Accretive Monthly Communique March 2015

MONTHLY COMMUNIQUÉ
MARCH 2015
INCOME TAX
Quantification of disallowance on default to deduct tax on payments made
to non-residents: The Central Board of Direct Taxes (CBDT) vide its instruction
no 2/2014 clarified that for disallowance in case of default in deduction of tax at
source on payments made to non-residents under section 195, the disallowance
shall be restricted to the appropriate income chargeable to tax under the act and
Income Tax
Central Excise
Customs
FTP
FEMA
the same shall be determined by the assessing officer. CBDT has now clarified that
where the appropriate income has been determined based on an application to the assessing officer, the
same shall form the basis for disallowance.
(Circular No. 03-2015 dated 12.02.2015)
CENTRAL EXCISE
Clarification regarding recovery of arrears in installments and amendment of Garnishee Notice:
The CBEC has clarified that the Central Excise officers are empowered to add, amend, vary or rescind a
notice issued by them for recovery of arrears of tax due of an assessee from another person (generally
known as Garnishee Notice) when the assessee comes forward for payment of arrears, once Garnishee
Notice are issued.
Further, the CBEC has allowed the recovery of arrears of taxes, interest and penalty in installments. The
power to allow payment in monthly installments is discretionary which shall be sanctioned by the
Commissioner upto a maximum of 24 monthly installments. It may be extended by another 12 monthly
instalments provided the same is sanctioned by the Chief Commissioner. This facility will be granted to
companies which show a reasonable cause for payment of arrears in installments such as the company
being under temporary financial distress. Frequent defaulters may not be allowed payment of arrears in
installments. The decision will be taken on a case to case basis taking into consideration the facts of the
case, interest of the revenue and track record of the company its financial situation
The procedure to be followed for allowing payments of arrears to be made in instalments is as under:
An application should be made by the Company to the jurisdictional Commissioner justifying why
the Company is unable to pay the arrears of tax.
On satisfaction of the application and reasons given by the Company, the jurisdictional
Commissioner should provide the acknowledgement of the approval to make the payment of arrears
in instalments.
MONTHLY COMMUNIQUÉ
MARCH 2015
The sanction / permission shall state the following:
• The number of installments;
• The month from which the payments of installments shall begin; and
• In case of default in payment of installments, the permission shall be withdrawn and action shall
be taken for recovery of arrears.
(Circular No. 996/3/2015-CX dated 28.2.2015)
Clarification regarding ‘Place of Removal’ for CEVNAT Credit of input service: With specific
reference to determination of place of removal in case of exports for claim of CENVAT credit of input
service, the CBEC has clarified that the place of removal. The place of removal in relation to clearance of
goods for exports from the factory of the manufacturer for input service credit could be of two types and
the place of removal would be as follows:
Clearance of goods for export by manufacturer exporter directly to his foreign buyer – The place of
removal would be the Port / ICD / CFS where the shipping bill is filed by the manufacturer exporter
and goods are handed over to the shipping line
Clearance of goods for export through merchant exporters – The place of removal would be place
where the property in the goods passes from the manufacturer to the merchant exporter which is
generally, the factory gate of the manufacturer. However, the place of removal cannot be beyond the
Port / ICD / CFS where shipping bill is filed by the merchant exporter.
(Circular No. 999/6/2015-CX dated 28.2.2015)
CUSTOMS
Simplification in compliance with Know Your Customer (KYC) norms: In order to address the
difficulties in compliance with KYC norms, the CBEC has prescribed 2 documents i.e. one for ‘proof of
identity’ and other for ‘proof of address’ for KYC verification. The documents prescribed is provided in
Board Circular No 9/2010-Cus dated 08.04.2010 In case of individuals, a single document containing
both, 'proof of identity' and 'proof of address would be sufficient if it is one of the documents already
prescribed by the Board. Further, ‘Aadhar Card’ is now recognized as a valid document in case of
individual. The documents prescribed in the circular mentioned supra are as under:
MONTHLY COMMUNIQUÉ
MARCH 2015
Form of organisation
Individual
Documents Prescribed
(i) Passport (ii) PAN card (iii) Voter's Identity card (iv) Driving licence (v)
Bank account statement (vi) Ration card
Company
(i) Certificate of incorporation (ii) Memorandum of Association (iii)
Articles of Association (iv) Power of Attorney granted to its managers,
officers or employees to transact business on its behalf (v) Copy of PAN
allotment letter (vi) Copy of telephone bill
Partnership firm
(i) Registration certificate, if registered (ii) Partnership deed (iii) Power of
Attorney granted to a partner or an employee of the firm to transact
business on its behalf (iv) Any officially valid document identifying the
partners and the person holding the Power of Attorney and their addresses
(v) Telephone bill in the name of firm/ partners
Trusts, Foundations
(i) Certificate of Registration, if registered (ii) Power of Attorney granted
to transact business on its behalf (iii) Any officially valid document to
identify the trustees, settlers, beneficiaries and those holding the Power of
Attorney, founders/ managers/ directors and their addresses (iv)
Resolution of the managing body of the foundation/ association (v)
Telephone bill
(Circular No. 07/2015-Cus dated 12.02.2015)
FTP
E - IEC Form: The Director General of Foreign Trade has notified a new format for issue of ImportExport Code numbers in electronic form i.e. e-IEC, in respect of applications filed online. The system
will generate and send the e-IEC to the applicant or send rejection letter with the grounds for rejection
(as the case may be) by e-mail to the registered e-mail address of the applicant. Further, the decision
regarding grant or refusal of IEC will be conveyed to the applicant through SMS. In addition, a
corrigendum to public notice 79 / (RE-2013)/2009-2014 dated 31.12.2014 has been issued stating that
online IEC application fee is Rs.250/- instead of Rs.500/-.
(Public Notice No. 84 (RE-2013)/2009-2014 10.02.2015 and Public Notice No.85 (RE-2013)/2009-2014 dated:
13.02.2015)
MONTHLY COMMUNIQUÉ
MARCH 2015
Deactivation of Multiple IEC against single PAN: As per the provision of Foreign Trade Policy
(FTP) and procedure there under every importer / exporter is allowed to have only one Import-Export
Code (IEC) against a single PAN. However, it is noticed by the DGFT that multiple IECs have been
obtained by some firms/companies from various Regional Authorities against the single PAN. It is now
notified that all importers / exporters having multiple IECs against a single PAN have the option of
retaining any one IEC and surrender all other IECs to the concerned RAs by 31.03.2015. If the multiple
IECs against single PAN is not surrendered before 31.03.2015, the same will be deactivated.
(Public Notice No. 87 (RE-2013)/2009-2014 dated: 17.02.2015)
FEMA
Foreign direct investment (FDI) in manufacturing of medical devices: The Reserve Bank of India
(‘RBI’), taking cognizance of the amendment to the FDI Policy of the Government of India, has
provided that FDI in manufacturing of medical devices would be permitted 100% under the automatic
route. Hitherto, FDI in the said sector was accorded the same treatment as FDI in the pharmaceutical
sector where FDI was permitted 100% under the automatic route in case of greenfield investments and
under the Government approval route in case of brownfield investments.
(A.P. (DIR Series) Circular No.70 dated 02.02.2015)
Lock-in-period for investments by Foreign Portfolio investors (FPI): Hitherto, investments only in
government securities and debt market in India by FPI required a minimum lock-in period of 3 years.
The RBI has now mandated that future investments in corporate bonds would also have a minimum
lock-in period of 3 years. It has also been provided that FPIs would now not allowed to make any
further investment in liquid, money market mutual fund schemes and commercial papers/debt
instruments (including those with optionality clause exercisable within 3 years).
The RBI has also provided that FPIs would be permitted to invest coupons received on their existing
investments in government securities; and such investments would be kept outside the purview of the
current USD 30 billion limit for investments in government securities.
(A.P. (DIR Series) Circular No.71 dated 03.02.2015, A.P. (DIR Series), Circular No.72 dated 05.02.2015&A.P.
(DIR Series) Circular No.73 dated 06.02.2015)
Online submission of returns – Foreign Direct Investment: RBI to promote the simplicity in
reporting of transactions under foreign direct investment, has enabled online filing of the following
returns with the Reserve Bank of India.
MONTHLY COMMUNIQUÉ
MARCH 2015
Advance Remittance Form (ARF) - used by the companies to report the foreign direct investment
(FDI) inflow to RBI; and
FCGPR Form - which a company submits to RBI for reporting the issue of eligible instruments to
the overseas investor against the above mentioned FDI inflow.
The e-Biz portal requires the customer to login, download the form, update and upload the same using a
digital signature certificate. The AD is required to download and verify the contents and upload the same
for RBI to process and issue unique identification number (UIN).The manual system of reporting will
however continue till further notice.
(A.P. (DIR Series) Circular No.77 dated 12.02.2015)
Liberalization of procedures for payments against imports: Hitherto, application towards payments
for imports into India by persons, firms and companies exceeding USD 5000 or its equivalent is to be
made in Form A-1 to the AD Category –I Banks. The RBI in order to simplify and liberalize the
procedure has decided to dispense off with the form; however, AD Category –I Banks shall obtain all the
requisite details from the importer and satisfy itself about the bonafide of the transactions before
effecting the remittance.
(A.P. (DIR Series) Circular No.76 dated 12.02.2015)
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Document date: 24.03.2015
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