Under the existing provisions of the IT Act, dividend received from foreign subsidiary companies is taxable in the hands of the Indian parent company @ 30% (plus applicable surcharge and cess). This acts as a major disincentive for the Indian parent companies having subsidiaries outside India, as the profits of foreign subsidiaries are already taxed outside India and the dividends distributed are out of such after-tax profits.
Under the existing provisions of section 10AA of the IT Act, a deduction of 100% is allowed in respect of profits and gains derived by a unit located in a SEZ from the export of articles or things or services for the first 5 consecutive AYs; of 50% for further 5 AYs and thereafter, of 50% of the ploughed back export profit for the next 5 AYs. The profits of such units are excluded for the purpose of levy of MAT based on book profits. It is proposed to bring profits of such units within the purview of MAT based on book profits @ 18.50% (plus applicable surcharge and cess).
The government proposes to complete the exercise for passage of general budget for 2011-12 in Parliament by March 24, Parliamentary Affairs Minister Pawan Kumar Bansal said today. Finance Minister Pranab Mukherjee will initiate the discussion on the budget in the Lok Sabha tomorrow and will reply on the debate on Thursday, Bansal told reporters here.
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Recovering from the global slowdown, the Indian Economy is geared up to achieve the GDP growth rate of 9 percent for 2011-12 on the basis of positive momentum in savings, investment rate and increasing investment in infrastructure. However, there is a soaring task in front of the Government to overcome from the crisis of elevated inflation rate on account of higher food, crude oil prices and poor implementation of the policy measures. The Finance Minister would thus need to strike a balancing act in insulating the aam aadmi from the higher inflation and at the same time keep the momentum going for the successful Indian growth story ahead.
After the issuance of Annual Supplement of the Foreign Trade Policy 2009-14, the Government maintained a close watch on the exports, especially of those sectors, which were badly hit by recession in the developed world. The Government observed that while the exports have generally shown a rising trend during last few months, certain sectors were still not performing well. To enhance competitiveness for products which are labour/ technology intensive, the Government has announced further export incentives to more than 600 products. Certain procedural simplifications have been announced to help trade facilitation and reduction of transaction costs. Special initiatives for pharmaceutical sector were also announced.
As per sections 5 & 6 of the Competition Act, the commission is empowered to probe a corporate deal for any possible breach of the competition law. However, the government has set a threshold limit as per which only those M&As would come under the CCI purview that have combined assets of R1,000 crore or more or combined turnover of R3,000 crore or more.
Finance Bill, 2011 has substituted the language of this section. The basic theme of this section has been kept alive alongwith certain additions. The new section states as follows:- Sub section 1 to section 11A says that where any duty is short levied/paid or not levied/paid or erroneously refunded by way of any reason other fraud, collusion or willfull misstatement of suppression of fact of contravention of this Act or of the rules made thereunder with intent to evade payment of duty:–
The Legal Consultancy service was brought under Service Tax net from 01.09.2009. The Taxable service was defined under sub-clause (zzzzm) of clause (105) of Section 65 of the Finance Act, 1994. The Legal services provided to a business entity by any other business entity in relation to advice, consultancy or assistance in any branch of law were covered.
In the chain of imposition of duty on new services the levy on hospitals has also been added in the budget 2010-11. Although the rate of service tax is kept constant at 10% but in order to increase indirect tax revenues the Hon’ble Finance Minister has proposed a new levy for hospitals. In his budget speech he expressed that the hospitals having 25 or more beds with centralized air-conditioner system is proposed to be taxed under service tax system.
