Regulations
SC to hear banks' plea against Mallya's non-disclosure of full assets
The Supreme Court will hear on July 18 a plea by a consortium of banks led by the State Bank of India that beleaguered liquor baron Vijay Mallya has not complied with its April 7 order asking him to fully disclose assets held by him and his family.
 
The bench of Justice Kurian Joseph and Justice Rohinton Fali Nariman agreed to hear the plea by the consortium of banks after Attorney General Mukul Rohatgi on Thursday mentioned it and sought an urgent hearing. 
 
The top court by its April 7 order had directed Mallya to disclose all the assets -- movable and immovable and tangible and intangible -- and other shareholdings and beneficial interests in India and abroad held by him, his wife and children by April 21. It had also asked Mallya to indicate the amount that he was prepared to deposit before it to show his bonafide for a meaningful negotiation with the banks seeking the recovery of loans advanced to his now-defunct Kingfisher Airlines.
 
The consortium of 13 banks is seeking the recovery of more than Rs9,000 crore in the principal and interest, loaned to his airlines.
 
The bench of Justice Joseph and Justice Nariman had in the course of the last hearing of the plea on April 26 rapped Mallya, saying: "The point is that you have not complied with our April 7 order both in letter and spirit."
 
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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Infosys net up 13% in first quarter
Global software major Infosys on Friday reported Rs3,436 crore consolidated net profit for first quarter (April-June) of this fiscal (2016-17), a 13.4% annual growth.
 
In a regulatory filing to BSE, the IT major said consolidated revenue for the quarter (Q1) grew 16.9% year-on-year (YoY) to Rs16,782 crore, as per the Indian accounting standard.
 
Under the International Financial Reporting Standard (IFRS), net income rose 7.4% YoY to $ 511 million and gross revenue 10.9% YoY to $2,501 million ($2.5 billion).
 
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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Declarants cannot pay tax from undeclared income, govt clarifies the issue raised by Moneylife
The Central Board of Direct Taxes (CBDT) on Thursday issued a clarification that says the declarant will not get any immunity under the Income Declaration Scheme, 2016 (the scheme or IDS) in respect of undisclosed income utilised for payment of tax. Moneylife on Tuesday highlighted how black money declarers can get away with a 31% tax rate instead of 45% as stated in the Scheme
 
Union Revenue Secretary Hasmukh Adhia in a series of tweets said, "...based on our Q&A an impression was created that the effective rate of IDS would now be 31%. We have clarified this point in the fourth set of Q&A, which is being placed on the website today. It is clarified that the effective rate of tax plus penalty plus cess remains at 45%, in case of Income Declaration Scheme." However, the question as to how the government will determine whether the declarant has used other undisclosed income for paying tax under the Scheme to make the effective tax rate at 31% instead of 45% as envisaged, remains open. Of course, it would take only a reckless person to try to pay the tax also from black money since the government has clarified. 
 
 
In a press release the CBDT says, "Queries have been received from various stakeholders whether the payment under the Scheme can be made out of undisclosed income without including the same in the income declared, thereby bringing down the effective rate of tax, surcharge and penalty payable under the Scheme to around 31%. The fourth set of FAQs seek to set this issue at rest."
 
"It is clarified that the intent of the clarification issued vide Question No5 of Circular No25 of 2016 was limited to conduct of enquiry by the Department. It in no way intends to modify or alter the rate of tax, surcharge and penalty payable under the Scheme, which have been clearly specified in the Scheme itself. Sections 184 & 185 of the Finance Act, 2016 unambigously provide for payment of tax, surcharge and penalty at the rate of 45% of undisclosed income. 
 
This is illustrated by the following example—
 
In a case a person declares Rs100 lakh as undisclosed income, being the fair market value of undisclosed immovable property as on 1 June 2016 and pays tax, surcharge and penalty or Rs45 lakh (Rs30 lakh + Rs7.5 lakh + Rs7.5 lakh) on the same out of his other undisclosed income. In this case the declarant will not get any immunity under the Scheme in respect of undisclosed income of Rs45 lakh utilized for payment of tax, surcharge and penalty but not included in the declaration filed under the Scheme. To get immunity under the Scheme in respect of the entire undisclosed income of Rs145 lakh (Rs100 lakh being undisclosed income represented by immovable property and Rs45 lakh being the payment made from undisclosed income) and pay tax, surcharge and penalty under the Scheme amounting to Rs65.25 lakh i.e., 45% of Rs145 lakh,” the release says.
 
Earlier, several chartered accounts (CAs) highlighted the gap (or lack of sufficient clarification) in tax charged (45%) and how it can be mis-used to make the effective rate as low as 31%, under the IDS initiative.
 
Bombay Chartered Accountants’ Society, Ahmedabad Chartered Accountants’ Association, Karnataka State Chartered Accountants’ Association and Chamber of Tax Consultants, in a letter to Hasmukh Adhia, Revenue Secretary have highlighted different interpretations of the reply given to FAQ No5 in Circular No25/2016 issued on 30 June 2016. 
 
The core of the controversy is, nowhere does the government circular or the FAQs (which anyway cannot be used as a reliable source at any legal forum), clarify as to what should be the source of the tax paid on the income disclosed. Under IDS, the effective tax is 45%. A person declaring an income of Rs10 lakh can pay Rs4.5 lakh or 45% as tax, including 30% basic tax, 7.5% as Krishi Kalyan Cess and 7.5% of the undisclosed income as penalty. But what would be the source of this Rs4.5 lakh? Could this be from black money or should it be from white money only? Common sense, dictates that it should be from white money. 
 
The latest clarification from the CBDT states that the declarant will not get any immunity under the Scheme in respect of undisclosed income of Rs45 lakh utilised for payment of tax. However, for this the CBDT and I-T department has to establish that the declarant has used undisclosed funds for paying tax under the Scheme. 
 
Separately, the CBDT has revised the schedule for making payments under the Scheme, allowing the declarants to disclose the black money in three instalments, by 30 November 2016, 31 March 2017 and 30 September 2017.

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COMMENTS

Gopalakrishnan T V

10 months ago

This sort of thinking only emanates in the minds of Chartered accountants who know only the art of evasion of taxes and they are brains behind all the black moneys generated in the country. Once the time limit fixed gets over, the Government should be after all the Chartered Accountants of the Country who are behind various Corporates, professionals, businessmen and are having roaring practice themselves without declaring income and paying taxes properly. The Income Tax Officials instead of harassing salaried class can be after the Charted accountants and fix the problem of generation of black money in the country. The bankers particularly private sector banks are also helping in different ways knowingly or unknowingly to evade taxes in collision with Charted accountants and tax officials. Evasion is an age long practice and it will take some years to erase the same from our culture.

Santhanam Krishnan

10 months ago

For every rule/law there is a loop hole! Probably the Revenue should buck up before issuing circulars as devils are on the opposite side.

c v manian

10 months ago

The honest tax payer gets bu****ed up all the time, while dishonest people have all the excuses for not paying their dues to the government. This is India after
69 years of independence. Even God cannot save India.

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