January 2016. NDTV shared the 2011 annual disclosure to BSE after a delay of 16 days, while again failing to disclose it with NSE, which received the information only on 14 January 2016, the SEBI finding says.
 
 
 
Earlier in November 2015, in an affidavit filed in the Supreme Court, the Enforcement Directorate (ED) has said it has received information from the Central Bureau of Investigation (CBI) that NDTV Studios, an Indian resident company, received Rs387.62 crore from NDTV (Media) Mauritius Ltd in 2008 and a small portion of the funds was used for investment in six new subsidiaries in India until 2009. In addition, in 2010, a major portion of the remaining funds, were invested in NDTV Multimedia (Mauritius) Ltd and further, in two existing wholly-owned subsidiaries in the Netherlands and UK through another subsidiary NDTV Worldwide Mauritius Ltd. Thereafter, NDTV Studios and its six subsidiaries were merged with NDTV thereby creating doubts about the purpose of their setting up as well as the sources of funds for NDTV (Media) Mauritius and the need to set up various companies in Mauritius. (Read: CBI, ED questions genuineness of NDTV transactions through Mauritius ; NDTV says it received show notice from ED on FEMA violations; ED charges amount involved is Rs2,030 crore )
 
Last year in June, SEBI levied a penalty of Rs2 crore on NDTV for company's failure to disclose information about the Income Tax demand notice to the Exchanges. (Read: SEBI imposes Rs2 crore penalty on NDTV for late disclosures ). The case related to non-disclosure of the Rs450 demand notice served by the Income Tax department on 21 February 2014 to the stock exchanges as is mandated by Clause 36 of the listing agreement. NDTV’s failure to disclose the notice, for wider dissemination to shareholders was taken up by the regulator for action. 
 
"The disputed amount of Rs450 crores in the tax demand is noted to be significant when compared with Rs349.77 crores of revenue of Noticee for the year ended 31 March 2014 as also the net worth of Rs365 crores as on 31 March 2014. The company has consistently posted a net loss for the past five years. The net loss in FY 2014 amounts to Rs.53.56crores. In view above, Noticee should have made voluntary disclosures to stock exchanges on an immediate and prompt basis.
 
Although it is the prerogative of companies to decide on materiality, in this case, the amount is material particularly considering the financials of the Company and information ought to have been disclosed. It is noted that the amount involved in the income tax demand was larger than the revenue of the company and significantly larger than its net profit i.e. net loss in the recent financial year as also greater than its net worth," the SEBI order dated 4 June 2015 said.
 
At 1.10pm Wednesday, NDTV was trading 1% up at Rs94 on the BSE, while the 30-share Sensex was also marginally higher at 26,525. 
 

 

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COMMENTS

SuchindranathAiyerS

6 months ago

SEBI's action against NDTV is like the proverbial Bikini. Big enough to hide the essentials but small enough to remain interesting:

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