The Chartered Accountant

DECEMBER 2008 1034 THE CHARTERED ACCOUNTANT
National update
Tax-free gratuity ceiling may treble to Rs 10 lakh
In a move that's likely to benefit the salaried, the labour ministry is mulling a proposal to virtually treble the ceiling on tax-free
gratuity to Rs 10 lakh from Rs 3.5 lakh now. The ministry has sought comments from workers and employers, and a decision
would be taken after considering the views of both sides. If the proposal is cleared, the ministry would urge the finance ministry
to hike the tax-free gratuity limit to Rs 10 lakh, government sources said.
CBEC on trail of sugar companies evading excise duty
Sugar mills have come under the Government scanner for alleged excise duty evasion. The Cabinet Committee on Prices (CCP)
has asked the Central Board of Excise and Customs to direct its field formations to keep a watch on sugar mills. According
to reports, sugar mills have deliberately withheld sale of dismantling buffer stock into the open market or have exported approximately
5 lakh tonnes of sugar without prior approval from the Government of India, for their own benefits & gains. It
resulted in excise loss of Rs 500 crore, besides not meeting demand in the domestic market. Sugar commissioners have also
been asked to monitor timely release of sugar in the domestic market. Hence, excise officials and sugar commissioners have
to work in tandem.
ITTA seeks excise, VAT exemption to import vehicles
With the Government intensifying preparations for the Commonwealth Games, Indian Tourist Transporters Association
(ITTA) President has written to the Finance and Commerce Ministries to provide them a one-time exemption from excise duty
and VAT under the Export Processing Guarantee Scheme (EPCG) on the purchase of nearly 5,000 vehicles. According to him,
this is imperative to ensure their logistical preparedness as they would need to invest around Rs 1,000 crore for these games.
Duty-free shops need local Customs clearance too
The finance ministry has clarified that companies that plan duty-free shops in the country will need to take a separate clearance
from local Customs authorities, once their plan is cleared by the Foreign Investment Promotion Board (FIPB). The FIPB’s
approval is only for the purpose of permitting foreign investment and any such approval does not automatically confer a right
on the applicant to open a duty-free shop at any port, an official said. Requisite clearances from the Customs authorities as
envisaged in the Customs Act, 1962 are mandatory, the official said.
Telcom firms not to deduct TDS on fee to MTNL, BSNL
In a relief to private telecom players, the Delhi High Court has ruled that no tax will be deducted at source on payments to
MTNL and BSNL for interconnection. Telecom companies are required to set up own equipment and infrastructure for operating
and maintaining their networks. Interconnection helps complete calls between two networks. Any operator who seeks
interconnection from MTNL or BSNL needs to pay a fee fixed by the telecom regulator and the same (payment by private
operators to PSUs) is reflected in their receipts for taxation purposes.
Government slaps 5% import duty on iron and steel
The government on 18 th November 2008 slapped a 5% import duty on specified iron and steel products and 20% duty on crude
soyabean oil in a move aimed at safeguarding the interests of domestic industry. While bringing cheer to the industry, the move
is also expected to give a marginal relief to the government revenues as well. The government, which has cut indirect taxes to
stimulate the economy in the budget and then later in the financial year including exempting crude oil from import duty has
witnessed a downslide in its excise and customs duty collections. The collections declined by 5% in October, 2008.
Attuning company law with other regulatory norms
According to the corporate affairs ministry, the Companies Bill 2008 introduced in parliament recently provides for harmonisation
of India’s company law framework. What’s being envisaged is avoidance of conflict between the Companies Act and various
specialised sectoral regulations. The proposed harmonisation, according to the ministry, would enable “sectoral regulators
to address their specific roles on the basis of their respective regulatory frameworks in a manner consistent with and complementary
to the company law framework.”