Sep 24, 2009


5:19 PM 0
Few days earlier some changes has been done in data of e TDS return .Now to validate new data changes Tin-Nsdl has released its new FVU(File validation utility) version 2.128 which required for e-TDS return furnished from 01.10.2008 .The new FVU can be downloaded from the link Given below

Extraction of e-TDS/TCS FVU:

1. To extract these files, double-click on ‘e-TDS FVU.exe’.
2. A ‘WinZip Self-Extractor – e-TDS FVU.exe’ will open.
3. By default, the path selected for extraction of the three files will be ‘C:\e-TDS FVU’.
4. The files can also be extracted in any other location (other than C:\e-TDS FVU). In that case, the appropriate path has to be defined by clicking the ‘Browse’ button where the three files should be extracted.
5. Thereafter, click on ‘Unzip’ button.
6. On clicking the ‘Unzip’ button, the three files mentioned above will get extracted to the specified path (i.e. in folder ‘C:\ e-TDS FVU’ by default or at the specified path)


Sep 23, 2009


3:03 PM 0
The Securities and Exchange Board of India (Sebi) is trying to ensure that mutual fund (MF) investors get the best deal from distributors. The regulator, in a circular on Wednesday amending the code of conduct for MF intermediaries, directed distributors to disclose to clients all information, involving commissions received for competing schemes of various MFs, of which the scheme was recommended. The move is an extension of the recent changes by Sebi in the fee structure of distributors. As per the changes, investors need to pay directly for the quality of services by the distributor, unlike previously, when MFs compensated the distributors. In June, Sebi had asked fund houses not to deduct marketing and distribution expenses from investments made by investors. Intermediaries will not rebate commissions back to investors and avoid attracting clients through temptation of rebate/gifts.

A focus on financial planning and advisory services ensures correct selling and also reduces the trend towards investors asking for passback of commission, the regulator said. Besides, distributors of MF products have been restrained from indicating or assuring returns in any type of scheme, unless the scheme information document is explicit in this regard. Sebi has also asked registrars to maintain necessary infrastructure to support the asset management companies in maintaining high service standards to investors. ensure that critical operations such as forwarding forms and cheques to AMCs/registrars and despatch of statement of account and redemption cheques to investors are done within the time frame prescribed in the SID/SAI and Sebi mutual fund regulations, the Sebi circular said. The chief marketing officer with a large domestic fund house said, These changes in disclosure fee will result in distributors concentrating on selling just 4-5 mutual funds rather than schemes from 25-30 fund houses

Sep 20, 2009


11:45 AM 0

Introduction: Amidst WTO & GATS, Special Economic Zones have attained a centre stage. The Central Government has enacted the SEZ Act with the major objective of generation of additional economic activity, promotion of export of goods and services, investment from domestic and foreign sources and creation of employment opportunities. This Act is unique as it helps in backward and forward integration of the economy.

Until now, SEZs were functioning under the provisions of the Foreign Trade Policy and were eligible for fiscal incentives as provided under the relevant statues. The SEZ Act, 2005, provides the legal framework for establishment of SEZs and also for units operating in such zones.

Extent and Commencement:

This Act extends to the whole of India. The Act received the assent of the President on 23rd June, 2005 and has come into force on 10th February, 2006.

Some Important Definitions [Section 2]:

1. Developer: Developer means a person who, or a State Government which, has been granted by the Central Government a letter of approval under sub-section (10) of section 3 and includes an Authority and a Co-Developer.

2. Co-Developer: Co-Developer means a person who, or a State Government which, has been granted by the Central Government a letter of approval. Any person who, or a State Government which, intends to provide any infrastructure facilities in the identified area referred to in sub-section (2) to (4), or undertake any authorised operation may, after entering into an agreement with the Developer referred to in sub-section (10), make a proposal for the same to the Board for its approval and the provisions of sub-section (5) and sub-sections (7) to (10) shall, as far as may be, apply to the said proposal made by such person or State Government. Every person or a State Government referred to in sub-section (11), whose proposal has been approved by the Board and who, or which, has been granted letter of approval by the Central Government, shall be considered as a Co-Developer of the Special Economic Zone.

3. Unit: Unit means a Unit set up by an entrepreneur in a Special Economic Zone and includes an existing Unit, an Offshore Banking Unit and a Unit in an International Financial Services Centre, whether established before or established after commencement of this Act;

4. Existing Special Economic Zone: Existing Special Economic Zone means every Special Economic Zone which is in existence on or before the commencement of this Act; and which shall be deemed to have been notified and established in accordance with the provisions of this Act and the provisions of this Act shall, as far as may be, apply to such Zone accordingly.

5. Domestic Tariff Area: Domestic Tariff Area means the whole of India (including the territorial waters and continental shelf) but does not include the areas of the Special Economic Zones.

6. Free Trade and Warehousing Zone:Free Trade & Warehousing Zone means a Special Economic Zone wherein mainly trading and warehousing and other activities related thereto are carried on.

7. Manufacture: Manufacture means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, cutting, polishing, blending, repair, remaking, re-engineering and includes agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining.

8. Services: Services means such tradable services which –

(i) are covered under the General Agreement on Trade in Services annexed as IB to the Agreement establishing the World Trade Organisation concluded at Marrakes on the 15th April, 1994;

(ii) may be prescribed by the Central Government for the purposes of this Act;

(iii) earn foreign exchange;

Administration of the Act:

Board of Approval: A Board to be called the ‘Board of Approval’ has been constituted to exercise the powers conferred on, and to perform the functions assigned to it, under this Act. The Board of Approval shall have the duty to promote and ensure orderly development of the Special Economic Zones.

Development Commissioner: The Central Government may appoint any of its officers not below the rank of Deputy Secretary to the Government of India as the Development Commissioner of one or more Special Economic Zones.

Every Development Commissioner shall guide the entrepreneurs for setting up of Units in the Special Economic Zone; ensure and take suitable steps for effective promotion of exports from the Special Economic Zone; ensure proper co-ordination with the Central Government or State Government Departments concerned; monitor the performance of the Developer and the Units in a Special Economic Zone; discharge such other functions as may be assigned to him by the Central Government under this Act or any other law for the time being in force; and discharge such other functions as may be delegated to him by the Board.

Approval Committee: The Central Government shall constitute a Committee for every Special Economic Zone, to be called the ‘Approval Committee’.

The Approval Committee shall approve the import or procurement of goods from the Domestic Tariff Area, in the Special Economic Zone for carrying on the authorised operations by a Developer; approve the providing of services by a service provider, from outside India, or from the Domestic Tariff Area, for carrying on the authorised operations by the Developer, in the Special Economic Zone; monitor the utilisation of goods or services or warehousing or trading in the Special Economic Zone; approve, modify or reject proposals for setting up Units for manufacturing or rendering services or warehousing or trading in the Special Economic Zone; allow foreign collaborations and foreign direct investments (including investments by a person outside India) for setting up a Unit; monitor and supervise compliance of conditions subject to which the letter of approval or permission, if any, has been granted to the Developer or entrepreneur; and perform such other functions as may be entrusted to it by the Central Government or the State Government concerned, as the case may be.

Special Economic Zone Authority: The Central Government shall, by notification in the Official Gazette, constitute, for every Special Economic Zone, an Authority to be called the ‘……… (Name of the Special Economic Zone) Authority’ to exercise the powers conferred on, and discharge the functions assigned to, it under this Act. Every Authority shall be a body corporate by the name aforesaid, having perpetual succession and a common seal. Every Development Commissioner of the Special Economic Zone for which he is appointed as such shall be the Chief Executive of the Authority concerned.

Establishment of SEZ [Section 3]:

A Special Economic Zone may be established under this Act, either jointly or severally by the Central Government, State Government, or any person for manufacture of goods or rendering services or for both or as a Free Trade and Warehousing Zone.

Any person, who intends to set up a Special Economic Zone, may, after identifying the area, make a proposal to the State Government concerned for the purpose of setting up the Special Economic Zone. The State Government may, on receipt of the proposal forward the same together with its recommendations to the Board within such period as may be prescribed. The Board will further communicate its decision about approval/modifications/rejection to the Central Government. The Central Government shall grant a ‘Letter of Approval’ if proposal is approved. The Central Government may approve more than one Developer in a Special Economic Zone in cases where one Developer does not have in his possession the minimum area of contiguous land as may be prescribed, for setting up a Special Economic Zone and in such cases, each Developer shall be considered as a Developer in respect of the land in his possession. (The minimum area requirements for the multi-product SEZs would be 1000 hectares or more; for the service specific zone, the area requirement is 100 hectares. However, SEZs for specific industries like gems and jewellery, bio-technology, it can be set up on 10 hectares or more.)

Any person who, or a State Government which, intends to provide any infrastructure facilities in the identified area or undertake any authorised operation may, after entering into an agreement with the Developer, make a proposal for the same to the Board for its approval. Such person or State Government (who has been granted the Letter of Approval) shall be considered as a Co-Developer of the Special Economic Zone.

The Developer shall then submit the exact particulars of the identified area to the Central Government and thereupon that Government after satisfying that the requirements are fulfilled, shall notify the specifically identified area in the State as a ‘Special Economic Zone’.

Setting up of ‘Unit’:

The procedure for setting up of a Unit for carrying on the authorised operations in a Special Economic Zone is similar to that of the establishment of the SEZ. Any person, who intends to set up a Unit, shall submit a proposal to the Development Commissioner. The Development Commissioner shall then submit the same to the Approval Committee. Upon approval, the Development Commissioner shall grant a ‘Letter of Approval’ to that person to set up a Unit.

Setting up and operation of Offshore Banking Unit:

An application for setting up and operation of an Offshore Banking Unit (Branch of a Bank) in a Special Economic Zone may be made to the Reserve Bank. The Reserve Bank shall, if it is satisfied that the applicant fulfills all the conditions specified, grant permission to such applicant for setting up and operation of an Off-shore Banking Unit.

Setting up of International Financial Services Centre:

The Central Government shall approve only one International Financial Services Centre in a Special Economic Zone.

Taxation of SEZ:

Any goods or services exported out of, or imported into, or procured from the Domestic Tariff Area by –

(i) a Unit in a Special Economic Zone; or

(ii) a Developer;

Shall, subject to such terms, conditions and limitations, as may be prescribed, be exempt from the payment of taxes, duties or cess under all enactments specified in the First Schedule.

The Second Schedule to the Act makes modifications to the Income-Tax Act, 1961.

The Developer of SEZs, who was hitherto getting a deduction under Section 80IA (4) (iv), will get such exemption under Sec. 80IAB.

The units located in SEZs, hitherto getting deduction under Sec. 10A (1A), will continue to get the deduction under the new Sec. 10AA. Additional tax on dividend distributed out of the profits from units in SEZs will not be levied in view of the amendments to Sec. 10(34) and 115-O.

The financiers being an infrastructure capital fund or infrastructure capital company for such projects, hitherto exempt under Sec. 10(23G), will continue to get the same exemption in respect of projects covered by SEZs by an amendment made in 10(23G) by substituting Sec. 80IA(4) by Sec. 80IAB(3).

Tax on capital gains on shifting of assets to an SEZ is spared by insertion of Sec. 54GA. The benefit of the above concessions would be for ten consecutive years out of the first 15 years.

Banking Units — scheduled banks in India, foreign banks having offshore banking units in an SEZ and units of International Financial Services Centre — are entitled to a 100 per cent deduction of income for the first five consecutive years and 50 per cent thereafter.

This is secured by insertion of Sec. 80LA, while a consequential amendment to Sec. 197A ensures that no deduction of tax at source will be made for any payment of interest on deposits or borrowings made to a non-resident or a resident not ordinarily resident, while Sec. 10(15) (viii) exempts such non-residents themselves who will not be liable to tax.


The Special Economic Zones (SEZ) Act, 2005 indeed provides a systemic approach for the establishment of SEZ and Units. The onus is on the Government to check and ensure that this Act is not used as a medium for exploiting the original land owners in the name of economic development and growth. ‘Identifying the area for SEZ’ may be the crux of the Act.


12:08 AM 0

The new centralised system for processing excise and service tax which would the save tax payer’s time and money would be rolled out across the country by the end of this year, CBEC Additional Director General of Systems D P Dash said here. The new system– Automation of Central Excise and Service Tax (ACES) – is a web-based application and has been tested through pilot projects.
“With the roll-out of ACES, the taxpayers time and cost in complying with the tax provisions will come down drastically, ” Dash said at a programme which marked the rolling out of ACES in the Hyderabad zone.

Making a detailed presentation on the ACES he said, “ACES aims to automate all major processes in Central Excise and Service Tax through a workflow-based application. A few modules would be implemented now and the entire project would be implemented in phases.”

This system, he said, will also improve the efficiency of the Department.

Also present there Chief Commissioner of Customs, Central Excise and Service Tax (Hyderabad Zone) Ahmed Hussain said the roll out is continuation of the efforts of the Department to harness information technology to improve the taxpayer services as well as internal efficiencies.


12:01 AM 0

About ‘Exchange Rate’ of a currency:

The exchange rate of the currency of a country in relation to the currency of another country depends on the comparative trade advantages and economic strengths of the countries.

If one US dollar is equal to 45 rupees, it simply means that in the US, if a dollar fetches 45 oranges while in India, a rupee would fetch only one orange of equivalent size and quality.

Just like any other commodity, the currency of any economy is based on dynamics of supply and demand, and its value depends on trading in currency exchanges all over the world. Higher the demand for a currency on an exchange, the stronger it becomes and vice versa. However, for currencies like INR which are not traded on exchanges, the value depends on capital inflows in the country.

Appreciation & Depreciation of currency:

A currency appreciates means its value has increased in relation to another currency.

A currency depreciates means its value has decreased in relation to another currency.

Eg. If 1 $ costs Rs 45 and if it now costs Rs 44, this means rupee has appreciated in its value (i.e. instead of Rs 45 you will get 1 $ in Rs 44, this also means the dollar has weakened). Similarly, if 1 $ costs Rs 45 and if it now costs Rs 46, this means rupee has depreciated in its value (i.e. instead of Rs 45 you will get 1 $ in Rs 46, this also means the dollar has strengthened).

Why do currency values fluctuate?

There are many participants in any foreign exchange market. These entities — like banks, corporations, brokers, even individuals — buy and sell currencies everyday.

Here too the universal economic law of demand and supply is applicable: when there are more buyers for a currency than sellers, its exchange rate rises. Similarly, when there are more sellers of a particular currency than buyers, its exchange rate will fall. This does not mean people no longer want money; it only means that people prefer to keep their wealth in some other form or another currency.

Scenario before occurrence of the current financial crises:

We were witnessing a surge of dollar-inflows into India due reasons like strong economic fundamentals and favourable business atmosphere, etc. These dollar inflows can be in the form of Foreign Direct Investment, portfolio inflows (foreign investment in equity), External Commercial Borrowings by Indian companies abroad, and remittances to India by Non-Resident Indians. Since the Indian economy and the Indian stock markets have been on a roll, the capital inflows to India has been pretty strong which has primarily led to the appreciation in value of rupee. This huge influx caused a significant demand – supply gap between the dollar and the rupee. Going by the laws of demand & supply, the rate of the rupee vis-à-vis the dollar, rises.

Due to this exporters were placed at a disadvantage with a rising rupee, since the dollar became weaker. Thus a dollar which fetched Rs. 48 about two years ago today fetched only Rs. 44 eating into the profit margins of exporters (since they earned less on their exports).

At the same time, importers benefit (since they need to pay less for their imports), but our economy was at a stage where we first needed to build our dollar reserves to meet our import payments and so the exporters’ woes were needed to be tackled first.

The Reserve Bank of India (RBI), as the central bank of India, which oversees the foreign exchange (forex) management of this country quite often intervened to ensure that the rupee was adequately propped at a particular rate. This was done to ensure that there are no sudden currency shocks, to protect exporters and importers and above all, to ensure the feeling of ‘national pride,’ which is attached to a stable and healthy currency.

When the RBI intervened to keep the rupee at some weak value, it had to buy the dollar inflows from exporters, from NRIs, from foreign direct investors, from companies that borrow abroad. In any case the sellers of dollars need rupees to conduct their businesses here. The RBI buys or sells dollars via state-run banks to prevent excessive volatility in the forex market and avoid any sharp appreciation or depreciation in the currency. When the RBI purchases foreign currency inflows, the domestic monetary base or money supply or both rises since for every dollar the RBI buys from the market, an equivalent amount of rupees gets injected into the system, adding to excess money in the system or the liquidity overhang. When the RBI buys dollars, it pays for them using freshly printed rupee notes. This leads to greater money supply, higher credit growth and inflation.

And precisely, here comes the catche. As RBI sells more rupees, the money supply increases which means too much money chasing same (or less) number of goods, thereby leading to inflation. So in effect one act of RBI creates another problem. In other words, when the RBI buys dollars from the Indian market, it simultaneously pumps rupees into the currency markets, creating the risk of inflationary pressures. The RBI typically controls the appreciation by manipulating demand-supply dynamics of currency market. It purchases dollars (to create more demand for dollar) and sells rupees (to increase supply of INR, thereby decreasing its value).

To contain inflationary pressures, the RBI adopts a measure termed as ’sterile intervention.’ Under this measure, the RBI sells Government of India bonds in the market. With the sale of these bonds, the rupee, which had flowed into the market for buying dollars, is once again sucked out of the market. When the RBI buys dollar-denominated assets, (to create demand for dollars and reduce supply of rupee) it sells rupee-denominated securities to suck the rupees back. But when the RBI has to suck out a whole lot of rupees back, it has to raise rupee interest rates, the Repo rate (the interest rate at which commercial banks borrow for short term from RBI) and the Cash Reserve Ratio (CRR).

This is how the RBI protects the dollar-rupee exchange rates and yet, manages to contain inflation.

Scenario after occurrence of the financial crises:

The sub-prime crises, bankruptcy, sale, restructuring and merger of some of the world’s largest financial institutions caused cataclysmic disruptions in the international stocks and money markets. Imprudent financial decisions, fed by greed and bad luck, have seen global financial markets collapse.

The current financial crises that shook the global financial markets has seen unprecedented bailouts and infusion of dollars into the US economy at a cost of many an emerging market, from where funds have been pulled out to flow back into America.

India, which was till recently having huge capital dollar inflows, now is experiencing flow of dollars outside the country due to selling of more Indian shares than bought (to the tune of over $9 billion), thereby making dollars scarce in India and reduced demand for rupees, simultaneously, as there is increased demand for dollars due to spurt in crude oil prices and the dipped capital inflows.

The dollar prices fell by some considerable amount with respect to most of the currencies. Here in India the rupee rose to around 40-41 a dollar from around the 45 rupees a dollar. There is a lot of panic among the exporters because a weak dollar adversely affects the exporters, especially in the services sector who have all their expenditure in rupees and earnings in dollar.

The growing Indian trade deficit and the large fiscal deficit are also contributing to the fall of the rupee. The higher price of imported goods, especially oil (India is a heavy importer of oil), has also led to an increase in domestic inflation and a fall in the value of the Indian currency. High inflation and a strong growth in the Indian economy have already forced the RBI to raise interest rates.

Example: Consider a firm; say ‘K software’ that has a profit margin of 5 %. Now ‘K software’ bags a contract of 100,000 USD from a big US based firm when the dollar Rupee exchange rate is 45 Rs a dollar. So the profit of ‘K software’ would be 5 % of 100,000 i.e. USD 5k (= 225k Rs at the exchange rate of 45Re= 1USD) and expenditure which is in Rupees as USD 95k i.e. 4275k Rupees. Therefore, ‘K software’ goes ahead with its project and when the project is completed the dollar gets weak and trades at 40 Rupees a dollar. Now ‘K software’ has already spent 4275k and now despite getting the promised 100,000 USD they get only 4000K rupees and end up, in effect, paying 275k for developing the software. So weakening of dollar is detrimental for the exporters.

To explain it with another example; Say that exchange rate is US 1 $ = 50 INR. If an exporter X earns US $ 1000 by exporting his goods/services to US, his earnings in Rupee terms is Rs. 50,000. If the Rupee appreciates to US 1 $ = 40 INR, then in rupee terms the earnings of exporter will be Rs. 40,000. A fall in earnings despite the exports being constant. But the exporter who is based in India has to spend in INR in India; he has less money at his disposal constraining his further growth by way of limiting his investment capacity.

Importers on the other hand have to pay less to import the same thing suppose you buy a 100$ iPod now you will have to shell out just around 4k instead of the earlier 4.5k. This is one of the reasons why all those Oil economies which are primarily the importers maintain very high exchange rates by regulating their currencies.

Reverse of what was happening before the crises:

Therefore, where the RBI was sucking out the excess liquidity from the system caused due to huge capital dollar inflows, it is now compelled to reverse its stance and infuse liquidity back into the system. Where previously the CRR was hiked, RBI now reduced the CRR, repo rate and adopted to increase the reverse repo rate(the interest rate at which RBI borrows for short term from the commercial banks), since there is shortage of money supply in the system and therefore reduced credit in the market.

Sep 18, 2009


8:49 PM 0

The Government today launched an interest subvention scheme of 1% on all individual housing loans upto Rs.10 lakh for units costing upto Rs. 20 lakh. The scheme recognizes that cut in interest rates has an important role to play in reducing EMIs of borrowers & creating additional demand for housing. The Scheme will cover all regions of the country and support the low and middle income sections of society to become house owners. The scheme is also expected to give a boost to credit flow to the housing sector and create additional employment in the housing and allied sectors, such as steel and cement.
The scheme was formulated in response to an announcement made by the Finance Minister in the Lok Sabha on 27th July, 2009 where he stated that housing, particularly lower and middle income housing, deserved to be supported. In order to stimulate the demand for housing for this segment of the population he proposed an amount of Rs. 1000 crore to be allocated as interest subsidy for a period of one year of operation of the scheme. The allocation of the amount and the guidelines of the scheme were approved by the Cabinet on 10th September 2009.

The scheme will be in operation for a period of one year starting from 1st October 2009 to 30th September 2010. Subsidy of 1 per cent will be defined as reduction in interest rate by 100 basis points per annum from the existing rate of interest for a particular amount & tenor. It will be applicable to the first twelve instalments of all such loans sanctioned and disbursed during the currency of the scheme and will be computed for 12 months on the disbursed amount. The subsidy amount will be adjusted upfront in the principal outstanding, irrespective of whether the loan is on fixed or floating rate basis. The Scheme will be implemented through scheduled commercial banks (SCBs) and housing finance companies (HFCs) registered with the National Housing Bank. The RBI and the NHB will be the Nodal Agencies for this Scheme for SCBs and HFCs, respectively. The number of beneficiaries covered under the scheme will depend, interalia, upon the size of the loan amount and the number of beneficiaries approaching the nodal agency for interest subvention. Being a demand driven scheme no specific targets for coverage of beneficiaries have been fixed. An amount of Rs. 300 crore will be allocated in the Budget of 2009-10 for implementation of the Scheme. The balance amount will be allocated in the Budget of next year.


12:14 PM 0
Registrars of Companies have to ensure that proper stamp duty is paid on the instruments registered with their office. As of now, physical submission of documents is mandatory where stamp duty is levied in order to ascertain that applicable stamp duty has been paid. In the present scenario, even though the eForm is submitted instantly, the RoC office has to wait for receipt of physical stamp papers to initiate necessary processing. It results in service delivery time getting longer. Hence, in furtherance of e-governance initiatives, provisions regarding stamp duty applicable on filing of e-forms have been amended and stakeholders shall have facility to pay stamp duty in electronic manner also. As of now, this process shall cover Form 1(including MoA, AoA), Form 5 and Form 44 only, accordingly revised eforms are being introduced w.e.f. 12.09.2009. These provisions shall be applicable to the eforms filed subsequent to this amendment. In case eforms filed earlier are 'Resubmitted' after implementation of this change, e-stamp shall not be applicable.

Keeping in view the requirement of stakeholders awareness, process of e-stamp has not been made mandatory, meaning thereby, stakeholders have option to pay stamp duty in electronic manner through MCA21 system or in physical form as per the existing procedure.Further this process shall be applicable only to such States/Union Territories which have agreed to the request of Ministry of Corporate Affairs for collection of e-stamp duty on their behalf.

List of eForms to which eStamping will be applicable
  2. FORM 5
  3. FORM 44
  4. FORM 67

FAQ on e payment of stamp duty
1. Please specify the services for which Stamp Duty can be paid through MCA21 system?
Stamp Duty payable on Filing of e-form 1 (including MOA & AOA), 5 and 44 can be paid through MCA21 system.

2. Am I required to fill the details of stamp duty in eform manually?
No, when user selects option to pay stamp duty through MCA21 system, the system itself prefills relevant details in the eform. In case user opts to pay stamp duty in physical manner, details of the same shall have to be provided in the eForm by the user.

3. Can I pay Stamp Duty in electronic manner with respect to all States / UTs?
List of States/ Union Territories in which eStamp duty payment on Form 1, MoA, AoA, Form 5 and Form 44 is available on line through MCA portal:

1.Andaman & Nicobar Islands
2.Andhra Pradesh
3.Arunachal Pradesh
12.Madhya Pradesh
19.Tamil Nadu
20.Uttar Pradesh
22.West Bengal

* eStamp payment services for these states will be available w.e.f. 20-09-2009

List of States/ Union Territories in which eStamp duty payment is not available on line through MCA portal

1. Chandigarh
2. Dadra and Nagar Haveli
3. Daman and Diu
4. Goa
5. Himachal Pradesh
6. Jammu and Kashmir
7. Kerala
8. Lakshadweep
9. Mizoram
10. Nagaland
11. Puducherry
12. Tripura

State where provisions of Companies Act, 1956 are not extended
1. Sikkim
Stamp duty applicable to other states/UTs is to be paid in physical form, as per current process.

4. Whether payment of stamp duty through MCA21 system is Mandatory?
Payment of stamp duty through MCA21 system is OPTIONAL till 31.12.2009. User may pay stamp duty either through MCA21 system or in the same manner as was prevailing till now. But w.e.f. 1st January, 2010, stamp duty shall have to be paid only through electronic mode for the states which have agreed for e-stamping. Please refer notification SO S.O. 2276 (E) issued by Ministry of Corporate Affairs in this regard.

5.What are the modes of payment of stamp duty through MCA21 system?
There are two modes, stamp duty can be paid through MCA21 system either off-line or on –line.

6. Whether Challan of MCA21 service fee shall include details of stamp duty also in case of off line mode?
There shall be separate SRN / challan for stamp duty, in addition to SRN / challan for MCA21 services.

7. What shall be the validity of challan for payment of stamp duty?
Validity of challan for payment of stamp duty shall be the same as that of the challan for MCA21 service fees.

8. In whose favour should I draw the check / DD to pay the stamp duty in case an offline challan has been generated?
An Information note has been provided on the challan of stamp duty regarding payment of stamp duty. Please refer to the same.

9. What is the procedure to pay for the challan generated for stamp duty?
Challan generated for stamp duty is to be paid in the same manner as challan for MCA21 services fees is deposited in an authorized bank.

10. Is it necessary to pay both the challans (i.e. challans for stamp duty and for MCA21 service fees) simultaneously?
It is not necessary to pay these two challans simultaneously but these should be paid within the validity period mentioned on the challan. It is suggested to make payment of both of these challans simultaneously as processing of the eForm shall not start unless both of these i.e. the MCA21 Service fees and stamp duty is paid and payment is confirmed."

Sep 16, 2009


12:10 AM 0


Decided by: Delhi High Court, In The case of: Commissioner Of Income Tax Vs. Db (India) Securities Ltd., Appeal No.: ITA No. 415/2007, Order Dated: 02.07.2009.


The assessee, a broker, purchased shares of the value of Rs.1,06,10,247 on behalf of its sub-broker. The sub-broker made payment of Rs.64 lakhs. As the remaining amount of Rs.41,37,881 was not paid, the assessee did not deliver those shares to the client though it offered the brokerage to tax. Since the balance payment was not made even in the next year, the assessee claimed deduction of Rs. 41,37,881 as a “bad debt” u/s 36 (1) (vii). The Tribunal allowed the claim. On appeal by the Revenue to the High Court HELD:

(i) The contention of the Revenue that the said amount was not a “debt” u/s 36 (2) and, therefore, could not be treated as a “bad debt” was not acceptable because there was a valid transaction between the assessee and the sub-broker. The brokerage was offered to tax and assessed. The assessee had to make payment on behalf of the sub-broker and as he could not recover to the extent of Rs.41,37,881/-, that sum had to be treated as a “debt”.

(ii) However, as the assessee had retained the shares, the “bad debt” would have to be reduced by the sale proceeds of the said shares. The balance was allowable.

Sep 15, 2009


4:57 PM 0

Shri Kapil Sibal, Union Minister of Human Resource Development launched a new Portal of the Copyright Office which includes a facility of on-line filing of copyright applications, here today. Also present on the occasion were Shri R.P. Agrawal, Secretary (HE) and Shri Amit Khare, Joint Secretary, Department of Higher Education.

Besides the facility of filing the applications on-line, this Portal will provide detailed information about registration process, Act and Rules, Enforcement of Copyright, Copyright Societies and financial assistance to organizations for copyright awareness.

The Portal also contains information about cases filed in the Copyright Board and their meeting dates for hearing of cases in their respective zones. Information about IPR Chairs and their activities is also provided in the new Portal.

This is the first phase of modernization of Copyright. In the second phase, the entire records of the Copyright Registration, since 1958, will be digitalized and uploaded on the Portal for enabling users to easily search the entire register of copyrights.

Sep 13, 2009


12:28 PM 0
If there is any sector in India’s economy that has suffered the most in the current global economic downturn it is the export sector. It has been recording consistent fall for the last 10 months now. In July, it registered a 28% fall. Merchandise exports fell by 27.7 % in July. In the first four months of the current fiscal exports have come down by 34% to $49.65 billion compared to $75.2 billion in the corresponding period in the last financial year. The overall growth in exports in 2008-09 has been just 3.4 % against over 20 % in the preceding 4 years. In volume terms it was $168 billion in 2008-09.
The only consolation however was that the Imports too registered an even steeper fall of 37% in July, which reduced the trade deficit by as much as 50 percent to $6 billion. But this was primarily due to fall in crude oil prices in the international market. Yes, the non- oil imports too fell by 24.5% which means there was less import of machinery and capital goods. But that may not be a flattering situation as it appears. Economists believe that a fall in both imports and exports is indicative of slower economic activity which is harmful in the long run. Imports in July fell for the 7th consecutive month.
The persistent fall in exports is due to contraction of world demand in countries which import goods and services from India. These are primarily Europe (36%) US (18 %) UK (16 %) and Japan (16 %). An ideal situation would be a rise in both imports and exports which, in the current economic scenario, will have to wait for some time. Protectionist measures adopted by the western countries have complicated the situation.
It is with this ground situation in view that the new Foreign Trade Policy, announced recently by the government seeks to tackle the issues that confront our economy. First, it aims at increasing the level of exports by providing as many incentives as possible to the exporters. This includes extension of Income Tax holiday for exporters for one more year and continuance of duty refund scheme till December 2010.The incentives available under the Focus Market Scheme has been raised from 2.5 to 3 %. Under the Focus Product Scheme these have been raised from 1.25 to 2 percent. Their validity periods have also been extended. Besides, a number of engineering goods and certain electronic items have been included in the Focus Product Scheme.
The exporters will now be able to import machinery and technology that they need to improve their competitiveness in the manufacturing sector, in certain cases duty free. Exporters will also be provided with adequate finances in dollars for this purpose by cutting down transaction costs. The fiscal burden on the government on all these measures is estimated at Rs. 2200 crores .
In a bid to extend the area of operation, 26 new markets have been identified for exports which include countries like Algeria, Egypt, Kenya, Nigeria, South Africa, Tanzania, Brazil, Mexico, Ukraine, Vietnam, Cambodia, Australia and New Zealand. These are the countries which have been least affected by the global economic downturn.

Sep 12, 2009


6:37 PM 0


Sep 11, 2009

TDS RATES FROM 01-10-2009

6:15 PM 0
TDS RATES FROM 01-10-2009



Section Code

Nature of Payment

Threshhold Limit to deduct tax

In case recipient is an Individual / HUF

If the recipient is other than Individual / HUF


Interest other than interest on securities

Interest from Banking Company

Rs.10,000/- p.a.

10 %

20 %


Interest other than interest on securities

Interest other than from Banking Company

Rs.5,000/- p.a.

10 %

20 %


Payment to Contractor

Rs.20,000/- Per Single Contract or Rs.50,000/- exceed during the financial year

1 %

2 %


Payment to Advertising Contractor / Sub Contractor

Rs.20,000/- Per Single Contract or Rs.50,000/- exceed during the financial year

1 %

2 %


Payment to transport contractor / sub contractor

If PAN Quoted




Payment to transport contractor / sub contractor

If PAN not quoted


*20% from 01.04.2010


*20% from 01.04.2010

Section Code

Nature of Payment

Threshhold Limit to deduct tax

In case recipient is an Individual / HUF

If the recipient is other than Individual / HUF


Payment of commission or brokerage to resident

Rs.2,500/- p.a.

10 %

10 %


Payment of Rent

Rs.1,20,000/- p.a.


*20% from 01.04.2010


*20% from 01.04.2010


Payment of Rent for use of Plant , Machinery or Equipment

Rs.1,20,000/- p.a.

2 %

*20% from 01.04.2010

2 %

*20% from 01.04.2010


Payment of professional or technical services

Rs.20,000/- p.a.

10 %

10 %

Note :

  1. Surcharge ,Education Cess and Health Cess is not applicable for TDS.
  2. w.e.f 01-10-2009, the nil rate will be applicable if the transporter quotes his PAN. If PAN is not quoted the rate will be 1% for an individual/HUF transporter and 2% for other transporters up to 31-03-2010
  3. The Rate of TDS will be 20% in all cases, if PAN is not quoted by the deductee (including transporter) w.e.f. 01-04-2010



Section Code

Nature of Payment

In case recipient is an Individual / HUF

/ Company



1 %

Note : Definition of scrap : ‘Scrap’ has been defined as waste and scrap from the manufacture or mechanical working of materials which is definitely not usable as such because of breakage, cutting up, wear and other reasons. It would include only such waste or scrap which arises from manufacture or mechanical working of materials. Further, such waste should not be usable as such. Accordingly, it would not include any waste or scrap –

  1. which does not arise from manufacture or mechanical working of materials.
  2. which is usable as such.

Thus the following are not covered –

  1. the waste or scrap arising from packing materials, newspaper, old machinery scrapped, etc. which cannot be said to arise from manufacture, or
  2. by-products generated from the manufacturing process as the same could be used as such.

It can inferred that, in case of sale of scrap, the provision would apply to only those sellers who are engaged in the business of manufacturing or mechanical working of



6:14 PM 0

The Income tax department has added a link at by the name “E filing Processing Status” under My Account Menu.

To know your status :

1. Login to with your PAN and password.

2. Go to the “My Account ” tab

3. Click ” E- filing Processing Status”

4. In the screen Fill your ITR-V Acknowledgment Number and select Assessment Year
5. The Status of the IT return/ITR-V processing status shall appear


5:23 PM 0

Tax Saving Mutual Funds in India

Prior to opting for a tax saving mutual fund, it is important that the investor consider certain important factors such as performance, investment style, expenses(entry load & exit load) and other critical parameters. This is done to ensure that the investor will start treating the fund at par with regular diversified equity fund which could lead to improper asset allocation. Despite of the current financial crisis that the market is going through, investors are advised to invest in funds where the underlying assets are mainly equity funds. If you invest in a rising market, the more risk you are willing to take will get you more returns. It means if you have more equity funds in your investment portfolio or if you invest in more aggressive Mutual Fund, you are bound to make money compared to a moderate investor.

The prime criteria that an investor will have to consider prior to opting for a tax saving mutual fund will be the performance of that particular fund in the recent past. Performance is critical parameter, through which a fund must re-deem itself before it could be considered to for investing. Practically all equity linked investments are considered with a 3-5 year period investment horizon. While evaluating the performance of a fund importance on premium on consistency across market phases is to be kept. Opting for tax-saving funds that have put in a reasonable show during the upturns and downturns of the market consistently during the last 5 years (approximately) is a good idea. Volatility and return along with proper investment planning is another important aspect of a mutual fund. Usually it is a fund manager, who determines the performance of a fund in the market. Good returns on Mutual Fund NAV’s (net asset values) can be achieved by pursuing an aggressive investment strategy. Investing in tax-saving funds that have rewarded investors more per unit of risk taken by them is suggested. Managing other costs and expenses like a fund manager’s salary, marketing/advertising costs, administering costs is to be maintained. The cost of investing in a mutual fund is measured by the expense ratio. The ratio represents the percentage of the fund’s assets that go purely towards the cost of running the fund.

According to SEBI (securities & exchange board India), taxes that are implied on your annual salary will be exempted if you invest in tax saving mutual funds. Moreover the returns that you earn aren’t taxable. Tax Saving Mutual Funds in India generally maintain the following rules while granting tax benefits on their schemes: 1) Any special tax benefits for the mutual fund company and its shareholders (only section numbers of the Income Tax Act and their substance should be mentioned, without reproducing the text of the sections). 2) Tax benefits are to be declared under the column of “objects of the offering”.

Some excellent tax saving mutual funds in India are: a) SBI Mutual Funds, b) Prudential ICICI, c) Franklin Templeton Mutual Fund India, d) Standard Chartered Mutual fund India, & e) Bajaj Capital. As stock markets turn more volatile, and the choice of funds increases, it will become pertinent to make the right investment decision to start with. Going forward, & opting to invest in a fund that not only provides you tax relief but also good returns is advisable


3:01 PM 0
Haryana government has announced the 4% vat on cash sales of hardware items which was 12.5% earlier with effect from 1st SEPTEMBER, 2009.

The 25th August, 2009
No. SO. 77/H.A. 6/2003/S. 59/2009. - In exercise of the powers conferred
by sub-section (1) of section 59 of the Haryana Value Added Tax Act, 2003 (Act 6 of
2003), and with reference to Haryana Government, Excise and Taxation Department,
notification No. Web. 3/H.A. 6/2003/S. 59/2009, dated the 4th August, 2009, the
Governor of Haryana hereby makes the following amendment in Schedule C appended to
the said Act, namely :-
In the Haryana Value Added Tax Act, 2003 (Act 6 of 2003), in
Schedule C, under columns 1 and 2, after serial number 34 and entry thereagainst,
the following serial number and entry thereagainst shall be inserted, namely : -
1 2
“34 A Hardware of iron and steel such as al drops, latches,
handles, hinges, door-springs and door-stoppers
whether polished, enameled or plated”.
Ramendra Jakhu
Financial Commissioner and Principal Secretary
to Government, Haryana, Excise and Taxation Department.

Sep 10, 2009


9:48 PM 0
Today (09.09.2009) Cost Inflation index for Financial Year 2009-10 Has been notified.The Index is to be used for the calculation of Long term capital Gain on Capital assets .More over person who has sold their assets in April & looking to invest money in Bonds is looking for this Notification as time limit for investment as per section 54EC is 6month from date of transfer of capital assets which is going to be expire in October 2009 for such persons.

NOTIFICATION NO : 67/2009, Dated: September 9, 2009

In exercise of the powers conferred by clause (v) of the Explanation to section 48 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes, number S.O.709(E), dated the 20th August, 1998, namely :-

In the said notification, in the Table, after serial number 28 and the entries relating thereto, the following serial number and entries shall be inserted, namely:-
“29 2009-10 632”

F.No.142/13/ 2009-TPL

(Vijay Kumar Jaiswal)
Under Secretary (TPL-IV)

Note :- The principal notification was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section( ii), vide number S.O.709(E), dated the 20th August, 1998 and was last amended vide number S.O. 2037(E), dated the 13th August, 2008.


Financial Year




























































Sep 9, 2009


10:25 PM 0
There have been two recent developments in regard to interest liability in cases of erroneously availed CENVAT credits on inputs. The question of law is whether in terms of the CENVAT Credit Rules 2004 (the Rules), the liability to interest is triggered upon the erroneous or incorrect availment of input tax credits or whether such liability is only applicable where such erroneously availed CENVAT credits are utilis [...]There have been two recent developments in regard to interest liability in cases of erroneously availed CENVAT credits on inputs. The question of law is whether in terms of the CENVAT Credit Rules 2004 (the Rules), the liability to interest is triggered upon the erroneous or incorrect availment of input tax credits or whether such liability is only applicable where such erroneously availed CENVAT credits are utilised to discharge duties on output products in which such inputs are used. In terms of the erstwhile CENVAT credit rules that were in force prior to the above Rules, the Punjab and Haryana High Court, in its decision in CCE vs. Maruti Udyog Ltd. [2007 (214) ELT 173 (P&H)], had upheld the order of Tribunal that in such a situation, the assessee was not liable to pay interest in a case where credits were only taken erroneously but not utilised. The Special Leave Petition filed against this order of the High Court by the department with the Supreme Court was thereafter dismissed. However, when the erstwhile rules were replaced by the Rules, the issue once again came into prominence for the reason that Rule 14 of the Rules was worded differently from the erstwhile rules and accordingly stated that where the CENVAT credits had been taken or utilised wrongly or had been erroneously refunded, the credit along with the interest shall be recovered from the manufacturer or the service provider under the relevant provisions of Section 11AB of the Central Excise Act, relating to payment of interest on excise duty payments. The matter hence once again came up to the Punjab and Haryana High Court upon a writ filed against the order of the Commissioner, Central Excise pertaining to an order passed by the Settlement Commission in that particular matter। In Ind-Swift Laboratories Ltd। vs। UOI [2009-TIOL-440-HC-P&H-CX],

the Court had to inter-alia once again determine the issue of whether interest was to be paid from the date that CENVAT credits were admittedly erroneously availed or it was payable from the date that such credits were utilised to actually pay the duties on the finished product. The court took into account the relevant provisions of Rule 14 read in conjunction with Section 11AB relating to interest on delayed payment of duty. The court went into the CENVAT Credit Scheme in detail and noted that the rules permitted a manufacturer or a
service provider to take CENVAT credit in respect of relevant inputs and that such credits could be utilised in order to discharge the
liability of duty on finished products in relation to which such CENVAT credits pertained. Thereafter, the
High Court took note of the decision of the Supreme Court in Pratibha Processors vs. UOI [2002-TIOL-273-SC-CUS], which held that interest was compensatory in character and was imposed on assessees who had withheld the payment of any tax that was due orpayable. The levy of interest was geared to the actual amount of tax withheld and the extent of the delay in paying the tax on the due date. Accordingly, interest was different from penalty, which was penal in character. The court accordingly read down Rule 14 of the Rules to hold interest was payable where CENVAT credits had been taken and utilised wrongly and interest could not be claimed simply for the reason that CENVAT credits were wrongly taken since availment by itself did not create a liability to excise duty. The Court read Section 11AB of the Act and the Rules conjointly and came to the above conclusion. The point to be noted is that this decision of the High Court was based on Rule 14 of the Rules and had taken note of the fact that while it did envisage payment of interest even on erroneous availment of credits, the fact that interest was compensatory in nature and would hence only apply from the date of utilisation of such erroneously availed credit towards payment of excise duty on output had to be kept in mind as well and hence erroneous availment of input credits by itself could not trigger an interest payment. The distinction between a compensatory measure and a penal measure has been very well brought. As opposed to this salutary decision of the High Court, the Department, in a recently issued Circular No. 897/17/2009-CX dated 03.09.2009, has, without taking note of the aforesaid decision, stated that Rule 14 of the CENVAT Credit Rules is clear and unambiguous and that in a situation where CENVAT credit is wrongly taken or utilised interest does become payable. Accordingly it clarifies interest is payable where credit had been wrongly taken, even without being utilised towards payment of duty. This Circular of September 2009, which is a full two months subsequent to the passing of the order of the High Court, is clearly contrary to the legal position as enunciated in the aforesaid order। The point that interest is compensatory in character and hence could not apply in a situation of incorrect availment of credit has not been considered at all. Indeed, the most surprising point is that the
decision of the Punjab and Haryana
High Court, which was on new Rule 14 of the Rules, has not been taken into account at all in arriving at the conclusion contained in the Circular. The Circular does however take note of the earlier decision of the High Court in the Maruti Udyog case which was, as indicated earlier, based on the erstwhile rules and distinguishes it on that basis without noting the subsequent decision based on the current Rules. It is hoped that the Department would take note of the correct position in law, as per the decision of the High Court in Ind Swift Laboratories, and withdraw the above Circular under reference.