The most awaited Cross Border Tax judgment in the matter of Vodafone is out and the Supreme Court of India has today set aside the Bombay High Court Judgment asking Vodafone to pay Income tax of USD 2 Bn. 

Juggling finances in one country is bad enough; having to do it in two can be baffling. When it comes to filing taxes, NRIs find themselves in this unenviable position as the Income tax rules for NRIs are different from those that are valid for residents. Here's a quick guide to NRI Taxation taxation. 

Currently, India has DTAA with around 80 countries. We will look at DTAA provisions that India has with UK and US. Broadly, NRIs will be able to avail a reduced TDS rate on certain incomes in India. If you are availing this lower rate, you would need to submit a tax residency certificate (issued by the country of your residence) to the payer. 

The Reserve Bank today said Indians who have non-resident accounts in the country can now hold them in any currency which is fully convertible. 

The grass is not really greener on the other side. And many Indians abroad are figuring it out the hard way. Faced with a gloomy economic and career prospects, some are packing their bags and heading back to test the job market. 

Director General of Audit, New Delhi has published Service Tax Audit Manual, 2010.  As per the guidelines, tax payers whose annual service tax payment (including cash and CENVAT) was Rs.3 crore or more in the preceding financial year may be subjected to mandatory audit each year.  It is preferable that Audit of all such Units is done by using Computer Assisted Audit Program (CAAP) techniques.  The frequency of audit for other taxpayers would be as per following norms:-

i. Taxpayers with Service Tax payment above Rs.3 crores (Cash + CENVAT) (MANDATORY UNITS) – to be audited every year.

ii. Taxpayers with Service Tax payment between Rs.1 crore and Rs.3 crores (Cash + CENVAT) – to be audited once every two years.

iii. Taxpayers with Service Tax payment between Rs.25 lakhs and Rs.1 crore (Cash + CENVAT) – to be audited once every five years.

iv. Taxpayers with Service Tax payment upto Rs.25 lakhs (Cash + CENVAT) – 2% of taxpayers to be audited every year.

The Audit selection guidelines, therefore, would apply to the non-mandatory taxpayers, forming part of the discretionary workload.  These taxpayers should be selected on the basis of assessment of the risk potential to revenue.  This process, which is an essential feature of audit selection, is known as Risk Assessment.  It involves the ranking of taxpayers according to a quantitative indicator of risk known as a “risk parameter”.  It is also suggested that the taxpayers whose returns were selected for detailed scrutiny, may not be taken up for Audit that year, to avoid duplication of work.  Similarly, the taxpayers who have been selected for Audit, may not be taken up for detailed scrutiny of their ST-3 Returns during that year.

In a move which could improve the fund flow and provide some stability to the choppy Indian bourses, the finance ministry has relaxed norms for foreign nationals and foreign institutional investors (FIIs) to obtain Permanent Account Numbers (PAN) that could also double as KYC (know your customer) compliance for any investment they make in Indian stocks.

Till now, FIIs or foreign nationals had to obtain a PAN and separately meet KYC requirements prescribed by the market regulator before investing in stocks. The tax obligation on any transaction is twice the due amount if they fail to mention PAN.

In the revised rules that come into effect from October 1, a foreign national will have to only produce either his/her citizenship number or taxpayer identification number to obtain a PAN.

The government is making amendments in Rule 114 and Form 49A of the Income Tax Rules and has proposed to introduce a new Form 49AA. While Form 49A will be used for Indian citizens, the other is for foreign nationals and FIIs.

Earlier rules stipulated that citizenship or taxpayer identification number would not be accepted as proof of identity in case of foreign nationals seeking PAN card. The applicant is required to take prescribed documents to an officer of Indian Embassy or High Commission where he is a resident to get them attested.

The revised guidelines ensure that a foreign national or an FII need not make rounds of Indian Embassies or High Commissions anymore. They can get copies of their documents attested by recognized authorities in their respective countries.

Several countries and trade and industry organizations had represented the finance ministry seeking changes in the rules, in particular documents to be accepted as proof of identity and address and their attestation.

The department of economic affairs and the central board of direct taxes (CBDT) also worked on harmonizing the requirements of PAN and meeting KYC obligation.

(Speech by Deepak Mohanty, Executive Director, Reserve Bank of India, delivered at the Motilal Nehru National Institute of Technology (MNNIT), Allahabad on 13th August 2011)

I thank the Motilal Nehru National Institute of Technology (MNNIT) for giving me this opportunity to address this distinguished gathering. I propose to speak on inflation which is a matter of concern to all of us. What is inflation? Simply put, inflation is the sustained increase in the overall price level. Relative change in prices of goods and services is a desirable attribute of market economy as it reflects productivity changes as well as demand and supply conditions. However, when this process transforms into an acceleration of the overall price level, we need to worry as inflation imposes many socio-economic costs.

The headline wholesale price index (WPI) inflation averaged 9.6 per cent in 2010-11 as compared with 5.3 per cent per annum in the previous decade. Similarly, the average consumer price inflation, measured by the consumer price index for industrial workers (CPI-IW), was even higher at 10.5 per cent in 2010-11 as compared with 5.9 per cent per annum in the previous decade. Moreover, this elevated level of inflation also persisted through the first quarter of 2011-12. In response to inflationary pressures, the Reserve Bank has raised the policy repo rate 11 times bringing it up from a low of 4.75 per cent in March 2010 to 8.00 per cent by July 2011. It is expected that inflation should come down towards the later part of this year.

Why has inflation been so high and persisted for so long? This is the theme of my talk today. In my presentation, I propose to address the following questions: Is India an outlier among major countries in terms of recent inflation performance? Has the inflation process changed? What are the causal factors – global and domestic as well as supply and demand? I will conclude with some thoughts on managing the inflation dynamics on the way forward.

As per Rule 6(1) of Service Tax Rules, 1994, service tax shall be paid to the credit of the Central Government, by the 5^th (or 6^th if paid electronically), immediately following the calendar month or the quarter (as the case may be) in which the service is deemed to be provided as per the rules framed in this regard.

Accordingly, Point of Taxation Rules, 2011 has been notified to provide the provisions to determine when the service is deemed to be provided. As per rule 2(e) of Point of Taxation Rules, 2011, “point of taxation” means the point in time when a service shall be deemed to have been provided.

Thus, now, for correctly discharging the monthly/quarterly service tax liability, assessee must know when the service shall be deemed to have been provided.

July is also the month when one has to file his or her annual income tax returns for the previous year ended in March. 31^st July is the last date to file tax returns for individuals and those whose accounts are not subject to any audit.

Digital Signature Certificate made mandatory w.e.f 1st July 2011 for Firms and Individuals whose accounts are required to be audited u/s 44 AB of the Income Tax Act’ 1961.

The Central Board of Direct Taxes (CBDT) has made millions of Indians smile by announcing that salaried taxpayers with an annual income of up to Rs 5 lakh need not file their returns. They won't have to spend time, effort and money in filing their tax returns. Or so they think. Given the stiff conditions, it's unlikely that anyone will be able to avail of the concession. Here's why the CBDT's proposal is just a clever ploy, a theoretical relief that nobody will get. 

As per the amendments in the income tax rules, coming into effect from July 1, quoting PAN  will be mandatory for any payment of Rs five lakh or more for purchase of bullion or jewellery.

Residency is an important factor in determining taxability of an individual. If an individual qualifies as a tax resident of a particular country, he is generally taxed on his global income in that country. The residency in a particular country is determined by rules that include physical presence, domicile and citizenship as may be prescribed under the domestic tax laws of different countries. 

The Finance Act, 2011 has introduced with effect from April 1, 2011, Point of Taxation Rules in which, these rules will determine the point in time when the services shall be deemed to be provided. The general rule will be that the time of provision of service will be the earliest of the following dates:
i. Date on which service is provided or to be provided
ii. Date of invoice
iii. Date of payment

The MCA has issued The Companies (Cost Accounting Records) Rules, 2011. These rules will apply to every company, including a foreign company, engaged in the production, processing, manufacturing or mining activities.

The government has decided to levy tax on the interest obtained on Post Office savings schemes from the current financial year.

Depreciation rates for the companies engaged in generation or supply of electricity

Based on the comments received on the Exposure Draft on taxonomy, the Ministry of Corporate Affairs (MCA) has finalised the Taxonomy and Business Rules for Commercial and Industrial (C&I) entities for filing their Balance Sheet and Profit and Loss Account in XBRL.

The Securities and Exchange Board of India (SEBI) launched a centralised web-based complaints redress system (SCORES) on Wednesday.

The Ministry of Corporate Affairs in supersession of  its Circular no.9/2011 dated 31.03.2011 and 25/2011 dated 12.05.2011, has mandated today that  certain class of companies are required to file Balance sheets and Profit and loss Account along with Director’s and Auditor’s Report for the year 2010-11 onwards by using XBRL taxonomy. The Taxonomy Business Rules, Validity tools etc required for preparation the above documents in XBRL format as the existing Schedule VI and Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 have been prepared and hosted on the website of the Ministry at www.mca.gov.in. The FAQs about XBRL have been framed by the Ministry and they are being annexed as Annexure I with this circular for the information and easy understanding of the stakeholders. To enable filing on XBRL by stakeholders, MCA-21 portal will have XBRL filing module by July, 2011. Actual date will be informed separately.