Taxation
Education cess ineffective from June 1

The basic rate currently is 12% and the education cess is at 3% of the basic tax, for a total of 12.36%

 

The currently levied education cess and secondary and higher education cess would become ineffective from June 1 as they would be subsumed in the service tax rate of 14 percent notified by the Central Board of Direct Taxes, the finance ministry said on Wednesday.
 
"The provisions levying education cess and secondary and higher education cess would also cease to have effect from June 1, 2015, as the same would be subsumed in the service tax rate of 14 percent," a statement here said.
 
"However, the date of giving effect to the provisions relating to imposition of a Swachh Bharat cess on all or any taxable service will be done in due course," the release added.
 
The basic rate currently is 12 percent and the education cess is at 3 percent of the basic tax, for a total of 12.36 percent.
 
Following Finance Minister Arun Jaitley budget announcement in February, the government has notified June 1, 2015 as the date from which the rate of service tax would go up from 12 percent to 14 percent.

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SEBI sets new norms for mutual funds managing offshore assets
Markets regulator SEBI on Wednesday simplified norms for domestic mutual funds to manage offshore pooled assets, dropping its "20-25 rule" which requires a minimum of 20 investors and a cap of 25 percent on investment by an individual, for funds from low-risk foreign investors.
 
In a notification saying the new regulations would be called the Securities and Exchange Board of India (Mutual Funds) Regulations, 2015, SEBI said the restrictions would not apply "if the funds managed are of Category I foreign portfolio investors (FPIs) and/or Category II foreign portfolio investors which are appropriately regulated broad based funds".
 
SEBI has classified FPIs into three categories, with the first two being low-risk foreign institutions that include sovereign wealth funds, pension funds, banks, mutual funds, insurers, multilateral institutions and well-regulated foreign entities, including portfolio managers.
 
As per the existing norms, a fund manager managing a domestic scheme is allowed to manage an offshore fund, subject to three conditions.
 
The first requires the investment objective and asset allocation of the domestic scheme and of the offshore fund to be the same. The second mandates at least 70 percent of the portfolio to be replicated across both the domestic scheme and the offshore fund.
 
The third condition requires that the offshore fund should be broad-based with at least 20 investors with no single investor holding more than 25 percent of the fund corpus. Otherwise, a separate fund manager is required to be appointed for managing an offshore fund.
 
SEBI's board approved the changes in March following an invitation for comments from the public on the proposals.

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Cheyyur UMPP will make electricity unaffordable in TN, says report
Even as Tamil Nadu contends with rising electricity rates, the Cheyyur UMPP will place an upward pressure on electricity tariffs in the state, says a research report prepared by US-based IEEFA
 
The 4,000MW ultra mega power project (UMPP) worth Rs24,200 crore at Cheyyur in Tamil Nadu is financially not viable and would only make electricity unaffordable in the state, says a report.
 
The report prepared by US-based Institute of Energy Economics and Financial Analysis (IEEFA) for Chennai-based Indian Institute of Public Policy (IIPP), says, "...the tariff for consumers would be Rs4.9 per kWh (unit) in 2021, its first year of operation, and an average tariff of Rs5.95 per unit over its 40 year life. Every year of delay will push up costs further. These rates are up to five times higher than tariff costs at other UMPPs and coal-fired power plants."
 
In January 2015, the Ministry of Power terminated the bid process for the proposed 4,000MW UMPP at Cheyyur after seven private bidders pulled out of competition for the power plant terming the proposition unworkable. While the Indian Government has promised to revise the bidding guidelines to make the project more favourable to investors, any such move will only increase the burden on State Electricity Boards, consumers and or taxpayers, the report says. 
 
According to the report, additional reworking of the bid documents may make the project more attractive for investors, but will make it even more financially fraught for consumers and cash strapped utilities. It says, "Any new program design must either pass along greater costs to the residential, industrial and agricultural users or necessitate greater governmental costs (subsidies)." 
 
The cost of the (Cheyyur) plant would place upward pressure on electricity prices in Tamil Nadu, a community already contending with an ailing utility and the problem of rising electricity costs. “current and planned grid and transmission improvements, competitive wind and solar prices, an existing pipeline of projects for Tamil Nadu and greater resource planning have decreased the need for Plant Cheyyur,” the report says.
 
Equatorials, an Ahmedabad-based financial advisory firm contributed to the report by analysing financial information available in the public domain.
 
"Ongoing and planned grid and transmission improvements, competitive wind and solar prices, the existing pipeline of power projects in Tamil Nadu and greater resource planning have diminished the need for construction of Plant Cheyyur," the report concluded.

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