Repeated violations of traffic rules resulting in cancellation of driving license is likely to be one of the major amendments to the Bill
The amendment to the Motor Vehicle Act is likely to be delayed by a couple of months as the Ministry of Road Transport and Highways has said it needs three months to review the current Act and thereafter will introduce it afresh in Parliament.
The Motor Vehicles (Amendment) Bill, which could be passed only in the Rajya Sabha in May 2012, proposes hefty penalties for traffic rule violations and drunken driving.
Union Transport Minister Nitin Gadkari said, "We need three months to study the (Motor Vehicle) Act in its totality and then we will try and bring it in Parliament in its next session."
He added that the Act should be as per international standards.
Gadkari, on 5th June, had said that the government in a month's time will re-draft the Motor Vehicle amendment bill, which will be in sync with six advanced nations - US, Canada, Singapore, Japan, Germany and the UK, and thereafter will introduce it in Parliament.
Repeated violations of traffic rules resulting in cancellation of driving license is likely to be one of the major amendments to the Bill.
"If anyone violates the road rules more than three times, his driving licence will be suspended for six months and if he continues to violate after that, then the driving licence will be cancelled. These are some of the considerations as part of redrafting the Motor Vehicles bill," the Minister had said.
Several provisions of the Motor Vehicles Act of 1988, especially those related to penalties for violations, have not been found to be effective in checking road accidents. The last time the Act was amended was in 2001.
Israel carried out overnight air strikes against Gaza’s security headquarters and police stations, in the heaviest bombardment since operations began on 8th July
For the first time, Israel has launched a ground operation inside northern Gaza to silence Hamas rocket fire while thousands of Palestinians fled their homes after the Israeli military threatened to widen its assault that has killed nearly 170 people in six days.
Ignoring global calls for a ceasefire, Israeli troops — thought to be naval commandos — briefly entered Gaza early Sunday and raided a missile launching site. This is the first time Israeli forces have acknowledged they’ve entered Gaza in what appeared to be the ground assault.
Israel has been building up its troops along the border with northern Gaza, fuelling speculation of a possible ground invasion.
During the incursion, which lasted about half-an-hour, both sides exchanged gunfire at the launch site, an Israeli military source said.
Four Israeli troops suffered light injuries, but all the soldiers returned home safely, the source said.
The Israeli jets later dropped leaflets at Beit Lahiya, home to about 100,000 people, warning residents to evacuate their homes ahead of their “short and temporary” campaign to begin.
“The Israeli Defense Forces intend to attack terrorists and terror infrastructures ...” the leaflets said, mentioning a list of areas that will be targeted.
“Israel is currently attacking, and will continue to attack, every area from which rockets are being launched at its territory.”
The Palestinian death toll from the Israeli air strikes hit 168 with another 1,120 people wounded, the emergency services said.
About 17,000 people, fearing for their lives, have taken shelter in installations of the UN agency for Palestinian refugees, UNRWA, its spokesman Chris Gunness said in a statement.
Meanwhile, around 800 Palestinians holding dual citizenship have reportedly begun leaving Gaza via Israel’s Erez Crossing.
Israel carried out overnight air strikes against Gaza’s security headquarters and police stations, in the heaviest bombardment since operations began on 8th July.
A senior security official has said the operation in northern Gaza is necessary because the area accounts for far more rocket attacks than other areas.
The Government’s move to keep CSR activities out of the business expenses periphery, would lead private sector making lump sum donations or contributions to eligible trusts and institutions instead of taking an initiative for actually making a difference to the society
The Finance Bill 2014 has proposed many changes under both, direct and indirect taxes. One such proposal, which is expected to have a major impact on the corporate sector is the exclusion money spent on corporate social responsibility (CSR) by companies, from the classification of business expenditure, resulting in a notional increase in the taxation burden on companies.
Requirement of CSR
Section 135 of the Companies Act, 2013 requires companies with a net worth of Rs500 crore or more / turnover of Rs1,000 crore or more / net profit of Rs5 crore or more, during any of the three preceding financial years, to contribute at least 2% of the average net profits of the company during the three immediately preceding financial years towards CSR activities as listed out in Schedule VII to the Act, 2013.
The draft CSR rules had provided that the tax treatment of CSR spent would be in accordance with the income Tax (I-T) Act as may be notified by Central Board of Direct Taxes (CBDT). However, the same was dropped from the final version of the CSR Rules leaving an ambiguity with respect to the tax treatment of expenditure incurred on CSR activities by companies. In the absence of any clarification, general consensus in the corporate world was to treat it as business expenditure. This would have resulted in deduction of the CSR spent from net profit of the company, thereby reducing its tax liability.
Section 13 of the Finance Bill, 2014 seeks to amend Section 37 of the Income Tax Act, 1961 (I-T Act) relating to general expenditure by inserting an Explanation II to sub-section (1) of Section 37 which states that:
‘For the removal of doubts, it is hereby declared that for the purposes of sub-section (1), any expenditure incurred by an assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession.’
The above amendment will take effect from 1 April 2015 and accordingly will apply to the assessment year (AY) 2015-16 and subsequent years.
The rationale was that companies with specified net worth, turnover or net profit share a portion of the Government’s burden in meeting social obligations by undertaking CSR activities. If such expenses were to be allowed as tax deduction for these corporates, this would result in subsidizing of around one third of such expenses by the Government by way of tax expenditure.
Are there any exceptions to the prohibition?
Section 37 (1) of the IT Act has been quoted below:
‘Any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head “Profits and gains of business or profession’.
This means that expenses falling under sections 30 to 36, which are not capital in nature, would qualify as expended for business or profession and therefore deductable from the income of the company.
Thus expenses falling under any of the sections 30 – 36 would fall out of the restriction.
Further, Section 80G of the I-T Act provides for deduction in respect of donations made to certain eligible funds, charitable institutions and trusts. In case a company contributes to such trusts, which falls within permissible CSR activities listed under Schedule VII of the Act 2013, the same would also qualify as a deduction in calculating the taxable income of the assessee.
With the changed scenario in sight, resulting percentage spent by companies on CSR activities would be higher than the required 2% of the average three years’ net profits. Let us understand this by way of an illustration:
The aggregate corporate taxation is 33.9% (taking a surcharge of 10%). Since the CSR spend is not included while calculating the net profit, the actual CSR spending percentage can be derived from the following formula: 2% / 1 – 33.9%. Thus the actual CSR spend of companies come to about 3.02% of the net profits, which is much higher than the required 2%.
Furthermore, since companies can now only avail deductions on such CSR spending pursuant to section 80G of the IT Act, the expenditure on CSR activities is most likely to become a passive chequebook CSR spending, wherein companies would be tempted to make contributions to trusts under section 80G of the IT Act, so as to get the deduction benefit instead of making actual spending on CSR activities.
With the Government’s move to keep CSR activities out of the business expenses periphery, thereby causing no actual benefits to the corporate sector, it has sown the seed of a laid back attitude, whereby private sector would merely make lump sum donations or contributions to eligible trusts and institutions instead of taking an initiative to actually make a difference to society.
Further Inclusions to CSR
Lastly, the Budget of 2014-15 included spending on ‘slum development’ activities as an eligible item for CSR to be undertaken by corporates. This was allowed with a vision to encourage the private sector to supplement the government's efforts to make the cities slum free.
(Shampita Das works as an Associate in Corporate Law Group at Vinod Kothari & Company)